Suzano to Invest $534 Million in Brazil Wood Pellet Production

Suzano Energia Renovavel, a unit of Brazilian paper and pulp company Suzano Papel e Celulose SA (SUZB5), will invest about 1 billion reais ($534 million) in new forests and pellet plants in the northeast to tap rising demand for biomass fuel in Europe.

The company will build two plants with total production capacity of 2 million tons of pellets a year in the state of Maranhao by 2014, Andre Dorf, president of Suzano Energia Renovavel, said today in a telephone interview.

Utilities in the European Union are consuming more biomass fuel to meet a directive requiring that 20 percent of member countries’ energy comes from renewable sources by 2020, Dorf said. The European market for pellets may expand to as much as 100 million tons a year, from 9 million tons now, he said.

“With the incentives Europe has in place, it makes business sense for power generators to run on renewables,” he said. “The price of pellets has risen recently,” to about 130 euros ($174) a ton.

Suzano, based in Salvador, will be able to sign long-term supply agreements with European utilities because it owns its own forests, he said.

“You can’t do that if you’re buying on the market because you can’t guarantee supply or quality of product,” he said.

Suzano said in July 2010 it would invest $800 million in five pellet plants and energy forests by 2020. Three of those facilities will be built by 2014 and two will be built in 2018 and 2019, respectively, Dorf said.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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