Will the financial crisis slow the pulp invasion?

In the southern Brazilian state of Rio Grande do Sul, eucalyptus pulp producers have been hit by the financial crisis, with currency slumps sending share values plummeting. Three major pulp companies in the region, Aracruz Cellulose, Votorantim Celulose e Papel (VCP) and Stora Enso, have informed the state government that three new pulp mills will no longer go ahead. It remains to be seen whether this will slow the spread of the eucalyptus plantations that were intended to supply fibre to the mills.

It is not surprising that a financial downturn would hit all three companies together as there are already tight links between them. Aracruz and Stora Enso are involved in a controversial joint venture, Veracel, and in September 2008 Aracruz agreed to a merger with VCP to form the world's biggest eucalyptus pulp manufacturer.