SUSTAINABLE USE OF FORESTS - PEREZ COMPANC S.A.

THE COMPANY

Perez Companc S.A. is a leading company in an important sector of Argentine and Latin American industry that includes the production and transportation of oil and gas; refining and petrochemicals; electrical generation, transmission, and distribution; and forest-related industries.

PECOM FORESTAL

The Pecom Forestal Division began operations in the late fifties and is involved in both lumber and non-lumber production in its forests. In 1998, this company had an 8% domestic market share in pine and a 5% share in the total Argentine lumber market. Sales amounted to U.S.$25 million, with a production of 85,000 cubic meters of sawn, dried lumber used in the construction industry; 55,000 tons of wood chips used as raw material for paper pulp; and 10,000 cubic meters of veneer panel board.

The  company currently has facilities in the provinces of Misiones (San Jorge Facility and others), Corrientes, and Buenos Aires, in the Paraná River Delta region.

Range of Activities at Pecom Forestal

ENVIRONMENTAL MANAGEMENT

Pecom Forestal is the first business of its kind in Argentina to implement and certify an Environmental Management System (EMS) based upon the ISO 14001 Standard. This process began in 1997 and includes all forest operations carried out at the San Jorge Facility and in the rest of the province of Misiones. The system identified the significant environmental issues involved in the company's business (including legal and corporate requirements), in order to establish a series of goals and objectives for improving environmental performance. These goals include the following:

  • Establishing baseline indicators to enable measurement and reduction of erosion.
  • Installing a lumber storage system in which water is used to control the moisture level in the lumber to be sawn, thus avoiding fungus infestations that damage the wood. This system enables more lumber to be stored for industrial processing, while avoiding the use of logging equipment on rainy days and giving the ground and roads time to dry out, so soil structure vulnerable to erosion is not damaged by traffic.
  • Avoiding air pollution by eliminating the common practice in this industry of burning off vegetation to clear land.
  • Reducing environmental deficits through restoration of protective forests.
  • Avoiding soil and water pollution.
  • Decreasing the generation of wastes affecting the environment, through extended-use synthetic oil and replacement of aerosol products.
  • Working in area schools to promote an environmental publicity and awareness program, which includes printed and audiovisual media and group participation workshops.
  • Maintaining the biodiversity of species in the area, including the establishment of a 20,000-hectare Multiple Use Forest Reserve for this purpose.

The implementation process for the ISO 14001 Standard included the establishment of operational controls necessary for compliance with objectives. Documentation of operations was also completed, and an emergency response program was developed. The internal audits needed to verify the functioning of the system were also performed.

Finally, in April of 1999, the EMS was successfully certified under the ISO 14001 Standard for forest operations in the province of Misiones. It will soon be expanded to the operation in the province of Corrientes.

As a supplement to the EMS, work is actively being done inside Grupo Perez Companc on the implementation and utilization of Environmental Performance Indicators (EPIs—ISO 14031 Standard) for performing continuous evaluation and follow-up on the systems that have been installed. In this effort, the first case to be actualized (Petroquímica Cuyo) was included in ISO TR 14032, and a pilot implementation plan for EPIs is currently under development, which, by next year, will include the forest area.

CONDITIONS IN THE ENVIRONMENT

Currently Pecom Forestal is carrying out most of its activities in the province of Misiones—specifically, at the San Jorge Facility—which borders the Iguazú National Park and the Uruguaí Provincial Park.

This facility has a total area of 59,000 hectares, of which 18,000 have been planted with pines (Pinus elliottii and Pinus taeda). Since 1998 a project has been underway to plant 15,000 hectares at a rate of 2,500 per year. Within the area of existing native forest, which is representative of the Paraná  jungle located at the extreme northeastern tip of the facility, 20,000 hectares were declared a Multiple Use Forest Reserve. This will be used under a compensation system for the purpose of maintaining the biodiversity of the area, as well as for conserving the watershed and setting up an environmental corridor with neighboring national and provincial parks and reserves. Also within the reserve are some 6,800 hectares of native palmito (Euterpe edulis), as well as 130 species of vegetation with great pharmaceutical and ornamental potential.

It is important to emphasize that the company's activities in this area are centered around an Environmental Management Plan, which includes a network of native vegetation connecting all the forest areas, thus enabling conservation of the habitat of animal and plant species in the region, as well as the sustainable use of resources.

MITIGATION OF CO2

The absorption of carbon dioxide (CO2) during photosynthesis is one of the mitigation processes included under the Kyoto Protocol for decreasing the concentration of greenhouse gases (GHG) in the atmosphere. Current and planned plantations will contribute to this process of decreasing GHG because of the plantations’ CO2 absorption capability. They will also help improve the environmental equation for this business once carbon offsets become accepted on a global scale.

Pecom Forestal conducted an analysis to estimate the amount of CO2 absorbed by plantations through the process of photosynthesis. The company’s objective in this analysis focused on the potential for producing marketable emissions certificates and rights, which could translate into greater financial and environmental benefits.

To prepare for eventual certification in carbon fixation, Pecom Forestal contracted the services of the Société Générale de Surveillance (SGS), which performed a pre-evaluation, or scoping visit, in late 1998. This study included a preliminary evaluation of carbon offsets.

OUTLOOK

With an eye on international market conditions—with its increasing demand for forest products and rising prices—and an objective of continuous growth in a sustainable forest industry on a competitive international scale, Pecom Forestal began looking in 1995 at the possibility of establishing itself in the province of Corrientes. This region offered comparative advantages such as high growth rates and a good price-quality ratio on lands suitable for foresting.

After deciding to make this investment, in 1997 the company devised a plan to begin reforesting 80,000 hectares in the province of Corrientes, which after a few years would supply raw material to an integrated sawn lumber, particleboard, and laminated board industry. In 1998, some 1,500 hectares were planted, and there are projections for 4,700 hectares annually up to the year 2010. The company will be extending the EMS to this operation in the immediate future.

According to the Pecom Forestal plan, estimates for the annual development of the forest

area up to 2010 are as follows:

Projection of  Forest Area (Native and Planted Forest)


 
Years
CONCLUSION

Within the framework of the growth of economic activities in countries, sustainable logging is becoming a desirable option for CO2 absorption. It also enables acceleration of the implementation process for the carbon offsets introduced in the Kyoto Protocol, thus creating economic, environmental, and social benefits. Because of these benefits, Pecom Forestal is considering potential forest projects throughout Argentina as well as in neighboring countries.

As Pecom Forestal continues its long-term projects, its most significant contribution will be the elimination of 1,000,000 tons of CO2 by the year 2010. It achieves this result by assuming an average annual absorption rate of approximately 10 tons of CO2 per hectare, while deducting 1.5 from emissions (boilers, dryers, and decomposition of organic matter).

CONTACT

Rodolfo Porrino
Pecom Forestal
Maipú 1, Piso 12
1599 Buenos Aires, Argentina
Tel. (54-11) 4344 6475
Fax (54-11) 4344 6612
E-mail: rporrino@pecom.com.ar