Votorantim Group

Last edited by crocodyl on April 22, 2008 - 2:51pm

Company Snapshot:

One of the largest private economic conglomerates in Brazil, the Votorantim Group has large positions in cement and concrete, mining and metals (aluminum, zinc, nickel and steel), as well as paper and pulp production. Described by the Wall Street Journal as "a tropical style General Electric," Votorantim also produces concentrated orange juice and specialty chemicals, and is involved in a number of electric generation projects (often to service its own industrial operations). Its financial arm is Banco Votorantim.

Votorantim has a history of paternalism and conservatism, which allowed it to thrive during Brazil's military dictatorship. But it adapted to the changes brought about by the election of left-leaning president Luiz Inácio Lula da Silva, who has urged the company to expand its domestic investments.

The company's landholding claims and industrial projects (e.g. dams) have been challenged by indigenous and land rights groups (including Brazil's Landless Worker Movement, or MST), some of whom have established encampments on the contested lands and/or protested at the company's offices.

The company faces increased scrutiny for its investments in agricultural biotechnology products intended for use on its own vast plantations in Brazil, including GMO trees (eucalyptus).

Founded in 1918, Votorantim is controlled by the Ermírio de Moraes family, now in its third generation, whose net worth Forbes estimates at $4 billion. The group's corporate governance model guarantees the controlling family strategic positions on the Board of Directors, relying upon professional managers from outside the family to run each of the conglomerate's business units.

Votorantim began to rapidly expand international operations starting in 2001. It has cement, metals/mining, pulp and paper, agribusiness and financial operations in a number of countries such as the United States, Canada, Colombia, Peru and Bolivia.

Ownership status:

Privately held

Number of employees worldwide:

3,498 ([http://www.secinfo.com/d16TCx.uE7.htm#16yh Votorantim Pulp & Paper] only)

Chief executive officer:

Carlos Emírio de Moraes

Website:

http://www.votorantim.com.br/ENU

Corporate accountability

Labor:

Votorantim has traditionally preferred company paternalism and incentive-based pay over strong labor unions. During the period of Brazil’s military dictatorship, the company apparently had no problem with the fact that independent unions were all but outlawed.

The group made adjustments when democracy was restored to the country and particularly when labor leader Luiz Inácio Lula da Silva was elected president. It accepted the reality of unions, though patriarch Antonio Ermirio de Moraes continued to promote laissez-faire economic policies.

The publicly traded Votorantim Pulp & Paper notes in its annual 20-F report to the U.S. Securities and Exchange Commission that most of its workers are members of unions and that since 1989 the company has experienced four strikes, which averaged only several days in length (p.73). The company claims to have “good relationships” with its employees, but it reveals that as of the end of 2006 it was a defendant in 1,200 employment lawsuits filed by former employees (p.78).

Environment and product safety:

In June of 2005, the Votorantim Group was complicit in the use of a fraudulent environmental impact assessment (P.54) conducted by Engevix Engenharia S.A. in 1999. The incident took place during work on the Barra Grande river hydroelectric plant in Santa Catarina and Rio Grande do Sul, Brazil, with the participation of other companies under the name of the "Baesa Consortium." The impact of the completion of the Barra Grand project is the submersion of 8,138 hectares of land, about half of which is forest.

On July 5, 2002 GreenBiz reported that Votorantim was among ten major cement companies that jointly announced a new Cement Sustainability Initiative. Critics point out that the greenest of available technologies can only reduce the cement industry's carbon dioxide emissions by 20 percent. Cement "is the single biggest material source of carbon emissions in the world, and the demand is going up," said Julian Allwood, a professor of engineering at Cambridge University. The New York Times reported on 27October, 2007 that cement production accounts for up to 5 percent of global CO2 emissions. Thus, critics of the industry view "sustainable cement" as a contradiction in terms — "like vegetarian meatballs." Cement kilns have also been criticized for additional toxic emissions from the use of hazardous waste as fuel.

Votorantim is one of the world's largest miners of zinc, a big use of sulphuric acid.

According to the Swiss Biotech Association, Votorantim Ventures is the biggest (est. $300 million) venture capital companies investing in the Brazilian biotechnology sector. The company is developing new types of eucalyptus trees for industrial use.

Votorantim is a 28 percent shareholder in Aracruz, the world's largest producer of bleached eucalyptus pulp, producing a total of 27 per cent of the world's bleached eucalyptus pulp. Aracruz is responsible for massive forest destruction in the Atlantic region to make way for its plantations in the 1970s. It has also been accused of planting monocultures in protected areas. The company was fined by IBAMA, Brazil´s environmental protection agency, for planting in protected areas.

In 2005 the U.S. Environmental Protection Agency announced it had cited the Dixon, Illinois plant of Votorantim Cimentos subsidy St. Marys Cement for violations of the Clean Air Act.

Human rights:

Brazil's Landless Workers' Movement (MST) reported in 2005 that 500 rural landless workers from the Chico Mendes Encampment were fighting the Votorantim Group for the ownership for 580 hectares of land of the Engenho São João, a part of the Usina Tiúma. The farm had been idle for 17 years, since the Usina Tiúma closed. Some of those living on the land were the ex-employees of the farm. After its closure, the workers were left without work and homes and their families suffered the constant threat of eviction. In 2005, the occupants of the Chico Mendes Encampment were subjected to a violent eviction enforced by the riot division of the military policy of Pernambuco.

According to a 2005 report by the NGO FIAN, more than 5,000 Brazilian peasant families, approximately 20,000 people, amongst them rural workers, Afro-Brazilians and indigenous people would be affected by the flooding of 430 km2 as a result of the construction of the Estreito dam (1,100 MW), on the River Tocantins, between the municipalities of Estreito and Aguiarnópolis. Votorantim is a partner in the project.

Votorantim is a 28 percent shareholder in Aracruz, the giant Eucalyptis pulp manufacturer criticized for poor relations with indigenous peoples, rural communities formed by the descendants of runaway slaves (Quilombolas) and other local communities. Aracruz was involved in violent attacks against indigenous peoples and responsible for an aggressive anti- indigenous peoples campaign. In August 2007, after 30 years of struggle, the Tupinikim and Guarani won the struggle for their land against Aracruz, when Brazil's Minister of Justice, Tarso Genro, signed two ministerial decrees acknowledging 18,070 hectares of land in Espírito Santo as belonging to the Tupinikim and Guarani Indigenous Peoples. Other land rights conflicts remain unresolved.

Political influence:

In 2007 Votorantim (VCP) received 40 million reais (about 22 million dollars) from the National Economic and Social Development Bank (BNDES) of Brazil. (World Rainforest Movement Bulletin 124, Nov. 2007).

Financial information

Total revenue:

$13 billion

Fiscal year:

2006

Major lines of business/segments:

The metals business division accounted for 30% of revenues in 2006 - from production of zinc, nickel, steel and aluminum.

Votorantim Metais is the world's third largest primary zinc producer with three operating zinc smelters and two operating zinc mines. It owns the Cajamarquilla zinc smelter and is a major shareholder of Milpo, both located in Peru. Votorantim Metais also acquired US Zinc, a zinc recycling company based in the USA with a plant located in China.

Votorantim Pulp & Paper is registered with the SEC and trades on the NYSE.

Miscellaneous

Other Information:

SEC filings for Votorantim Pulp & Paper provide additional financial information.

Specialized Information

Major units/subsidiaries/affiliates:

“Votorantim Participações S.A.”, or “VPAR”, is the holding company of the Votorantim Group. VPAR controls three areas of the business: Votorantim Industrial, Votorantim Finance and Votorantim New Businesses, each of them containing one or more business units.

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Votorantim Group

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