FOREST-PULPINTEGRATED PROJECT

PORTUCEL MOZAMBIQUE

19th November 2015

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 1|

AGENDA

PORTUCEL MOZAMBIQUE

project overview

Project distinctive features

Partnership with IFC - WBG

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 2|

PORTUCEL MOZAMBIQUE project overviewProject’s key figures (estimates)

356,000 hectares – 50+50 years concession of very high productive forest

1.5 million tonnes p.a. BEKP mill (from 2023 onwards)

USD 3-3.5 billion of total investment (not all to be undertaken by PM)

USD 1 billion of annual sales by 2026/28

3% of current gross domestic product (USD 29.8 bn)

20%+ of current exports (USD 4.3 bn)

+7,000 direct and indirect jobs (90-95% locals) at peak phase

USD 40 million comprehensive social plan

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 3|

PORTUCEL MOZAMBIQUE project overview

Concession areas

Province Borders

Districts

Pulpmill sites

Total Concession

“DUAT” Area: 356,213 ha,

of which 246,000 ha are

available for planting

Province

of Zambezia

1

Province

of Manica 2

Concession Area:

182,886 ha

Total DUATs: 22

Awarded: 2011

Plantation Area:

126,000 ha

Concession areas

Province Borders

Districts

Concession areas

Province of Zambezia1

Concession Area: 173,327 ha

Total DUATs: 21

Awarded: 2009

Plantation Area: 120,000 ha

Province of Manica2

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 4|

PORTUCEL MOZAMBIQUE project overview

Starting of operations Ramp-up of plantation Construction of pulp mill

2009-14 2015-18 2019-23

• Productivity tests (land and

species)

• Negotiation of DUATs

(~356 kha)

• First plantations

• Social / environmental studies

• Acceleration of plantations

• Construction of nurseries

• Pulp mill go-ahead decision

(latest by the end of 2018)

• Establishment of sustainable

forestry base

• Establishment of pulp

production unit

• 20-30,000 ha acquired

• 3,000 ha planted

• 60,000 ha planted • 160 kha planted (total)

• 1.5 million tonnes pulp mill

• USD 30 mn (capex) • USD 130 mn (additional

forest capex), plus USD 15

mn of opex

• Up to USD 140 mn in forest

(additional capex)

• Up to USD 2.4 bn in pulp mill

• Up to USD 800 mn in logistics

Project timeline

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 5|

Project distinctive features

• Very high productivity forest (similar to South America’s most productive lands)

• Logistic cost advantage vs. pulp mills in South and North America

• Most competitive pulp cash cost delivered in China

Highly competitive wood / pulp targeting the Asian market

• Africa’s largest pulp mill

• Upgrade / Construction of critical logistical infrastructures

• Local employment for +7,000 people (peak employment)

Transformational project for Mozambique

• Portucel: world-class know-how in managing forests and industrial projects

• IFC/World Bank: unrivalled experience for ensuring sustainability of and social

inclusiveness of Project’s development

• Joint efforts to share value with local communities, improving local people

livelihoods

Best practice for sustainable development

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 6|

• On December 15th 2014 IFC signed an

agreement to subscribe 20% of Portucel

Moçambique

• The IFC committed to an initial

investment of up to USD 30.4 million.

• This Investment is further leveraged by

the ongoing technical advisory IFC has

been giving to Portucel in the sustainable

development of forestry operations in

Mozambique.

Mr. Jin-Yong Cai, IFC’s Executive Vice-President and CEO, with Mr. Diogo da Silveira, Portucel Group CEO

The partnership with IFC - World Bank GroupWorld Bank / IFC is a strategic investor in PORTUCE L MOÇAMBIQUE and a leading advisor on issues of environmental and social sustainabilit y around the Project

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 7|

The partnership with IFC - World Bank GroupInauguration of Luá tree nursery – Zambezia – 07th Septe mber 2015

From left to right: President of Mozambique Mr. Filipe Nyusi; Mr. Sérgio Pimenta - IFC Vice-President; Mr. José Pacheco - Minister of Agriculture; Mr. Pedro Queiroz Pereira - Chairman of Portucel Group, Mr. Celso Correia - Minister of Land, Environment and Rural Development; Mr. Diogo da Silveira -CEO of Portucel Group

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 8|

The Community Development Program aims to promote inclusive and self-sustaining

development of the communities related to the Project

The partnership with IFC - World Bank Group

Produce and/or procure

sufficient quantity and quality

of food securing a resilient

subsistence (e.g., stable crops

and legumes, fruit trees,

livestock)

Increase equity and assets

with income generated

through agriculture

production, service and trade

opportunities (e.g.,

eucalyptus outgrowers,

entrepreneurship and SME’s)

Enable and improve

livelihoods, economic

growth, and access to health

services and education (e.g.,

fighting Malaria and HIV

programs, teaching

materials / equipment)

Objective 1 Objective 2 Objective 3

Promote improvement of

Quality of Life

Develop opportunities for

economic / income growth

Preserve and improve

livelihoods

IFC is assisting PORTUCEL with the design (complete d) and roll out of “best-practice” Community Development Program

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 9|

IFC is providing valuable support and assistance to PORTUCEL also in the following areas:

• Design and fine-tuning of Portucel’s land access policy in

order to avoid resettlement and economic displacement

of local families and communities

• Capacity building for local forestry SMEs to take full

advantage and offer services to the project

• Development of eucalyptus outgrower program

• Development of commercial agriculture and contract and

outgrowers schemes to link smallholder farmers to the

market

• Stakeholder engagement, including government, donors

and civil society

• Development of successful agribusiness-forestry

MOSAIC development

The partnership with IFC - World Bank Group

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 10|

Protection land Agriculture land Forestry plantation

The innovative Mosaic forestry model

• The plantation model will be based

on a “mosaic” forestry model,

contemplating agriculture plots,

forestry plots and natural land areas

• Trees are grown where land is

available and accessible

• “Mosaic” key to prevent

resettlements and recruit / engage

local people

• 40-60,000 ha of forest to be planted

by farmers on their own land

(outgrowers)

The partnership with IFC - World Bank Group

PORTUGAL EXPORTADOR | Forest-Pulp Integrated Project 11|