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Aracruz Celulose and Indigenous Communities Sign Agreement
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Sao Paulo, Brazil, 03 December 2007 -- An agreement settling a long process of land disputes in the State of Espírito Santo was signed in Brasilia today by Aracruz Celulose and indigenous leaders.

As a consequence of ministerial edicts 1.463 and 1.464, the new so-called Conduct Adjustment Agreement (TAC), signed in the presence of Justice Minister Tarso Genro and representatives of the Federal Public Prosecutor's Office, considers the rights and obligations of each party (company, Indians, and the National Indian Foundation-FUNAI) in transferring approximately 11,000 hectares of land to the indigenous communities. The enlargement of the Indian reservations must still be approved by decree from the President of Brazil, with the subsequent demarcation of the lands in question.

According to Aracruz's president and CEO, Carlos Aguiar, the company considers the settlement a sustainable solution that balances the interests of all parties involved. "This agreement reflects the efforts of Aracruz, the Indians, the Justice Ministry, FUNAI, and the Public Prosecutor's Office to negotiate a solution that finally ends the dispute and enabling good relations between the parties, thus establishing a climate of peace in the region," he said.

"The agreement satisfies the demands of the Indians for an enlargement in their lands, while at the same time providing Aracruz with the legal assurances that these lands will not be expanded again. This guarantees a suitable climate for the company to continue production and investment, thus protecting thousands of jobs and generating [foreign exchange] earnings for Brazil," Aguiar added. The decision, reached after two months of negotiations, ends a dispute that began at least 30 years ago.

In a letter to Aracruz, Justice Minister Genro praised the good understanding between the ministry, FUNAI, the company, and the indigenous communities. Furthermore, he acknowledged that Aracruz had acquired the area in question in good faith, had not taken land away from the Indians nor expelled any of them from the area, and had committed no illegalities in acquiring or using the lands.

Aracruz is a Brazilian company controlled by the Safra (28%), Lorentzen (28%), and Votorantim (28%) groups and the Brazilian National Economic and Social Development Bank (BNDES).

The agreement definitively resolves the demarcation of the lands and sets forth that both parties shall waive any actions currently underway. According to the Justice Ministry, other areas not demarcated by the current edicts have not been identified as Indian lands. The document will be ratified in court, with the involvement of all the authorities who participated in the negotiation process, including the Public Prosecutor's Office and FUNAI.

FUNAI will be responsible for the demarcation of the lands, with Aracrz's logistical support, and the Indians as observers.

Aracruz Celulose has up to one year to remove its wood from the area in question, a measure proposed by the company to speed up the process. During this period, FUNAI will sign an agreement with Aracruz to contract an independent security company, under Federal Police supervision. The foundation, at the invitation of the company, will audit Aracruz's data on the current wood inventory in the area, to serve as the basis for future discussions.

Through the TAC, Aracruz is committed to support the development of the indigenous communities, financing up to R$3 million of an ethnic-environmental study by FUNAI to identify the best use of the lands aiming the preparation of projects and programs to foster the self-sustainability of the indigenous communities.

Before the signing of the settlement, the terms of the TAC were submitted to the indigenous communities and approved at an assembly on 16 October, and subsequently ratified by them on 28 November, as recommended by Convention 169 of the International Labor Organization (ILO) regarding indigenous and tribal peoples, to which Brazil is a signatory.



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