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Aracruz Plans Investment in River Terminals for Transportation
São Paulo, Brazil, 29 May 2008 -- Aracruz Celulose S.A. (NYSE: ARA), the world’s largest producer of eucalyptus pulp and one of Brazil’s leading exporters, as part of the project for the expansion of its Guaíba Unit, in Rio Grande do Sul (RS), intends to build three river terminals for transporting wood. The terminals will be built at Guaíba, Rio Pardo, and Cachoeira do Sul, the last of these at a later stage, some time after 2015. The company also will build a private maritime terminal in São José do Norte, for the distribution of pulp.

The Jacuí waterway, in the Rio Pardo valley, has an important role to play in the future logistics of Rio Grande do Sul, as it passes through highly productive agricultural regions, connecting them with the capital, Porto Alegre, and the port of Rio Grande. Presently, it is under utilized. The volumes that Aracruz intends to transport represent a 25% increase over the current transport movement. The aim is to achieve and preserve the uninterrupted navigability of the River Jacuí, between Rio Pardo and Guaíba, carrying a daily volume of up to 10,000 tons. The waterway transportation needs to operate continuously, all year round, transporting 50% of the raw material carried to the pulp mill.

These initiatives represent an investment of USD 170 million and are part of a USD 2.6 billion investment announced by Aracruz in April for construction of a second production line at its Guaíba unit, in the state of Rio Grande do Sul, which will augment the plant’s annual capacity to 1.8 million tons of bleached eucalyptus pulp.

Veracel 2

Aracruz, together with its partner Stora Enso, also will give the utmost importance to expanding the production capacity of the Veracel plant, in Bahia, with the construction of a second production line, which will have an annual capacity of around 1.4 million tons when it begins production around the beginning of 2012.

Veracel Celulose S.A., a 50-50 joint venture between Aracruz and Stora Enso, went into operation in May 2005 and is recognized worldwide for its operational excellence and consequent lowest production cost in the industry. The plant, which is located in the municipality of Eunápolis, in the south of Bahia, has the capacity to produce 1 million tons a year of bleached eucalyptus pulp.

Growth strategy

The increase in the capacity of the Guaíba unit and the Veracel expansion will both contribute towards realizing Aracruz’s strategy for sustainable growth, aimed at supplying 25% of world hardwood market pulp demand — equivalent to approximately 7 million tons a year — by the year 2015.

To this same end, Aracruz intends to announce, later this year, the conclusion of the feasibility studies for a third expansion project in Brazil, which will be a totally new plant.

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