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Suzano Advances Bioeconomy Plan With Mitsui Deal

BRAZIL (From news reports) -- Suzano has signed an agreement with Japan's Mitsui & Co, focusing on the development of new bioeconomy businesses based on the potential of sustainable biomass.

The non-exclusive agreement, signed in January, will see the firms developing next-generation bioproducts using biomass from the 15,000 square kilometers of eucalyptus farms Suzano manages in Brazil and residual by-products from the pulp production process.

According to the companies, the collaboration does not include any capital expenditure commitment, though there is the potential for future joint investments following the first wave of the project.

A factor behind the appeal of the partnership between the companies lies in Suzano's capacity to provide biomass that, according to the Brazilian firm, is both environmentally friendly and cost-effective on a large scale. The current emphasis of the collaboration is on identifying new product domains for expansion using this sustainable biomass, with a view to introducing more eco-friendly options that could change how existing markets operate.

"We are talking about a renewable raw material with characteristics to replace fossil-based products, which can contribute to the decarbonization of the global economy," says Christian Orglmeister, executive director for new bio-businesses, strategy, and digital technology at Suzano.

When it comes to specific technologies that could be used in the development of these new products, the companies are "keeping an open mind," according to the Suzano executive.

"We expect to look at a broad range of approaches, ranging from novel and innovative processes coming out of cutting-edge research, to ways we could adapt common industrial processes so they can effectively use eucalyptus biomass as a feedstock," he says.

Evolving a bio business strategy

The Mitsui agreement aligns with Suzano's broader bio business strategy beyond its core activities of pulp, paper, and consumer goods production. This line of work includes biotechnology subsidiary FuturaGene, as well as Woodspin, a joint venture for a wood pulp facility with Finnish materials technology firm Spinnova.

Additionally, Suzano invests in startups and spinouts in areas such as agtech and forest tech, novel biomass applications, carbon removal, and sustainable packaging solutions under Suzano Ventures, the firm's $70 million corporate venture capital arm.

When it comes to potential challenges ahead in the new phase of bioproduct development with Mitsui, Orglmeister notes that having a clear commercial pathway to scaling up production of the new bioproducts and reaching cost-competitiveness with fossil-based alternatives is the most significant hurdle.

Commenting on the role Suzano and Mitsui will play in the research and development process, the executive highlighted a significant asset: Suzano's database of the eucalyptus genome, which the company claims to be the largest pool of data of its kind. "I don't believe that any organization in the world understands the eucalyptus tree as well as Suzano," he points out.

On the other hand, the executive noted the Mitsui partnership is relevant due to factors such as the Japanese firm's expertise in global trade in various industrial sectors, as well as relationships with potential future customers of the bioproducts stemming from the partnership.

"[These prospects] will help us to effectively qualify the commercial and market potential of each opportunity, which is just as important as getting the technology right when making future investment decisions in new-to-the-world applications," Orglmeister says.

Managing environmental impact

Established 100 years ago, Suzano is one of the world's largest paper and pulp manufacturers. As the company presses ahead with the expansion of its eucalyptus plantations, concerns have been raised around the consequences of large-scale monoculture practices, including depletion of water sources, land degradation, and adverse impacts on traditional communities. Commercial tree farming is also generally understood to offer reduced carbon offsetting capabilities compared to native ecosystems.

Despite these concerns, Suzano has successfully attracted billions in green financing due to high ratings in environmental, social, and governance (ESG) standards. The company acknowledges that activities such as farming will have a greater impact on the environment than leaving native land untouched but says it does not engage in deforestation to plant eucalyptus.

"Our eucalyptus plantations are primarily cultivated on land historically already degraded by other agricultural activities, mostly livestock grazing, rather than being converted from native forest," says Marcela Porto, communications and sustainability director at Suzano. The executive noted that approximately 40% of Suzano's land is set aside for permanent conservation and that the company is working on the restoration of 37,000 hectares of degraded areas across Brazil.

In addition, Suzano claims to use techniques to reduce the impact of its monocultures on biodiversity. This includes mosaic planting, whereby eucalyptus planting is interspersed with areas of native vegetation. Technologies such as geospatial intelligence and on-the-ground monitoring to map and manage its impact on the areas where the firm operates are also being used to that end.

As part of its environmental commitments, Suzano announced at the COP27 Climate Conference in Egypt in 2022 that it is one of the companies behind Biomas, a company created to focus on the restoration, conservation, and preservation activities of forests in Brazil. Banks Santander, Itaú, and Rabobank, mining firm Vale, and food processing company Marfrig are also involved in the project.

With an initial investment from each company of 20 million Brazilian reais ($4 million), the new company aims to restore and protect 4 million hectares of native forests in biomes such as the Amazon, Atlantic Forest, and Cerrado over the next 20 years, an area comparable to the size of Switzerland.

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