Fibria CEO Castelli calls for market pulp industry consolidation, says Fibria is open to being a consolidator

LOS ANGELES , November 11, 2012 () – Fibria Celulose SA CEO Marcelo Castelli says the market pulp industry needs to consolidate.

Castelli told Industry Intelligence Inc. that the announcement of the pending closure of the Jari Celulose SA bleached eucalyptus kraft pulp (BEKP) mill sends “a strong signal for the market that the industry is struggling” and he said rising costs and low prices will force pulp producers to consolidate.

“This is an amazing moment for consolidation,” said Castelli, who heads the world’s largest pulp-producing company, with mills in Brazil producing 5.3 million tonnes/year of BEKP.

Fibria is open to being “one of the consolidators in the industry (and) would prefer to consolidate if possible,” he said.

He said the paper industry is very actively consolidating and that he assumes the pulp industry will follow the trend.

Commenting that 80% of Fibria’s production goes to its top five clients and that it is certified and of good quality, he said, “We don’t have a problem with demand. It is price.”

Though there “cultural aspects” to consolidation, “It is better to be a partial owner of a very nice company than a 100% owner of a company that is not performing well,” Castelli said.

Fibria itself is the result of the consolidation, in September 2009, of competitors Votorantim Celulose e Papel (VCP) and Aracruz Celulose SA.

“I am proud of Fibria. We have a history together,” said Castelli, who was with the company before becoming CEO in July 2011 and had held leadership positions with VCP and Aracruz.

He said Fibria would prefer to consolidate in the eucalyptus pulp sector but would also be open to companies with different fibers.

Having left the paper sector following the VCP/Aracruz merger, Fibria would want to consolidate in pure pulp or pulp plus bioenergy, Castelli said, commenting that bioenergy results in maximum value from forestry and complements the pulp business.

“The industry is reshaping itself,” he said. As for bioenergy, he said, “My bet’s on that.”

Castelli made his remarks during London Pulp Week last week.

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