To those responsible for, and investing in, the Prototype Carbon Fund (PCF)

March 2003

Dear PCF investors,

We are Brazilian organisations, movements, politicians, churches and citizens from different states like Minas Gerais, Espirito Santo, Bahia and Rio de Janeiro, concerned with the continuing expansion of large-scale eucalyptus monocultures in our states, which result in negative environmental, social, economic and cultural impacts on local communities and stimulate the profit of a few at the expense of the majority of the people.

Corporations like Plantar S.A. installed themselves in our states in the 1960s and 1970s during the military dictatorship, taking advantage of attractive tax incentives. Unfortunately, local communities who were directly impacted by the actions of the corporations were never consulted about whether they wanted this type of project for their region. The result was that Tupinikim and Guarani Indigenous peoples were expelled from their lands, as well as traditional afrobrazilian communities and tens of thousands of peasants, increasing unemployment and, consequently, the despair of these populations who lost their lands and were left without their biodiversity and without their water, on which they were dependent.

We were surprised and bewildered by the news that the corporation Plantar S.A., one of the largest of these companies, with eucalyptus plantations totaling 280,000 hectares, presented a project to the PCF, the World Bank fund that is involved in the “carbon market”. Plantar´s aim is to sell “carbon credits”, based on the plantating of 23,100 hectares of eucalyptus monocultures in the region of Curvelo, in the state of Minas Gerais. These plantations are for the production of charcoal, used in the pig iron plant of Plantar S.A. According to the project documentation, the corporation would have a right to these credits because of the supposed fact that the eucalyptus plantations are long term carbon “sinks”, and because of the supposed fact that charcoal as an energy source for pig iron production releases less CO2 into the atmosphere than coal, utilized today by the majority of iron producers worldwide.

We think that “sinking” carbon in tree plantations never guarantees a long term result, since sooner or later the fixed CO2 will be released back into the atmosphere, and for this reason the “balance” will be zero. Only permanently preserved natural vegetation, like our native atlantic forest or the “cerrado” (a type of savannah vegetation), can guarantee a long-term carbon sink. Besides, we believe that Plantar does not deserve any “carbon credits”, until this corporation acts to address the negative impacts of its past activities. We would like to draw your attention to the following facts:

- The corporations that plant eucalyptus in the state of Minas Gerais claim that their tree plantations diminish the pressure on native vegetation, such as the atlantic forest and “cerrado”. But, the same corporations forget to mention that they themselves burned large amounts of atlantic forest and “cerrado” to plant their 2 millions of hectares of eucalyptus plantations, according to communities that are neighbours of the plantations and studies made by researchers. Moreover, the management of the plantations today does not mean that native vegetation is safe. On the contrary, according to truck drivers who transport charcoal, and who were interviewed in the Curvelo region in October 2002 by researchers evaluating Plantar’s FSC certification for the World Rainforest Movement, the pig iron companies still use around 15-20% native vegetation (“cerrado”). This is possible because of the total lack of control on the roads where the transport of charcoal takes place.

- The major part of the lands owned by these corporations are “devolutas”; that is, lands without land titles that belong to the state. According to Brazilian law, corporations cannot acquire this type of land, only peasants. Even so, with often fraudulent registrations in the registry offices and “hiring” contracts with the state, the corporations succeeded in acquiring hundreds of thousands of hectares of “devolutas” lands, directly impacting local populations that often were expelled. With the occupation of “cerrado” areas, the companies affected the traditional collective use of this vegetation by local communities, making more difficult the subsistence of these people, which was based on the immense biodiversity of the “cerrado”.

- The Curvelo region, where Plantar wants to install its “carbon sink” project, is a “cerrado” region. The environmental impacts of the eucalyptus plantations in this region have been disastrous. Rivers have dried up, eucalyptus was planted in water sources like springs, and permanent preservation areas were not respected. The short cycle eucalyptus monoculture does not allow any other plant or any animal or bird to live within it, and therefore does not possess any biodiversity. Visiting local communities in this region, these impacts can be easily seen “in loco”. A present complaint of the communities is about the construction of the new Plantar nursery in 2000, about which no local inhabitant was consulted. The project, close to Curvelo, diverted an existing road that has always been utilized by local communities, and extended the travelling distance for local inhabitants by more than 5 km.

- Plantar, like other companies in the same business, does not have an environmental impact evaluation and report (EIA/RIMA) of its activities, a legal requirement in Brazil for any undertaking that potentially causes environmental impacts. This shows the “special” treatment that the company receives from the state authorities. If this evaluation report had been made, it would have shown the serious negative environmental, social, economic and cultural impacts of large-scale eucalyptus plantations and charcoal production.

- Working conditions in Plantar’s areas are very dangerous. For this reason, in March this year the corporation was once again sued by the Regional Working Office (DRT), together with 41 other eucalyptus planting and charcoal producing firms in the state of Minas Gerais for not obeying Brazilian labour law. The company was also cited in a Parliamentary Investigation Commission (CPI) in the Parliament of Minas Gerais state as a company that is involved in the illegal and degrading subcontracting of work. Recently in July 2002, this commission concluded its final report. As a result, Plantar has been forced to sign a “Term of Adjustment of Conduct” with the Public Prosection Service for Labour Affairs in Minas Gerais, addressing the negative impacts caused by the illegal subcontracting of its activities. The subcontracting of work stimulates dangerous working conditions, child labour and also the further subcontracting of work.

- Initially, companies like Plantar created employment. However, the occupation of “cerrado” areas contributed greatly to the crisis in the local economy that was heavily dependent on the products of this native vegetation. In Curvelo, various food products factories closed because of a lack of raw material, increasing umemployment. At the same time, job layoffs by companies like Plantar from the beginning of the 1980s resulted in the present unemployment crisis. Most glaring is the fact that Plantar does not do anything for its former workers, many of whom are injured or suffering from health problems; many have already died as a result of the very bad working conditions associated with charcoal production and eucalyptus cultivation. It is worth mentioning that eucalyptus plantations result in less jobs if compared with any other agricultural activity.

- The FSC (Forest Stewardship Council) certification of Plantar, granted in 1998 by the certifier SCS, is only valid for 4.8% of the total area of Plantar and does not guarantee “good forest management”. A recent study by the World Rainforest Movement conducted in the Curvelo region, shows serious mistakes committed by the certifier SCS, as well as evidence, some of which is cited in this letter, that should make it impossible to certify this company. One of the main points is that no representative of workers nor local communities has been consulted in the certification process. Also, the investigations of the company conducted by the Public Prosection Service for Labour Affairs and the Parliament of the state of Minas Gerais were not taken into account by the certifier.

Our intention is to promote economic activities that respect the interests of the local communities and environment, in all its fundamental aspects. We are against projects that represent the opposite. We believe that the people who invest in and administer the PCF should know the local reality before approving a certain CDM Project. We would like to stress that everything that we state in this document is based on visits to local communities that are neighbours of the Plantar company, which revealed to us the desperate situation of these people. As well, our statements are based on conversations with the Public Prosection Service for Labour Affairs in Minas Gerais, with workers and ex-workers of the company, and with members of parliament and trade unionists in the region where Plantar is based.

The fact that eucalyptus absorbs carbon dioxide to grow is true, however this fact can never be used to justify the environmental, social, economic and cultural damage that has occurred in places where large-scale monoculture tree plantations have been implemented in our country. Besides, the argument that producing steel from charcoal is less worse than producing it from coal is a sinister strategy. This means that you make an isolated analysis of a broader environmental issue which only considers carbon emissions. What about the environmental impacts of large-scale eucalyptus plantations, so severely felt by local communities? What about the emissions that still happen in the pig iron industry, burning charcoal? What we really need are investments in clean energies that at the same time contribute to the cultural, social and economic well-being of local populations. We believe that what is really needed is the development of other technologies that do not pollute the environment, that do not involve precarious working conditions, that create work and don’t affect local communities.

We can never accept the argument that one activity is less worse than another one to justify the serious negative impacts that Plantar and its activities have caused. What we want is to prevent these impacts and construct a society with an economic policy that includes every man and woman, preserving and recovering our environment. That is essential for survival and consequently for the future of local communities.

This project is not “clean development” and we urge you not to invest in it.

Endorsed by the organisations and individuals listed below.

For further information contact:

FASE-ES

Marcelo Calazans (coordinator)

FASE-ES is one of the members of the Alert against the Green Desert

Movement, a broad network of organizations, churches, local groups and

citizens in four different Brazilian states which opposes the

present model of large-scale industrial tree plantations in Brazil

e-mail: fasees@terra.com.br

1. AGB – Assoc. dos Geógrafos Brasileiros – Seção Vitória (ES) Association of Brazilian Geographers – Dpt. Vitória -Espírito Santo

2. Andréa Zhouri - Gesta/UFMG – Professor Federal University of Minas Gerais

3. Ana Rita Esgário – Vereadora de Vila Velha – PT/ES – city-councillor of Vila Velha – Workers Party - Espírito Santo

4. Apedema (Assemb. Permanente de Ent. de Defesa do M.Ambiente-RJ) Permanent Assembly of Environmental Defence Organizations of the State of Rio de Janeiro

5. Associação Padre Gabriel Maire em Defesa da Vida Association Father Gabriel Maire in Defence of Life – Espírito Santo

6. Bicuda Ecológica/ Environmental organization - Rio de Janeiro

7. Casa da Pastoral Comunitária de Montes Claros – Minas Gerais – Community Church social service Centre – Montes Claros – Minas Gerais.

8. Centro de Defesa dos Direitos Humanos da Serra Centre of Defence of Human Rights – Serra - Espírito Santo

9. Centro de Defesa dos Direitos Humanos de Baixo Guandu Centre of Defence of Human Rights --Baixo Guandu - Espirito Santo

10. Centro de Defesa dos Direitos Humanos de S. Gabriel da Palha Centre of Defence of Human Rights - São Gabriel da Palha - Espírito Santo

11. Centro de Defesa dos Direitos Humanos do Extremo Sul da BA Centre of Defence of Human Rights - Extreme South of Bahia

12. CEPEDES – Centro de Pesq. p/ Desenv. do Extremo Sul da BA Research and Development Centre of the Extreme South of Bahia

13. CIMI Equipe ES – Conselho Indigenista Missionário Indigenist Missionary Council – Espírito Santo

14. Cláudio Vereza – Deputado Estadual – PT/ES State Member of Parliament – Workers Party – Espírito Santo

15. COMIN - Conselho de Missão entre Índios Mission Council among Indigenous Peoples

16. COOPICAR – Cooperativa das Famílias Carvoeiras do Norte do ES Cooperation of Charcoalworkers Families in the North of Espirito Santo

17. CPT São Mateus – Comissão Pastoral da Terra Pastoral Land Commission of São Mateus – Espirito Santo

18. CPT – Comissão Pastoral da Terra – Estado de Minas Gerais – Pastoral Land Commission of the state of Minas Gerais.

19. CPT – Comissão Pastoral da Terra – Norte de Minas Gerais – Pastoral Land Commission of the North of Minas Gerais.

20. CUT Extremo Sul Bahia Central Workers Union – Extreme South of Bahia

21. CUT/ES – Central Única dos Trabalhadores Central Workers Union – Espírito Santo

22. Dauri Tamanhão – Vereador de S. Gabriel da Palha – PT/ES city-councillor of São Gabriel da Palha – Workers Party – Espirito Santo

23. Espaço Cultural da Paz – Teixeira de Freitas Cultaral Peace Centre – Teixeira de Freitas - Bahia

24. FAMMOPOCI – Fed das Assoc de Mor e Mov Pop de C. de Itapemirim Federation of Peoples Associations and Social Movements of Cachoeiro de Itapemirim – Espírito Santo

25. FAMOPES – Fed das Assoc de Moradores e Mov Populares do ES Federation of Peoples Associations and Social Movements of the state of Espírito Santo

26. FASE/ES – Fed. de Órgãos p/Assistência Social e Educacional Federations of social and educational organizations/Espírito Santo

27. Federação Sindical e Democrática dos Trabalhadores nas Indústrias Metalúrgicas , Mecânicas e de Material Elétrico de Minas Gerais (veja abaixo see above )Trade Unions and Democratic Federation of Workers in the Steel, Mecanic and Eletric Materials Industries of Minas Gerais.

28. Fórum de Lutas do Campo e da Cidade – Forum of Struggles of Rural and Urban Areas – Espirito Santo

29. Fórum de Mulheres do Espírito Santo – Women´s Forum of Espirito Santo

30. Helder Gomes, mestre em economia pela UFES. – M.A. in economics – Espírito Santo

31. GAE-Grupo de Ação Ecológica – Group of Ecological Action – Rio de Janeiro

32. Igreja de Confissão Luterana /Brasil (Sínodo do Espírito Santo a Belém) – Lutherian Church- Synod of Espirito Santo at Belém/ Brazil

33. Jean Pierre Leroy - Projeto Brasil Sustentável e Democrático – Project for a Sustainable and Democratic Brazil – Rio de Janeiro

34. João Batista da Silva - Bicuda Ecológica/APEDEMA – Environmental organization in Rio de Janeiro

35. João José Barbosa Sana - Diretor SEEB/ES-CUT-– Director of the Trade Union of Bank clerks of Espirito Santo.

36. João Passos – Vereador de Montanha – PT/ES – Town Councillor of Montanha – Workers Party – Espírito Santo

37. Maria Diana de Oliveira – Associação dos Geógrafos do Brasil – Minas Gerais – Brazilian Association of Geographers – Minas Gerais

38. Missionários Combonianos (Carapina/Serra/ES) – Combonian Missionaries – Carapina/Serra – Espírito Santo

39. Movimento Nacional de Direitos Humanos/Regional Leste I – National Movement for Human Rights/Eastern Region I – Espirito Santo

40. Movimento Nacional de Meninas e Meninos de Rua – National Movement of Street Children – Espírito Santo

41. MPA – Mov dos Peq Agricultores de S.Gabriel da Palha – V. Valério/ES – Movement of Peasants – São Gabriel da Palha and Vila Valério – Espírito Santo

42. MST – Movimento dos Trabalhadores Rurais Sem Terra – Movement of Landless Peasants – Espirito Santo/Rio de Janeiro

43. OJAB – Organização da Juventude Negra – Nação Zumbi – Organization of Afrobrazilian Youth – Zumbi Nation – Espírito Santo

44. Organização Afro-Cultural Benedito Meia Légua – Conceição da Barra – Afrocultural Organization Benedito Meia Légua – Conceição da Barra – Espírito Santo

45. Pastoral Social de Braço do Rio – Social Pastoral Work – Braço do Rio – Espírito Santo

46. Paulo César Scarim – Geógrafo – Geographer – Espírito Santo

47. Pedro Ivo Batista - Presidente do Instituto Terrazul – President of the environmental institute Terrazul – Rio de Janeiro

48. Sandra Mara Nunes – Vereadora de Linhares – PT/ES – city-councillor of Linhares – Workers Party – Espírito Santo

49. Sebastião Ribeiro – Advogado especializado em Direito Ambiental – environamental lawyer – Espírito Santo

50. Sindicato dos Trabalhadores nas Empresas de Asseio e Conservação, Turismo e Hospitalidade do Norte de Minas Gerais – Trade Union of the Workers in Cleaning and Tourism companies of the North of Minas Gerais.

51. Sindicato dos Trabalhadores Rurais de Linhares – Rural Workers Trade Union of Linhares – Espírito Santo

51. Sindicato dos Trabalhadores Rurais de Montanha – Rural Workers Trade Union of Montanha – Espírito Santo

52. Sindicato dos Trabalhadores Rurais de São Gabriel da Palha – Rural Workers Trade Union of São Gabriel da Palha – Espírito Santo

53. Sindicato dos Trabalhadores Rurais de São Mateus – Rural Workers Trade Union of São Mateus – Espírito Santo.

Esta Federação conta com os Sindicatos Filiados abaixo relacionados: This Federation counts the following member trade unions:

- Sindicatos Metalúrgicos Araxá,

- Sindicatos Metalúrgicos;

- Alfenas,Sindicatos Metalúrgicos BH/Contagem;

- Sindicatos Metalúrgicos Betim;

- Sindicatos Metalúrgicos Cambuí;

- Sindicatos Metalúrgicos Divinópolis;

- Sindicatos Metalúrgicos Extrema;

- Sindicatos Metalúrgicos Governador Valadares;

- Sindicatos Metalúrgicos Itajubá;

- Sindicatos Metalúrgicos Paraisopolis;

- Sindicatos Metalúrgicos Itaúna;

- Sindicatos Metalúrgicos João Monlevade;

- Sindicatos Metalúrgicos Juiz de Fora;

- Sindicatos Metalúrgicos Lavras;

- Sindicatos Metalúrgicos Matozinhos;

- Sindicatos Metalúrgicos Ouro Preto;

- Sindicatos Metalúrgicos Patos de Minas;

- Sindicatos Metalúrgicos Pirapora;

- Sindicatos Metalúrgicos Pouso Alegre;

- Sindicatos Metalúrgicos Raul Soares;

- Sindicatos Metalúrgicos Sabará;

- Sindicatos Metalúrgicos Santa Luzia;

- Sindicatos Metalúrgicos São João Del Rei;

- Sindicatos Metalúrgicos Timoteo;

- Sindicatos Metalúrgicos Três Marias;

- Sindicatos Metalúrgicos Uberlândia/Araguari;

- Sindicatos Metalúrgicos Várzea da Palma;

- Sindicatos Metalúrgicos Varginha;

- Sindicatos Metalúrgicos Vespasiano,