• Chile-based Arauco has begun building a pulp and paper mill in a Brazilian region that’s been prioritized for conservation.
• The project overlaps with the Três Lagoas biodiversity conservation area, where it could potentially contaminate rivers, dry up groundwater, increase wildlife roadkill, and transform this region of Cerrado savanna into a “green desert” of eucalyptus monocultures.
• While Arauco has promised to implement monitoring and mitigation measures for the environmental impacts of its new project, its track record in Chile is rife with cases of pollution and environmental violations.

See All Key Ideas

A Chilean company with a history of pollution has begun building a new pulp and paper mill in Brazil, threatening to turn a highly biodiverse region into a “green desert” of eucalyptus monoculture, experts warn.

Arauco announced in April this year that it would begin work on the Projeto Sucuriú site in Inocência municipality, in Mato Grosso do Sul state. The project is expected to cover 3,500 hectares (about 8,650 acres) near where the MS-377 highway crosses the Sucuriú River.

The company is investing $4.6 billion in the project, or nearly a fifth of Mato Grosso do Sul’s 2021 GDP, according to Brazilian government data. In August, the company signed a contract for financing amounting to $250 million from the Interamerican Development Bank (IDB) and another $600 million from the World Bank’s International Finance Corporation (IFC).

The Mato Grosso do Sul state environment agency, IMASUL, issued the company its installation license in May 2024, at an event attended by the state’s governor, Eduardo Riedel; Inocência Mayor Antônio Ângelo; and Arauco’s Brazilian CEO, Carlos Altimiras.

Riedel said at the event that Arauco is one of the world’s cleanest pulp and paper companies, and touted its commitment to sustainability and carbon neutrality. In Brazil, however, the pulp and paper industry is classified as being potentially highly polluting under the as stated in 2000 National Environmental Policy Law.

The project also poses a threat to the biodiversity and water resources of this region of Brazil, which lies in the Cerrado biome, the world’s most biodiverse savanna ecosystem. Arauco in particular has a track record of social and environmental impacts at its other operating sites in Chile, including soil contamination, water contamination, and air pollution from its runoff and waste. The company also has a history of conflicts with Indigenous peoples.

Arauco’s investment extends beyond the pulp and paper mill; it also encompasses logistics infrastructure to transport an expected 3.5 million metric tons of pulp every year. Brazilian newspaper O Estado de S. Paulo reported that the company plans to invest $1 billion in a 1,050-kilometer (650-mile) railway connecting Inocência to the port of Santos in São Paulo state, running alongside the MS-377 highway.

Another potential route to Santos being eyed by the company would see its freight trucked on the MS-377 to the main port on the Paraná River in Três Lagoas municipality, also in Mato Grosso do Sul; shipped via the Paraná-Tietê waterways until Pederneiras municipality, in in São Paulo state, and from there taken by train to the port. With Santos as its key logistics hub, Arauco is also planning to build a receiving center there to transfer its cargo to ships.

For many observers, this logistical footprint will have socioenvironmental impacts far beyond just the mill in Inocência.

Biodiversity at risk

In the environmental impact study and environmental impact report (EIA-RIMA) the company drew up as part of the permitting process to build its mill, it’s apparent that the project overlaps into the Três Lagoas Biodiversity Conservation Priority Area.

The site is part of a network of priority areas, established by federal decree in 2004, aimed at conserving and recovering ecosystems and species. The policy has since spawned several conservation areas, led to licensing requirements for potentially polluting activities, and mandated monitoring and support for sustainable use and environmental regulation.

Três Lagoas was included in the second edition of the priority areas list, finalized in 2018. This list expanded and redefined the criteria for defining conservation targets. It ranked their “biological importance” (extremely high, very high, high, or lacking information) and to their “priority for action” (extremely high, very high, or high). Três Lagoas was rated “extremely high” on both counts.

The biological importance of priority areas was assessed according to the number of times each ranked as essential for meeting conservation targets, with some regions considered irreplaceable compared to others when it comes to preserving biodiversity. Três Lagoas was deemed to fall in the “irreplaceable” category.

This map shows the overlap of Projeto Sucuriú, Arauco’s pulp factory (in brown) onto the Três Lagoas Priority Area for the Conservation of Biodiversity in Mato Grosso do Sul (in light green). Source: IMASUL, Ministry of the Environment and Climate Change.

The region is home to endemic Cerrado birds like the helmeted manakin (Antilophia galeata), large-billed antwren (Herpsilochmus longirostris) and yellow-faced parrot (Alipiopsitta xanthops). The latter is considered at risk of extinction, alongside mammals like the giant armadillo (Priodontes maximus), giant anteater (Myrmecophaga tridactyla), black-striped capuchin (Sapajus libidinosus), common tapeti (Sylvilagus brasiliensis), maned wolf (Chrysocyon brachyurus), lowland tapir (Tapirus terrestris) and white-lipped peccary (Tayassu pecari). All these species live in the area that will be directly affected by the mill construction and in its direct area of influence, according to the company’s own environmental impact study.

Marine Dubos-Raoul is a geographer, researcher and visiting professor at the Federal University of Mato Grosso do Sul (UFMS). She says the disappearance of natural areas directly affects the biodiversity of fauna, which loses habitat.

“Animals can’t feed themselves and start traveling to other areas [in search of food],” she says. “This results in roadkill and the invasion of crops in rural communities.”

Wildlife roadkill is one of the main problems on the highways in Mato Grosso do Sul. There were 1,416 instances of vehicles striking wildlife reported between July 2020 and November 2024 in the state, according to data from Estrada Viva, a roadkill monitoring program under the state’s infrastructure agency. The program looks only at state roads, not federal highways like MS-377.

The construction of an industrial supply chain like Arauco’s means there will be more vehicles on the region’s roadways to ship its cargo and transport its employees. While there are no roadkill data for MS-377, experts warn the factory’s presence could increase the number of wildlife deaths in the area.

A giant anteater killed on a highway in Mato Grosso do Sul. Image courtesy of ICAS/Press Room.

‘Green desert’

A common but outdated perception of paper production is that it’s made from pulping forest trees. Today, however, nearly all pulp and paper companies, like Arauco, cultivate their own pulpwood trees, typically fast-growing eucalyptus or acacia, in vast monoculture plantations. According to Dubos-Raoul, the forestry industry has become more prevalent in the region in recent decades, resulting in a series of impacts on the Cerrado. The state government exempts these companies from environmental licensing, effectively giving them a blank check to plant eucalyptus trees under a 2024 federal law.

That means monocultures of pine, eucalyptus and mahogany for commercial purposes aren’t listed as potentially polluting activities or users of environmental resources at the federal level. This change eliminates the need to declare forestry activities in mandatory reporting, and exempts companies from paying environmental control and inspection fees.

One of the reasons Arauco chose Inocência as the site of its new mill is the “proximity of space for development of a forested area able to meet the supply demands for wood for the pulp industry,” according to its environmental impact report. The company estimates it will need about 10.5 million metric tons of eucalyptus to produce 3.5 million tons of pulp each year. While the report doesn’t specify whether Arauco will grow its own eucalyptus, the project’s website says 400,000 hectares (nearly 1 million acres) of land will be dedicated to planting.

Monocultures — vast plantations of a single commercially valuable species — are typically referred in industry parlance as “planted forests.” In the pulpwood industry, in particular, proponents maintain that eucalyptus trees “reforest” degraded land. But they also affect neighboring native forests.

“When we conduct studies to understand the evolution of land use and occupation, we can see that eucalyptus is spreading into areas already degraded by pasture, but also that it is moving into native vegetation in the Cerrado,” Dubos-Raoul says. “The landscape changes. We oftentimes call it a green desert.”

She says eucalyptus plantations, unlike natural forests, don’t host biodiversity or provide ecosystem services, and that the year-round green of eucalyptus trees isn’t normal during the dry season in the Cerrado.

“At this time of year, the plants lose their leaves, and just their twisted trunks remain,” Dubos-Raoul says of the native vegetation. “This is vegetation that burns naturally and then bursts forth again from the ashes when the rains come.”

Water scarcity

Arauco’s project is also located in the same region as the Bauru-Caiuá Aquifer, a key source of water for nearby municipalities. The establishment of an extensive eucalyptus plantation in the area is therefore of high concern, Dubos-Raoul says, given that these nonnative trees are notorious for drying up springs and groundwater.

“Companies like to say that because eucalyptus trees don’t have deep roots, they won’t dry up aquifers,” she says. “In fact they don’t have deep roots, but the Cerrado has deep, well-drained soil and this is what maintains the groundwater. This is why the trees [native to] the Cerrado have deep roots. When eucalyptus is planted, they absorb the rainwater at the surface, and the groundwater doesn’t get replenished.”

Clyvihk Camacho is an engineer with the Brazilian Geological System’s (SGB), Integrated Network of Underground Water Monitoring (RIMAS). He’s observed reduced volumes in the Bauru-Caiuá Aquifer in recent years, and co-authored a 2023 study showing how the aquifer lost 6 cubic kilometers (1.4 cubic miles) of water volume between 2002 and 2021 due to prolonged drought and more water use than the water cycle was able to replace.

This implies that Projeto Sucuriú could increase water scarcity in the region. In its environmental impact report, Arauco says it must implement and operate environmental programs, including monitoring surface and groundwater quality, given the risk of contamination from effluent and chemical leaks. However, the report lacks any indication of whether it will monitor the volume of water used or if it plans to replenish it.

Camacho says it’s imperative to recharge the aquifer.

“It can’t be used indiscriminately. There are ways [to replenish in regions where monoculture is maintained], like artificial restocking, where rainwater is collected and injected into the aquifer. It’s a very intelligent solution, because if the water is underground, much less of it evaporates,” he says. “If it’s done correctly, you can actually use large volumes and manage to replace it.”

A eucalyptus plantation in a region of Minas Gerais that was originally Cerrado savanna. Forestry monocultures are called “green deserts” by environmentalists because of their lack of biodiversity. Image by Mikaella Balis via Wikimedia Commons (CC BY-SA 3.0).

A history of violations and contamination

Even though Arauco has promised to monitor and mitigate any possible environmental impacts from Projeto Sucuriú, the company’s history reveals a reality marked by a series of violations and contamination.

The Chilean multinational has a trail of more than two decades of conflicts with the Mapuche Indigenous people and ocean and river water pollution. The first records date back to 2004 and 2005, when its Horcones plant in Biobío, southern Chile, released 5,000 liters (1,300 gallons) of turpentine, a byproduct of pulp manufacturing, into the Gulf of Arauco. The people living in the region experienced poisoning by inhalation and skin contact.

Biobío resident Juan Pablo Toledo is a plant biotechnology engineer and activist for Red por La Superación del Modelo Forestal (Network for Overcoming the Forestry Model), who’s fighting to end exploitation by the industry because of its impacts on the environment and human health.

“I spent half of my life between the ports and [Arauco’s] pulp factory, which is one of Latin America’s largest. I see trains loaded with acid arriving at the industrial plants all the time. Soon thereafter, I see the foam spreading on the beaches when the acid is dumped after its use,” he says.

In 2020, Arauco was slapped with a fine of more than 4 billion pesos (about $5 million at the exchange rate at the time) for environmental violations at another of its plants, Valdívia in the region of Los Ríos, in 2014. That year, more than 2,000 dead fish surfaced in the Cruces River just a few meters away from its factory, which had been releasing its industrial waste into the river. Chile’s environment ministry identified 11 infractions, mostly related to the release of industrial waste into the river.

Then, in 2022, local authorities in Constitución, in the Maule region, shut down one of the company’s factories after a release of liquid gas. The case was reported by people living next to the industrial complex who reported experiencing dizziness and vomiting from the poisoning.

Response from Arauco

Mongabay contacted Arauco to ask why it had chosen to build its new mill in a region considered of “extremely high” importance for the conservation of biodiversity. We asked how the company plans to prevent a recurrence of past violations and pollution in the Três Lagoas region, and if it has any plans for replenishing the Bauru-Caiuá Aquifer. The company’s press department responded that it would not answer any of our questions.

We also contacted IMASUL, the state environmental agency, about its approval of Projeto Sucuriú within the Três Lagoas Biodiversity Conservation Priority Area, and how it plans to monitor Arauco’s adherence to the environmental commitments it’s made, including whether the company has any plans for replenishing groundwater. The agency had not responded by the time this article was first published.

 
Banner image: Aerial view of the land where Chilean company Arauco’s new pulp and paper factory will be built in Inocência, Brazil. Image courtesy of Projeto Sucuriú.

This story was first published here in Portuguese on Oct. 16, 2025.

Citation:
Renna Camacho, C., Getirana, A., Rotunno Filho, O. C., & Mourão, M. A. (2023). Large‐scale groundwater monitoring in Brazil assisted with satellite‐based artificial intelligence techniques. Water Resources Research, 59(9). doi:10.1029/2022wr033588