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Date submitted: September, 3, 2000

Prototype Carbon Fund
Project Idea Note (PIN)
1. Project Proponent
1.1. Name of Organization:

Plantar S/A Planejamento, Técnica e Administração de Reflorestamentos

1.2. Organizational Category (Government/Government
Agency/Municipality/Company/NGO):

Company

1.3. Address:

Av. Raja Gabáglia, 1380, Santa Maria, Belo Horizonte, State of Minas Gerais, Brazil,
ZIP Code 30.380-090

1.4. Contact Person:

Geraldo Alves de Moura – Director
Marco Antônio Fujihara – Consultant
Luiz Carlos Goulart – Environment Manager

1.5. Phone/Fax:

+55 31 290-4088 / +55 31 290-4055

1.6. E-mail:

gmoura@plantar.com.br
fujihara@uol.com.br
goulart@plantar.com.br

1.7. Function of Proponent in the Project (Sponsor/Operational
Entity/Intermediary/Technical Advisor):

Sponsor

1.8. Project Sponsors (please list all):

Plantar S/A Planejamento, Técnica e Administração de Reflorestamentos.

2. Type of Project
2.1. Greenhouse Gases Targeted (CO2/CH4/N2O/HFCs/PFCs/SF6):

CO2

2.2. Type of Activities (Abatement/CO2 Sequestration):

Abatement – by avoided emission and by not using charcoal

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CO2 sequestration – by strategic and dynamic stock in forest, formed from year 1 to
year 6 and maintained during the 21 years of the project.

2.3. Field of Activities (Renewable Energy/Alternative Energy/Energy
Efficiency/Demand Side Management/Fuel Switching/Land Use, Land Use Change
and Forestry):

Renewable energy

Alternative energy

3. Location of Project
3.1. Region (Africa/East Asia & Pacific/South Asia /Europe & Central Asia/Middle East &
North Africa/Latin America & the Caribbean):

Latin America & Caribbean

3.2. Country:

Brazil

3.3. City:

Curvelo, Itacambira and Sete Lagoas, State of Minas Gerais

3.4. Brief Description of Location:

Curvelo/MG: Property of Plantar located in the BR 135 highway, km 633 with total
area of 13.144 hectares. It is 80 km far from Sete Lagoas and 150 km far from Belo
Horizonte, the capital of the State.

Itacambira/MG: Property of Plantar located next to BR 135 highway, in
Itacambira/MG with total area of 33.570 hectares. It is 360 km far form Sete Lagoas
and 430 km far from Belo Horizonte.

Sete Lagoas/MG: The pig iron mill of Plantar is located in the BR 040 highway, km
465 and it is 70 km far from Belo Horizonte.

Geographically, the project relies on good access by roads, rail roads and the
proximity to the consumption market as well as the supplier markets of raw material.

4. Expected Schedule
4.1. Earliest Project Start Date:

The project was started in the year 2000

4.2. Current Status (Under Discussion/ Planning / In Preparation/ Advanced in
Preparation, i.e. already discussed with government):

Advanced in preparation. The project was already discussed with the government.

4.3. Time Required Before Becoming Operational:

The project is already in operation.

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4.4. Project Lifetime:

21 years

5. Financing Sought
5.1. Total Project Cost Estimate in US$:

US$ 53.130.000,00 concerning to land investments, infrastructure, plantation and
forest maintenance.

5.2. PCF Contribution sought: [Please Note: PCF only finances the additional component
of a project, which makes it climate-friendly and which would not be realized in the
absence of PCF contribution]

US$ 13.648.033,40 part of the additional component of the project which makes it
climate-friendly.

5.3. Expected Schedule for PCF Contribution: [Please Note: 1PCF contribution is
provided, in principle, on delivery of Emission Reductions, but some up-front
financing may be provided to support project implementation]

TIMETABLE OF CARBON DELIVERY
(Ton of carbon)

EMITIONS EMITTIONS
YEAR SEQUESTRATION YEAR SEQUESTRATION
REDUCTIONS REDUCTIONS
2000 100.827,67 2011 100.827,67
2001 100.827,67 71.483,00 2012 100.827,67
2002 100.827,67 166.793,00 2013 100.827,67
2003 100.827,67 166.793,00 2014 100.827,67
2004 100.827,67 166.793,00 2015 100.827,67
2005 100.827,67 238.275,00 2016 100.827,67
2006 100.827,67 142.965,00 2017 100.827,67
2007 100.827,67 2018 100.827,67
2008 100.827,67 2019 100.827,67
2009 100.827,67 2020 100.827,67
2010 100.827,67 TOTAL 2.117.381,00 953.100,00

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EXPECTED SCHEDULE FOR PCF CONTRIBUTION

EMITIONS REDUCTIONS DELIVERY (TON.
PCF CONTRIBUTION OF C)
YEAR (US$)
ON TIME IN THE FUTURE
100.827,67
3.412.008,35 100.827,67
3.412.008,35 100.827,67
3.412.008,35 100.827,67
3.412.008,35
100.827,67
100.827,67
100.827,67
100.827,67
100.827,67
100.827,67
100.827,67
100827.67
13.648.033,40 403.310,68 806.621,36

5.4. Brief Description of Current Financial Arrangement:

DESCRIPTION Us $
Own resources already invested (land plus infrastructure) 18.480.000,00
Resource financed by BDMG (pro-forests, 2000 plantations) 3.300.000,00
PCF contribution 13.648.033,40
Other sources (advance sale of CER, etc.) 17.701.966,60
Total 53.130.000,00

6. Technical Summary of Project
Please provide a brief paragraph of maximum 10 lines for each of the below.
6.1. Objective:

To contribute for the reduction of carbon dioxide emissions, through the replacement
of the fossil fuel, coal/coke, for renewable energy of biomass, charcoal.

6.2. Brief Description of Project:

To reform the plantations of eucalyptus in exhaustion ( third harvesting ) over the
next 7 years, that will produce 9.885.260 ton. of charcoal and will substitute the coal
/coke in the production of 3.802.023 ton of pig iron in the next 21 years.

It will guarantee 100% of the supply of charcoal of our pig iron mill. The charcoal will
be produced in a sustainable way , according to the principles and criteria of the
FSC, in other words:

• Environmentally fair, Socially beneficial, Economically feasible.

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Our forests in Curvelo/MG have been certified by FSC since 1998. The
implementation of this project will provide a new concept of pig iron, “THE GREEN
PIG IRON”.

This project may be expanded for the whole pig iron sector in Brazil and other
countries, that have pig iron mills and land availability.

6.3. Technology to be Employed:

Better eucalyptus clones of high productivity to be used in the production of biomass,
replacing the traditional plantations of seeds.

The production of charcoal in kilns is widespread in Brazil, however the recovery of
its sub-products such as the tar and other, which will trigger a carbon-chemical chain,
allows several environmental gains and reduction of emissions not considered in this
project.

There is no introduction of new technology in the production of pig iron , however this
project will allow the modernization and the survival of this activity.

6.4. Brief Description of Technology [Please Note: PCF only supports projects that
employ commercially available technology. It would be useful to provide a few
examples of where the proposed technology was previously used]:

In the production of biomass:

The technology of selected clones of high productivity eucalyptus has been
researched by Plantar for more than 16 years. During this time , an own genetic base
was created, tested and applied in plantations in commercial scale, by Plantar and by
outsiders, mainly the pulp industry of Brazil.

It is based on previously selected trees being reproduced in nurseries.

This technology allowed us to improve from an average productivity of 7.5 ton of dry
wood per ha/year to 17.5 ton/ha/year. Our research department already selected
clones that indicate a productivity of 21 ton/ha/year.

In production of pig iron

The pig iron is a basic component for the production of founded parts and steel.
There is no economically feasible substitute for the foundry industry and it is
essential for the steel production, which can use only a small compound of scrap
iron.

All over the world, the pig iron is produced with coal in large blast furnaces with an
individual production capacity of more than 1 million tons per year.

Only in Brazil, mainly in the State of Minas Gerais, the technology was maintained
and developed to produce foundry pig iron starting from charcoal, in various little
furnaces with capacity close to 90.000 ton./year.

7. Expected Environmental Benefits
Please provide a brief paragraph of maximum 10 lines for each of the below.

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7.1. Estimate of Greenhouse Gases Abated/CO2 Sequestered (in “tons of carbon
equivalent”):
7.1.1. before 2008: 806.021 ton of C emission reductions and 953.102
of C sequestration
7.1.2. during 2008 – 2012: 504.138 ton of C emission reductions
7.1.2. during entire Project Lifetime: 3.070.481 ton of C

7.2. Baseline (or Reference) Scenario [Please describe what would otherwise occur in
the absence of PCF contribution]:

Without this project within 21 years 3.802.023 tons of foundry pig iron would stop
being produced with charcoal and will start being produced using coal and it will
release 1.951.475 tons of C in the atmosphere. One ton of foundry pig iron
produced based on coal releases 1,882 tons of CO2 in the atmosphere.

Without the financial resources from PCF/CDM, the alternative would be either the
use of coal or closing down the pig iron blast furnaces operations, both cases are
already happening in the sector, in other words the biggest pig iron mills are
converting to coke and the smallest ones are closing down.

7.3. Specific Global & Local Environmental Benefits Expected:

Global benefits:

Reduce the CO2 emissions to the atmosphere by the not using coal.

CO2 sequestration and carbon fixation on a permanent basis in the trees during three
cycles of eucalyptus production (21 years). It is not a sink, it is a strategic dynamic
stock that needs to be maintained to guarantee the operation of the pig iron mill.

Local benefits:

Avoids the acid rain by the non emission of SO2
Contribute in the recovery of degraded areas.

Other environmental benefits: The forest protects the soil, offers shelter to wildlife,
prevents erosion. For each 100 hectares of growing forests, at least 20 hectares of
indigenous forests are maintained to preserve the native flora, fauna and to protect
the water streams.

7.4. Relevance for Host Country Socioeconomic and Environmental Priorities:

To support its sustainable development by using clean and renewable energy.
Avoids the pressure on the indigenous forests by offering cultivated biomass from
forest plantations.
The forestry activity is a great job creator, mainly in the rural areas, where jobs are
scarce.
It develops the qualification and education, including environmental education, of the
labor which seems to be unqualified.

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The forestry activity, encourages the opening of new schools, drawing a number of
additional services, thus bringing the development to those rural communities,
extremely in need.
The employment in the rural areas avoids the rural exodus, the pressure in the big
cities and the emergence of slums.
From a social/economical point of view, it keeps a secular niche of activity typically
regional, decentralized by small industrial entrepreneurs, whose industries also
create a great number of jobs, increase tax collection in the cities where they are
located.
These small industries supply the internal market, export and also they don’t use
imported components, contributing to the country’s balance.
The replacement of the blast furnaces based on charcoal for the ones based on coal,
reduces the employment since there is no forestry activity, concentrating in the
industrial activity. Besides that, the large blast furnaces use a more advanced
technology, which helps to decrease the job opportunities.
The remaining employment concentration is totally undesirable because of the social
problems it causes, usually in poor regions, as for the city that received the
concentrating industry because it will demand more basic infra-structure, housing,
transportation, etc.
Another undesirable concentration is the pollution. Not only because of the amount
that increases sharply but also because the metallurgical industries based on coal
besides releasing CO2 they also release SO2 which causes the acid rain, bringing
about harmful consequences to the humans and the environment.
Jobs Created
The pig iron sector based on charcoal created 103.641 jobs in 1997, including the
forestry activity and the charcoal making, with a production of 6.379.570 tons of
foundry pig iron in the same period.
This project, with 23.100 hectares will produce around 3.802.023 tons of foundry pig
iron in 21 years, creating and maintaining around 3.000 jobs.
This project received endorsement letters from the Federal, State, Municipal Government and
NGO’s with local and national representatively.

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PIG IRON PRODUCTION DIAGRAM

Bauxite Vibrating
screening
system

Forest Lim estone
Gas cleaning
system
Quartz
Re-sprout
Harvest (three cycles) Gas
Excessive gas
Iron Ore Clean gas flaring

Manganese
Ore
Kiln
Cham inee
Foundry Iron
Others Blast Glendons
Charcoal storage
Charcoal Furnace
handling / Truck
loading Vibrating Blow ers
screening Lum p charcoal Pig casting
system
Hot air A ir m achine
(750 °C ) Hot metal
Charcoal
transportation Slag
Charcoal fines

Available
Pig Iron
Truck
unloading Available

Static
screening Market
Lum p charcoal
system

Charcoal fines