Four major shareholders control the company's voting shares: the Lorentzen, Safra and Votorantim groups (each owning 28% of the voting shares); and BNDES (12.5%). Various other minority investors own the remaining 3.5% of the company’s voting shares. Aracruz’s preferred shares, which constitute over 50% the company's total outstanding shares, are traded on the Sao Paulo, New York and Madrid stock exchanges.

The proposed IFC investment is a corporate loan (A Loan) of $50 million for IFC’s own account.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

Aracruz has corporate offices in Rio de Janeiro, Brazil. Pulp production is currently distributed between two sites: - Barra do Riacho in the state of Espírito Santo, where the company operates a pulp making complex that is fully integrated with company-owned eucalyptus plantations. The site contains three mills with total capacity of 2 million tons a year of pulp. The industrial complex includes three recovery boilers, three continuous digesters, five bleaching and drying lines, and facilities for chemicals recovery, water treatment and electricity generation through biomass. Environmental control is ensured through modern systems that treat all solid, liquid and gaseous wastes; and - Guaíba in the state of Rio Grande do Sul, where Aracruz operates a high-tech mill with capacity to produce 400,000 tons a year of BEKP. A third unit, Veracel Celulose (Veracel), is being built in the municipality of Eunápolis, in the state of Bahia, in partnership with Stora Enso (a 50% ownership stake each). With startup of operations scheduled for 2005, Veracel will have the capacity to produce 900,000 tons a year of BEKP.

The proposed IFC investment will support the ongoing investment program of one of the lowest cost BEKP producers and one of the most productive users of capital in the industry. The company’s overall investment program will allow to continue to lead the industry in profitability and sustainability practices. The benefits to Brazil are huge and stem form having the competitive leader in this industry that serves as a benchmark for efficiency and currently generates over $1 billion in mostly foreign exchange revenue per year and creates more than 9,000 direct jobs. IFC’s role in the project includes: - broadening Aracruz’s sources of long-term funding in order to reduce the perception of risk associated with its operations being located in an emerging market; - environmental and social sustainability, by helping the company build on its existing environmental and community development initiatives; and - transfer of industry best practices.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor.

The following potential environment, health and safety and social impacts of the projects were analyzed:

- compliance with IFC''s environmental and health and safety guidelines;
- environmental management capacity;
- cleaner technologies and eco-efficiency;
- sustainable forest management practices and their incorporation in Aracruz''s plantations; and
- social programs and relationships and other sustainability aspects.
Location of environmental documents in locally affected community
Environmental documentation will be disclosed at the following locations: Rio de Janeiro, RJ SPS Comunicação Av. Rio Branco, 181 - grupo 711 Rio de Janeiro, RJ Phone: 3231-2650 Vitória, ES Pauta 6 Comunicação R. José Alexandre Buaiz, 190/salas 506 e 507 Edifício Master Tower Enseada do Suá Vitória, ES Phone: 27-3235-6999 Porto Alegre, RS Estilo Comunicação R. Dona Laura, 471 - Cj. 203 Moinhos de Vento Porto Alegre, RS Phone: 51-3330-9236