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Dispute with local indigenous populations over land rights.
Aracruz Celulose is a Brazilian company, the world's leading producer of bleached eucalyptus pulp. It is responsible 24% of the global supply of the product, used to manufacture printing and writing, tissue, and high value added specialty papers. Aracruz's forestry operations are situated in the states of Espírito Santo, Bahia, Minas Gerais and Rio Grande do Sul. They involve some 286,000 hectares of eucalyptus plantations, intermingled with around 170,000 hectares of native forest reserves, which are of fundamental importance for ensuring the balance of the ecosystem. Aracruz Cellulose is based in Brazil and is a major pulp producer, responsible for 27% of the world’s supply of eucalyptus pulp.
In Espirito Santo, Aracruz has been involved in a long running dispute with local indigenous populations over land rights. When Aracruz first established operations in this region in 1967, the indigenous Tupiniquim and Guarani had no formally recognised land rights in the region. Aracruz and the communities still disagree on whether the Tupiniquim and Guarani were actually living on these lands in the 1960s before Aracruz moved to the area. In 1982 an indigenous reservation was created alongside Aracruz lands and Aracruz ceded some of their land to the reservation. The indigenous communities requested expansion of their territory in 1993, 2002 and 2005. In 1998 and 2005 they moved on to Aracruz lands to protest at the amount of land that had been conceded. In 2005 they also entered Aracruz’s industrial installations. The federal police were brought in to remove people from the lands and the conflict became violent. 
Attempts have been made to resolve this conflict via a formal conflict resolution process involving the indigenous communities, represented by their leaders; the Brazilian government’s department for indigenous affairs (FUNAI); and the Federal Public Attorney’s Office. Formal consultations have also been held with the communities to seek endorsement of their leaders’ decisions. FUNAI has established Working Groups to assess the claims and make recommendations to the Minister of Justice, who has legal responsibility for making decisions on land allocations.
In 1998, a 20-year agreement was negotiated between Aracruz and the communities, including hand-over of land to the communities and support for community development projects. This agreement lasted until 2005. The latest agreement, involving a further concession of land, was signed in December 2007. The main provisions were that Aracruz would not appeal against the decision, but legal assurances were given to Aracruz that the reservation would not be expanded further. Aracruz also committed to fund an ethno¬environmental study and to support further community projects.
The conflicts with the local indigenous populations have hindered Aracruz in securing FSC certification. An FSC certificate that Aracruz acquired via purchase of another forestry operation in another region was withdrawn after protests from indigenous and environmental pressure groups. Efforts to reapply for FSC certification continue to face sustained opposition from these groups.
One of the lessons from the conflict has been the need for a robust conflict resolution process to overcome the lack of trust and understanding between the company and the communities. There is a need for a credible facilitator to overcome the polarisation of discussions. Aracruz is currently introducing a new community relations process, including: (a) strengthening the system of community liaison representatives;(b) establishing a meaningful dialogue, including discussing plans before the activities take place and then returning to talk to people, and establishing committees to address specific issues; (c) identifying priority communities and focusing efforts in the most critical ones; and (d) using consultants e.g. NGOs or more independent people to help build relations and understanding.
Aracruz now is conducting dialogues, involving communities and NGOs, at state and national level. They have agreed to invite other companies. In two states the dialogues have proven to be effective. In third state it is less successful and the dialogue remains polarised. A dialogue is being facilitated at the national level by the Bio Atlantic Institute.
Box D: Aracruz Cellulose: Conflict Resolution Through Dialogue in Brazil