Aperam BioEnergia faces allegations from the Global Forest Coalition regarding environmental and social impacts of its eucalyptus plantations in Brazil. The report challenges the sustainability of the company's 'green steel' model, which relies on charcoal production. With a €250 million IFC financing deal secured in early 2025 for expansion, these claims raise ESG risks that stakeholders may monitor.
Aperam BioEnergia, a subsidiary of the stainless steel producer Aperam, is facing fresh scrutiny following a report by the Global Forest Coalition. The report details allegations regarding the environmental and social consequences of the company's industrial eucalyptus plantations in Brazil’s Jequitinhonha Valley.
The report claims that the extensive monoculture plantations have caused the regional water table to drop by 4.5 meters between 1974 and 2019. It links these changes to high water consumption by eucalyptus trees, which has allegedly contributed to the depletion of local river basins, such as the Fanado River, and affected local water availability. Beyond environmental concerns, the study alleges that these operations have led to the displacement of traditional Quilombola and Groteira-Chapadeira communities and raised concerns regarding the use of chemical pesticides.
At the heart of the controversy is the company’s "green steel" strategy. Aperam produces over 420,000 tonnes of charcoal annually, which is used as a renewable fuel source for its steel operations and as a basis for generating carbon dioxide removal credits. The Global Forest Coalition argues that this model effectively commodifies ecological degradation, challenging the company's sustainability claims and questioning the validity of the carbon credits generated through its biomass operations. The report suggests that the industrial model prioritizes carbon sequestration metrics while ignoring the broader ecological and social costs.
This controversy comes shortly after Aperam BioEnergia secured significant financial support. In February 2025, the company finalized a €250 million financing agreement with the International Finance Corporation (IFC), a member of the World Bank Group. These funds are intended to support the company’s expansion plans, including the acquisition of over 42,000 hectares of land and an increase in charcoal production capacity.
The allegations present a reputational and ESG (Environmental, Social, and Governance) risk. For investors and stakeholders, the key monitorable will be how the company and its lenders, particularly the IFC, respond to these claims. Any potential investigation or findings regarding human rights or environmental impacts could influence the company’s sustainability ratings and its ability to maintain its green financing commitments. Market participants may look for updates on independent audits or company disclosures regarding its land management practices and community relations in the region.