A Brazilian Pulp Mill Project's Big-Picture View of Success Helped Create a Legacy—and Stimulate the Local Economy
BY TEGAN JONES
CMPC Celulose Riograndense's pulp mill in Guaíba, Brazil
PHOTO COURTESY OF CMPC CELULOSE RIOGRANDENSE
Sitting at the junction of five rivers, the city of Porto Alegre, Brazil is one of the nation's primary commercial and industrial hubs. Its surrounding hillsides produce a steady flow of timber, providing a reliable source of wood pulp to the global paper market—and helping fuel the local economy.
In recent years, higher consumer spending has increased the global demand for paper, driving up the price of wood pulp to an all-time high. CMPC Celulose Riograndense anticipated this market shift back in 2012—and seized an opportunity. The company launched a project to triple the annual output at the pulp mill in the suburb of Guaíba. The US$2.4 billion expansion project represented the largest private investment in the history of the state of Rio Grande do Sul.
“Because society is demanding paper, pulp is very important in the global market,” says Walter Lídio Nunes, CEO, CMPC Celulose Riograndense, Guaíba, Brazil.
But Porto Alegre's metro area—home to more than 4 million residents—had concerns. The mill's neighbors were worried that the construction of such a large facility would disrupt their daily life, creating excess noise, traffic and debris. The larger community also feared that an expanded mill would create more pollution and put the public water supply at risk.
“We didn't inform the community that we would do the project. We first asked the community if we were invited to come here and build this project.”
—Walter Lídio Nunes, CMPC Celulose Riograndense, Guaíba, Brazil
So CMPC found common ground by starting the conversation early, working with the community to ensure project goals went beyond boosting company profits. Through this process, the team was able to address the community's pain points, creating a plan that included a commitment to support the local economy and protect the planet.
From left, Felippe Zanotti Schneider, PMP, Walter Lídio Nunes and Alejandro Millan, PMP, CMPC Celulose Riograndense
PHOTO BY ANDRÉ KLOTZ
“We didn't inform the community that we would do the project,” Mr. Lídio Nunes says. “We first asked the community if we were invited to come here and build this project.”
“[The safety manager] had the power to stop the work any time.”
– Alejandro Millan, PMP, CMPC Celulose Riograndense, Guaíba, Brazil
The team laid the foundation for a positive long-term relationship by communicating with the mill's neighbors on a regular basis. It published a monthly newsletter about upcoming activities, held community council meetings and made a call center available 24 hours a day, seven days a week. This approach played a big part in keeping the project on track, says Felippe Zanotti Schneider, PMP, engineering and reliability manager, CMPC Celulose Riograndense, Guaíba, Brazil.
“If we have the community on our side, we can avoid project delays,” he says.
The team maintained community support by staying true to its promise to use the best environmental technology available. By using state-of-the-art equipment, it was able to decrease the mill's impact on the ecosystem, even as its production increased.
Today, the expanded mill consumes 60 percent of the water used at the original facility and recycles 99.7 percent of its solid waste. It is powered entirely by the steam it creates, but the facility is beyond self-sufficient: CMPC sells excess clean energy back to the grid, enough to power 120,000 homes.
The team invested in redundancy to avoid accidents that could damage the project's hard-earned local support, installing backup technology that would step in if the system failed.
“With this kind of relationship, we are reducing the risk of the business,” Mr. Lídio Nunes says. “If you don't have a sustainable vision, probably in the future the society will close your mill or your business.”
The project team also aimed to make a positive impact on the local workforce. Over its 2.5-year timeline, the project created 9,429 jobs. But many of those roles required specialized skills local workers lacked. So CMPC trained more than 8,000 community members in fields including civil engineering and mechanical assembly, which will improve their future job prospects.
“The goal was to generate jobs for the local community,” Mr. Lídio Nunes says. “If I just build a project and bring people from other parts of the country, that means we are not giving the local community the opportunity to participate in the project.”
January 2013: Project approved
May 2013: Project implementation begins
July 2013: Construction begins
September 2013: Water seal system available
January 2014: Chemical wash of the recovery boiler begins
November 2014: Utilities operational
May 2015: Project closes, mill operations begin
Today, the expanded mill consumes 60 percent of the water used at the original facility and recycles 99.7 percent of its solid waste.
Worker strikes were another risk the project team identified during a feasibility study. Starting off on the right foot required CMPC to work together with the unions to learn more about their needs and concerns. Those conversations helped the team create the safest possible working conditions for the project's workforce.
For instance, CMPC updated its organizational chart to support a project team structure that would cultivate a stronger safety culture. The company put the safety manager at the same level as the construction manager, which gave him the authority to enforce the team's strict guidelines, says Alejandro Millan, PMP, project control specialist, CMPC Celulose Riograndense, Guaíba, Brazil.
“He had the power to stop the work any time,” he says. “We gave him that power, so that shows our priority.”
The team also used collaborative management tools to identify safety risks. For instance, whenever a worker made a mistake or deviated from a predefined process, a project team member would log it into the system. Over time, the team was able to identify patterns, homing in on times and activities that had the greatest safety risks.
The project site in the fourth quarter of 2013
Alejandro Millan, PMP, project control specialist, CMPC Celulose Riograndense
Location: Guaíba, Brazil
Experience: 10 years
Other notable projects:
1. Guaíba Road System, a US$25 million road system in the city of Guaíba, Brazil completed in 2013. Mr. Millan was planning coordinator.
2. UP Enterprise, a US$18 million residential buildings construction project in Porto Alegre, Brazil completed in 2005. Mr. Millan was planning engineer.
Career lesson learned:
“Generate a climate of interaction and transparency to discuss and resolve problems. Align all the stakeholders.”
“With this information in our system, we knew that Monday mornings between 10 and 12 had the most deviations, meaning the highest risk for accidents,” Mr. Millan says. “So we had to take some actions to minimize risks during that period on Mondays.”
Encouraging the team to stick to the process helped the team set a new standard for worker safety: The project closed with the lowest accident frequency rate of any pulp industry new construction project in Brazil.
“I've been on other projects just like this one, and always in Brazil we had some kind of bad injuries or fatalities—and this has not happened here,” says Mr. Zanotti Schneider. “We did very good project management to avoid and to eliminate this kind of problem.”
Proactive planning also helped the team manage external risk factors. In 2014, the team had to deal with two major disruptions in Brazil: national elections and the World Cup. Each event brought its own obstacles. For instance, the government rolled out special rules during the World Cup that limited the type and quantity of materials that could be shipped by road.
“We left a legacy. I'm sure that this region is not going to be the same as it was before.”
—Felippe Zanotti Schneider, PMP, CMPC Celulose Riograndense, Guaíba, Brazil
“Also, the people in Brazil wanted to watch the games on TV,” Mr. Lídio Nunes says. “So we stopped the construction when the Brazilian team played. We created internal rooms for workers to watch TV. But we planned all these activities in a proper way from the beginning.”
A VIRTUOUS CYCLE
While the project plan included significant environmental and social investments, the bottom line was still top priority. Every month, the team estimated the cost required to complete the remainder of the project. If the budget wasn't aligned to plan, they had the information early enough to take corrective action.
“I am not setting the price; I just can set my costs,” Mr. Lídio Nunes says. “If we have a very competitive cost, you have a very good position inside the commodity market—and this is our case.”
SITE PHOTOS COURTESY OF CMPC CELULOSE RIOGRANDENSE. PORTRAITS BY ANDR´E KLOTZ
To make sure the suppliers delivered to the project's unique requirements, the team created standardized contracts based on A Guide to the Project Management Body of Knowledge (PMBOK® Guide).
“Beside the formal contracts, we had 24 contract appendices that was like a mirror of the PMBOK® [Guide],” says Mr. Zanotti Schneider. “So exactly the things that we wanted to have on the project, they were supposed to do. And that was fantastic.”
Smart supplier management also helped CMPC develop a more mature local supply chain. The company wanted to work with local businesses, but many were unable to deliver to the new mill's specifications. So the team created an institute that helped develop local businesses so they could supply services and materials for the project. In some cases, CMPC changed its requirements in order to engage local companies. In the end, the project spent US$1 billion with businesses based in the state.
By taking a big-picture view of what it means to succeed, the Guaíba mill expansion project has had a lasting impact on the state and the local community. The new mill is responsible for 1.5 percent of the state's GDP and has created 28,000 local jobs.
“We left a legacy,” says Mr. Zanotti Schneider. “I'm sure that this region is not going to be the same as it was before.”
Mr. Millan believes this project also will leave a legacy within the industry, showing other companies that they can protect the environment while turning a profit.
“I think if another company is doing another pulp mill, they're going to use the best technologies that we already used,” Mr. Millan says. “If we do good, the next will be better, and so on. I think that's an improvement cycle.” PM
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