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Yara Plans Stopped by Judgement

Yara is planning phosphate production in a protected rain forest area in Brazil. But three legal decisions have so far stopped the company’s environmental authorisation. On November 24th Yara’s Brazilian joint-venture company lodged an appeal.

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Yara is planning phosphate production in a protected rain forest area in Brazil. But three legal decisions have so far stopped the company’s environmental authorisation. On November 24th Yara’s Brazilian joint-venture company lodged an appeal.

By Erik Hagen

Published in English 3 December 2009.

While Norway is investing 15 billion Norwegian kroner (2,7 billion US $) to save the rain forest, partly Norwegian state-owned Yara is planning – by means of a joint venture in Brazil – to establish a phosphate plant in a protected Atlantic rain forest.

Norwatch has visited a small valley in southeastern Brazil, where Yara’s search for the country’s phosphate reserves may have great consequences for the local environment.

The spot lies in an old volcanic landscape and is a location for the Atlantic rain forest. This forest type will soon be eradicated, and the areas that remain are protected, in accordance with federal law.

At the bottom of the valley runs a frothy waterway that is the habitat of at least nine endangered plant and animal species; forest cats and rare parrots, among others, use the area in their search for food.

Giant Project
This is where Yara owns the rights to phosphate production together with the American company Bunge. Their plans involve digging out 1.8 million tonnes of stone mass yearly from an opencast mine. When they have removed the superfluous stone masses and given the final treatment to the remaining phosphate stone, they will finally end up with half a million tonnes fertiliser yearly. The work is to be carried out by the joint-venture company IFC, which is owned by Yara and Bunge in partnership.

The waste mass from the production will be transported by pipeline down through the valley, where it will be collected in so-called tailing dams. Together with the rest of the waterway, the mass will be drained by means of two 56-meter-high dams.

All the fertiliser is to be sold on the Brazilian market. Today Brazil imports more than half of the phosphate they utilise. The authorities are therefore highly interested in realising this project.

The plant in Anitápolis municipality has been in the planning stage for about 30 years, and already in the eighties a Brazilian fertiliser company bought out the residents. When Yara, which is big on the Brazilian market, bought into this company in 2000, it also gained entry to the Anitápolis project.

Stopped by the Courts
Yara’s plans for phosphate production in Anitápolis reached a “milestone”, according to Yara, when the environmental authorities in the state on 13 April this year granted environmental authorisation to continue with the project.

The environmental authorities, FATMA, had utilised a loophole in the legal system that an exception could be made in the permanent forest protection for Atlantic rain forest in cases in which developments are of “public or social interest”.

On 28 September, however, the case took a new turn. By means of an interim court order, a federal court in Florianópolis withdrew the environmental authorisation granted to IFC.

“There is well-founded apprehension that serious damage to the environment may occur if the environmental authorisation is upheld and logging and building are permitted,” the judge wrote.

“Would it not be possible to imagine that the continual activities will end the water supply in the region after the 33 years? Or is it not probable that the deforestation will lead to total extermination of the plant and animal species that are endangered there,” the judge asked rhetorically.

The judge also wondered whether the dams could collapse because of the erosion in the area, especially if the climate changes led to more flooding. Nor can a fertiliser plant be included in what the legal system defines as “public/social interest”, the judge pointed out. Consequently, the rain forest must be preserved, rather than the company’s plans.

“In this case it is a matter of private economic interests that can not be given preference over the ecologic interests,” the judge wrote, as she froze all further authorisations.

Both the community and the state authorities, which are eager to start the phosphate project, have nevertheless appealed the decision twice. The environmental authorities in the state, FATMA, have also appealed, to be able to carry out the plans. But in November two courts upheld the decision to freeze the environmental authorisation until all environmental aspects have been examined. The project has thus been stopped for the time being.

Further appeals are on the way. November 24th, Yara’s joint-venture company IFC joined as an appellant at a federal court of law in Porto Alegre

Changed the Regulations
It was the environmental organisation Montanha Viva that made sure that the environmental authorisation was brought to court. They question how the environmental authorisation could have been granted in the first place. According to the organisation, the state is supposed to have introduced a new environmental legal system exactly the same day as when the authorisation was granted. This enabled the state authorities to give the go-ahead to the phosphate project.

“Up until 13 April this year it was the responsibility of the federal environmental authorities to issue this kind of authorisation. By a strange coincidence, however, the state authorities introduced an environmental legal system the same day that the phosphate project received its authorisation,” Luhk Zeller of Montanha Viva told Norwatch.
With the new legal system the state environmental authorities, FATMA, could give such projects the go-ahead. Before that such decisions had to be assessed by the federal environmental authorities, IBAMA.

“It is the federal authorities that must make the decision when mining operations and protection of nature are at stake. It is important that decisions that affect the environment do not lie with the state authorities but with at the federal level, so that the environment can be protected. The responsibility for protection still belongs to the federal authorities, but here the state now interprets it in another direction,” Zeller said.

The authorities in the state are already in the process of developing the roads to Anitápolis community.

Yara Disagrees about Decision
“The company takes note of the judge’s decision but disagrees with it. It is IFC that is an appellant in the case and which therefore must come to a decision on the question of an appeal,” Asle Skredderberget, Chief Communications Officer in Yara, told Norwatch.

He confirmed that an appeal process is under way.

“It is important for us to emphasise that Yara generally is greatly preoccupied with environmental challenges and is working actively in a series of fields with environment-improving measures and products. With regard to IFC and the Anitápolis project, in which we own a 50% share, this has been an extremely thorough process,” Skredderberget said.

“It is the Brazilian authorities who have made the regulations in this process, and IFC has complied with all demands. With regard to land use, it is also important to emphasise that, out of a total area of about 1760 hectares, 1400 hectares, or ca 80%, will be protected,” Skredderberget said.

The Case
*Yara owns 50% of the joint venture company Indústria de Fosfatados Catarinense (IFC). The American company Bunge owns the other half.
* The project in Anitápolis in southeastern Brazil, which IFC is behind, entails extraction of a phosphate deposit and construction of a fertiliser factory. Phosphate is the key ingredient in fertiliser.
* All production is planned for the Brazilian market. Today Brazil produces only 50% of its own phosphate for agricultural production. IFC will contribute to reducing the foreign dependence.
* Several endangered plant and animal species are located in the area where IFC is to construct its phosphate plant. (See separate story)
* A village right below the plant is apprehensive about having a dam as its closest neighbour. (See separate story)
* A court froze IFC’s environmental authorisation on 28 September this year. Two appeals have so far upheld the decision.
* The Norwegian partly state-owned company Yara is among the world leaders within production and trade of fertiliser and is big on the Brazilian market.