Aperam Brazil

In February 2025, the International Finance Corporation (IFC) approved a $250 million Sustainability Linked Loan to Aperam, a global stainless-steel producer headquartered in Luxembourg. 

Aperam finances the expansion of Aperam BioEnergia, its Brazilian subsidiary, which produces and supplies charcoal in Brazil to the company’s blast furnaces for iron production.

According to IFC’s website, prior to the project, BioEnergia owned about 124,000 hectares in Minas Gerais, of which 66% are Forest Stewardship Council (FSC) certified eucalyptus plantations, while the remainder is covered by native vegetation and infrastructure. 

BioEnergia currently produces 427,200 tons of charcoal annually, with plans to expand to 539,000 tons/year by 2033. In 2023, the company sourced 30,000 m3 of wood from third parties for charcoal production. 

The funds of the loan will be used for: 

• the acquisition of 42,600 ha of land (including two properties: Jogil, approximately 27,700 ha; and SADA, approximately 1,900 ha), and around 13,000 hectares yet to be acquired; 
• the expansion of charcoal production capacity;
• improvements in kiln efficiency and gas burner enhancements; 
• the establishment of a bio-oil business line utilizing by-products from charcoal production; and
• the expansion of seedling nursery capacity to meet the increasing demand for superior clonal seedlings from other forestry companies.

According to project documents, approximately one-third of the 29,600 ha of land already acquired consists of established plantations. The remainder includes Legal Reserves (LR), Permanent Protected Areas (APP), and 5,000 ha of inactive land under natural regeneration. The company did not define the location of the additional 13,000 ha to be acquired at the time of appraisal.

IFC classifies the project as Environmental Category A, as it is expected to have significant adverse environmental and/or social risks and impacts. The loan was approved on March 14, 2025.

Lack of Information and inadequate due diligence 

• Lack of basic information about the project: Project documents do not define the area of influence and merely mention the names of two plantations (Jogil and SADA), which have been acquired, without providing their exact locations or borders. IFC states that the company has refused to disclose to IFC the location of a 13,000-hectare property to be acquired as part of the project, citing that making this information public could impact its operation.
• Inadequate identification of impacts and risks: IFC acknowledges that the current risk identification process falls short of meeting PS 1 requirements, by requesting that the company prepare a “PS-compliant ESIA (Environmental and Social Impact Assessment) and an E&S Management Plan (ESMP) aligned with IFC Performance Standards, WBG EHS Guidelines, and national regulations.” Neither the ESIA of the acquired land nor the ESIA of the lands to be purchased has been made publicly available.
• Lack of information on the criteria and definition of the area of influence of the project: There is no definition and no information on the criteria used to define the area of influence of the project. There is no clarity on where the project’s impacts will occur and what potential risks need to be managed.
• Inadequate due diligence: While Aperam states that all its forests are or will be FSC-certified, a 2024 audit by Accreditation Services International (ASI) of Aperam found that assessments of FSC certification were often vague and insufficient. The audit also raised concerns about the risks of water depletion and its impacts on rural and Quilombola communities, and noted that the company lacked proper procedures for handling complaints.

Social concerns:

• Consultations. It is unclear whether impacted communities were meaningfully consulted and marginalized groups were considered in the project. Local communities in the region have long resisted Aperam’s forestry operations, citing human rights violations and environmental harm.(1) As previously stated, the location of the remaining 13.000 hectares is reportedly unknown to IFC; therefore, Quilombola communities can’t determine which communities may be affected. IFC has also failed to specify whether relevant stakeholders have been adequately informed about the risks, including sexual exploitation, poor labor conditions, loss of livelihoods, relocation, biodiversity loss, use of pesticides, that are associated with the operation or the availability of complaint and grievance mechanisms.
• Land acquisition: It is still unclear if the project will lead to the displacement of local communities. Although IFC’s documents do not identify any local communities in the project area, the Bank did request that the company “develop a land acquisition procedure aligned with PS5 requirements”.
• Risks to the livelihoods of smallholder subsistence agriculture in the area: Quilombola communities in Minas Gerais engage in food production due to their deep historical and cultural connection to the land, which is fundamental to their identity and autonomy. These communities rely on agriculture for subsistence, economic self-sufficiency, and to supply cities in the region, as well as for the preservation of cultural knowledge and traditions.
• Risks of gender discrimination and sexual exploitation: According to IFC, “women representation in Bioenergia’s workforce reached 21.5% in 2023, while 78.5 % was men”. It is unclear how the project will consider the families affected by the expansion of eucalyptus plantations, and how to create jobs for women. Limited access to alternative livelihood or professional development opportunities may increase the vulnerability of women to engaging in transactional or exploitative forms of labor, including sex work.

Environmental concerns:

• Concerns about biodiversity loss: IFC acknowledges that Aperam’s mechanisms to prevent biodiversity loss are inadequate, and therefore requests that the company develop a biodiversity policy aligned with PS6. The Bank notes that “the assessment for the remaining 13,000 ha has not started, as the land has not yet been acquired.”
• Risk of deforestation: Project documents state that a significant portion of the wood used for charcoal production and steel furnaces ( 30,000 m³ in 2023, equivalent to about 2 percent) is sourced from other companies, and note that the company has adopted a Supply Chain Risk Assessment & Management System. The lack of robust controls on Aperam’s suppliers could lead to deforestation and the expansion of the agricultural frontier.
• FSC certification: An audit conducted on the company identified gaps in FSC certification for previously acquired lands, particularly regarding stakeholder consultations in areas already under management. Also, regarding the newly acquired land, IFC notes that “42,000 ha of lands acquired by BioEnergia through this proposed investment will achieve FSC certification.” It remains unclear how IFC will verify ex post that the company has complied with this requirement, and how this will also be achieved in the land yet to be purchased.
• Water usage: In 2022 and 2023, BioEnergia’s water consumption increased from 357,000 m³ to 399,000 m³. The ESRS also mentions that water flows are controlled through “dams”. It is unclear how the project’s expansion will affect neighboring communities and ecosystems.
• Misleading GHG emissions statement. Project documents claim that Aperam is carbon neutral or even carbon positive, based on the use of supposedly regenerated charcoal. However, they do not explain how this estimation is made. This is problematic, as the wood produced in these plantations is used as biomass, which, when burned, releases the carbon initially stored in the soil and vegetation into the atmosphere, thereby contributing to the greenhouse effect. The additional use of fossil fuels further aggravates this negative impact. According to the IFC document, in terms of energy consumption, BioEnergia’s usage in 2023 included 6,500,000 liters of diesel, 475,000 liters of gasoline, and 1,300,000 kWh of electricity. If the carbon neutrality claim is based on comparisons with other steel production alternatives, such estimations must be technically justified and clearly documented in the project materials.

It is also unclear what additionality IFC is bringing to this project, especially since Aperam is consistently described in the project documents as a “leading” company in the sector. As with other IFC projects, the specific value or impact that IFC’s involvement adds to this investment is not clearly defined. If additionality refers to the extent to which an investment would not have occurred, or would have been less impactful without the support of public finance, further clarification is needed to demonstrate how IFC’s participation is truly catalytic in this case.

(1) Communities have even requested that the Forest Stewardship Council (FSC) withdraw its certification of responsibly managed forests. The communities are also opposing Apream’s new expansion, which could result in further harm to Quilombola lands. Quilombola communities are recognized as traditional peoples under the Brazilian constitution and laws, as well as international frameworks, including ILO Convention 169, which guarantees their rights to land, consultation, and self-determination.

Recommendations

• Require the company to draft and disclose a comprehensive environmental and social impact assessment covering the entire project’s area of influence, including existing plantations and the new lands to be acquired. All anticipated environmental and social impacts and risks should be thoroughly addressed, and the mitigation hierarchy adopted in line with IFC’s performance standards.
• Adopt robust controls on wood suppliers for Aperam to prevent the project from driving the expansion of the deforestation frontier.
• Establish effective monitoring and verification systems to confirm that all new plantations meet FSC standards.
• Identify Quilombola and other affected communities and actively involve them throughout the project’s design and implementation phases.
• Require the development and enforcement of a comprehensive plan to prevent illegal labor or poor working conditions, and also address risks of sexual exploitation, abuse, and harassment, with clear protocols for reporting, monitoring, and victim support to provide safety and dignity to all community members.
• Adopt a robust gender-sensitive approach to prevent local women from being disproportionately affected by job losses or exclusion from employment opportunities resulting from the project.

Instituto Maira