Large-scale eucalyptus plantations in Brazil’s Jequitinhonha Valley have resulted in a significant decline in groundwater levels, the drying of springs and streams, and severe social and economic stress for traditional communities.
The findings have been revealed in “Aperam BioEnergia's Green Steel and Carbon Removal Illusion: Dry Streams in an Ocean of Eucalyptus”, a report published by the Global Forest Coalition (GFC) in collaboration with local community organisations such as the Centro de Agricultura Alternativa Vicente Nica (CAV).
The report investigates the social, economic and environmental impacts of Aperam BioEnergia — one of the world's largest charcoal producers — in the Jequitinhonha Valley, located in Minas Gerais, Brazil.
Aperam manages roughly 150,000 hectares of land, two-thirds of which are covered by industrial eucalyptus monocultures.
“Eucalyptus plantations have fundamentally changed the way of life of traditional and Quilombola communities and the ecosystems they depend on. These plantations supply the raw material for the energy required to smelt steel: wood, which is turned into charcoal in large kilns,” the authors noted.
It added that the company is one of the largest charcoal producers in the world and produces over 420,000 tonnes of charcoal from its industrial eucalyptus plantations every year to power Aperam South America's steel mill in Timóteo, marketing its product as "green steel" powered by renewable forestry.
Aperam re-markets its fine charcoal by-product (moinha) as biochar for carbon dioxide removal (CDR) credits on voluntary carbon markets. It has retired nearly 100,000 credits, targeting up to €6.4 million in annual biochar revenue, the report found.
The report alleged that Aperam's "green steel" and biochar carbon credits are a false climate solution and greenwashing strategy that monetises a waste product while externalising severe ecological and human rights costs onto vulnerable rural communities.
It noted, “The carbon sequestration benefits of biochar are highly contested and uncertain, and carbon credits generated by Aperam enable continued pollution elsewhere, rather than mitigating climate change at the source. On top of this, Aperam’s. biochar production is inseparable from its charcoal and plantation operations, with the income from carbon credit sales benefiting the entire operation.”
It stated that their investigation led to the conclusion is that the company’s model of carbon removal is fundamentally unsustainable, externalising social and ecological costs onto vulnerable communities.
The authors found that, due to the year-round high evapotranspiration of eucalyptus plantations, the regional water table dropped by 4.5 metres between 1974 and 2019, drying up local springs and streams and undermining traditional agriculture and local food security.
On the Chapada das Veredas plateau, native vegetation cover plummeted from 86.1 per cent in 1973 to 24.6 per cent by 2018.
The report alleged that the Acesita company reduced highly biodiverse native vegetation across large swaths of land to monoculture eucalyptus plantations.
A more recent report confirms that, “Over time, 60 per cent of the native vegetation in this expanse of Cerrado savanna was replaced by sprawling plantations of eucalyptus trees.”
The same investigation found that approximately 50 per cent of annual rainfall now infiltrates the soil and replenishes groundwater under native Cerrado vegetation, compared with about 29 per cent under eucalyptus monocultures.
The report further observed that a 2019 survey conducted through interviews with residents by the Turmalina City Council found that 89 per cent of water springs had dried up by then. It further cites research showing a substantial reduction in runoff in regional river basins since the 1980s.
The report said, “Their analysis of data for the Fanado River revealed that the maximum flow rate of over 300 m3 / s in the 1980s had fallen to less than 1.0 m3 / s during the dry season and remains low for an increasingly longer period of the year; as a result of this process, it has become intermittent.”
It added that the researchers attributed this to a decrease in underground water recharge, since they did not find abnormal variations in data on precipitation that would explain such a large alteration in the water levels.
The case study further documented the loss of access to chapadas — communal plateau lands traditionally used for generations by traditional groteira-chapadeira and Quilombola communities for livestock grazing, fishing, gathering fruit, medicinal plants and wood, as well as leisure and transit.
It noted that the communities lost access to grazing grounds, native fruits such as pequi and araticum, and water for traditional crops. Despite claims of regional development, the company’s operations generated only 0.02 jobs per hectare, that is, one job per 50 hectares, compared with family farming's five jobs per hectare.
“However, this job boom was short-lived, revealing the short-sightedness of the “developmentalist” model. The company mechanised most of its operations, and the number of employees fell. Today, Aperam is not a significant source of employment in the region, especially for women: women represented only 21.5 per cent of Aperam’s workforce in 2023,” it said.
The authors said that the actions of the company have been detrimental to the environment. It said that the company uses toxic pesticides, including glyphosate and sulfluramid, which are banned in the EU and UK due to toxicity. The report also highlighted a 2017 court case over an illegal dump of Aldrin, a banned insecticide, alongside air pollution from charcoal kilns and widespread community fears over rising cancer rates.
“In 2024 alone, the municipality of Turmalina spent over R$2.2 million (372,863 euros) on transporting residents to and from Belo Horizonte for health treatment, mainly for
cancer.18 At the time of our field research, the municipality did not have data on the number of cases and types of cancer, nor did it have a plan for identifying potential causes. It also does not test the water used in rural areas regularly,” the report stated.
The report said that the company now plans to expand its plantation operations by 20 per cent with support from the International Finance Corporation of the World Bank Group.
The IFC Disclosure Portal stated that the company signed a €250-million financing agreement with IFC on February 14, 2025. Up to €150 million would come from IFC and up to €100 million from other lenders. The planned uses include the acquisition of 42,600 hectares, expansion of charcoal-production capacity, improvements to kiln efficiency and gas burners, development of a bio-oil business and expansion of nursery capacity.
Among a list of demands, the authors have asked for the immediate halting of the expansion of eucalyptus plantations and the cessation of further acquisition of land, through intervention and investigation by authorities.
They have also called for the return of land taken from local communities and restoration of the veredas and the Cerrado.
They have also demanded compensation for families for their losses and an end to the use of chemicals that harm the environment.