Newsletters: June 2010

I was recently rewarded for referring a friend of mine to an internet service provider. The truth of it was I said the company gave me a great service because that's just what they did. I was happy to recommend them, but even happier when my next three months charges were waived because they had a new client - courtesy of my referral.

So how about something similar for our own clients we mused? We like to think we give a good service, not that we are getting complacent. Maybe we could offer a similar sort of client reward scheme for our investors?

Cue drum roll.

We hereby reveal the Greenwood Management Referral Scheme.

This is an online scheme, which can be found here. The aim of the scheme is to reward our existing clients with a €200 voucher for each new client they recommend to us. These vouchers can be redeemed online, allowing clients to choose from an extensive collection of retailers, such as Amazon.com, Decathlon and Marriott.

In Other News

The Bioenergy Awards

At Greenwood Management we have a great number of clients who specifically tailor their portfolios to the environmental sector. With this in mind some news that came in at the end of last month from Sweden might be of interest. The news concerns a prestigious award at the 'World Bioenergy Conference' in Jönköping Sweden on 27th May 2010, where the 'World Bioenergy Award' was given for the first time.

There was fierce competition with 90 nominees from all fields of the bioenergy sector (wind, solar, renewable energies, etc). In this hugely competitive market the nominees were trimmed down to only seven finalists. Brazilian researcher Laércio Couto and his team were declared the winners.

The basis of Mr Couto's award winning work is one of Greenwood Management's favourite trees, the eucalyptus. Mr Couto became interested in eucalyptus when he was a student when he realised it had enormous potential for energy production. "Eucalyptus provided the solution to a problem. Eucalyptus saves natural forests". Not a man to mince his words, Mr Couto

According to Mr. Couto, power plants in Brazil use the by-products from sugar cane as fuel but these by-products are only available for half of the year. The rest of the time the power plants use fossil fuels and natural forestry. This practice is clearly not sustainable and has been a significant contributor to global warming and caused encroachment into sensitive environments such as the Amazon rainforest.

"Adjacent to the sugar plantations are 200 million hectares of land that are not being cultivated and are not suitable for sugar cane," Laércio Couto says. "We don't have to chop down a single tree in environmentally sensitive areas."

Now this extra land is being used to cultivate eucalyptus. The result is that power plants can run 12 months of the year on biomass without impacting on sensitive environments.

Today bioenergy is accepted as one of the single most important solutions to the environmental problems we face. So this news just goes to show how our forestry investment projects, specifically those in Brazil, are not just financially rewarding but also environmentally friendly.

Financial News from Brazil

For those of a more financial bent the figures reported by the Economist on May 20th should prove to be of interest, especially given the current state of the world's major economies.

According to the article, Brazil created 962,000 new jobs between January and April-the highest figure since records began in 1992. Over the past six months the economy has grown at a pace of over 10% if averaged out for the year.

Brazilian's largest stainless steel maker has announced that it will spend $95 million on its Minas Gerais plant to change its production fuel from imported coke to locally produced charcoal.

ArcelorMittal Inox, which has a 90 percent market share of Brazil's stainless steel industry, produces 900,000 tonnes of steel at its Timóteo plant headquarters in Minas Gerais. Head of the stainless steel division, Paulo Magalhaes, said that the aim is to reduce costs and reduce dependency on imported products.

Furthermore, he said, charcoal is produced from a 100 percent renewable source - eucalyptus - which will reduce carbon dioxide emissions from the blast furnace at 500 thousand tons per year. Minas Gerais is also the base of Greenwood Management's Brazilian forestry investment projects.

Brazil's First-Quarter GDP Expanded 9% From Year Ago

Currently Brazil's economy is growing at its fastest annual rate since 1995 in the first quarter. Gross domestic product has expanded by 9% from a year earlier; this is faster than any other Latin American economy. In a survey conducted by 41 analysts from Bloomberg this figure was only predicted at 8.5%. In addition GDP grew 2.7% from the previous quarter.

"If this isn't a V-shaped recovery, I don't know what is," said Neil Shearing, a senior emerging-markets economist at Capital Economics Ltd., "What makes Brazil unique is the strength of domestic demand. Retail sales have been staggeringly strong over the past three or four months."

According to Itau Unibanco Holding SA, Brazil's biggest bank by market value, Latin America's biggest economy is growing at a 'Chinese like' pace and because of that it has raised its 2010 growth estimate to 7.5%.

Of the BRIC countries Brazil is the second fastest growing, behind China, which grew 11.9% in the first quarter and ahead of India and Russia who grew by 8.6% and 2.9% respectively in the first three months of the year.

Charcoal promotes sustainability of the steel industry

Last week the scientific director of Eco Consulting, Túlio Jardim Raad held a talk with the congressmen of the 2nd Congress Forests of Mato Grosso do Sul. The theme of the discussion was the use of sustainable planted forests which would be harvested to generate charcoal to then be used in steel production. The talks also touched on coal produced energy.

"What the industry is today conditioned on is the best technology of biomass in the world. We must invest in renewable energy, make charcoal. Oil and natural gas will end. The cost-benefit analysis is to evaluate three major points: the economic, social and environmental," says the lecturer.

Eucalyptus plantations are expanding in the state and the pig iron industry feeds this growth, since the law only allows them to work with charcoal. Like every sector growth slowed in the period between 2008 and 2009 (the global economic crisis) but since then it has bounced back better than ever and according to Raad, the steel and pig iron plants have made significant investments in forestry plantations.

Best regards,

Joe Randall
Greenwood Management

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