The pig iron and carbonization segments are important sources of employment in Brazil. By 1998, the pig iron segment employed 131000 people in Brazil, about two-thirds of these in Minas Gerais. The vast majority was employed in reforestation and production of charcoal from native or planted sources (May and Chomitz, 2001). About 25 per cent were engaged in forward linked activities in the steel and foundry industries that use pig iron as an input (ABRACAVE, 2001). Charcoal production is the most labor-intensive part of the charcoal-based iron industry. Of the 84000 employed in the independent pig-iron segment, 70000 or 83 per cent are engaged in field activities related to cutting, transporting and carbonising fuel wood (SINDIFER, 2000).

Traditionally, labor conditions in the production of charcoal have been appalling. The field activities related to cutting, transporting and carbonizing fuel wood have

been historically criticized for health and safety risks, poorly remunerated labor conditions and child labor. Growing social awareness and concern has led to a worldwide campaign against rural wage slavery and child labor in Brazil (May and Chomitz, 2001).

The Plantar Group (which also includes a division for provision of services to third parties) currently employs 5500 people, who may retain their jobs as the project goes ahead. Labor conditions in Plantar are above average and the firm does not employ children, as certified independently by the SCS Group as part of the Forest Stewardship Council’s certification process. The planned changes in the carboniza­tion process are also expected to lead to substantial improvements in the health of employees. Associated with the social requirements of the Forest Stewardship Council, there is scope for Plantar to provide a better model of socially responsible enterprises.

The pig iron sector is beneficial to the Brazilian economy, being a major employer, responsible for significant amount of exports (US$ 445 million FOB in 2000 according to IBS 2000), and the source of raw materials to other industries in the country.

The Plantar project provides a new model for financing the charcoal-based pig iron industry in Minas Gerais and Brazil, allowing for the survival of independent producers and the plantation forestry sectors in the region. This new business model could also help attract substantial additional foreign investment to the country, with positive effects to the Brazilian balance of payments.

Considering the focus on the small independent producers, there are also important benefits to be accrued from wealth distribution and development of small and medium sized enterprises. The multiplier effect of this investment is likely to bring additional benefits, particularly in rural areas where the project is located. It will result in additional job creation and preservation of jobs associated with forestry activities, having important effects in the regional rural economy.