The epic trailblazers

In the early 1940s, an expedition led by Alfredo Fedrizzi explored the land of Santa Catarina and Paraná beyond where there were thick forests of pine trees, to find somewhere to build a paper mill.

The search ended when the party settled down in the Vale do Rio do Peixe, amid a splendid landscape made up of the floodplain, the valleys and hills. Which is how Irani Papel e Embalagem was founded on June 6, 1941 in the region of Campina da Anta (later called Campina da Alegria), which is now part of the municipality of Vargem Bonita, in the Midwest of Santa Catarina.

The mill, located at the 47km marker of the BR 153, is now the paper and packaging section of the company.

• Brazil and Argentina had disputed the land where Irani’s factory stood, for centuries. In 1895, the President of the United States, Stephen Grover Cleveland, was asked to arbitrate over the conflict and he came down in favor of Brazil.
• The Vale do Rio do Peixe was in land that had been divided from São Paulo in 1853, and then was part of Paraná, before being incorporated into Santa Catarina in 1917. Drovers used to drive cattle and merchandise, through the land.
  
  The pulp and paper industry in Brazil first began at the start of the 20th century, but only began to expand after World War II (1939-1945), when the import of products was affected by submarine attacks on ships crossing the Atlantic Ocean.
  
  The Brazilian government began to encourage paper companies within the country. “Most of the industries were established at this time”, explains Sérgio Ribas, CEO of Irani Papel e Embalagem and the Habitasul Group.
  
  During those days, Vinícola Riograndense, based in Caxias do Sul (RS), wanted to diversify due to the contraction of the fine wine sector. As a result, the controllers Galeazzo Paganelli and José Moraes Vellinho sent an expedition, led by Alfredo Fedrizzi, to find a suitable place to produce paper based on fiber from the native araucaria forests. “They were not used to replanting or planting forests, like nowadays,” says Ribas.
• The ax-splintered wooden ranches, built in 1941 on the banks of the Anta river, led to the creation of the village of Campina da Alegria, which now has just over 1,000 inhabitants - most of them directly or indirectly linked to Irani.
  
  The first equipment arrived in 1942: a hydraulically driven crusher, boilers and a steam engine to produce power, salvaged from an old vessel. As some of the imported machinery was lost in a ship sunk by German submarines, Fedrizzi was forced to travel to São Paulo to acquire domestic machinery. As a result, Irani started off by producing paper from old paper and mechanical pulp, rather than wood pulp.
  
  However, two years later, Paper Machine Number 1 was inaugurated by the then governor of Santa Catarina, Nereu Ramos. This enabled Irani to produce paper from imported and mechanical pulp. The first shipment from the factory was sent to Editora Globo to print the novel, “Um Olhar para a Vida”, by São Paulo writer Maria Luiza Cordeiro.
• “Um Olhar para a Vida” (A Look at Life) was the winner of the Alcântara Machado award, from the São Paulo Academy of Literature, it tells the story of two sisters who, due to financial difficulties after the death of their father, move and live in humble circumstances on a small pension.
  
  After 1946, with the development of its native forestry, Irani began using its own pulp to manufacture Bufom paper, 48 grams, as well as newsprint paper, manila paper, H.D. Kraft paper and cardboard, and other types. The company continued to use imported cellulose to make satin paper.
  
  In 1949 a dam was built at the Flor do Mato falls to supply the mill’s energy needs. It had a capacity of 3,000 kilowatts, enough to meet the demand of the entire mill at that time. The power plant was named Flor de Maria, after Alfredo Fedrizzi's wife.

A decade of success in a time of euphoria

Two words summed up the 1950s in Brazil: euphoria and optimism. This feeling of confidence in the future was based, in part, on the economic growth experienced by the whole world after the end of World War II. But it was also driven by the construction of the new federal capital, Brasília, which was completed at the beginning of the next decade.

• In the 1950s, the hope for a better future affected even the arts, with the arrival of Bossa Nova, a genre that introduced Brazilian popular music to the rest of the world.
  
  President Juscelino Kubitschek's order to encourage the accelerated modernization of the country - the slogan of his campaign was “50 years in 5” - became the National Economic Development Plan, the Target Plan. To achieve this objective, he ordered the National Bank for Economic Development (BNDE) to provide financial support to domestically-based industries, including the paper and pulp industry. One of the main projects chosen for this industry was the production of eucalyptus pulp.
  
  Despite the favorable climate, Irani had problems establishing itself nationally, mostly because of its geographical isolation. Its mill, located in the south of the country, was too far away from the main markets, something that was aggravated by the poor transport infrastructure of that time. In addition, because of the limits of the technology, the company had to deal with a shortage of labor in what was predominantly manual work.
• Women were needed to remove the bark from the wood, which was going to be part of the papermaking process.
  
  Despite all of these obstacles, Irani made some important progress during the 1950s. One of the most significant changes was the opening of the São Luiz hydroelectric plant, in Ponte Serrada (SC), in 1953. The dam, located next to the waterfall on the River Irani provided twice the generating capacity of the Flor do Mato Plant (built in the previous decade), and ensured the mill would have a good hydroelectric power supply.
  
  At that time, Irani didn’t just invest in generating power, but also to improve production. In 1954, Paper Machine II was assembled. It operated at a speed of 60 meters per minute. To give you some idea of the difficulties with installing machinery: the area for it was excavated by hand, using picks and shovels and it was Irani’s workers who had to put it together.
  
  But, like Brazil, the company was in a hurry to modernize. And so in 1954, they began putting together Machine III to produce pulp to sell to other companies.
  
  At that time, even before there were any federal environmental laws on reforestation, Irani, on its own initiative, encouraged the planting of araucaria and pinus insignis seedlings (a species of pine, native to Chile), which demonstrates how much of a pioneer the company was in protecting the environment.

A transition period before expansion

In the 1960s, the Brazilian pulp and paper industry was slow to develop. So much so that, in the middle of the decade, the BNDE conducted a study to try to understand what the main problems with the industry were.

Their conclusion was that the obstacles were still the result of the period when imports were being replaced during World War II (1939-1945). At that time, there had been a growth in a large number of small paper mills, which were generally less efficient.

In October 1968, the BNDE’s Board of Directors established some measures to support the paper industry, in order to make it more competitive. The aim was to finance expansion projects for mills that could produce at least 250 metric tons / day of newsprint paper and 50 metric tons / day of any other type of paper. For pulp paper, the minimum qualification was 100 metric tons / day.

• In the 1960s, the cold hit mid-west Santa Catarina. In 1965, 20cm of snow fell in Campina da Alegria, which still houses Irani’s first production facility.
  
  Even with incentivizations, the 1960s were a period of low growth. However, the efforts to improve its logistics continued. The paper produced by the plant in Campina da Alegria was transported in bales of approximately 150kg to Cruzeiro do Sul, in the municipality of Joaçaba. The company had a warehouse there, next to the Rio Grande - São Paulo railway line, through which they were distributed across the country.
  
  Importantly, Irani established a nursery between 1961 and 1962, to grow pine seeds imported from Georgia in the United States. The start of the use of pine for pulp production was one of the first steps towards creating Irani´s Forestry Section, although the large scale harvesting of this timber only began in the 1970s.
• It seemed like the world was upside down in the 1960s with the cultural revolution of the Beatles, which not only changed what the world listened to - the long hair and colorful clothes of the English band also influenced the fashion and behavior of the youth of that period.
  
  Life for the 5 thousand inhabitants of Campina da Alegria was a little less frenetic. Not that the town was cut off from the rest of the world. After all, it was no longer as isolated as when the nearest civilization was 25km away and there was no road to get there. In two years, routes had opened up the secluded forest and the houses multiplied to create a community of Irani workers.
  
  In the 1960s, the inhabitants of Campina da Alegria began to receive the trappings of modern life. In the middle of the decade, the Cine Alegria opened. It was far more comfortable than the old town cinema, built in the 1950s out of pine wood, with a tin roof. To give you some idea, the ceiling of the old hall had been made from metal sheets from old soda drums. As it had so many holes, movie-goers needed to bring umbrellas to watch the movies, when it rained.
  
  Another good development was the opening of the new church in 1964, which replaced the narrow chapel covered with chipped boards, left over from the early 1940s. In fact, the newly opened church created a new ceremony for St. Christopher's Day (July 25), the patron saint of drivers, when a line of trucks formed up to receive the priest's blessing.
  
  

New horizons open for Irani

The paper industry started the decade on a high, after the incentivization policies of the previous few years. As an example of this development in figures - between 1957 and 1973, production of wood pulp increased by nearly seven times, while internal consumption had grown 3.5 times, making exports possible.

In 1974, the First National Paper and Pulp Program was launched to meet the demand in this sector. This program ensured that performance continued to improve, throughout the decade - between 1974 and 1980, growth in pulp production was 201% and 81% for paper production, while paper for packaging and paper for printing had grown by 98% and 84%, respectively.

Due to the favorable climate, Irani invested in Paper Machine No. 4, manufactured by the German company Voight, in 1975, in order to increase productivity at Campina da Alegria. The equipment enabled the company to produce FineKraft and FlashKraft paper to supply to the flexible packaging sector, increasing the company’s activity within the country.

In 1978, Irani produced 32,400 tons of paper from Sulphite pulp of the following types: newspaper, manila (suitable for packaging), cardboard, gold Kraft and green Kraft.

• The importance of the environment - which had already been part of Irani’s culture - was first noted by the paper industry in 1976, when BNDE signed an agreement with the Special Department for the Environment to make the preservation of nature one of the evaluation conditions for agreeing the financing of projects.
  
  In 1970 Alfredo Fedrizzi left Irani, after more than three decades at the helm. Before he retired, Fedrizzi was involved in founding Madeireira Rio Irani, a partnership between Irani and Madezorzi, a local timber company. The project was established at Campina Redonda, ten kilometers away from Campina da Alegria. According to the managers at the time, the operation was designed to establish a native forest to create a reforestation area.
  
  “Mr. Alfredo”, as he was known, had been more than just a manager. In the early days of the village of Campina da Alegria, due to the limited infrastructure, he had even acted as a sheriff - when there were disagreements, he was called to separate the brawlers, who respected him. It was not until the late 1940s that a police officer was assigned to Campina da Alegria. As there were also no doctors (the village had its first doctor in 1944), patients went to see the manager, who had brought medical manuals with him from Caxias do Sul to deal with minor problems, as well as basic medicines.
  
  Health issues were a concern for a while though. Jocimara Mafra Alves’s family has a long history of service with the company. She has been with Irani for 41 years and currently works as a field service manager at the Campina da Alegria mill. Her father, João Francisco, drove a truck for Irani to create roads or haul wood to the factory yard. He would also drive patients to hospitals in Concórdia or Joaçaba in a Rural Willys, as there was no way to care for them in the village. “When I was a child, I remember my father would sometimes only get home the following morning. He would sleep in the Willys, waiting for the patient”.
• The care of patients in Campina da Alegria improved dramatically when the Flor de Maria Hospital, built by Irani, was opened in 1971. It was named after Maria, the wife of Alfredo Fedrizzi.

The end of a century, the start of a new cycle

The Habitasul Group of Porto Alegre was founded in 1967. In the first half of the 1990s it was interested in diversifying its portfolio. Its main activities at that time were real estate, hotels and tourism. “We wanted to have a presence in an industry that used some of Brazil's comparative advantages. At first, we were considering the agribusiness and heavy industry. In the end we chose the paper industry”, recalls Péricles Pereira Druck, who is currently the chairman of the Board of Directors of Irani and the Habitasul Group.

Irani, meanwhile, was in crisis. At the beginning of the 1990s, the unstable Brazilian economy had made things very difficult for the paper industry. The situation was aggravated by the outbreak of a strike by workers, which affected the paper and pulp companies of Santa Catarina, in 1990. As a result, Irani was forced to file for bankruptcy – currently, the term used for this action in Brazil is judicial recovery.

In 1994, the Habitasul Group bought up the shares of Irani, which marked the start of a new period of development for the business. “Grow, grow and grow, this has always been the hallmark of the companies run by Péricles Freitas Druck”, said Paulo Sérgio Mallmann, who worked as Irani's lawyer in the 1990s and has been a member of the Board of Directors since 2001.

• Following this, Irani’s financial issues were resolved and it began to reorganize and expand its assets. In 1997, it bought Orprin, a manufacturer of corrugated cardboard, in Santana do Parnaíba (SP), which was the beginning of the company's corrugated card operations. This development continued with the opening of the Corrugated Card Packaging Factory in Vargem Bonita (SC), at the end of the 1990s.
• In 1999, Irani took over the Furniture factory in Rio Negrinho (SC). The factory’s production was intended exclusively for the United States and Europe. It used replanted wood for its raw material, which was managed in accordance with international standards and requirements for environmental conservation.
  
  Another focus of investment was in updated technology, with the renovation of Paper Machine II and the construction of Paper Machine III. In 1998, Irani produced 71,778 tons of paper.
  
  As well as expanding into new markets and investing in technology, Irani took the first steps to improve its corporate governance at the Meeting for our future, held by the Habitasul Group, in Canela, in 1999. At the meeting, Péricles de Freitas Druck proposed some ambitious and innovative themes, such as strategic planning and a Social Balance Sheet, which would take form in the first decade of the new century.

Establishing the new Irani

The first decade of the 21st century saw the establishment Irani's new era, after it was taken over by the Habitasul Group. In 2004, it became the biggest supplier of light-weight paper (35 to 60g/m²) in the country. It also received the approval of the Adolfo Lutz Institute to sell packaging solutions for direct contact with food. This opened up the market from large fast-food chains and bakeries.

In 2007, the Superação Project was launched, which was intend to satisfy the company's main technology and infrastructure requirements. This project included renovating Paper Machine 5, in Campina da Alegria, and the inauguration of a new packaging plant in Indaiatuba (SP), which helped to double the production of corrugated cardboard boxes and sheets.

• The 2000s was also an important period for the development of Irani's corporate governance. In 2004, the organization established its first Strategic Planning cycle, which put the ideas announced at the Meeting for our future, by the Habitasul Group, in 1999, into practice. In the commercial area, in particular, a strategic review was carried out in 2006, supported by the Industrial Marketing School (SP). During this period, Irani adopted some transformative approaches such as “customer focus”.
• The 2010s were equally an important decade for sustainability. On September 4, 2006, Irani became the first pulp and paper company in Brazil and the second in the industry in the world to receive carbon credits issued under the Kyoto Protocol, in accordance with the Clean Development Mechanism (CDM) approved by the UN.
  
  This achievement was due to the building of a Cogeneration Power Plant at the Paper Mill in Vargem Bonita (SC), in 2005. The new plant helped to reduce Greenhouse Gas emissions – such as methane gas and carbon dioxide, by generating energy from the burning of biomass. In 2007, Irani started taking inventory of its Greenhouse Gas Emissions from all of its sites.
• After publishing its first Social Balance Sheet in 2005, which included social, environmental and economic indicators, the company released its first Sustainability Report in 2007, in the year that commemorated the fortieth anniversary of the Habitasul Group’s operations. In 2008, Irani was the only company from the paper, pulp and packaging industry to feature in the rankings for Brazil’s Leading Reports from the Rumo à Credibilidade (Towards Credibility) survey, by the Brazilian Foundation for Sustainable Development (FBDS) and SustainAbility.
  
  The importance given to preserving the environment had already been reflected in Irani's organizational structure, with the creation of the Environmental Management Department in 2004. Five years later, it was merged with the Sustainability department to form the Management of Excellence Department – and as a result, the environmental agenda was formally included in the company's strategic agenda.
  
  It is also worth mentioning how important the company believes it is to preserve the past, the historical legacy of the company. In 2007, the house that was the home of Alfredo Fedrizzi and his family, in Campina da Alegria, became the headquarters of the Irani Wood Pulp Cultural Center, where documents relating to the organization's history were kept.
  
  Finally, one more event from the 2000s that should be mentioned was the tornado that hit the factory and the village of Campina da Alegria in 2009. This event caused production to be shut down so that everyone could concentrate on saving the possessions of the village's residents.

Optimism on the horizon

It was the beginning of the 1940s when Alfredo Fedrizzi led an expedition to find forests with an abundance of pines. The aim? Build a Paper Mill. It was an attempt by Vinícola Riograndense, in Caxias do Sul, to diversify its business. After exploring the lands of Paraná and Santa Catarina, they picked a location in mid-west Santa Catarina. In the depths of Várzea Bonita there was a hidden forest of araucarias, perfect for starting a business. Irani’s future was clear.

The challenges

No matter the industry or country; Few companies can claim to be fully operational for eight decades. It is the legacy that Irani Papel e Embalagem has built up over this period that makes it ready to take on the next 80 years.

It is difficult to imagine that “Mr. Fedrizzi” would have imagined what the company would become when it began. Of course, no-one could have predicted what the world would be like, eight decades later. The values that have underpinned the organization's success, however, have never been so firm.

Any long-lived company will have been through difficult times. Irani has been no different. And it won’t be any different. The secret to getting this far in such health, is the way it has met its challenges: by following its principles for ethics and innovation, putting people at the top of the list - customers, suppliers, shareholders, workers.

The achievements

In the 1950s Irani pioneered replanting in Brazil. It’s no surprise therefore that in 2006 it was the first paper and pulp company in the country to issue carbon credits under the Kyoto Protocol - the second in the world.

Its innovative calling was also evident in 2020, when it raised BRL 405 million from a share issue. Irani now has 30 thousand shareholders and has now moved on to the New Market of the B3 - a select group of publically-listed companies in Brazil.

These events were only thanks to the improvements in governance and financial restructuring that have taken place since the 1990s, when the Habitasul Group took over.

Irani’s immediate future is the Gaia Platform. This is a series of ongoing projects, that equate to a total investment of BRL 743 million by 2023. The aim is to become more competitive by increasing production and energy supplies.

Next?

80 years after the development of the settlement at Campina da Alegria, the results for the first quarter of 2021 impressed both analysts and investors. Profitability was reported to be sustainable and the market conditions highly favorable. The limits set for the company were expanding, the result of a virtuous circle based on growth and greater efficiency. Therefore, it is no exaggeration to say, without any fear of the unexpected: Irani’s future is clear.