Pulp & Paper in Chile Strategic Priorities and Investments Analysis¶
Strategic Priorities¶
The strategic priorities of the major players in the Chilean Pulp & Paper industry, particularly Empresas CMPC S.A. and Celulosa Arauco y Constitución S.A. (Arauco), are primarily centered around growth, sustainability, competitiveness, and addressing market and operational challenges.
Empresas CMPC S.A.: CMPC's strategic focus for 2025 and beyond is guided by its 2030 Strategy, which has five key pillars: Sustainability, Growth and Innovation, Customer, Competitiveness, and Talent. A core ambition is to double the size of the company in the coming years by providing innovative solutions based on natural and renewable fibers. Sustainability is a leading priority, aiming to be an industry leader and a change agent for social development, with specific environmental and social goals set for 2025 and 2030. Key sustainability targets include eliminating solid (non-hazardous) waste to landfill by 2025, reducing industrial water use per metric ton of product by 25% by 2025 (vs. 2018 baseline), and reducing Scope 1 and 2 carbon footprint by 50% by 2030 (vs. 2018 baseline). Growth and innovation are targeted through expanding in Biopackaging, Wood, and Pulp segments and creating new businesses through innovation, aiming for innovation to contribute 10% of sales by 2025. The company also prioritizes focusing on customer needs and achieving P10 competitiveness leveraged by innovation and technology. CMPC has also indicated interest in exploring growth opportunities in the Americas, while also considering options outside the region. Challenges such as volatile pulp prices, weak demand in certain markets, and high net debt influence their focus on competitive improvement and enhancing margins, particularly in the packaging segment.
Celulosa Arauco y Constitución S.A. (Arauco): Arauco's strategic priorities are heavily influenced by its significant expansion projects and a strong commitment to sustainability and innovation. The company aims to strengthen its competitive position and increase its strategic relevance within the Empresas Copec group. A major priority is growth in pulp production capacity, notably through the Sucuriú project in Brazil, which represents the largest investment in its history. Sustainability is a fundamental aspect of Arauco's strategy, focusing on maintaining and improving its environmental performance, particularly regarding climate change, biodiversity conservation, and circular bioeconomy. Specific sustainability goals include remaining carbon neutral, reducing Scope 1 and 2 emissions by 40.6% and Scope 3 by 35.1% by 2030 (vs. 2019 baseline), restoring 25,000 hectares of native forest by 2050, and maintaining forest certification above 95%. They also aim to conduct an inventory of natural capital in Chile by 2024. Innovation is key to diversifying their product portfolio, including developing biodegradable and recyclable products and expanding into wood-based construction materials like OSB. Fire prevention and firefighting are also significant priorities, with a comprehensive strategy and substantial investment allocated for the 2024-2025 season. Like CMPC, Arauco faces the challenge of market volatility and aims to benefit from increased volumes and efficiency from projects like MAPA.
Empresas Coipsa: While less detailed information is available on recent strategic priorities for 2024-2025, Empresas Coipsa's actions indicate a strategy focused on the containerboard and packaging sector, with an emphasis on utilizing recycled fiber and contributing to the circular economy. Their conversion of a former newsprint mill to produce lightweight containerboard using recovered paper highlights this focus. [See Value Chain Analysis]
Masisa S.A.: Based on the provided information, Masisa's primary focus remains on the production and marketing of wood-based boards for furniture and interior spaces, supported by their forestry operations. [See provided key players table] Recent financial results indicate challenges, with slightly decreased revenue and reported losses, suggesting a focus on improving financial performance. [See provided key players table]
Recent and Planned Investments¶
Major investments in the Chilean Pulp & Paper sector for 2024-2025 are dominated by large-scale projects by CMPC and Arauco, primarily outside of Chile, alongside ongoing maintenance and specific capacity expansions within Chile.
| Company | Project/Investment | Type of Investment | Location | Estimated Value (USD) | Timeline/Status (2024-2025 focus) |
|---|---|---|---|---|---|
| Arauco | Sucuriú Project (New Pulp Mill) | Greenfield Pulp Mill | Brazil | $4.6 billion | Obtaining licenses in 2024; project financing and planted areas goals in 2H 2024; engineering in 2024; board approval sought in Q4 2024; construction could start in 2025; start-up estimated H2 2027. |
| Arauco | OSB Production Line at Trupán Cholguán Complex | New Production Line | Ñuble Region, Chile | ~$100 million | Construction began in 2024; operation estimated to begin Q2 2026. |
| Arauco | MDF Production Line at Zitácuaro plant (Vikingo) | New Production Line | Mexico | $250 million | Main capital expenditure in 2024. Consists of construction of a new MDF line. |
| Arauco | Fire Prevention and Firefighting Strategy | Operational/Sustainability | Chile | ~$60 million | Investment for the 2024-2025 season. |
| Arauco | General Capex / Debt Reduction | Capital Expenditure / Financial | Global | $1.3-$1.5 billion (cash flow from operations for 2024-2025) | Efforts to achieve significant debt reduction by end of 2024, aided by asset sale. Decrease in capital spending and dividends expected to free up cash flow in 2024-2025. Estimated leverage increase in 2025-2026 amid high capex intensity. |
| CMPC | Natureza Project (New Pulp Mill) | Greenfield Pulp Mill + Infra | Rio Grande do Sul, Brazil | >$4.5 billion (~$4bn for unit, ~$420m infra, ~$150m port) | Technical studies and environmental assessments in 2024-mid-2026; board submission planned mid-2026. |
| CMPC | Overall Investment Plan 2024 | General Capex | Global | $850 million | Less than 40% allocated to Chile; distributed across forestry, pulp (tech/innovation), Softys, and Biopackaging. |
| CMPC | Capital Expenditure Budget 2025 | General Capex | Global | $600-$700 million | Focus on sustaining growth and improving margins. |
| CMPC | Acquisition of Powell Valley | Acquisition | Not specified | $40 million | Deal mentioned in news from Q1 2025. |
| CMPC | Refinancing and Upsize of Revolving Credit Facility | Sustainable Finance | Global | $400 million | Completed in 2024. |
| CMPC | Issuance of Green Sustainable Linked Bond | Sustainable Finance | Global | $500 million | Issued in 2024. |
| Empresas Coipsa | Containerboard Production | Manufacturing/Recycling | Chile | Not specified | Ongoing operation utilizing recovered paper. [See Value Chain Analysis] |
| Masisa | Operations | Wood Products/Forestry | Chile & other SA | Not specified | Ongoing operations; reported losses in 2023 and 2024. [See provided key players table] |
Note: Investment figures may represent total project costs spanning beyond 2025.
Alignment Between Strategic Priorities and Investment Flows¶
There is a strong alignment between the stated strategic priorities of CMPC and Arauco and their recent and planned investment flows, particularly in the areas of growth and sustainability.
Both companies prioritize growth, and their major investment projects for 2024-2025, the Sucuriú project by Arauco and the Natureza project by CMPC, are massive greenfield pulp mill constructions in Brazil aimed at significantly increasing production capacity. These investments directly support their strategies to grow in the pulp segment and expand their international presence, particularly in Latin America. Arauco's investment in a new OSB line in Chile also aligns with its strategy to expand its wood-based product portfolio and contribute to addressing local needs.
Sustainability is another clearly aligned priority. Both companies have explicit sustainability goals and are channeling investments into initiatives that support these objectives. Arauco's investment in fire prevention and firefighting is a direct response to a significant environmental and social challenge in Chile and aligns with protecting their assets and supporting communities. Arauco's Sucuriú project emphasizes advanced technologies and sustainable practices for energy efficiency and environmental impact reduction. CMPC's stated allocation of its 2024 investments includes funds for technological and innovation improvements in the pulp sector and for its Softys and Biopackaging divisions, which often involve sustainability-related upgrades. Furthermore, CMPC's engagement in sustainable finance, such as the refinancing of a revolving credit facility and the issuance of a green sustainable linked bond in 2024, demonstrates their commitment to channeling investments towards environmental and social initiatives and achieving sustainability goals. The focus on innovation by both companies, as a strategic pillar for CMPC and evident in Arauco's development of dissolving pulp and wood-based construction [See provided key players table, 10], is supported by investments in new production lines and technology.
Competitiveness is implicitly addressed by these investments. Large-scale, modern mills like those planned in Brazil are designed to achieve economies of scale and operational efficiency, which are crucial for maintaining competitiveness in the global pulp market. Investments in technology and innovation within existing mills also contribute to improving efficiency and product quality.
While the major investments are currently directed towards Brazil, CMPC's allocation of a portion of its 2024 investment budget to Chile for forestry and pulp improvements, as well as for its Softys and Biopackaging businesses, shows a continued commitment to its operations and strategic priorities within Chile, despite concerns about the local investment climate.
In the case of Empresas Coipsa, their investment in converting a mill to utilize recycled fiber directly aligns with the growing importance of the circular economy and their focus on the containerboard sector. [See Value Chain Analysis] Masisa's investments, though not detailed for 2024-2025, would likely focus on maintaining and potentially upgrading their wood board production facilities and forestry assets to support their core business, driven by the need to improve financial performance.
Overall, the investment flows of the major players in the Chilean Pulp & Paper industry in 2024-2025 strongly reflect their strategic priorities of pursuing growth through capacity expansion, particularly in favorable international locations, and embedding sustainability and innovation into their operations and financial strategies.
References¶
- Empresas Copec And Celulosa Arauco Ratings Affirmed On Expansion - Mziq
- Parque Arauco Consolidates Growth Plan for Over US$ 500 Million, Announcing the First Multifamily Building Integrated Into a Shopping Center in Chile | Business Wire
- Empresas CMPC 2025 Company Profile: Stock Performance & Earnings - PitchBook
- Sustainability at CMPC
- Inversionistas AntarChile
- Earnings call transcript: CMPC Q4 2024 sees earnings miss, stock steady - Investing.com
- Arauco to present Sucuriú project to board by late 2024 - Fastmarkets
- AFRY awarded EPCM project for Arauco's new pulp mill in Brazil
- Sustainability - CMPC
- AFRY Chile to Carry Out Engineering for Ambitious Forestal Arauco Project in Ñuble
- Arauco plans new pulp mill in Brazil
- 2030 Strategy - CMPCFP
- Parque Arauco will build the first multifamily building integrated into a shopping center in Chile | AméricaEconomía
- CMPC Plans $850 Million Investment in 2024, Focusing Outside Chile | Acoforag
- Rating Action: Moody's Ratings affirms Celulosa Arauco's Baa3 ratings; outlook changed to stable
- 2030 Strategy - CMPC
- Annual Report for Fiscal Year Ending December 31, 2024 (Form 20-F)
- sustainable financing & impact report 2024
- ADDITIONAL SUSTAINABILITY INSIGHTS
- ARAUCO to invest nearly US$60 million in fire prevention and firefighting strategy
- Parque Arauco Consolidates Growth Plan for Over US$ 500 Million, Announcing the First Multifamily Building Integrated Into a Shopping Center in Chile - Business Wire
- CMPC Warns of Possible Pullback in Chile and Announces Over US$4 Billion Investment in Brazil | Acoforag
- Empresas CMPC - It's Now for Nature
- Sustainable Financing Framework - ARAUCO
- parque arauco investor presentation 4q24 - Modyo
- Arauco | Now For Nature
- Chile's CMPC plans over US$4.5bn investments in pulp mill, infra in Rio Grande do Sul
- Sonae Arauco secures a 200 million euro sustainable loan
- Arauco approves US$100 million investment in Ñuble - Empresas Copec S.A.
- ARAUCO commits to reduce 1.5 million tons of CO2 and receives approval from Science Based Targets - Empresas Copec
- Afry awarded EPCM project for Arauco's new pulp mill in Brazil | PULPAPERnews.com
- CMPC Q1 2025 presentation: Net income rebounds amid mixed segment performance
- Empresas CMPC S.A. Reports Earnings Results for the First Quarter Ended March 31, 2025
- Transcript : Empresas CMPC S.A., Q1 2025 Earnings Call, May 09, 2025 | MarketScreener
- Empresas CMPC SA (XSGO:CMPC) Q4 2024 Earnings Call Highlights: N - GuruFocus
- Celulosa Arauco y Constitucion SA's Proposed Senior Unsecured Notes Rated 'BBB-'
- CMPCFP: Home
- empresas cmpc sa and subsidiaries
- Arauco Sucuriu - IFC Disclosure
- Empresas CMPC SA Outlook Revised To Negative On Slower-Than-Expected Deleveraging; 'BBB' Ratings Affirmed
- CMPC Plans 2.5 Million MTPA Pulp Mill in Brazil - Papermart
- 2022 Integrated Report | CMPC FP
- Investor Relations - Empresas CMPC S.A.