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Pulp & Paper in Chile Follow the Money Report

Opportunities for Change

The analysis of investment, M&A, and new entrant activities within the Chilean Pulp & Paper sector reveals several key opportunities for change that are currently attracting investment or represent strategic shifts by market players. These opportunities are primarily driven by established companies expanding their core businesses, diversifying into related product lines, and adapting to sustainability trends, rather than by new, disruptive entrants significantly altering the market landscape.

The primary opportunities for change receiving investment are:

  1. Expansion of Pulp Production Capacity (Primarily Outside Chile):

    • Both CMPC and Arauco are making substantial investments in new greenfield pulp mills in Brazil (CMPC's Natureza Project and Arauco's Sucuriú Project). While geographically outside Chile, these investments are driven by Chilean-based multinational companies and will significantly impact their global pulp market share and operational scale.
    • Value Chain Stages Affected: Forestry (for potential future integration or raw material sourcing strategies, though these projects are in Brazil), Pulp Production.
    • Nature of Investment: Greenfield projects, capacity expansion.
    • Key Players Investing: Empresas CMPC S.A., Celulosa Arauco y Constitución S.A.

  2. Diversification and Value-Addition in Wood Products within Chile:

    • Arauco is investing in a new Oriented Strand Board (OSB) production line in the Ñuble Region, Chile. This indicates a strategy to move further downstream and add value to its forestry resources within Chile.
    • Value Chain Stages Affected: Wood Products Manufacturing (a segment related to but distinct from traditional pulp and paper manufacturing, utilizing forestry outputs).
    • Nature of Investment: New production line, capacity expansion, product diversification.
    • Key Player Investing: Celulosa Arauco y Constitución S.A.

  3. Shift Towards Recycled Fiber and Circular Economy Models:

    • Empresas Coipsa's conversion of a former newsprint mill to produce lightweight containerboard using recovered paper is a significant example of this trend. While the conversion itself occurred in 2022, its impact continues and represents an ongoing opportunity and shift in the paper manufacturing segment towards circularity.
    • This trend also implies investment in the Recycling segment of the value chain, including collection, sorting, and processing of recovered paper. While not detailed as specific new investments in the provided texts, the Coipsa example underscores the viability and growing importance of this area.
    • Value Chain Stages Affected: Recycling, Paper Manufacturing (specifically containerboard).
    • Nature of Investment/Change: Asset repurposing, shift in raw material sourcing, focus on sustainable products.
    • Key Player Investing/Driving Change: Empresas Coipsa (Unipapel).

  4. Investment in Sustainability and Operational Resilience:

    • Arauco's significant investment in fire prevention and firefighting strategies in Chile highlights the critical need to protect forestry assets, a foundational part of the value chain. This is an investment in operational continuity and risk mitigation.
    • CMPC's sustainable finance activities (green sustainable linked bond) indicate a broader corporate strategy to align financial operations with sustainability goals, which can influence investment priorities across their value chain.
    • Value Chain Stages Affected: Forestry (fire prevention), Corporate/Financing (influencing all stages).
    • Nature of Investment: Operational expenditure, strategic financing.
    • Key Players Investing: Celulosa Arauco y Constitución S.A., Empresas CMPC S.A.

  5. Modernization and Efficiency in Existing Operations:

    • CMPC's ongoing capital expenditure includes allocations for "technology and innovation" within its pulp segment in Chile. This suggests investments aimed at improving efficiency, product quality, or potentially developing new pulp grades or bio-products.
    • Value Chain Stages Affected: Pulp Production, potentially other manufacturing segments.
    • Nature of Investment: Capital expenditure for upgrades, technology adoption.
    • Key Player Investing: Empresas CMPC S.A.

While the M&A analysis showed limited recent activity directly within Chile's core pulp and paper value chain by the major players (CMPC's acquisition of Powell Valley lacks sufficient detail to assess its impact on Chilean operations), the primary investment drivers are clearly focused on capacity growth (especially in pulp, albeit abroad), product diversification within Chile (wood products), the circular economy (recycled content), and sustainability/operational efficiency.

The "New Entrants and Disruptors" analysis primarily pointed to the trend of increased recycled fiber use and the circular economy as a disruptive force, with Empresas Coipsa being a key example of an existing player capitalizing on this change within Chile. There is no strong indication of new companies entering and significantly challenging the established order through novel technologies or business models in the 2024-2025 timeframe based on the provided information. The opportunities for change are largely being pursued by the incumbent major players adapting their strategies.

Key Findings

Opportunity for Change Value Chain Stage(s) Affected Key Players Involved/Investing Nature of Investment/Change
Expansion of Pulp Production Capacity Forestry (indirectly for global supply), Pulp Production Empresas CMPC S.A., Celulosa Arauco y Constitución S.A. Greenfield projects, capacity expansion (primarily in Brazil)
Diversification in Wood Products Wood Products Manufacturing Celulosa Arauco y Constitución S.A. New production lines, capacity expansion, product diversification (in Chile)
Shift to Recycled Fiber & Circular Economy Recycling, Paper Manufacturing Empresas Coipsa (Unipapel), (broader industry trend influencing CMPC, Arauco) Asset repurposing, shift in raw material, focus on sustainable products
Investment in Sustainability & Operational Resilience Forestry (asset protection), Corporate/Financing (strategic alignment) Celulosa Arauco y Constitución S.A., Empresas CMPC S.A. Operational expenditure, strategic financing
Modernization & Efficiency in Existing Operations Pulp Production, other manufacturing segments Empresas CMPC S.A. Capital expenditure for upgrades, technology adoption

References

  • AFRY awarded EPCM project for Arauco's new pulp mill in Brazil
  • AFRY Chile to Carry Out Engineering for Ambitious Forestal Arauco Project in Ñuble
  • Annual Report for Fiscal Year Ending December 31, 2024 (Form 20-F)
  • Arauco approves US$100 million investment in Ñuble - Empresas Copec S.A.
  • ARAUCO to invest nearly US$60 million in fire prevention and firefighting strategy
  • Arauco to present Sucuriú project to board by late 2024 - Fastmarkets
  • Arauco plans new pulp mill in Brazil
  • Chile's CMPC plans over US$4.5bn investments in pulp mill, infra in Rio Grande do Sul
  • CMPC Plans $850 Million Investment in 2024, Focusing Outside Chile | Acoforag
  • CMPC Plans 2.5 Million MTPA Pulp Mill in Brazil - Papermart
  • CMPC Q1 2025 presentation
  • Empresas CMPC S.A. Reports Earnings Results for the First Quarter Ended March 31, 2025
  • Empresas Coipsa converts former BO Paper newsprint mill in Chile to containerboard [https://www.risiinfo.com/industry-news/packaging/empresas-coipsa-converts-former-bo-paper-newsprint-mill-in-chile-to-containerboard/]
  • Sustainable Financing Framework - ARAUCO
  • sustainable financing & impact report 2024
  • Transcript : Empresas CMPC S.A., Q1 2025 Earnings Call, May 09, 2025 | MarketScreener
  • Value Chain Analysis - Abstract
  • Value Chain Analysis - Value Chain Definition, 6
  • Value Chain Analysis - Players Analysis
  • Value Chain Analysis - Paper Manufacturing
  • Value Chain Analysis - Recycling
  • Value Chain Analysis - Value Chain Summary Table
  • Value Chain Analysis - Profiles of Key Players
  • Value Chain Analysis - Business Models
  • Value Chain Analysis - Bottlenecks and Challenges, 8
  • Industry Research - Detailed description of the main activities within each segment
  • Industry Research - List examples of key players with detailed profiles
  • Industry Research - Show estimates of volumes and sizes of each step in the value chain
  • Industry Research - Value Chain Summary Table
  • Industry Research - Examples of Main Players
  • Industry Research - Volumes and Sizes
  • Global vs Local Outlook Analysis - Trends detailing