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A Blow to the Heart of Tierra del Fuego: The Closure of Forestal Russfin

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The recent and abrupt announcement of the closure of Forestal Russfin, a company that operated in the Province of Tierra del Fuego since 1991 under the protection of the Navarino Law, has caused a real earthquake in the Magallanes Region. The news not only signifies the loss of one of the most important industries in the Fuegian territory but has also opened a deep debate about the effectiveness of development and incentive policies in the country's extreme zones. The cessation of operations of the company, located near the commune of Timaukel, is not just an economic setback but also a symbol of the complexities and challenges faced by those trying to thrive in Chile's remote geographies.

Forestal Russfin was not just any company. Founded over three decades ago, it became a key player in Tierra del Fuego's productive ecosystem. With a track record described as "impeccable" by various stakeholders, the firm employed over 100 people directly, serving as an engine for the local economy in one of the country's most isolated areas. Its strategic role in supplying processed wood for the national construction industry gave it relevance that extended beyond regional borders. Its operations not only generated jobs but were also crucial for the supply chain of a fundamental input for the country's development.

The president of the Magallanes Livestock Association (Asogama), Gerardo Otzen, summarized it this way: "Forestal Russfin was a company with capital from the north that believed in Magallanes and invested a significant amount of money to establish this industry, which was an example for the forestry and agricultural sector." Otzen highlighted the company's commitment, its concern for worker welfare, and its vision of transforming Timaukel into a development hub.

THE CAUSES OF AN INEVITABLE DECISION

According to the letter sent by the company itself to its suppliers, the closure is due to a perfect storm of factors that made operations unsustainable. The firm revealed it had faced four consecutive years of losses, a situation that became untenable. The main reasons forcing this decision were:

- Low demand for products: The national market, the primary destination for its production, failed to sustain the levels needed to maintain the company's profitability.

- Sustained increase in production costs: Rising input and energy prices severely impacted the economic viability of operations.

- Logistical problems: The remoteness of its operations, hundreds of kilometers from major urban centers and ports, drove up transportation and distribution costs—a critical factor in a region with limited infrastructure.

"Unfortunately, sustaining these losses is not viable, and we see no possibility of reversing these results," they stated in the letter, acknowledging the harsh reality the company faced.

THE SOCIAL AND ECONOMIC IMPACT ON THE TIMAUKEL COMMUNITY

The news hits the Fuegian community hard. The Regional Minister of Economy, Marlene España, confirmed that the closure will leave over a hundred people unemployed, most from Porvenir and Timaukel. The loss of these jobs is not just a number—it represents the hardship faced by entire families in a region with limited employment opportunities.

The mayor of Timaukel, Luis Barría, bitterly expressed his community's sentiment: "It's sad to see the only industrial company with Navarino Law benefits in Timaukel having to close..." The mayor not only lamented the loss of direct jobs but also highlighted the domino effect on contracts with transporters, raw material purchases, and especially the closure of the only fuel pump in southern Tierra del Fuego—a vital service for residents, livestock farmers, and tourists in a vast and remote area.

Regional councilor Rodolfo Cárdenas also warned about the "direct effect on workers and local service providers," emphasizing that this closure affects not only Russfin employees but the entire economic ecosystem that revolved around it.

Gerardo Otzen of Asogama added to this picture the positive externalities the company will no longer provide. "Forestal Russfin... offered valuable logistical support to the livestock and tourism sectors. It provided lodging, food, fuel sales, and tire repair services in an isolated area where these services are unavailable within at least a 180-kilometer radius."

CRITICISM OF GOVERNMENT PASSIVITY AND DEVELOPMENT POLICIES

The closure of Russfin has catalyzed criticism from various stakeholders, who question the authorities' management and the effectiveness of current incentive tools.

Mayor Barría, who witnessed the company's inauguration in 1992, was particularly critical of the government, stating that the company faced delays in Navarino Law payments and was subjected to "harsh inspections" by the SEC and the Labor Directorate. "It seems the government doesn’t care about the loss of a job source," he asserted. He also lamented that the Navarino Law, which does not benefit livestock farmers, "was neither improved nor extended under this administration."

Discontent is evident in the productive sector. The president of the Chilean Chamber of Construction in Magallanes (CChC), Cristóbal Bascuñán, called the closure a "terrible signal" and a reminder of "the urgent need to review investment instruments in extreme zones," urging their modernization. The head of the CPC Magallanes, Mario Elgueta, agreed, stating that Russfin's case "reflects a reality that cannot be ignored: operating in such extreme zones entails enormous costs, and without effective and updated tools, the survival of companies like this becomes unviable."

The president of Multigremial Magallanes, Jaime Jelincic, offered a broader and more concerning perspective. He linked the forestry closure to other economic events, such as the shutdown of Mina Invierno and the decline in salmon production. "We really should reevaluate what’s happening. This is not a minor issue... The region is not an attractive place to develop industry," he stated.

Jelincic questioned the passivity of government authorities and legislators, both ruling and opposition parties, and criticized the lack of a long-term vision for regional development. "We don’t have a line of significant investments to promote private investment alongside public investment to improve economic sectors. Honestly, this is very administrative and not about creating investment opportunities," he said.

A CALL TO ACTION AND THE SEARCH FOR SOLUTIONS

Despite the blow, measures are being taken to mitigate the immediate impact. The Regional Minister of Labor, Jéssica Bengoa, announced the formation of an inter-institutional roundtable to address the workers' situation. Key stakeholders such as the CPC, Cámara Franca, Omil, and Sence will participate, aiming to coordinate a labor retraining plan for terminated employees.

Meanwhile, the Regional Minister of Economy, Marlene España, defended the work of the Productive Diversification Roundtable, though she acknowledged its focus is not on the forestry sector. She assured that the Regional Government's plan is long-term, concentrating on formalizing guilds and strengthening the business ecosystem, with an emphasis on salmon farming, energy, and tourism.

However, for many, the authorities' response is seen as insufficient. Councilor Cárdenas called to "accelerate the execution of stalled or significantly delayed projects," such as the construction of the new Porvenir Costanera, to generate jobs and boost the local economy. He also urged the implementation of Sercotec's SME support programs, which have faced delays. "We need reactive measures now," he emphasized.

Jaime Jelincic summarized the sentiment of many Magellanians by stating that Russfin's closure is a regrettable signal showing that "the region is not creating greater spaces for growth and development in economic activity areas." He called for long-term planning, spanning 12 to 15 years, with a development project that "brings us all together" as Magellanians. He concluded with a concerning statistic: the SME mortality rate in Magallanes is 35% after three years—higher than the rest of the country—highlighting the fragility of the regional business ecosystem.

The closure of Forestal Russfin is more than a business story; it is a symptom of a deeper ailment in Chile's extreme zones. It is a wake-up call demanding an urgent review of territorial development policies and a reflection on whether the country is willing to create conditions so that investment, talent, and opportunities are not lost in the distant yet strategic Magallanes Region.

Source:El Pingüino