Arauco considers selling forests in Chile to help finance its mega pulp project in Brazil

Following the MAPA project in Bío Bío, Sucuriú is the focus of Arauco's major efforts to expand its production capacity, through a mega pulp plant in Brazil alongside 400 thousand hectares of its own eucalyptus plantations.

This is the largest outlay in the history of the Angelini-owned company, part of Empresas Copec, with an estimated investment of US$4.6 billion.

And today, in its results conference, the company shed light on the progress of its next crown jewel, revealing that they are studying the sale of forests in Chile to help finance the initiative, specifically a port terminal in São Paulo.

Arauco and progress on the Sucuriú project

According to reports from Diario Financiero (DF), Arauco's Chief Financial Officer (CFO), Gianfranco Truffello, highlighted that Sucuriú is 62% complete and is 7% ahead of the original schedule, with a workforce of 12,000 workers.

Notable progress includes boilers, steel structures, transmission lines, and fiber and drying lines in terms of mechanical assembly.

As a result, they have already planted half of the eucalyptus hectares planned to supply the complex, while the railway line that will connect to the Brazilian network is already 16% complete out of the planned 50 kilometers.

This will allow production to leave the factory and reach a terminal they will build at the Port of Santos - in the state of São Paulo - about 750 kilometers from the facilities.

According to Truffello, the land purchase documents are ready, but this specific initiative is on hold while construction costs and timelines are clarified, in addition to analyzing whether to proceed with a partner or not.

If they ultimately decide to finance it solely as Arauco, the CFO stated that "we will find other ways to reduce debt elsewhere to make room for that capital, which amounts to around US$40 million and US$450 million initially, where cash flows are more allocated to 2027 and 2028 than to 2026," as reported by DF.

Financing topics

Although the forestry company's parent company has already approved an early capital injection of US$200 million for mid-June, amid its liquidity commitments of US$1.2 billion for the mega project, the company is also weighing other alternatives to access resources, ensuring that its investment grade is not affected by higher debt.

In this regard, the finance officer revealed that they are considering selling forests, "mainly in Chile," through contracts that contemplate this alternative, or "selling land and trees that are not strategic for us."

There is also the option of selling long-term contracts for green energy sales at a fixed price, new hybrid bonds, or even an additional capital increase from Copec "if things don't turn out as we believe" - the latter subject to the parent company's decision.

According to the executive, Arauco holds about US$2.5 billion in "biological assets" in our country.

Source:BiobioChile