Chilean brothers Horacio and Rodrigo Fernandez and their company Polincay have introduced a breath of competitive fresh air to Chile’s panel industry, for years dominated by two giant national groups.
In little over a decade, Polincay became a leading MDF mouldings exporter to the US, Chile’s top flush door manufacturer, and is now South America’s first producer of MDF panels on a Chinese-built line.
After challenging Chile’s giants Masisa SA and Celulosa Arauco y Constitución SA in the formerly lucrative US MDF mouldings business, Polincay this year launched its first MDF plant.
Conscious of their company’s reliance on its giant competitors for supply of the MDF raw material for its mouldings, the brothers finally decided they too would have to get into the panels business.
A team of 50 Chinese workers spent eight months assembling a 150,000m3/year line in the isolated southern Chilean community of La Unión. The modified line is one of only two supplied to foreign panel makers by the firm Shanghai Jiecheng Baihe Woodworking Machinery Co Ltd. The other was to Azerbaijan.
The new plant started up in January 2008 and by June, when WBPI visited Polincay, MDF output had reached 50% of capacity. The unit is due to achieve full capacity by this November according to the firm.
Polincay’s MDF line is part of an ambitious integration project which includes an existing sawmill, supplying up to 100,000m3 of finger jointed mouldings annually, and the addition of two Chinese low-pressure laminating lines, each with a 36,000m3/year capacity.
In addition, Polincay expects to launch a Chinese-built thin MDF Mende-type line in La Unión next year.
The meteoric rise of the youthful Fernandez brothers in the wood products industry began in the 1990s. While Rodrigo (43) had his own successful graphic arts business, Horacio (48) was a manager at a Chilean construction firm.
There, from simple solid wood picture frame mouldings, he developed new pre-finished MDF mouldings, US exports of which grew rapidly from 1993. Two years later, Rodrigo and Horacio jumped at the opportunity to buy the wood products operation when the parent group offered it for sale.
Polincay enjoyed several years of booming US export sales of its quality primed mouldings, although competition from the Chilean giants, and from US producers, began to hot up. In 2000, the brothers also set up a flush door making operation in Santiago which now manufactures some 80,000 doors per month.
But then came 2005, and, with the US market downturn and export prices plunging, Polincay found its mouldings business squeezed. Panel volumes supplied by its big competitors were being restricted, leaving the small company unable to fully service its North American customers, the Fernandez brothers claim.
It was then they finally vowed to invest in their own panel production. “MDF volume was not really sufficient and we were losing customers, and there was no other way [forward].
“Now, we can retain the confidence and trust of our customers that we will still be in the [mouldings] business when the market gets better,” explained Rodrigo Fernandez.
But he and Horacio faced a steep learning curve. They were not only launching their first panel manufacturing line, but using technology from China never before operated in the region.
Keen to select the best possible MDF line, but with no background in panel making, he and his brother hired a plant manager with exceptional experience.
Victor Maruri served 25 years with Masisa, the region’s top panel manufacturer. He managed both particleboard and MDF plants for the group in Chile, Argentina and Mexico and was well placed to choose and set up the new line.
After rejecting the option of buying secondhand, the brothers and Mr Maruri went to China where they visited several machinery suppliers including Suzhou-based Sufoma Machinery Co Ltd, Shanghai Wood Based Panel Machinery Co Ltd (SWPM) and Shanghai Jiecheng Baihe Woodworking Machinery Co Ltd.
The Chileans viewed a number of lines from each firm, operating in China. Although Baihe had little export experience, Polincay found it easier than the other suppliers to deal with. There, they could talk to engineers and top executives as opposed to just sales people, and Baihe was more flexible over essential line modifications, recalled Mr Maruri.
For its line, Polincay required the addition of a chip washer, additional green chip silos and a comprehensive control system. The Chinese line had a limited Siemens control system, but Polincay’s plant manager preferred to expand this using the more familiar Allen-Bradley system, he recalled.
The deal was finally clinched, when Baihe agreed not only to supply its equipment, but also to modify and assemble the line in Chile and bring it to start-up. For that, Polincay was to pay just US$12m, said Mr Maruri.
A further US$8m had to be invested at the 5ha La Unión site on plant foundations and building construction, much of which was handled by a Chilean building firm.
During line construction – from March to December 2007 – materials for the plant, from pipework to the line itself, were shipped across the Pacific from China.
Polincay made novel arrangements in rural La Unión to accommodate the big team of Chinese Baihe and sub-contract workers employed at different stages of construction. Apart from providing a small house near the site, Polincay hired six big shipping containers, specially converted into living quarters complete with windows, bathrooms and bedrooms!
Communication proved difficult as few of the Chinese even spoke English, let alone Spanish. But Polincay executives avoided the need to translate via English by enlisting the aid, as interpreter, of a Chinese who had studied Spanish in Colombia.
Polincay began its first 100% eucalypt MDF panel sales to Chilean customers in April this year. Earlier output was dedicated to its mouldings business. In June the company exported its first board to Mexico and Costa Rica.
“At present, because of the bad situation in the US market, we are selling board to other customers in Chile and abroad...Chilean customers are pleased they have greater market choice since Polincay’s start-up. The market was dominated by the two big groups,” Mr Maruri told WBPI.
The Fernandez brothers are confident they can exploit a number of fresh
markets for laminated MDF across their region, including Brazil, Peru and the Caribbean states.
The Chinese MDF line, bigger than Baihe’s standard equipment capacity, has a 15-opening press.
When the line reaches full capacity, Polincay still aims to devote half its MDF output to mouldings, with most of the rest dedicated to melamine faced panels. Both low-pressure lines, supplied by Xinxieli (Suzhou) Enterprise Development Co Ltd, were up and running by this August.
“What we’re trying to do here [at Polincay] is to focus on added-value business. That’s why we’re aiming to produce 5,000m3/month of melamine covered MDF board,” explained Horacio.
With their first MDF line now in
operation, the brothers are focused on the project’s next stage. But, it is clear they face a major new challenge in realising their original plan for the Mende-type thin MDF line in the current economic
climate.
Although the La Unión site has much of the infrastructure required for a second panel line, and Polincay has agreed in principle that Baihe should supply it, the machinery price has soared since 2006; Polincay has estimated that it will need to find around US$15m to cover the cost of installing the second line.
Chinese suppliers faced with the rising cost of steel and other raw materials, and reduced government export subsidies, have hiked their machinery prices in the past two years. If Polincay was purchasing its first MDF plant today, the cost would have almost doubled, the brothers estimated.
In June, escalating prices meant Polincay could not possibly still include the Mende line in its total project budget of US$40m; spending on the sawmill, MDF line 1 and laminating already totalled US$32m.
Horacio and Rodrigo Fernandez concluded they would need to find a foreign industry partner, willing to share the burden of installing the thin board line. Polincay has already attracted financial investors from Chile.
When WBPI met them, the brothers voiced optimism that the all-important US market was showing clear signs of recovery. “We are confident of future growth and we are now waiting for the market to improve a little more and to find suitable partners to allow Polincay to proceed with this project,” Rodrigo said in June.
Polincay plans to produce 3-5mm thick MDF panels primarily for use in its doors business. Currently, not enough thin board is being manufactured to sustain this demand.
After that, the firm will sell its Mende product to third party operations for use in such applications as furniture drawer bottoms, according to Mr Maruri.
Other applications may include wainscot room mouldings and finish foil
covered panels for the Central American market.
Polincay, which runs its door and mouldings plants on the outskirts of the Chilean capital Santiago, located its sawmill and panel units so far south in La Unión to take advantage of available wood resources.
Forest plantation in Chile’s eighth Region of Biobio, inland from Concepción, is dominated today by the country’s two big forest product groups. But in the 10th Region of Los Lagos, there are ample supplies of eucalypt forest, grown in anticipation of a Japanese pulp mill which never materialised.
Today, there are around 15,000ha of eucalypt forest plantations on small third-party land holdings within 100km of Polincay’s La Unión plant. Growth rates at this latitude are good, at about 25m3/ha/year, yielding around 350,000m3/year, according to the firm’s forestry manager Francisco Gallardo.
In Santiago, Polincay’s mouldings plant is an impressive operation. Despite the current cutback in US demand, it continues to work with one shift at almost 70% of capacity. The plant is seeking new markets and has begun to make headway in Australia, among other countries, according to Pedro Laneri from the export department.
The plant runs two MDF strip cutting lines, together capable of turning out 150m3/day; five moulding machines; five independent paint priming lines and three integrated moulding, painting, drying and sanding lines.
Polincay manufactures MDF mouldings ranging in thickness from 9-30mm, all pre-finished for the market. The products are exported from the port of San Antonio near the Chilean capital, whereas panels sold abroad are shipped via the southern port of San Vicente.
Polincay’s nearby doors plant has a capacity of 1.5 million flush doors/year. Its output is divided into two sections – standard doors and special ready-finished made-to-order doors.
Apart from their industrial interests, the Fernandez brothers run a Santiago art gallery where they are helping to promote the wider recognition and celebration of the work of Chilean artists.
So devoted are they to this cultural cause, that in 2004 they sponsored the decoration of Santiago metro station with four giant colourful murals created by Chilean artist Rodolfo Opazo. A copy of one of them is displayed in their company’s reception.
The brothers’ passion for art is evident even to visitors to their Santiago plant offices. The reception area has many paintings by contemporary national artists.
Not only have Rodrigo and Horacio Fernandez brought a little colour to the world of panel making, but their enterprise and determination is creating a minor revolution at the heart of the South American wood panels sector.  n

Another of Chile’s big wood pulp corporations has joined the South American wood based panels club with the recent decision of Empresas CMPC SA to launch its first pine plywood mill.
The Santiago-based pulp and paper group’s subsidiary, CMPC Maderas SA, plans to install a 225,000m3/year line beside the group’s Pacifico pulp mill next year to turn out high-quality sanded panels for the US and European markets.
CMPC, one of Chile’s top forestry and pulp groups, alongside Celulosa Arauco y Constitución SA, is following the lead of Arauco which launched its first plywood line in 1997. Today, Arauco also makes particleboard, MDF and hardboard.
For CMPC, which also manufactures tissues, carton board and writing paper, the move into plywood is a natural one as it wants to make fullest use of its forest resource, which in Chile last year amounted to more than 400,000ha of mainly radiate pine and eucalypt plantations.
“Everything is related to the forest base we have. The timing of this project is tied to the availability of pruned logs in forest areas with radiata pine trees aged from 25 to 28 years old,” explained CMPC Maderas’ vice president, Hernan Fournies. Plywood is an obvious added-value product for a company with an abundance of large, high quality ‘radiata’ pine logs, he added.
The group is no novice in the world of wood products for the construction sector. CMPC Maderas already operates three Chilean sawmills at Mulchén, Bucalemu and Nacimiento producing close to one million m3/year of sawn pine timber. In addition, it runs a remanufacturing plant in Los Angeles (Chile) with a 110,000m3/year output of mouldings, solid panels and finger joints.
In the case of its wood products, about 90% of sales – which for 2004 totalled around US$225m – are in the form of exports. Last year, timber went largely to Asia, the Middle East and US, while CMPC sold its remanufactured component production mainly to the US and Japan.
“Our customers are associated with construction, mainly in the US, with some in Europe, so it makes sense for us to offer plywood as a complement to our lumber products,” said Mr Fournies, who met WBPI in Santiago recently.
CMPC is already discussing its likely equipment needs with machinery suppliers, including Raute who provided plywood lines for Arauco. The group expected to be ready to choose the supplier at the end of June and to begin work on the mill plan by the end of the year. Start-up is likely by September 2006, according to Mr Fournies.
The group has earmarked a Greenfield site of around 45ha south of the Pacifico pulp mill to create a major forest products complex. The US$56m plywood plan is just the first phase of what may become a bigger scheme, likely also to accommodate a sawmill and perhaps a new mill work operation, the Maderas executive explained.
The choice of the Pacifico site was prompted, not only because of readily available wood resources to feed the plant but also to take advantage of power, steam and water supply from the pulp unit.
Plywood raw material will be drawn from an average distance of between 50 and 60km from plantation forest mainly in the Los Angeles and Temuco areas of Chile’s Eighth and Ninth Regions.
A major part of plywood production will be concentrated on ‘A’ grade panels “for markets where the appearance is really appreciated”, including the US DIY market, the furniture industry and for some applications in construction like decorative panelling, said Mr. Fournies. “Basically, our target is to reach a premium product with a very good appearance. That’s what we are finding is in demand,” he added.
CMPC readily accepts that the plywood business in general has been under attack and has sustained damage from the advance of OSB and other panels. But the group remains confident that, with its high quality raw material, good technology and capacity focused on the sanded plywood niche business, it can succeed despite this threat.
The Chilean company means to concentrate primarily on serving the large US market, but sees good opportunities for export sales too, in Mexico and Europe. Last year, CMPC estimates, US consumption of sanded plywood reached 5.2 million m3 out of a total national plywood market totalling 20 million m3/year.
CMPC can take advantage of distribution channels it has developed, chiefly in the US but also in Europe, for its solid wood products. The group, which ships to US ports including Houston, Charleston and Baltimore, has warehouses in Texas and on the East Coast.
The group claims a good environmental pedigree with certified forests and products, and believes its work in polishing its corporate image, particularly in eco-sensitive markets, will also aid its success in the plywood business.
So, with plywood under its belt, is CMPC set to follow Arauco’s dramatic, full scale incursion into the business of wood based panels? In barely seven years, through major capital investment and key acquisitions in Chile, Brazil and Argentina, Arauco has become a regional industry leader.
The answer is, apparently, not. CMPC may later expand plywood production, possibly in another country in South America’s ‘Cono Sur’ or Southern Cone. But it still sees its core role as that of a pulp and paper maker, according to Mr Fournies.
“Technically, any other [panel] opportunity, like MDF or OSB, we would compete for the raw material that we are now using for pulp. The company is committed to its pulp business,” stressed the vice president, who has served 18 years with CMPC’s wood products division.
In fact, the plywood project is far from being the only current investment scheme on the minds of CMPC senior management. As if to emphasise its firm commitment to pulping, the group is to launch its huge 780,000 ton/year ‘Santa Fé II’ pulp line, costing some US$700m, by September 2006.
CMPC Maderas has other expansion projects including the US$28m expansion next year of sawn wood capacity by 500,000m3/year at its Mulchen sawmill, rebuilt after fire destroyed the main mill and machinery in 2003. A US$10m project will see capacity growth for mouldings and edge-glued panels at the Los Angeles remanufacturing plant by early 2006.
In addition, CMPC, which is extending its plantations in both Chile and Argentina, expects to develop new solid wood products from its Chilean mature eucalypt forest. Overall, at the start of 2004, its planted ‘globulus’ and ‘nitens’ eucalypt resource in both countries amounted to 120,000ha.
At the end of 2004, Empresas CMPC SA, one of the largest firms quoted on the Chilean Stock Exchange, reported annual group sales of around US$1.6bn. The group is controlled by the Matte family, one of the country’s top business leaders.

In a year overshadowed by controversy surrounding an ambitious pulp mill plan in Valdivia, Chilean forest products giant Celulosa Arauco y Constitución has, in contrast, enjoyed growing success in the wood panels arena.
The Santiago-based group has reinforced its already formidable presence in South America’s wood panel business with the launch late last year of its third sanded ‘radiata’ pine plywood line in Chile.
Barely four months later, Arauco also established a vital base in Brazil. It staged a lightning US$300m cross-border coup to acquire the wood panel manufacturing, forest and resin production interests of French conglomerate Louis Dreyfus SA in Brazil and Argentina.
At a stroke, not only is Arauco acquiring respected Brazilian panel pioneer Placas do Paraná SA of Curitiba, but also its Argentine sister particleboard maker, Faplac SA, along with 34,000ha of planted pine, eucalyptus and poplar forest in Argentina and Brazil.
The Dreyfus deal is significant, not least because of Brazil’s huge population and great sales potential for panel producers. It also broadens Arauco’s already substantial product portfolio, taking it for the first time into resins, particleboard and laminate flooring.
Up to now, Arauco has been serving its Brazilian panel customers from across the border in northern Argentina where it launched the 250,000m3/year Alto Paraná MDF mill three years ago. Now, with a Brazilian plant, earlier plans for a second MDF line on this site have been shelved.
The acquisition follows Arauco’s strategy of developing new panel plants within key national domestic markets. Because of the price of wood panels, transport costs become significant when it comes to margins, especially in a country as big as Brazil, it says.
There is another point, too. Arauco, along with other MDF and particleboard makers who serve Brazil from plants in Argentina, was on the sharp end of a dispute with Brazilian producers over allegations of dumping.
Among Brazilian accusations was that Arauco was destabilising their domestic market by selling MDF from Alto Paraná at heavily discounted prices. The group never responded publicly to the claims.
Now, the dumping storm, which last year seemed set to escalate into a trade dispute between the governments of Brazil and Argentina, has abated following talks between the two sides.
Even so, there is little doubt the row helped justify the Chilean group’s move into Brazil. “That [Brazilian criticism] did have some bearing on this acquisition,” admitted Arauco group commercial director Charles Kimber.
“The [Dreyfus] deal gives us a foot in that market [Brazil] as a local producer, otherwise, we would always be seen as a foreign exporter there, he said.
The ‘gem’ of the deal for Arauco is undoubtedly Placas do Paraná’s 260,000m3/ year Metso (Valmet) MDF continuous press line, started up at Jaguaríaiva, Paraná state late in 2001, said Mr Kimber, interviewed by WBPI in Santiago at the end of May (2005).
Initially, Arauco reduced the direct workforce at Placas by about 160, with some of these retained on a contracting basis, but the group is still reviewing its purchases overall.
It does recognise the need to improve board quality and volumes at Placas’ particleboard plant in the state’s capital, Curitiba. This runs four small single-daylight Dieffenbacher press lines with a design capacity of 320,000m3/year, as well as a Wemhöner melamine overlay line and a Barberán finish foil laminating line.
“There are some important issues [there] we should deal with to increase our productivity and quality... In the next couple of months we will be making some small investments in different parts of the [particleboard] lines to increase volumes.
“But we don’t expect to do that by more than 10%,” explained Paneles Arauco’s sales and marketing director, Carlos Bianchi. The task for 2005 is to target the particleboard lines’ nominal capacity, he said.
Arauco is adamant that it does not plan to throw its weight about as soon as it arrives in Brazil. “We are not just going to go and build another MDF or particleboard mill in Brazil.We first have to learn how [best] to operate those mills [we acquired] ... and understand what the market can sustain,” said Mr Kimber.
Placas do Paraná did have a grand plan for panel production at its northern Paraná site of Jaguaríaiva. As the MDF plant took shape, it was preparing to build a second continuous line there for particleboard. This 520,000m3/year unit was due to replace the small, less efficient Curitiba batch lines, but the project was later shelved.
Arauco has not ruled out the option of replacing the old Curitiba capacity with a large, modern continuous press line in due course. But it is not intending to make a snap investment decision to expand in particleboard immediately, stressed Mr Kimber.
The executive was quick to recognise the “spectacular” growth of the MDF business in Brazil over the past nine years – from zero to today’s figure of around 1.5 million m3/year. Domestic market demand is set to run “for years to come” as the country develops, and Brazil will not export MDF much, the Arauco executive suggested.
The Chilean group has other priorities now it has landed in Brazil. It has inherited 26,000ha plantation pine woods in northern Paraná state and plans to extend its holding with new purchases of forest land.
“We have got to look at expanding our forest base and probably (later) get into other sectors of the wood business – sawmilling or plywood – and eventually into the pulp business,” declared Mr Kimber, whose group owns five pulp mills, four in Chile and one in Argentina, with a total annual capacity of more then two million tonnes.
Arauco is continuing the strategy of putting plants close to its forest, which it first followed in Chile. “Then, as we have consolidated the industry base, we look at how to expand markets domestically. That is where the particleboard complements our MDF supply,” explained Mr Kimber.
In addition, the new deal gives Arauco a 50% stake in Dynea Brasil SA, formerly Dreyfus’ 130,000ton/year resin manufacturing joint venture in Brazil with Dynea group.
However, Arauco still sees itself as a forestry company, skilled at managing its plantations to get the greatest yield and utilizing efficiently every part of the tree it grows. It is developing low cost integrated industrial complexes to optimise returns from the manufacture of value-added forest products.
The group has built up its forest resources in Argentina where, early last year, it finally acquired 60,000ha, 24,000ha of which were planted with pine, and a sawmill from the Argentine industrial group, Perez Companc. Today, Arauco has 111,000ha of forest in the country and an additional 20,000ha of pine plantations in Uruguay. In Chile, it has nearly 700,000ha.
Arauco has benefited from the economic recovery in both Argentina and Brazil and counts these countries, along with Chile, as its main markets for MDF and now  particleboard products. In the case of its Argentine acquisitions, it is still awaiting the green light from the anti-trust regulators in Buenos Aires. The official go-ahead is  anticipated by September, said Arauco.
Apart from Faplac’s particleboard mill in Zarate, the Chilean group is set to gain the Resinfor Metanol SA formaldehyde and urea formaldehyde resins plant in Santa Fé province. In addition, Arauco will win a 60% stake in Flooring SA, Dreyfus’ two million m2/year laminate floor manufacturing joint venture with the European panels group, Fantoni SpA of Udine, Italy, which is also based in Zarate.
Faplac made history back in 1960 as the company which first introduced wood panel manufacture to South America. Six years later, its Brazilian sister, Placas, launched the first particleboard plant in Brazil. Today, Faplac runs the 270,000m3/year continuous Metso (Küsters) press panel line, but ambitious Dreyfus plans to install a 350,000m3/year MDF line alongside the existing Zarate line were abandoned in the face of Argentina’s economic crisis.
Arauco’s latest acquisition means it is reassessing how best to integrate its new capacity for adding value to its panels. That means looking at melamine overlay facilities it has in Brazil and Argentina and how best to serve the national and export markets.
The Brazilian units will be directed to serving the big domestic market, while the Argentine capacity could perhaps serve foreign markets like Chile, South Africa, the US and Mexico.
Arauco’s meteoric rise in the panel business has been marked primarily by its success in supplying its top quality ‘AraucoPly’ sanded pine plywood, especially to the US market. Starting in 1997 with its first Raute line at Horcones in Chile, the group added a second there in 2000 and these together have a combined 360,000m3/year capacity.
Its third plywood mill, with a larger 210,000m3/year line capacity, was launched last November as part of phase I of a huge forest industry complex, which includes a log merchandiser, a 400,000m3/year sawmill, a big power plant and the plywood mill. Phase II will comprise a giant 856,000 ton/ year bleached pulp mill due for completion in the second quarter of 2006.
Arauco says the integrated Nueva Aldea Forest Industrial complex, located on a vast 200ha mountain top site near Itata, Chile is a major “resource driven initiative”.
“The Itata complex is an improved version of what we did at Horcones,” explained Mr Kimber. “As our forest is maturing in the northern part of our estate, north of the Bio Bio River, we see it is good for us to have a sawmill, plywood mill, log merchandiser and pulp mill, as well as our MDF plant close by at Trupan, so we are making integral use of our forest.”
The highly automated plywood line – supplied jointly by Raute and a combined venture between US companies Globe Machine Manufacturing Co of Tacoma, Washington and Portland, Oregon-based Spar Tek Industries Inc – is housed in a 40,000m2 building at one end of the site.
The mill produces its clean radiata pine plywood in 8ft x 4ft panels, much of it destined for markets – including furniture, decorative siding or floor structures in construction or special packaging – in up to 35 countries, notably the US. Other markets include Chile and European countries.
Raute provided the line up to the plywood lay-up section while the Globe-Spar Tek team supplied Paneles Arauco with the presses onwards. The log merchandiser allocates the base sections of 17m long logs to the plant. These are heat treated before passing to its state-of-the-art lathes, one 8ft, the other a 4ft unit.
Coordination between the lathes and clippers is much improved on the Itata line enabling faster processing, and stacking is straighter, said Franco Bozzalla, managing director of Paneles Arauco. The plant has three hot air driers followed by two composers and two automatic lay-up lines.
Plywood panels pass on to the two presses supplied by the Globe-Spar Tek partnership and product finishing is handled on this production line by sanding units provided by Imeas. Arauco’s other plywood lines employed sanders from Steinemann.
As much as 95% of the panels manufactured by Arauco is ‘A’ and ‘B’ facing plywood. “We do basically the same things here as at Horcones. The difference is that the [site] layout is much better here at Itata because it was conceived as a big, complete complex from the start,” said Mr Bozzalla.
At the end of May, when WBPI visited the Nueva Aldea site, the plywood unit was still in the start-up phase with the line running at 10,000m3/month or 500m3/day. The target was 700m3/day.
While Phase I plants at Itata have been unaffected by the environmental controversy resulting from the distant 685,000ton/ year Valdivia pulp mill project, the Itata pulp mill construction was halted in January 2005 for one month.
As for the Valdivia project, this major mill started up in February 2004. But, since October last year, it has been the target of local criticism after reports claimed its  pollutants in the waters of the Cruces River killed algae eaten by black necked swans in a wetlands nature reserve. The mill is located 30km upstream from the reserve.
This led to strong denials from Arauco, the resignation of its long-serving president and chief executive Alejandro Pérez, a lengthy wrangle with the Chilean environmental authorities over regulations and Arauco’s voluntary temporary shutdown of the Valdivia plant from this June.
The experience has made an impression on the giant group and is likely to influence its policy over the Itata mill. “We have learnt a lesson here, that we have to work closer with the local community and present these things in a timely and adequate fashion,” admitted Mr Kimber.
Even so, there’s no denying the group’s international success in both pulp production and with other forest products, notably, wood based panels.