SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of June, 2017

Commission File Number 33-99720

ARAUCO AND CONSTITUTION PULP INC.

(Translation of registrant’s name into English)

El Golf 150

Fourteenth Floor

Santiago, Chile

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

ARAUCO AND CONSTITUTION PULP INC

TABLE OF CONTENTS

Item		Page
1.	Ratio Analysis of the Interim Consolidated Financial Statement		1
2.	Unaudited Interim Consolidated Statement of Financial Position		7
3.	Unaudited Interim Consolidated Statement of Profit or Loss		9
4.	Unaudited Interim Consolidated Statement of Changes in Equity		11
5.	Unaudited Interim Consolidated Statement of Cash Flow		12
6.	Unaudited Notes to the Interim Consolidated Financial Statement		13
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

1. ANALYSIS OF FINANCIAL POSITION

a) Statement of Financial Position

The principal components of assets and liabilities at each period, as follows:

Assets	06-30-2017 ThU.S.$		12-31-2016 ThU.S.$
Current assets		2,629,591		2,722,360
Non-current assets		11,044,213		11,283,821
Total assets		13,673,804		14,006,181
Liabilities	06-30-2017 ThU.S.$		12-31-2016 ThU.S.$
Current liabilities		1,066,287		1,346,064
Non-current liabilities		5,630,585		5,660,834
Non–parent participation		43,679		44,032
Net equity attributable to parent company		6,933,253		6,955,251
Total net equity and liabilities		13,673,804		14,006,181

As of June 30, 2017, total assets decreased MU.S.$332 compared to December 31, 2016, equivalent to a 2.37% variation. This deviation was driven mainly by decreases in the balance of biological and property assets, plants and equipment.

In turn, total liabilities decreased by MU.S.$310 mainly due to a decrease in accounts payable and financial liabilities.

The main financial and operational indicators as of the dates and periods indicated below are as follows:

Liquidity ratios	06-30-2017		12-31-2016
Current Liquidity (current assets / current liabilities)		2.47		2.02
Acid ratio ((current assets-inventories, biological assets) / current liabilities)		1.39		1.16
Debt indicators	06-30-2017		12-31-2016
Debt to equity ratio (total liabilities / equity)		0.96		1.00
Short-term debt to total debt (current liabilities / total liabilities)		0.16		0.19
Long-term debt to total debt (non-current liabilities / total liabilities)		0.84		0.81
	06-30-2017		03-31-2016
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		1.43		2.14
Activity ratio	06-30-2017		12-31-2016
Inventory turnover-time (cost of sales / inventories + current biological assets)		3.03		2.99
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		4.12		3.97
Inventory permanence-days ((inventories + biological assets) /cost of sales)		118.81		120.42
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		87.44		90.68

As of June 30, 2017, the short-term debt represented 16% of total liabilities (19% as of December 31, 2016).

1

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Our financial expenses coverage ratio decreased from 2.10 to 1.43, mainly due to the lower earnings before taxes for the period ended June 30, 2017, compared to the same period of 2016.

b) Statements of profit or loss

Income before income tax

Income before income tax registered a profit of approximately MU.S.$51 compared to a profit of approximately MU.S.$150 in the same period of 2016. The negative variation of MU.S.$99 is explained by the factors described in the following table:

Item	MU.S.$
Gross margin		123
Distribution and Administrative Expenses		(29	)
Other income and expenses (*)		(207	)
Others		14
Net change in income before income tax		(99	)

(*) Includes MU.S.$174 of losses due to forestry claims.

The main indicators related to result accounts and the details of revenues and operation costs are as follows:

Revenues	06-30-2017 ThU.S.$			06-30-2016 ThU.S.$
Pulp		1,151,260			1,067,282
Timber		1,292,744			1,226,945
Forestry		48,769			47,051
Other		20,893			12,033
Total revenues		2,513,666			2,353,311
Sales costs	06-30-2017 ThU.S.$			06-30-2016 ThU.S.$
Wood		376,629			375,592
Forestry work		301,093			275,293
Depreciation and amortization		185,497			183,986
Other costs		886,071			876,898
Total sales costs		1,749,290			1,711,769
Profitability index	06-30-2017			12-31-2016
Profitability on equity		1.11			3.19
Profitability on assets		0.56			1.57
Return on operating assets		4.03			2.21
Profitability ratios	06-30-2017			06-30-2016
Income per share (U.S.$) (1)		0.34			0.96
Income after tax (ThU.S.$) (2)		38,795			110,387
Gross margin (ThU.S.$)		764,376			641,542
Financial costs (ThU.S.$)		(117,617	)		(135,770	)

(1) Earnings per share refer to the profit to net equity to parent company.

(2) Includes non-controlling interest.

2

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

EBITDA	06-30-2017 MU.S.$			06-30-2016 MU.S.$
Gain (loss)		(38.8	)		110.4
Finance costs		117.6			135.8
Financial income		(12.3	)		(17.9	)
Expenses for income tax		11.8			39.6
EBIT		155.9			267.8
Depreciation and amortization		201.8			199
EBITDA		357.7			466.8
Cost at fair value of the harvest		161.8			167.1
Gain from changes in fair value of biological assets		(67.3	)		(98.9	)
Exchange difference		0.2			(0.9	)
Others*		173.9			2.1
Adjusted EBITDA		626.2			536.2

* 2017: Forestry claims of MU.S.$173.9

* 2016: Forestry claims of MU.S.$2.1

2. MAIN SOURCES OF FINANCING

Arauco’s financing needs are mainly covered through the capital markets, with bond issuances and credits obtained from banks and financial institutions serving as the main sources of financing. For short-term borrowing, Arauco follows a liquidity policy which indicates the amounts and institutions from which it can borrow according to several conditions defined in the policy. In the case of long-term debt, corporate bond issuances in the local market and also in international markets are used as sources of new resources. Another source of long-term financing corresponds to borrowings from banks and financial institutions around the world.

3. DIFFERENCE BETWEEN ECONOMIC VALUES AND BOOK ASSETS

Assets and liabilities are presented in the Financial Statements according to International Financial Reporting Standards and instructions issued by the Chilean Securities Commission. We believe that there are no material differences between the economic value of our assets and the value reflected in these Financial Statements.

4. MARKET SITUATION

Pulp Division

Even though the first months of summer usually bring slower global pulp demand, pulp prices continued their positive rally during the second quarter. The second line at the OKI Mill ramped up during April, but with little to no impact in prices. This was supported by a lower production in the CMPC Guaiba Mill, which encountered operational issues back in February and operated at only 80% during the quarter. World inventories remained balanced, with long fiber inventories increasing two days compared to the last quarter to 31 days, and short fiber decreasing by one day to 37 days. Arauco sold less sales volume Q-o-Q as many storm surges hit the Chilean coast, delaying some ships to embark and consequently lagging sales invoiced.

In Asia, paper prices continued increasing thanks to a dynamic paper market, supported by sporadic production downtimes of some paper producers. Short fiber prices increased between 6% and 7%, or U.S.$ 40 per ton, during the quarter. On the other hand, long fiber prices showed an upward trend during the first two months of the quarter, with a 3% or U.S.$ 20 per ton gain. However, long fiber prices corrected by 1% during the month of June, mainly due to seasonally weaker demand. Other Asian countries such as Korea have followed suit in terms of price movements; prices for both fibers have increased, with a slight correction in long fiber prices in June.

3

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

European markets showed the highest increase in pulp prices this quarter, with a gain in short fiber prices of approximately 16%. Many paper producers decided to take the risk of buying pulp spot thinking that the market would be more favorable to them. Nevertheless, unexpected downtimes in pulp mills have given way to higher pulp prices each month. Now many paper producers are looking to extend their contracts up to the end of next year in order to close their exposure to short-term pulp prices. When compared to Asian markets, margins continue subdued despite the price recovery. Pulp producers therefore continue to export volume to Asia, which in turn clears the way for larger price hikes in Europe.

Markets in Latin America remained stable throughout the quarter, following international Price trends. Venezuela continued subdued, where Arauco has not sold any pulp volume during the first part of the year.

The ramp-up of the Klabin mill continues to affect prices in Brazil, and we have decided to increase exports of fluff to other markets such as the Middle East, where countries like Turkey have shown better margins than selling locally in Argentina.

Pulp production remained fairly stable in comparison to last quarter, and increased by 6.4% compared to the same quarter of last year. Despite the forest fires during the first quarter of the year, wood supply has not been obstructed. Mills must take the added precaution of monitoring closely incoming wood so as to not contaminate the pulp with bits of charcoal. We had maintenance stoppages in Line 1 of our Arauco Mill during the end of March and beginning of April, and Montes del Plata during the month of May.

Composite Panel

Sales slightly increased this quarter when compared to last quarter. MDF increased its sales volume by 0.7% and prices by 1.1% when compared to the first quarter of 2017, while PB increased its sales volume by 6.4% and prices by 3.0%.

In North America, demand was stable. Disruptions in market production volumes after an MDF mill exploded in North Carolina enabled Brazilian imports to permeate the market with renewed strength, without detriment to price levels. In Mexico, MDF sales remained subdued as supply from new MDF plants as well as higher imports intensified competition. On the other hand, PB prices rose throughout the quarter, reflecting a healthy demand in our design lines.

Latin American sales were mixed. The Brazilian market continued constrained after a tumultuous economic and political crisis. Although demand for panels seemed to be in good condition, prices in some local markets continued pressured. Despite all these setbacks, Arauco was able to slightly increase prices and sales volume within this country. The Argentine market has shown promise, boosted by increased sales of our valued added products. In Chile, lower economic activity principally affected melamine sales. Prices and sales volume in Colombia were pressured as more supply came from local and international producers. In contrast, the market in Peru has shown sustaining levels of growth.

4

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Timber Division

Markets showed recovery in total sales, mainly boosted by higher prices compared to the first quarter, and higher sales volume of 1.9% when plywood is not taken into account. Compared to last year, however, prices remain at higher levels. Asian and Middle Eastern markets particularly have shown improvement. In Korea, we were able to push through price hikes, while the Chinese market was stimulated by an increase in demand for furniture in the United States. In the Middle East, the appreciation of the euro decreased incoming competition from Europe, therefore increasing margins. Remanufactured product sales volume likewise remained stable compared to last quarter. The North American market was also active, enabling price hikes in various products. Supply and demand seemed to be in balance, giving way to a stable outlook for the rest of the year.

Panels

Prices continued the positive trend seen during the first quarter, increasing by 3.3%, although in detriment of sales volume which decreased 10.2%. A healthy level of demand in the North American market endured, and preliminary tests to launch new products were successful thus far. In Europe, we have also been able to increase prices, thanks to the strengthening of the construction sector.

5. ANALYSIS OF CASH FLOW

The main components of net cash flow in each period are as follows:

	06-30-2017 ThU.S.$			06-30-2016 ThU.S.$
Positive (negative) Cash flow
Cash flow from operating activities		485,960			453,719
Cash flow from (used in) financing activities:
Loan and bond obtention and payments		(258,759	)		31,355
Dividend payments		(60,481	)		(100,250	)
Others		67			37
Cash flow from (used in) investment activities:
Incorporation and sale of property, plant and equipment		(153,939	)		(137,391	)
Incorporation and sale of biological assets		(86,756	)		(72,126	)
Incorporation and sale of intangible assets		(7,746	)		(1,644	)
Additions (Disposals), Investments in joint ventures and associates		3,123			(146,354	)
Dividends received		1,156			3,272
Others		(5	)		(3,289	)
Positive (negative) Net cash flow		(77,380	)		27,329

The financing flow shows a higher negative balance of 319 million for the current period, presenting variations in respect of the previous period (negative balance of 69 million), resulting mainly from a higher indebtedness during the 2016 period.

Regarding the investment flow, as of the closing of the current period, it shows a lower negative balance of 244 million (357 million for the 2016 period), mainly due to higher disbursements arising from the payment of the purchase of the joint business SONAE ARAUCO during the 2016 period.

5

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

7. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of June 30, 2017, a ratio of fixed rate debt to total consolidated debt of approximately 85.4%, which it believes is consistent with industry standards. The Company does not participate in futures trading as to maintain one of the lowest cost structures in the industry, the risks for price fluctuations are bounded.

The Company and most of its subsidiaries maintain their accounting records and prepare their financial statements in U.S. dollars. Both the accounts receivable and most financial liabilities are denominated in U.S. dollars or are covered by an exchange rate swap, as well as most of their revenues. As a result, exposure to changes in the exchange rate has decreased significantly.

In the report to the Consolidated Financial Statements as of June 30, 2017, a detailed analysis of the risks associated with the business of Arauco is available (See Note 23).

6

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CLASSIFIED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Note		06-30-2017 (Unaudited) ThU.S.$		12-31-2016 ThU.S.$
Assets
Current Assets
Cash and cash equivalents		5		512,723		592,253
Other current financial assets		23		4,361		5,201
Other current non-financial assets		25		181,334		144,915
Trade and other current receivables		23		704,609		701,610
Accounts receivable from related companies		13		6,204		12,505
Current Inventories		4		846,975		852,612
Current biological assets		20		303,600		306,117
Current tax assets				67,328		104,088
Total Current Assets other than assets or disposal groups classified as held for sale				2,627,134		2,719,301
Non-Current Assets or disposal groups classified as held for sale		22		2,457		3,059
Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners				2,457		3,059
Total Current Assets				2,629,591		2,722,360
Non-Current Assets
Other non-current financial assets		25		11,715		8,868
Other non-current non-financial assets		23		110,962		130,319
Trade and other non-current receivables				13,969		14,273
Investments accounted for using equity method		15-16		347,923		446,548
Intangible assets other than goodwill		19		90,972		89,497
Goodwill		17		74,484		74,893
Property, plant and equipment		7		6,867,111		6,919,495
Non-current biological assets		20		3,519,006		3,592,874
Deferred tax assets				7,114		6,097
Total non-Current Assets				11,044,213		11,283,821
Total Assets				13,673,804		14,006,181

The accompanying notes are an integral part of these interim consolidated financial statements.

7

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CLASSIFIED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

	Note	06-30-2017 (Unaudited) ThU.S.$			12-31-2016 ThU.S.$
Equity and liabilities
Liabilities
Current Liabilities
Other current financial liabilities	23		454,021			697,452
Trade and other current payables	23		508,849			537,891
Accounts payable to related companies	13		8,489			3,831
Other current provisions	18		378			842
Current tax liabilities			4,787			1,641
Current provisions for employee benefits	10		5,378			5,244
Other current non-financial liabilities	25		84,385			99,163
Total current liabilities other than assets included in disposal groups classified as held for sale			1,066,287			1,346,064
Total Current Liabilities			1,066,287			1,346,064
Non-Current Liabilities
Other non-current financial liabilities	23		3,866,748			3,870,914
Other non-current provisions	18		37,516			38,138
Deferred tax liabilities	6		1,603,953			1,631,065
Non-current provisions for employee benefits	10		61,845			60,084
Other non-current non-financial liabilities	25		60,523			60,633
Total non - current liabilities			5,630,585			5,660,834
Total liabilities			6,696,872			7,006,898
Equity
Issued capital			353,618			353,618
Retained earnings			7,315,437			7,329,675
Other reserves			(735,802	)		(728,042	)
Equity attributable to parent company			6,933,253			6,955,251
Non-controlling interests			43,679			44,032
Total equity			6,976,932			6,999,283
Total equity and liabilities			13,673,804			14,006,181

The accompanying notes are an integral part of these interim consolidated financial statements.

8

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

			January-June						April-June
			(Unaudited)
	Note		2017 ThU.S.$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Income Statement
Revenue		9		2,513,666			2,353,311			1,279,930			1,207,286
Cost of sales		3		(1,749,290	)		(1,711,769	)		(877,671	)		(879,943	)
Gross profit				764,376			641,542			402,259			327,343
Other income		3		80,948			119,766			32,616			61,749
Distribution costs		3		(252,129	)		(234,414	)		(128,119	)		(121,928	)
Administrative expenses		3		(247,507	)		(236,620	)		(127,157	)		(131,511	)
Other expenses		3		(201,168	)		(33,411	)		(8,052	)		(12,902	)
Profit (loss) from operating activities				144,520			256,863			171,547			122,751
Finance income		3		12,317			17,897			5,904			6,585
Finance costs		3		(117,617	)		(135,770	)		(57,745	)		(65,485	)
Share of profit (loss) of associates and joint ventures accounted for using equity method		3-15		11,570			10,031			3,439			5,993
Exchange rate differences				(175	)		918			(1,636	)		(191	)
Income before income tax				50,615			149,939			121,509			69,653
Income Tax		6		(11,820	)		(39,552	)		(37,442	)		(12,185	)
Net Income				38,795			110,387			84,067			57,468
Net income attributable to
Net income attributable to parent company				38,391			109,084			83,999			56,910
Income attributable to non-controlling interests				404			1,303			68			558
Profit (loss)				38,795			110,387			84,067			57,468
Basic earnings per share
Basic earnings per share from continuing operations				0.3392640			0.9639831			0.7423052			0.5029178
Basic earnings per share				0.3392640			0.9639831			0.7423052			0.5029178
Earnings per diluted shares
Earnings per diluted share from continuing operations				0.3392640			0.9639831			0.7423052			0.5029178
Earnings per diluted share				0.3392640			0.9639831			0.7423052			0.5029178

The accompanying notes are an integral part of these interim consolidated financial statements.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			January-June						April-June
			(Unaudited)
			2017			2016			2017			2016
	Note		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Profit (loss)				38,795			110,387			84,067			57,468
Components of other comprehensive income that will not be reclassified to profit or loss before tax:
Other comprehensive income before tax actuarial gains losses on defined benefit plans				31			(2,915	)		119			(874	)
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss before tax				(1,407	)		(323	)		(1,307	)		604
Other Comprehensive Income that will not be reclassified to profit or loss before tax				(1,376	)		(3,238	)		(1,188	)		(270	)
Components of other comprehensive income that will be reclassified to profit or loss before tax:
Exchange differences on translation
Gains (losses) on exchange differences on translation, before tax		11		(2,745	)		191,553			(36,466	)		102,646
Other Comprehensive Income before tax exchange differences on translation				(2,745	)		191,553			(36,466	)		102,646
Cash flow hedges
Gains (losses) on cash flow hedges, before tax				3,425			11,242			(14,285	)		5,256
Reclassification adjustments on cash flow hedges before tax				(8,740	)		(8,119	)		(6,453	)		(5,503	)
Other Comprehensive Income before tax Cash flow hedges				(5,315	)		3,123			(20,738	)		(247	)
Other Comprehensive income that will be reclassified to profit or loss before tax				(8,060	)		194,676			(57,204	)		102,399
Income tax relating to components of other comprehensive Income that will not be reclassified to profit or loss before tax
Income tax relating to defined benefit plans of other comprehensive income				(8	)		788			(18	)		226
Income tax relating to share of other comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss before tax				280			67			270			(160	)
Income tax relating to cash flow hedges of other comprehensive income		6		953			(1,042	)		5,179			336
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss abstract				953			(1,042	)		5,179			336
Other comprehensive income				(8,211	)		191,251			(52,961	)		102,531
Comprehensive income				30,584			301,638			31,106			159,999
Comprehensive Income attributable to
Comprehensive income, attributable to owners of parent company				30,631			295,163			32,325			156,566
Comprehensive income, attributable to non-controlling interests				(47	)		6,475			(1,219	)		3,433
Total comprehensive income				30,584			301,638			31,106			159,999

The accompanying notes are an integral part of these interim consolidated financial statements.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited 06-30-2017	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2017		353,618		(703,886	)		1,096			(20,752	)		(4,500	)		(728,042	)		7,329,675			6,955,251			44,032			6,999,283
Changes in Equity:
Comprehensive income
Net income																			38,391			38,391			404			38,795
Other comprehensive income, net of tax				(2,290	)		(4,362	)		19			(1,127	)		(7,760	)					(7,760	)		(451	)		(8,211	)
Comprehensive income		0		(2,290	)		(4,362	)		19			(1,127	)		(7,760	)		38,391			30,631			(47	)		30,584
Dividends																			(52,629	)		(52,629	)		(299	)		(52,928	)
Increase (decrease) through for transfers and other changes equity																			0			0			(7	)		(7	)
Changes in equity		0		(2,290	)		(4,362	)		19			(1,127	)		(7,760	)		(14,238	)		(21,998	)		(353	)		(22,351	)
Closing balance at 06/30/2017		353,618		(706,176	)		(3,266	)		(20,733	)		(5,627	)		(735,802	)		7,315,437			6,933,253			43,679			6,976,932
06-30-2016	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2016		353,618		(872,770	)		(55,396	)		(16,668	)		(4,526	)		(949,360	)		7,204,452			6,608,710			37,735			6,646,445
Changes in Equity:
Comprehensive income
Net income																			109,084			109,084			1,303			110,387
Other comprehensive income, net of tax				186,389			2,081			(2,135	)		(256	)		186,079						186,079			5,172			191,251
Comprehensive income		0		186,389			2,081			(2,135	)		(256	)		186,079			109,084			295,163			6,475			301,638
Dividends																			(43,732	)		(43,732	)		(439	)		(44,171	)
Increase (decrease) for transfer and other changes																			0			0			(75	)		(75	)
Changes in equity		0		186,389			2,081			(2,135	)		(256	)		186,079			65,352			251,431			5,961			257,392
Closing balance at 06/30/2016		353,618		(686,381	)		(53,315	)		(18,803	)		(4,782	)		(763,281	)		7,269,804			6,860,141			43,696			6,903,837

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT METHOD

	06-30-2017			06-30-2016
	Unaudited
	ThU.S.$			ThU.S.$
STATEMENTS OF CASH FLOWS
Cash Flows from (used in) Operating Activities
Classes of cash receipts from operating activities
Receipts from sales of goods and rendering of services		2,688,994			2,571,994
Other cash receipts from operating activities		170,661			245,884
Classes of cash payments
Payments to suppliers for goods and services		(1,927,244	)		(1,874,981	)
Payments to and on behalf of employees		(274,030	)		(250,573	)
Other cash payments from operating activities		(50,264	)		(113,136	)
Interest paid		(112,709	)		(106,230	)
Interest received		8,337			15,408
Income taxes refund (paid)		(13,595	)		(34,684	)
Other (outflows) inflows of cash, net		(4,190	)		37
Net Cash flows from Operating Activities		485,960			453,719
Cash flows (used in) investing activities
Cash flow used in purchase of associates and joint ventures		3,123			6,781
Capital contributions to joint ventures		0			(153,135	)
Proceeds from sale of property, plant and equipment		3,328			8,030
Purchase of property, plant and equipment		(157,267	)		(145,421	)
Purchase of intangible assets		(7,746	)		(1,644	)
Proceeds from other long-term assets		312			4
Purchase of other non-current assets		(87,068	)		(72,130	)
Dividends received		1,156			3,272
Other outflows of cash, net		(5	)		(3,289	)
Cash flows used in Investing Activities		(244,167	)		(357,532	)
Cash flows from (used in) Financing Activities
Total loans obtained		77,645			366,987
Loans obtained in long term		1,463			297
Proceeds from short-term borrowings		76,182			366,690
Repayments of borrowings		(336,404	)		(335,632	)
Dividends paid by subsidiaries or special purpose companies		(60,481	)		(100,250	)
Other inflows of cash, net		67			37
Cash flows from (used in) Financing Activities		(319,173	)		(68,858	)
Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		(77,380	)		27,329
Effect of exchange rate changes on cash and cash equivalents		(2,150	)		6
Net increase (decrease) of Cash and Cash equivalents		(79,530	)		27,335
Cash and cash equivalents, at the beginning of the period		592,253			500,025
Cash and cash equivalents, at the end of the period		512,723			527,360

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016 AND DECEMBER 31, 2016

NOTE 1. PRESENTATION OF INERIM CONSOLIDATED FINANCIAL STATEMENTS

Entity Information

Celulosa Arauco y Constitución S.A. and subsidiaries, (hereafter “Arauco” or the “Company”), tax identification number 93,458,000-1, is a closely held corporation, that was registered in the Securities Registry (the “Registry”) of the Superintendency of Securities and Insurance (the “SVS”) as No. 042 on June 14, 1982. Additionally, the Company is registered as a non-accelerated filer with the Securities and Exchange Commission (SEC) of the United States of America.

Forestal Cholguán S.A., a subsidiary of Celulosa Arauco y Constitución S.A., is also registered in the Securities Registry as No. 030.

The company’s head office address is El Golf Avenue 150, 14^th floor, Las Condes, Santiago, Chile.

Arauco is principally engaged in the production and sale of products related to the forestry and timber industries. Its main operations are focused on business areas of pulp, timber and forestry.

Arauco is controlled by Empresas Copec S.A., which owns 99.9780% of Arauco, and is registered in the Securities Registry as No. 0028. Each of the above mentioned companies is subject to the oversight of the SVS.

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through the entity Inversiones Angelini y Cia. Ltda., which owns 63.4015% of the shares of AntarChile S.A., the controlling shareholder of our parent company Empresas Copec S.A.

Arauco’s Interim Consolidated Financial Statements were prepared on a going concern basis.

Presentation of the Interim Consolidated Financial Statements

The Financial Statements presented by Arauco as of June 30, 2017 are:

• Interim Classified Consolidated Statements of Financial Position as of June 30, 2017 and December 31, 2016.

• Interim Consolidated Statements of Profit or Loss for the periods between January 1 and June 30, 2017 and 2016

• Interim Consolidated Statements of Comprehensive Income for the periods between January 1 and June 30, 2017 and 2016

• Interim Consolidated Statements of Changes in Equity for the periods between January 1 and June 30, 2017 and 2016

• Interim Consolidated Statements of Cash Flows for the periods between January 1 and June 30, 2017 and 2016

• Explanatory disclosures (notes).

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Period Covered by the Interim Consolidated Financial Statements

Periods between January 1 and June 30, 2017 and 2016.

Date of Approval of Interim Consolidated Financial Statements

These interim consolidated financial statements for the periods between January 1 and June 30, 2017 were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Meeting No. 574 held August 23, 2017.

Abbreviations used in this report:

IFRS - International Financial Reporting Standards

IASB - International Accounting Standards Board

IAS - International Accounting Standards

IFRIC - International Financial Reporting Standards Interpretations Committee

MU.S.$ - Millions of U.S. dollars

ThU.S.$ - Thousands of U.S. dollars

U.F. – Inflation index-linked units of account

UTA – Annual Tax Unit

ICMS – Tax movement of inventories and services (Brazil)

Functional and Presentation Currency

Arauco and most of its subsidiaries determined the United States (“U.S.”) Dollar as its functional currency since the majority of its revenues from sales of its products are derived from exports denominated in U.S. Dollars, while their costs of sales are to a large extent related or indexed to the U.S. Dollar.

For the pulp reportable segment, most of the sales are exports denominated in U.S. Dollars and costs are mainly related to plantation costs which are settled in U.S. Dollars.

For the sawn timber, panel and forestry reportable segments, although total sales include a mix of domestic and exports sales, prices of the products are established in U.S. Dollars, which is also the case for the cost structure of the related raw materials.

In relation to the cost of sales, although labor and services costs are generally billed and paid in local currency, these costs are not as significant as the costs of raw materials, which are driven mainly by global markets and therefore, influenced mostly by the U.S. Dollar.

The presentation currency of the interim consolidated financial statements is the U.S. Dollar. Figures on these interim consolidated financial statements are presented in thousands of U.S. Dollar (“ThU.S.$”).

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Summary of significant accounting policies

a) Basis for preparation of interim consolidated financial statements

These interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and represent the explicit and unreserved adoption of IFRS.

The interim consolidated financial statements have been prepared on the historical cost basis, except for biological assets and certain derivative financial instruments which are measured at revalued amounts or fair value at the end of each period as explained in the following significant accounting policies.

b) Critical accounting estimates and judgments

The preparation of these financial statements, in accordance with IFRS, requires management to make estimates and assumptions that affect the carrying amounts reported. These estimates are based on historical experience and various other assumptions that are considered to be reasonable. Actual results may differ from these estimates. Management believes that the accounting policies below are the critical judgments that have the most significant effect on the amounts recognized in the interim consolidated financial statements.

-Biological Assets

The recovery of forest plantations is based on discounted cash flow models which means that the fair value of biological assets is calculated using cash flows from continuing operations on a discounted basis, based on our sustainable forest management plans and the estimated growth of forests.

These discounted cash flows require estimates in growth, harvest, sales prices and costs; therefore it is important that management make appropriate estimates of future levels and trends for sales and costs, as well as conduct regular surveys of the forests to establish the volumes of wood available for harvesting and their current growth rates. The main considerations used to measure forest plantations are presented in Note 20, including a sensitivity analysis.

-Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of the Group’s holding in the identifiable net assets of the acquired subsidiary at the date of acquisition. The aforementioned fair value is determined whether based on assessments and/or the discounted future flow method using hypotheses in their determination, such as sales prices and industry indexes, among others. See Note 17.

-Litigation and Contingencies

Arauco and its subsidiaries are subject to certain litigation proceedings. Future impact on Arauco’s financial condition derived from such litigations is estimated by management, in collaboration with its legal advisors. Arauco applies judgment when interpreting the reports of its legal advisors who provide updated estimates of the legal contingencies at each reporting period and/or at each time a modification is determined to be necessary. For a description of current litigations see Note 18.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

c) Consolidation

The interim consolidated financial statements include all entities over which Arauco has the power to direct the relevant financial and operating activities. Subsidiaries are consolidated from the date on which control is obtained and up to the date that control ceases.

Specifically, a company controls an investee or subsidiary if, and only if, they have all of the following:

(a) power over the investee, i.e. the investor has existing rights which give it the ability to direct the relevant activities (the activities that significantly affect the investee’s returns)

(b) exposure or rights to variable returns from involvement with the investee; and

(c) the ability to use power over the investee to affect the amount of the investor’s returns.

When Arauco holds less than the majority of voting rights in a company in which it participates, it nonetheless has the power over said company - when these voting rights are enough - to grant it in practice the ability to unilaterally direct said company’s relevant activities. Arauco takes into account all facts and circumstances in order to assess if the voting rights in a company in which it participates are enough for granting it the power, including:

a) the size of the investor’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

b) potential voting rights held by the investor, other vote holders or other parties;

c) rights arising from other contractual arrangements; and

d) any additional facts and circumstances that indicate the investor has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

The Company will reevaluate whether or not it holds control of a company in which participates if the facts and circumstances indicate that changes have occurred in one or more of the three elements of control mentioned above.

Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when the investor loses control of the investee. An entity includes the income and expenses of an acquired or sold subsidiary in the interim consolidated financial statements from the date it gains control until the date when the entity ceases to control the subsidiary.

The profit or loss of each component of other comprehensive income is attributed to owners of the parent company and the non-controlling interest, as appropriate. Total comprehensive income is attributed to the owners of the parent company and non-controlling interests even if the results of the non-controlling interest have a deficit balance.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

If a subsidiary uses accounting policies other than those adopted in the interim consolidated financial statements for transactions and other events in similar circumstances, appropriate adjustments are made to the interim consolidated financial statements of subsidiaries in order to ensure compliance with Arauco’s accounting policies.

All intercompany transactions and unrealized gains and losses from subsidiaries have been fully eliminated from interim consolidated financial statements and non-controlling interest is presented in the interim consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

The interim consolidated financial statements at the end of this period include the assets, liabilities, income and expenses of the subsidiaries shown in Note 13.

Certain consolidated subsidiaries have Brazilian Real, Argentine Peso, Canadian Dollar and Chilean Pesos as their functional currencies. For consolidation purposes, the financial statements of those subsidiaries have been prepared in accordance with IFRS and translated into the presentation currency as indicated in Note 1 (e) (ii).

A parent company will present non-controlling interests in the interim consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

d) Segments

Arauco has defined its reportable segments according to its business areas, based on the products and services sold to its customers. This definition is consistent with the management, resource allocation and performance assessment made by key personnel responsible for making relevant decisions related to the Company’s operation. The Chief Operating Decision Maker (CODM) is the Chief Executive Officer who is responsible for making these decisions and it is supported by the Corporate Managing Directors of each segment.

Based on the aforementioned process, the Company has established reportable segments according to the following business units:

• Pulp

• Timber

• Forestry

Refer to Note 24 for detailed financial information by reportable segment.

e) Functional currency

(i) Functional currency

All items in the financial statements of Arauco and each of its subsidiaries, associates and jointly controlled entities are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The interim consolidated financial statements are presented in U.S. dollars, which is Arauco’s functional and presentation currency.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

(ii) Translation to the presentation currency of Arauco

For the purposes of presenting interim consolidated financial statements, assets and liabilities of Arauco’s operations in a functional currency different from Arauco’s are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange rate differences are recognized in other comprehensive income and accumulated in “Other reserves” within–equity.

(iii) Foreign Currency Transactions

Transactions in currencies other than the functional currency are recognized at the exchange rates prevailing at the dates of the transactions. Profit or loss on transactions in currencies other than the functional currency resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the statements of profit or loss, except those which are recorded in other comprehensive income and accumulated in equity such as cash flows hedging derivatives.

f) Cash and cash equivalents

Cash and cash equivalents include cash-in-hand, deposits held on demand at banks and other short term highly liquid investments with an original maturity of three months or less and which are subject to an insignificant risk of changes in value.

g) Financial Instruments

Financial assets

Financial assets are classified into the following specified categories: ‘loans and receivables’ and “derivative financial instruments”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All purchases and sales of financial assets are recognized and derecognized on the trade date, which require delivery of assets within the same time frame established by regulation or convention in the marketplace.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are classified as current assets, except for those with maturities more than 12 months after the reporting period, which are classified as non-current assets. Loans and receivables include trade and other receivables.

Loans and receivables are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition and are subsequently measured at amortized cost using the effective interest rate method, less any impairment.

Derivative financial instruments are explained in Note 1 h)

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Financial liabilities

Financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments (including all fees and amounts paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Financial obligations are classified as current liabilities, unless Arauco holds an unconditional right to defer their settlement during at least 12 months after the balance sheet’s date.

The estimate of the fair value of obligations with banks is determined using valuation techniques that include discounted cash flow analyses applying rates of similar loans. Bonds are appraised at market value.

h) Derivative financial instruments

(i) Derivative Financial Instruments - The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps, currency swaps and zero cost collar contracts. The Company’s policy is to enter into derivatives contracts only for economic hedging purposes.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss unless the derivative is designated as a hedging instrument and complies with hedge accounting requirements of IAS 39, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

(ii) Embedded derivatives - The Company assesses the existence of embedded derivatives in financial instrument contracts. Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL as a whole. Arauco has determined that no embedded derivatives currently exist.

(iii) Hedge accounting - The Company designates certain hedging instruments as either fair value hedges or cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, Arauco documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

-Fair Value Hedges under IAS 39 - Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instruments and the change in the hedged items attributable to the hedged risks are recognized in profit or loss in the corresponding line item.

-Cash flow hedges under IAS 39 - The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the Finance costs line item in the interim consolidated statement of profit or loss. Amounts previously recognized in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

i) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method.

The cost of finished and in process products includes the cost of raw materials, direct labor, other direct costs and manufacturing overhead expenses.

Initial costs of harvested wood are determined at fair value less cost of sale at the point of harvest.

Biological assets are transferred to inventories when forests are harvested.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

When market conditions result in the production costs of a product exceeding its net realizable value, the inventories are written-down to their net realizable value. This write-down also includes obsolescence amounts resulting from slow moving inventories and technical obsolescence.

Spare parts that will be consumed in a period of less than twelve months are presented in inventories and recognized as an expense when they are consumed.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

j) Non-current assets held for sale

The Group classifies certain property, plant and equipment, intangible assets, investments in associates and disposal groups (groups of assets to be sold together with their directly associated liabilities) as non-current assets held for sale which as of the date of the statements of financial position are the subject of active sale efforts which are estimated to be highly probable. Non-current assets held for sale are presented separately from the other assets in the balance sheet.

These assets or disposal groups are measured at the lower of the carrying amount or the fair value less the costs to sell, and are no longer depreciated or amortized from the time they are classified as non-current assets held for sale.

k) Business Combinations

Arauco applies the acquisition method to account for a business combination. This method requires the identification of the acquirer, determination of the acquisition date, recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree; and recognition and measurement of goodwill or a gain from a bargain purchase. Identifiable assets acquired and liabilities assumed and any contingent liabilities in a business combination are initially measured at fair value at the acquisition date, except:

-deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;

-liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 3 at the acquisition date; and

-assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with such standard.

Acquisition-related costs are accounted for as expenses when they are incurred, except for costs to issue debt or equity securities which are recognized in accordance with IAS 32 and IAS 39.

A parent will present non-controlling interests in the interim consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

Changes in the ownership interest of a parent in its subsidiary that do not result in a loss of control are treated as equity transactions. Any difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent company. No adjustment is made to the carrying amount of goodwill, neither gains nor losses are recognized in the statement of profit or loss.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may initially be measured either at fair value or at the present ownership instruments’ proportionate share of non-controlling interests, in the recognized amounts of the acquirer’s identifiable net assets. The choice is made on a transaction-by-transaction basis.

Arauco measures the fair value of the acquired company in the businesses combination achieved (“step acquisition”), recognizing in the statements of profit or loss the effects of the re-measurement of previously held equity in the acquiree.

If the initial accounting for a business combination is not completed by the end of the reporting period in which the combination occurs, Arauco reports preliminary amounts for the items for which the accounting is incomplete. During the measurement period (no more than one year), these preliminary amounts are retrospectively adjusted, or additional assets or liabilities are recognized to reflect new information about facts and circumstances that existed at the acquisition date, if known, would have affected the amounts recognized at that date.

Business combinations that are under common control transactions are accounted using as a reference the pooling of interest. Under this method, assets and liabilities related to the transaction carry over the previous carrying values. Any difference between assets and liabilities included in the consolidation and the consideration transferred, is accounted in equity.

l) Investments in associates and joint arrangements

Associates are entities over which Arauco exercises significant influence, but not control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Joint arrangement is defined as an entity over which there is joint control, which exists only when the decisions about strategic of activities, both financial and operational, require the unanimous consent of the parties sharing control.

Investments in joint arrangements are classified as a joint venture or as a joint operation. A joint operation is a joint arrangement in which the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement in which the parties that have joint control of the arrangement (i.e., participants in a joint venture) have rights to the net assets of the arrangement.

Investments in associates and joint ventures are accounted for using the equity method and are initially recognized at cost. Their carrying amount is increased or decreased to recognize the portion corresponding to the statements of profit or loss or to the statement of comprehensive income. Dividends received are recognized by deducting the amount received from the carrying amount of the investment. Arauco’s investment in associates includes goodwill (both net of any accumulated impairment loss).

The investments in joint operations are recognized through consolidation of assets, liabilities and results of operations in relation to Arauco’s ownership percentage.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Investments in associates and joint ventures are presented in the interim consolidated statement of financial position in the line item “Investments accounted for using equity method”.

If Arauco’s share of losses of an associate or joint venture equals or exceeds its interest in the associate or joint venture, Arauco discontinues recognizing its share of further losses. After Arauco’s carrying value in the investee is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that Arauco has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, Arauco resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.

m) Intangible assets other than goodwill

After initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortization and impairment losses.

Amortization of an intangible asset with a finite useful life is allocated over the asset’s useful life. Amortization begins when the asset is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

(i) Computer Software

Computer software licenses are capitalized in terms of the costs incurred to acquire and make them compatible with existing software. These costs are amortized over the estimated useful lives of the software.

(ii) Water Rights, Easements and Other Rights

This item includes water rights, easements and other acquired rights recognized at historical cost which have indefinite useful lives as there is no foreseeable limit to the period over which these assets are expected to generate future cash flows. These rights are not amortized, but are tested for impairment at least annually, or when there is any indication that the assets might be impaired.

(iii) Customers and trade relations with customers

Correspond to the valuation over the time of the established relationship with customers, from the sale of products and services through its sales team. These relations will materialize in sales orders, which generate revenue and cost of sales. The useful life has been determined to be 15 years.

n) Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquired company, and the fair value of the acquirer’s previously held equity interest in the acquired company (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statements of profit or loss.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Goodwill is not amortized but tested for impairment on annual basis.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of impairment testing, goodwill in a business combination is allocated as of the acquisition date to the cash generating unit or a group of cash generating units expected to benefit from the synergies of the combination irrespective of whether other assets or liabilities of the acquired company are allocated to those units or group of units.

The goodwill generated on acquisitions of foreign companies, is expressed in the functional currency of such foreign company.

Goodwill recognized for the acquisition of the subsidiary Arauco do Brasil S.A. whose functional currency is the Brazilian Real, is translated into U.S. Dollars at the closing exchange rate. At the date of these interim consolidated financial statements, the change in the carrying amount of goodwill in Brazil is only related to the net exchange rate differences on translation.

o) Property, Plant and Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment. The cost includes expenditures that are directly attributable to the acquisition of the assets.

Subsequent costs, such as improvements and replacement of components, are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Arauco and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized from property, plant and equipment. All other repairs and maintenance costs are expensed in the period in which they are incurred.

Arauco capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets as part of the cost of those assets, until the assets are ready for their intended use (See Note 12).

Depreciation is calculated by components using the straight-line method.

The useful lives of the items of property, plant and equipment is estimated according to the expected use of the assets. The residual values and useful lives of assets are reviewed and adjusted, if appropriate, annually.

p) Leases

Arauco applies IFRIC 4 to assess whether an arrangement is, or contains, a lease. Leases of assets in which Arauco substantially holds all the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

Finance leases are initially recognized at the lower of the fair value at the inception of the lease of the leased property and the present value of the minimum lease payments.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

When assets are leased under a finance lease, the present value of lease payments are recognized as financial accounts receivable. Finance income, which is the difference between the gross receivable and the present value of such amount, is recognized as the interest rate of return.

Arauco evaluates the economic nature of the contracts that grant the right to use certain assets, for the purposes of determining the existence of implied leases. In these cases, the Company separates - at the beginning of the contract, and based on relative reasonable values - payments and considerations associated with the lease, from the rest of the elements incorporated to the contract.

q) Biological Assets

IAS 41 requires that biological assets, such as standing trees, are measured at fair value less cost to sell in the statement of financial position. Forestry plantations are accounted for at fair value less costs to sell, based on the presumption that fair values of these assets can be measured reliably.

The measurement of forestry plantations is based on discounted cash flow models whereby the fair value of the biological assets is determined using estimated future cash flows from continuing operations calculated using our sustainable forest management plans and including the estimated growth of the forests. This valuation is performed on the basis of each identifiable farm block and for each type of tree.

The measurement of new forestry plantations made during the current year is made at cost, which corresponds to the fair value at that date. After twelve months, the valuation methodology used is that explained in the preceding paragraph.

Biological assets shown as current assets correspond to those forestry plantations that will be harvested in the short term.

Biological growth and changes in fair value of forestry plantations are recognized in the line item “Other income” in the interim consolidated statement of profit or loss.

r) Income taxes and deferred taxes.

The tax liabilities are recognized in the interim consolidated financial statements based on the determination of taxable income for the year and calculated using the tax rates in force in the countries where Arauco operates.

Deferred income tax is recognized using liability method, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. Deferred income tax is determined using tax rates contained in laws adopted as of the date of the financial statements and that are expected to be applicable when the related deferred tax asset is realized or the deferred income tax liability is settled.

The goodwill arising on business combinations does not give rise to deferred tax.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The deferred tax assets and tax credits are generally recognized for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which those deductible temporary differences can be utilized.

s) Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period.

t) Revenue recognition

Revenues are recognized when Arauco has transferred the risks and rewards of ownership to the buyer and Arauco has no right to dispose of the assets, nor effective control of such good.

(i) Revenue recognition from the Sale of Goods

Revenue from the sale of goods is recognized when Arauco has transferred to the buyer the significant risks and rewards of ownership of the goods, when the amount of revenue can be reliably measured, when Arauco does not retain any managerial involvement over the goods sold and when it is probable that the economic benefits associated with the transaction will flow to Arauco and the costs incurred in respect of the transaction can be measured reliably.

Sales are recognized in terms of the price agreed to in the sales contract, less any volume discounts and estimated product returns at the date of the sale. Volume discounts are evaluated in terms of estimated annual purchases. There is no significant financing component given that receivables from sales are collected within a short period, which is in line with market practices.

The structure for recognizing revenue from export sales is based on the 2010 Incoterms, which are the official rules for the interpretation of commercial terms issued by the International Chamber of Commerce.

The main Incoterms used by Arauco are the following:

“CFR” (Cost and freight), where the company bears all costs including main transportation, until the products arrives at its port of destination. The risk is transferred to the purchaser once the products have been loaded onto the vessel, in the country of origin.

“CIF” (Cost Insurance & Freight), where the Company organizes and pays for external freight services and some other expenses. Arauco is no longer responsible for the products once they have been delivered to the ocean carrier company. The point of sale is the delivery of the products to the carrier chartered by the seller.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

(ii) Revenue recognition from Rendering of Services

When the outcome of a transaction involving the rendering of services can be reliably estimated, revenue is recognized by reference to the stage of completion of the transaction at the date of the reporting period, and when it is probable that the economic benefits associated with the transaction will flow to the Arauco.

Arauco mainly provides power supply services which are transacted principally in the spot market of the Sistema Interconectado Central (“Central Interconnected System”). According to current regulations, the prices on that market called “Marginal Costs” are calculated by the Centro de Despacho Económico de Carga del Sistema Interconectado Central (CDEC–SIC) (“Economic Load Dispatch Center of the Central Interconnected System”) and are generally recognized in the period in which the services are rendered.

Electrical power is generated as a by-product of the pulp and wood process and is a complementary business to it, which is initially supplied to the group’s subsidiaries and any surplus is sold to the CDEC-SIC.

Arauco provides other non-core services such as port services and pest control whose revenues are derived from fixed price service contracts, generally recognized during the period of the service contract on a straight-line basis over the term of the contract.

Revenues from reportable segments mentioned in Note 24 are measured in accordance with the policies indicated in the preceding paragraphs.

Revenues from inter-segment sales (which are made at market prices) are eliminated in the interim consolidated financial statements.

u) Minimum dividend

Article No. 79 of the Chilean Corporations Law states that, unless otherwise unanimously agreed by the shareholders, corporations must distribute annually at least 30% of net income for the current year as cash dividend to shareholders determined in proportion to their shares or in the proportion established in the by-laws for preferred shares, if any, except where necessary to absorb accumulated losses from prior years.

The General Shareholders’ Meeting of Arauco agreed to distribute annual dividends at 40% of net distributable income, including an interim dividend to be distributed at year end. Dividends payable are recognized as a liability in the financial statements in the period when they are declared and approved by the Arauco’s shareholders or when arises the corresponding present obligation based on existing legislation or distribution policies established by the Shareholders’ Meeting.

The dividends payable provision is registered for 40% of the liquid distributable profit and against a lower equity, based on the yearly resolution of the Shareholders’ Meeting.

Dividends payable are presented in the line item “Other current non-financial liabilities” in the interim consolidated statement of financial position.

v) Earning per share

Basic earnings per share are calculated by dividing the net profit for the period attributable to the parent company by the weighted average number of ordinary shares outstanding during the period, excluding the average number of shares in the Company held by a subsidiary, if such circumstance exists. Arauco has not performed any type of transaction with a potential dilutive effect that would cause diluted earnings per share to be different from basic earnings per share.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

w) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment and other long-term assets with finite useful lives are measured whenever there are any circumstances indicating that the assets have to recognize an impairment loss. Among the circumstances to consider as evidence of impairment are significant declines in the assets’ market value, significant adverse changes in the technological environment, obsolescence or physical damages of assets and changes in the manner in which the asset is used or expected to be used). Arauco evaluates at the end of each reporting period whether there is any evidence of the indications above mentioned.

A previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, however a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

For the purposes of assessing impairment losses, assets are grouped at the lowest level for which there is identifiable cash flows separately for each cash-generating unit. Non-financial assets, other than goodwill, which had recognized an impairment loss, are reviewed at the end of each reporting period whether there are any circumstances indicating that an impairment loss previously recognized may no longer exists or has decreased.

“Cash-generating units” are the smallest identifiable groups of those cash inflows that are largely independent of the cash inflow from other assets or groups of assets.

Goodwill

Goodwill and intangible assets with indefinite useful life are tested annually for impairment or whenever circumstances indicate it. The recoverable amount of an intangible asset is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognized whenever the carrying amount exceeds the recoverable amount.

A cash-generating unit, for which goodwill has been allocated, is tested for impairment annually or more frequently when there are circumstances indicating that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets pro rata based on the carrying amount of each asset in the unit. Any impairment loss of goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Goodwill is allocated to cash-generating units for impairment testing purposes. The allocation is made between cash-generating units or groups of cash generating units expected to benefit from the synergies of the combination.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Financial Assets

At the end of each reporting period, an assessment is performed in order to identify whether there is any objective evidence that a financial asset or a group of financial assets may have been impaired. Financial assets are impaired only when there is objective evidence that, as a result of one or more loss events that occurred after the initial recognition of a financial asset, the estimated future cash flows of the financial asset have been affected. Impairment losses are recognized in the consolidated statement of profit or loss.

An allowance for doubtful accounts is established based on an analysis of the maturity of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed, for example, when there is objective evidence of default or delinquency in payments under the original sale terms and when the customer enters into bankruptcy or financial reorganization, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

The allowance for doubtful accounts is measured as the difference between the carrying amount of receivables and the present value of estimated future cash flows. The carrying amount of the receivable is reduced through the use of the allowance. If the impairment loss decreases in later periods, it is reversed either directly or by adjusting the provision for doubtful accounts, with effect in profit or loss.

x) Employee Benefits

Arauco constitutes labor obligations for severance payable in all circumstances for certain of its employees with at least 5 years of work in the Company, based on the terms of the staff’s collective and individual bargaining agreements.

The related provision is an estimate of the years of service to be recognized as a future labor obligation liability, in accordance with contracts between Arauco and its employees and pursuant to actuarial valuation criteria for this type of liability. This post-employment benefit is considered a defined benefit plan.

The main factors considered for calculating the actuarial value of severance obligation for years of service are employee turnover, salary increases and life expectancy of the workers included in this benefit.

Actuarial gains and losses are recognized in other comprehensive income in the year they are incurred.

These obligations are related to post-employee benefits in accordance with current standards.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

y) Employee Vacations

Arauco recognizes the expense for employee vacation according to labor legislation in each country on an accrual basis.

This obligation is presented in the line item “Trade and Other current payables” and “Trade and Other non-current payables” depending on their respective maturities in the interim consolidated statements of financial position.

z) Recent accounting pronouncements

a) Provisions, interpretations and amendments that are mandatory for the first time, for the financial years commencing as of January 1, 2017.

Amendments and improvements	Content	Mandatory application for annual periods beginning on or after
IAS 7	Statement of Cash Flows Introduces additional disclosure that enable users of financial statements to evaluate changes in liabilities arising from financial activities.	January 1, 2017
IAS 12	Income taxes Clarifies the accounting for deferred tax assets relating to debt instruments measured at fair value.	January 1, 2017
IFRS 1	First-Time adoption of the IFRS Suspension of short-term exceptions	January 1, 2017
IFRS 12	Disclosure of Interests in Other Entities. Clarifies the scope of this rule.	January 1, 2017
IAS 28	Investments in Associates and Joint Ventures.	January 1, 2017

The adoption of the standards, amendments and interpretations described above do not have a significant impact on the Consolidated Interim Financial Statements of Arauco.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

b) Standards, interpretations and amendments, the application of which is not yet mandatory, which have not been adopted in advance:

Standards and interpretations	Content	Mandatory application for annual periods beginning on or after
IFRS 9	Financial Instruments The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.	January 1, 2018
IFRS 15	This standard defines a new model to recognized revenue from contracts with costumers.	January 1, 2018
IFRS 16	Leases Specifies guidelines to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.	January 1, 2019
IFRIC 22	Transactions in Foreign Currency and Anticipated Considerations Applies to a transaction in foreign currency (or partially in foreign currency) when an entity recognizes a non-financial asset or a non-financial liability arising from the payment or collection of an anticipated consideration, before recognizing the related asset, expense, or income.	January 1, 2018
IFRIC 23	Uncertain tax positions It clarifies the method of applying the acknowledgment and measurement requirements of IAS 12 when there is uncertainty regarding the fiscal treatments.	January 1, 2019
Amendments and improvements	Content	Mandatory application for annual periods beginning on or after
IFRS 2	Share-based payment Clarifies the measurement of cash settled share-based payment transactions and the accounting for amendments that change such payments to equity instruments.	January 1, 2018
IFRS 15	Revenue from contracts with customers. Introduces clarifications to the guidelines and examples related to the transition towards the new rule.	January 1, 2018
IFRS 4	Insurance contracts Introduces two approaches: overlap and temporary exemption of IFRS 9.	January 1, 2018
IAS 40	Investment properties Clarifies the requirements needed to transfer to, or from, investment properties.	January 1, 2018
IFRS 10 y IAS 28-Amendments	Sale or Contribution of assets among an Investor and its Associates or Joint Ventures.	Indeterminate

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

IFRS - 9 Financial Instruments.

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. The provision includes new rules applicable to hedge accounting and a new impairment model for financial assets. The financial assets held by the Group mainly include: Mutual Fund Holdings, (hedge) Derivatives, and highly-liquid financial instruments.

Consequently, Arauco does not expect the new standard to have a significant impact in the classification and measurement of its financial assets. There will be no impact over the accounting of the group’s financial liabilities, because the new requirements only affect the accounting of financial liabilities that are recognized at fair value through profit and loss, and the group does not have such liabilities. Arauco does not intend to adopt IFRS 9 prior to its date of mandatory applicability.

IFRS 15 – Ordinary Activities’ Income from Contracts with Clients.

The new provision specifies how and when income will be recognized and increases the disclosures. The provision provides a single five-step model based on principles applicable to all contracts with clients. The provision will be in full force and effect on January 1, 2018.

Arauco is a pulp and wood supplier in the global markets. Arauco’s contracts with clients can be clearly identified on the basis of purchase orders placed by such clients. Performance obligations are regularly explicitly defined as the products are delivered in accordance with the client’s contracts.

The main contracts with clients do not include additional separate performance obligations that would substantially change the timing of income recognition in accordance to IFRS 15, compared to current income recognition practices.

IFRS 16 - Leases

IFRS 16 was issued in January, 2016. The new provision will result in recognizing practically all leases in the balance sheet, because the distinction between operational and financial leases was eliminated. Under the new provision an asset (the right to use the leased property) as well as a financial liability is recognized for lease payments. Short-term and low-value leases are an exception to this rule. This provision will be in full force and effect on January 1, 2019.

The group’s main assets with which it conducts its operations are either held or kept under financial lease by Arauco and its subsidiaries; this it does not expect that the impact of the new rule will cause a significant effect on the financial statements. However, the group has still not assessed what other adjustments, if any, are necessary in view of the changes in the definition of the lease termination and the different treatment of the lease’s variable payments and options to extend and terminate it. Therefore, it is not yet possible to estimate the value of the right of use over the assets and the liabilities for leases that shall be recognized in the adoption of the new rule and how this can affect the group’s earnings or losses and the classification of the cash flows in the future.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

According to the evaluations carried out, the adoption of the other standards, amendments and interpretations described above will not have a significant impact on Arauco’s Interim Consolidated Financial Statements during its initial application period.

NOTE 2. ACCOUTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES

There have been no changes in the treatment of estimates, amendments and accounting policies with respect to same period of last year.

NOTE 3. DISCLOSURE OF OTHER INFORMATION

a) Disclosure of information on Issued Capital

At the date of these interim consolidated financial statements the share capital of Arauco is ThU.S.$353,618.

100% of Capital corresponds to ordinary shares

	06-30-2017	12-31-2016
Description of Ordinary Capital Share Types	100% of Capital corresponds to ordinary shares
Number of Authorized Shares by Type of Capital in Ordinary Shares	113,159,655
Nominal Value of Shares by Type of Capital in Ordinary Shares	ThU.S.$0.0031210 per share
Amount of Capital in Shares by Type of Ordinary Shares that Constitute Capital	ThU.S.$353,618
	06-30-2017	12-31-2016
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	113,159,655

b) Dividends paid

The interim dividend paid in December 2016 was equivalent to 20% of the distributable net income calculated as of the end of September 2016 and was considered a decrease in the interim statement of consolidated changes in equity.

The final dividend paid each year, by the end of May, corresponds to 40% of the prior year distributable net profit, which takes into account the interim dividend paid

The ThU.S.$52,629 (ThU.S.$43,732 as of June 30, 2016) presented in the interim statement of consolidated changes in equity correspond to the minimum dividend provision recorded for the period 2017.

In the Intermediate Statement of Cash Flow, the Dividend paid line shows an amount of ThU.S.$ 60,481 as of June 30, 2017 (ThU.S.$ 100,250 as of June 30, 2016), of which ThU.S.$ 59,005 (ThU.S.$ 99,221 as of June 30, 2016) correspond to the payment of dividends by Arauco.

The following are the dividends paid and per share amounts during the period 2017 and 2016.

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Interim Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-10-2017
Amount of Dividend	ThU.S.$59,005
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.52143

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	12-14-2016
Amount of Dividend	ThU.S.$29,572
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.26133
Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-11-2016
Amount of Dividend	ThU.S.$99,221
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.87683

c) Disclosure of Information on Reserves

Other reserves comprise reserves of exchange differences on translation, reserves of cash flow hedges and other reserves. Arauco does not have any restrictions associated with these reserves.    

Reserves of exchange differences on translation

Reserves of exchange differences on translation correspond to exchange differences relating to the translation of the results and net assets of Arauco’s subsidiaries whose functional currency is other than Arauco’s presentation currency.

Reserves of cash flow hedges

Reserves of cash flow hedges correspond to the portion of net gain or loss of derivative financial instruments that complies with the requirements of hedge accounting at the end of each period.

Reserve of Actuarial Losses in Defined Benefit Plans

This corresponds to changes in the present value of the obligation for defined benefits resulting from experience adjustments (the effect of the differences between the previous actuarial assumptions and the events that occurred within the context of the plan) and the effects of the changes in the actuarial assumptions.

Other reserves

This mainly corresponds to the share of other comprehensive income of investments in associates and joint ventures.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Other items in the Statements of Profit or Loss

The table below sets forth other income, other expenses, finance income, finance costs and share of profit (loss) of associates and joint ventures as of June 30, 2017 and 2016:

	January - June						April - June
	Unaudited						Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Classes of Other Income
Other Income, Total		80,948			119,766			32,616			61,749
Gain from changes in fair value of biological assets (See note 20)		67,282			98,874			24,025			48,399
Net income from insurance compensation		304			2,226			237			770
Revenue from export promotion		1,873			1,129			978			510
Lease income		2,262			1,561			1,228			742
Gain on sales of assets		4,789			10,147			2,823			7,269
Access easement		441			86			403			86
Other operating results		3,997			5,743			2,922			3,973
Classes of Other Expenses by activity
Total of Other Expenses by activity		(201,168	)		(33,411	)		(8,052	)		(12,902	)
Depreciation		(1,335	)		(632	)		(444	)		(314	)
Legal expenses		(1,977	)		(2,851	)		(1,127	)		(1,390	)
Impairment provision for property, plant and equipment and others		(2,731	)		(1,878	)		(1,756	)		(951	)
Operating expenses related to plants stoppage		(2,184	)		(2,004	)		(1,142	)		(465	)
Expenses related to projects		(637	)		(1,037	)		13			(975	)
Loss of asset sales		(2,598	)		(864	)		(2,034	)		(617	)
Loss and repair of assets		(3,712	)		(566	)		7			(335	)
Loss of forest due to fires		(173,867	)		(2,064	)		4,494			(2,064	)
Other Taxes		(3,765	)		(4,928	)		(1,898	)		(3,066	)
Research and development expenses		(1,553	)		(1,139	)		(818	)		(576	)
Fines, readjustments and interests		(435	)		(303	)		(158	)		(151	)
Loss on disposal of associates		—			(10,369	)		—			—
Other expenses		(6,374	)		(4,776	)		(3,189	)		(1,998	)
Classes of financing income
Financing income, total		12,317			17,897			5,904			6,585
Financial income from mutual funds - term deposits		5,637			6,308			2,939			3,067
Financial income resulting from swap - forward instruments		3,980			8,069			2,135			1,524
Other financial income		2,700			3,520			830			1,994
Classes of financing costs
Financing costs, Total		(117,617	)		(135,770	)		(57,745	)		(65,485	)
Interest expense, Banks loans		(15,517	)		(16,916	)		(7,770	)		(8,221	)
Interest expense, Bonds		(85,289	)		(83,765	)		(41,523	)		(41,702	)
Interest expense, other financial instruments		(9,211	)		(26,350	)		(4,314	)		(12,614	)
Other financial costs		(7,600	)		(8,739	)		(4,138	)		(2,948	)
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		11,570			10,031			3,439			5,993
Investments in associates		3,125			8,787			(290	)		5,512
Joint ventures		8,445			1,244			3,729			481

35

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The analysis of expenses by nature contained in these interim consolidated financial statements is presented below:

	January - June					April - June
	Unaudited					Unaudited
Cost of sales	2017 ThU.S.$		2016 ThU.S.$			2017 ThU.S.$		2016 ThU.S.$
Timber		376,629		375,592			189,864		186,742
Forestry labor costs		301,093		275,293			151,455		143,565
Depreciation and amortization		185,497		183,986			89,871		96,557
Maintenance costs		129,507		152,612			65,519		80,806
Chemical costs		253,536		237,271			128,226		119,320
Sawmill Services		54,020		58,924			25,357		31,092
Others Raw Materials		93,743		110,718			49,241		54,666
Others Indirect costs		81,460		69,384			39,220		40,651
Energy and fuel		88,029		69,613			43,439		37,194
Cost of electricity		23,078		20,313			13,908		8,912
Wage and salaries		162,698		158,063			81,571		80,438
Total		1,749,290		1,711,769			877,671		879,943
	January - June					April - June
	Unaudited					Unaudited
Distribution cost	2017 ThU.S.$		2016 ThU.S.$			2017 ThU.S.$		2016 ThU.S.$
Selling costs		18,396		16,733			9,216		9,151
Commissions		6,483		7,140			2,974		3,623
Insurance		1,545		1,842			782		922
Provision for doubtful accounts receivable		104		(25	)		103		(68	)
Other selling costs		10,264		7,776			5,357		4,674
Shipping and freight costs		233,733		217,681			118,903		112,777
Port services		14,832		13,160			7,540		6,778
Freights		188,469		167,467			95,302		86,770
Other shipping and freight costs		30,432		37,054			16,061		19,229
Total		252,129		234,414			128,119		121,928
	January - June					April - June
	Unaudited					Unaudited
Administrative expenses	2017 ThU.S.$		2016 ThU.S.$			2017 ThU.S.$		2016 ThU.S.$
Wage and salaries		103,342		98,082			53,275		55,316
Marketing, advertising, promotion and publications expenses		5,052		4,639			2,677		2,317
Insurance		9,232		12,237			4,987		6,317
Depreciation and amortization		14,339		13,237			6,726		7,133
Computer services		14,871		12,067			8,160		8,544
Lease rentals (offices, warehouses and machinery)		7,999		6,858			4,120		4,337
Donations, contributions, scholarships		3,858		5,652			1,461		2,824
Fees (legal and technical advisories)		17,250		20,038			8,053		10,149
Property taxes, patents and municipality rights		9,399		8,170			5,094		5,447
Personal care, supervision and transport services		12,461		11,958			6,029		6,281
Variable third party services (maneuvers, logistic operator)		20,048		20,416			9,978		10,130
Basic services (telephone, electricity, water)		4,087		4,247			2,024		1,975
Maintenance and repair		2,702		3,136			1,429		1,552
Seminars, courses, teaching materials		884		1,287			430		714
Other administration expenses		21,983		14,596			12,714		8,475
Total		247,507		236,620			127,157		131,511

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

		January - June				April - June
		Unaudited				Unaudited
		2017		2016		2017		2016
Expenses for	Note	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Depreciations	7		194,981		192,512		93,566		100,980
Employee benefits	10		268,069		259,700		135,779		137,603
Amortization	19		6,788		6,505		3,243		3,485

e) Auditor Fees and Number of Employees (Not audited)

Auditors fees	06-30-2017 ThU.S.$
Audit services		1,126
Other services
Tax services		407
Others		172
TOTAL		1,705
Number of employees		No.
		15,737

NOTE 4. INVENTORIES

	06-30-2017		12-31-2016
	Unaudited
Components of Inventory	ThU.S.$		ThU.S.$
Raw materials		77,628		61,252
Production supplies		94,663		102,760
Products in progress		51,033		59,332
Finished goods		459,197		468,544
Spare Parts		164,454		160,724
Total Inventories		846,975		852,612

Inventories recognized as cost of sales at June 30, 2017 were ThU.S.$1,707,640 (ThU.S.$1,633,455 at June 30, 2016).    

In order to have the inventories recorded at net realizable value at June 30, 2017, a net increase of inventories was recognized associated with a less provision of obsolescence of ThU.S.$3,831 (greater provision of ThU.S.$1,265 at June 30, 2016). As of June 30, 2017, the amount of obsolescence provision is ThU.S.$24,668 (ThU.S.$28,499 at December 31, 2016).

At June 30, 2017 there were inventory write-offs of ThU.S.$475 (ThU.S.$693 at June 30, 2016)

The inventory obsolescence provision is calculated based on the sales conditions of products and age of inventory (inventory turnover).

37

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

As of the date of these interim consolidated financial statements, there are no inventories pledged as security to report.

Agricultural Products

Agricultural Products are mainly forestry products that are intended for sale in the normal course of our operations and are measured at fair value less costs to sell at the point of harvest at the end of each reporting period. Agricultural products are classified as raw materials within the line item inventories.

NOTE 5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, bank checking account balances, time deposits, repurchase agreements and mutual funds. These are short-term highly liquid investments that are readily convertible to known amounts of cash, and are subject to an insignificant risk of changes in value.

The investment objective of time deposits and repurchase agreements is to maximize the amounts of cash surpluses in the short-term. These instruments are permitted under Arauco’s Investment Policy which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

Arauco invests in local and international mutual funds in order to maximize the returns of cash surpluses denominated in Chilean Pesos or in foreign currencies such as U.S. Dollars or Euros. These instruments are permitted under Arauco’s Investment Policy.

As of the date of these interim consolidated financial statements, there are no amounts of cash and cash equivalents with restrictions on use.

	06-30-2017 Unaudited		12-31-2016
Components of Cash and Cash Equivalents	ThU.S.$		ThU.S.$
Cash on hand		174		3,156
Bank checking account balances		183,653		146,290
Time deposits		175,636		247,391
Mutual funds		70,080		195,416
Other cash and cash equivalents (*)		83,180		—
Total		512,723		592,253

The risk classification of the mutual funds in effect as of June 30, 2017 and December 31, 2016 is shown below.

	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
AAAfm		63,720		192,895
AAfm		6,360		2,521
Total Mutual Funds		70,080		195,416

38

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 6. INCOME TAXES

The tax rates applicable in the countries in which Arauco operates are 25.5% in Chile, 35% in Argentina, 34% in Brazil, 25% in Uruguay and 34% in the United States (federal tax).

On September 29, 2014, the Official Gazette published Law No. 20,780, which introduced various amendments to the current income tax system, as well as to other taxes in Chile. The main amendment was the establishment of an option between two tax regimes: attributed income system and the partially integrated system. One of the effects of the regime selection is that it attaches a progressive increase in the First Category Tax for the fiscal years of 2014, 2015, 2016 and 2017 onwards, increasing to 21%, 22.5%, 24% y 25%, respectively, if the Company chooses the application of an attributed income system, or an increase to 21%, 22.5%, 24%, 25.5% y 27% for the fiscal years 2014, 2015, 2016, 2017 and thereafter, if the Company chooses the application of the partially integrated system.

Subsequently, on February 28, 2016, the Official Gazette publishes Law No. 20,899, which introduced amendments to Law No. 20,780. Among the main amendments is the incorporation of certain limitations for applying to the attributed income system, and therefore Arauco’s Chilean companies must apply the general rule, that is, the partially integrated system.

Deferred Tax Assets

The following table sets forth the deferred tax assets as of the dates indicated:

	06-30-2017			12-31-2016
	Unaudited
Deferred Tax Assets	ThU,S,$			ThU.S.$
Deferred tax Assets relating to Provisions		5,253			5,771
Deferred tax Assets relating to Accrued Liabilities		9,035			11,716
Deferred tax Assets relating to Post-Employment benefits		18,058			17,618
Deferred tax Assets relating to Property, Plant and equipment		12,097			9,806
Deferred tax Assets relating to Financial Instruments		10,163			12,699
Deferred tax Assets relating to Tax Losses Carryforwards		75,293			50,917
Deferred tax Assets relating to Inventories		6,650			7,158
Deferred tax Assets relating to Provisions for Income		3,946			7,069
Deferred tax Assets relating to Allowance for Doubful Accounts		4,364			4,886
Intangible revaluation differences		11,135			10
Deferred tax Assets relating to Other Deductible Temporary Differences		25,019			30,216
Total Deferred Tax Assets		181,013			157,866
Netting presentation		(173,899	)		(151,769	)
Net Effect		7,114			6,097

Certain subsidiaries of Arauco, as of the date of these interim consolidated financial statements, present tax losses for which we estimate that, given the projection of future profits, will allow the recovery of these assets. The total amount of these tax losses is ThU.S.$253,406 (ThU.S.$157,403 at December 31, 2016), which are mainly originated by operational and financial losses.

39

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

In addition, as of the closing of these interim consolidated financial statements there are ThU.S.$ 81,100 (ThU.S.$ 76,280 at December 31, 2016) of non-recoverable tax losses from companies in Uruguay as joint operations based on the participation of Arauco, for which deferred tax assets have not been recognized. The estimated recovery period exceeds the expiry date of such tax losses.

Deferred Tax Liabilities

The following table sets forth the deferred tax liabilities as of the dates indicated:

	06-30-2017			12-31-2016
	Unaudited
Deferred Tax Liabilities	ThU.S,$			ThU.S.$
Deferred tax Liabilities relating to Property, plant and equipment		913,965			934,892
Deferred tax Liabilities relating to Financial Instruments		8,367			7,186
Deferred tax Liabilities relating to Biological Assets		728,011			719,577
Deferred tax Liabilities relating to Inventory		36,494			31,072
Deferred tax Liabilities due to Prepaid Expenses		45,550			42,881
Deferred tax Liabilities due to Intangible		26,892			27,222
Deferred tax Liabilities relating to Other Taxable Temporary Differences		18,573			20,004
Total Deferred Tax Liabilities		1,777,852			1,782,834
Netting presentation		(173,899	)		(151,769	)
Net Effect		1,603,953			1,631,065

The effect of the period of the current and deferred taxes related to the financial instruments for hedges, results in a payment of ThU.S.$ 953 as of June 30, 2017 (a charge amounting to ThU.S.$ 1,042 as of June 30, 2016), which is presented in its net amount in the coverage Reserves in the interim statement of consolidated changes in equity.

40

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of deferred tax assets and liabilities

Unaudited	Opening Balance 01-01-2017		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) for Bussines Combination		Increase (decrease) Net exchange differences			Closing balance 06/30/2017
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		5,771		(497	)		—			—		(21	)		5,253
Deferred tax Assets relating to Accrued liabilities		11,716		(2,633	)		—			—		(48	)		9,035
Deferred tax Assets relating to Post-Employment benefits		17,618		431			(8	)		—		17			18,058
Deferred tax Assets relating to Property, Plant and equipment		9,806		2,291			—			—		—			12,097
Deferred tax Assets relating to Financial Instruments		12,699		(612	)		(1,924	)		—		—			10,163
Deferred tax Assets relating to Tax Loss Carryforward		50,917		25,008			—			—		(632	)		75,293
Deferred tax assets relating to Inventories		7,158		(508	)		—			—		—			6,650
Deferred tax assets relating to Provisions for Income		7,069		(3,127	)		—			—		4			3,946
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,886		(518	)		—			—		(4	)		4,364
Intangible revaluation differences		10		(264	)		—			11,389		—			11,135
Deferred tax Assets relating to Other Deductible Temporary Differences		30,216		(5,094	)		—			—		(103	)		25,019
Total Deferred Tax Assets		157,866		14,477			(1,932	)		11,389		(787	)		181,013
Unaudited	Opening Balance 01-01-2017		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) for Bussines Combinatión		Increase (decrease) Net exchange differences			Closing balance 06/30/2017
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		934,892		(20,554	)		—			—		(373	)		913,965
Deferred tax Liabilities relating to Financial Instruments		7,186		1,181			—			—		—			8,367
Deferred tax Liabilities relating to Biological Assets		719,577		(28,648	)		—			38,016		(934	)		728,011
Deferred tax Liabilities relating to Inventory		31,072		5,422			—			—		—			36,494
Deferred tax Liabilities relating to Prepaid Expenses		42,881		2,667			—			—		2			45,550
Deferred tax Liabilities relating to Intangible		27,222		(195	)		—			—		(135	)		26,892
Deferred tax Liabilities relating to Other Taxable Temporary Differences		20,004		(1,337	)		—			—		(94	)		18,573
Total Deferred Tax Liabilities		1,782,834		(41,464	)		—			38,016		(1,534	)		1,777,852

41

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 12-31-2016
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		13,498		(8,019	)		—			292			5,771
Deferred tax Assets relating to Accrued Liabilities		8,535		3,181			—			—			11,716
Deferred tax Assets relating to Post-Employment benefits		15,480		579			1,509			50			17,618
Deferred tax Assets relating to Property, Plant and equipment		7,730		2,076			—			—			9,806
Deferred tax Assets relating to Financial Instruments		21,805		1,500			(10,606	)		—			12,699
Deferred tax Assets relating to Tax Loss Carryforward		35,751		11,498			—			3,668			50,917
Deferred tax Assets relating to Inventories		4,240		2,918			—			—			7,158
Deferred tax Assets relating to Provisions for Income		3,997		3,050			—			22			7,069
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,572		261			—			53			4,886
Intangible revaluation differences		56		(46	)		—			—			10
Deferred tax Assets relating to Other Deductible Temporary Differences		24,587		3,593			—			2,036			30,216
Total Deferred Tax Assets		140,251		20,591			(9,097	)		6,121			157,866
	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 12-31-2016
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		930,608		(1,065	)		—			5,349			934,892
Deferred tax Liabilities relating to Financial Instruments		6,376		810			—			—			7,186
Deferred tax Liabilities relating to Biological Assets		693,103		12,642			—			13,832			719,577
Deferred tax Liabilities relating to Inventory		31,912		(840	)		—			—			31,072
Deferred tax Liabilities relating to Prepaid Expenses		40,907		2,078			—			(104	)		42,881
Deferred tax Liabilities relating to Intangible		26,419		(528	)		—			1,331			27,222
Deferred tax Liabilities relating to Other Taxable Temporary Differences		26,203		(9,229	)		—			3,030			20,004
Total Deferred Tax Liabilities		1,755,528		3,868			—			23,438			1,782,834

42

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:

	06-30-2017						12-31-2016
	Unaudited
	Deductible			Taxable			Deductible			Taxable
	Difference			Difference			Difference			Difference
Detail of classes of Deferred Tax Temporary Differences	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred Tax Assets		105,720						106,949
Deferred Tax Assets - Tax loss carryforward		75,293						50,917
Deferred Tax Liabilities					1,777,852						1,782,834
Total		181,013			1,777,852			157,866			1,782,834
	January - June						April - June
	Unaudited
Detail of Temporary Difference Income and Loss Amounts	2017 ThU,S,$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Deferred Tax Assets		(6,355	)		2,239			5,414			2,750
Deferred Tax Assets - Tax loss carryforward		20,832			(2,908	)		(1,697	)		(5,605	)
Deferred Tax Liabilities		41,464			5,596			6,880			14,024
Total		55,941			4,927			10,597			11,169

Income Tax Expense

Income tax expense consists of the following:

	January - June						April - June
	Unaudited
Income Tax composition	2017 ThU,S,$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Current income tax expense		(67,812	)		(47,337	)		(47,540	)		(23,370	)
Previous period current tax adjustments		(746	)		487			(785	)		(100	)
Other current tax expenses		797			2,371			286			116
Current Tax Expense, Net		(67,761	)		(44,479	)		(48,039	)		(23,354	)
Deferred tax income (expense) relating to origination and reversal of temporary differences		35,109			7,835			8,720			16,774
Tax benefit arising from previously unrecognized tax assets used to reduce deferred expense from taxes		20,832			(2,908	)		1,877			(5,605	)
Total deferred Tax Expense, Net		55,941			4,927			10,597			11,169
Income Tax Expense, Total		(11,820	)		(39,552	)		(37,442	)		(12,185	)

43

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth the current income tax expense detailed by foreign and domestic (Chile) companies at June 30, 2017 and 2016:

	January - June						April - June
	Unaudited
	2017			2016			2017			2016
	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Foreign current income tax expense		(16,406	)		(16,352	)		(9,390	)		(11,427	)
Domestic current income tax expense		(51,355	)		(28,127	)		(38,649	)		(11,927	)
Total current income tax expense		(67,761	)		(44,479	)		(48,039	)		(23,354	)
Foreign deferred tax expense		7,992			(3,502	)		(455	)		1,659
Domestic deferred tax expense		47,949			8,429			11,052			9,510
Total deferred tax expense		55,941			4,927			10,597			11,169
Total tax income (expense)		(11,820	)		(39,552	)		(37,442	)		(12,185	)

Reconciliation of income tax expense from statutory tax rate to the effective tax rate.

The reconciliation of income tax expense is as follows:

	January - June						April - June
	Unaudited
	2017			2016			2017			2016
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Statutory domestic (Chile) income tax rate		25.5	%		24.0	%		25.5	%		24.0	%
Tax Expense at statutory tax rate		(12,907	)		(35,986	)		(30,985	)		(16,717	)
Tax effect of foreign tax rates		1,223			(2,346	)		890			73
Tax effect of revenues exempt from taxation		12,541			5,047			(1,114	)		4,255
Tax effect of expense not deductible in determining taxable profit (tax loss)		(18,587	)		(4,952	)		(8,164	)		3,153
Tax rate effect from change in tax rate (opening balances)		1,134			(1,039	)		477			(453	)
Tax rate effect of adjustments for current tax of prior periods		(746	)		487			(785	)		(100	)
Other tax rate effects		5,522			(763	)		2,239			(2,396	)
Total adjustments to tax expense at applicable tax rate		1,087			(3,566	)		(6,457	)		4,532
Tax expense at effective tax rate		(11,820	)		(39,552	)		(37,442	)		(12,185	)

44

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	06-30-2017			12-31-2016
	Unaudited
Property, Plant and Equipment, Net	ThU.S.$			ThU.S.$
Construction in progress		408,355			321,031
Land		1,003,972			991,450
Buildings		2,134,720			2,169,731
Plant and equipment		3,146,875			3,256,348
Information technology equipment		23,620			24,154
Fixtures and fittings		10,283			9,880
Motor vehicles		16,192			16,858
Other property, plant and equipment		123,094			130,043
Total Net		6,867,111			6,919,495
Property, Plant and Equipment, Gross
Construction in progress		408,355			321,031
Land		1,003,972			991,450
Buildings		3,852,526			3,825,259
Plant and equipment		6,139,703			6,128,494
Information technology equipment		78,709			76,421
Fixtures and fittings		35,173			33,613
Motor vehicles		49,014			48,534
Other property, plant and equipment		148,054			153,838
Total Gross		11,715,506			11,578,640
Accumulated depreciation and impairment
Buildings		(1,717,806	)		(1,655,528	)
Plant and equipment		(2,992,828	)		(2,872,146	)
Information technology equipment		(55,089	)		(52,267	)
Fixtures and fittings		(24,890	)		(23,733	)
Motor vehicles		(32,822	)		(31,676	)
Other property, plant and equipment		(24,960	)		(23,795	)
Total		(4,848,395	)		(4,659,145	)

Description of Property, Plant and Equipment Pledged as Security for Liabilities

As of June 30, 2017, there are no significant assets pledged as collateral to be disclosed in these interim consolidated financial statements.

45

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Disbursements commitments for the acquisition of property, plant and equipment and disbursements for property, plant and equipment under construction.

	06-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Amount committed for the acquisition of property, plant and equipment		143,844		122,757
	06-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Disbursements for property, plant and equipment under construction		156,028		317,159

46

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of Property, Plant and Equipment

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment as of June 30, 2017 and December 31, 2016:

Movement of Property, Plant and Equipment Unaudited	Construction in progress			Land			Buildings			Plant and equipments			IT Equipment			Fixtures and fittings			Motor vehicles			Other Property, Plant and Equipment			TOTAL
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance 01-01-2017		321,031			991,450			2,169,731			3,256,348			24,154			9,880			16,858			130,043			6,919,495
Changes
Additions		156,028			277			4,379			29,413			203			39			704			661			191,704
Disposals		—			(1,422	)		(17	)		(3,220	)		(27	)		— 9			(254	)		(2,070	)		(7,019	)
Retirements		(4,872	)		(17	)		(546	)		(2,414	)		(3	)		(7	)		(39	)		(2,290	)		(10,188	)
Depreciation		—			—			(62,093	)		(151,122	)		(2,980	)		(1,014	)		(1,679	)		(3,111	)		(221,999	)
Impairment loss recognized in profit or loss		—			—			(28	)		928			3			(266	)		—			—			637
Increase (decrease) through net exchange differences		(853	)		(2,729	)		(1,615	)		(1,523	)		113			-23			419			(140	)		(6,351	)
Reclassification of assets held for sale		—			—			—			832			—			—			—			—			832
Increase (decrease) through transfers from construction in progress		(62,979	)		16,413			24,909			17,633			2,157			1,683			183			1			—
Total changes		87,324			12,522			(35,011	)		(109,473	)		(534	)		403			(666	)		(6,949	)		(52,384	)
Closing balance 06-30-2017		408,355			1,003,972			2,134,720			3,146,875			23,620			10,283			16,192			123,094			6,867,111
Movement of Property, Plant and Equipment	Construction in progress ThU.S.$			Land ThU.S.$			Buildings ThU.S.$			Plant and equipments ThU.S.$			IT Equipment ThU.S.$			Fixtures and fittings ThU.S.$			Motor vehicles ThU.S.$			Other Property, Plant and Equipment ThU.S.$			TOTAL ThU.S.$
Opening Balance 01-01-2016		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396
Changes
Additions		317,159			6,350			7,966			59,997			554			269			1,281			25,618			419,194
Disposals		(44	)		(1,107	)		(443	)		(2,382	)		(105	)		—			(199	)		(1,607	)		(5,887	)
Retirements		(1,754	)		(295	)		(926	)		(2,209	)		(24	)		(8	)		(30	)		(2,811	)		(8,057	)
Depreciation		—			—			(122,257	)		(330,876	)		(5,352	)		(1,970	)		(3,969	)		(4,729	)		(469,153	)
Impairment loss recognized in profit or loss		—			—			9			(1,254	)		(7	)		(1	)		—			(1,553	)		(2,806	)
Increase (decrease) through net exchange differences		6,610			30,514			(2,388	)		51,224			134			116			112			3,145			89,467
Reclassification of assets held for sale		—			—			—			341			—			—			—			—			341
Increase (decrease) through transfers from construction in progress		(252,459	)		4,350			105,127			134,832			2,744			(386	)		2,942			2,850			—
Total changes		69,512			39,812			(12,912	)		(90,327	)		(2,056	)		(1,980	)		137			20,913			23,099
Closing balance 12-31-2016		321,031			991,450			2,169,731			3,256,348			24,154			9,880			16,858			130,043			6,919,495

47

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The depreciation expense for the period ending June 30, 2017 and 2016 is as follows:

	January - June				April - June
	Unaudited				Unaudited
	2017		2016		2017		2016
Depreciation for the year	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Cost of sales		181,292		180,666		87,479		94,911
Administrative expenses		11,756		10,052		5,356		5,294
Other expenses		1,933		1,794		731		775
Total		194,981		192,512		93,566		100,980

The useful lives of property, plant and equipment are estimated based on the expected use of the assets. The average useful lives by asset class are as follow:

	Years of Useful Life (Average)
Buildings		58
Plant and equipment		30
Information technology equipment		8
Fixtures and fittings		28
Motor vehicles		7
Other property, plant and equipment		14

See Note 12 for details of capitalized borrowing costs.

48

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 8. LEASES

Arauco acting as lessee

	06-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Property, Plant and Equipment under finance leases		116,603		117,206
Plant and equipment		116,603		117,206

Reconciliation of Financial Lease Minimum Payments:

	06-30-2017
	Unaudited
	Present Value
Periods	ThU.S.$
Less than one year		39,396
Between one and five years		73,763
More than five years		—
Total		113,159

	12-31-2016
	Present Value
Periods	ThU.S.$
Less than one year		40,400
Between one and five years		73,586
More than five years		—
Total		113,986

Lease obligations are presented in the interim consolidated statements of financial position in line items “Other current financial liabilities” and “Other non-current financial liabilities” depending on their respective maturities as stated above.

49

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Arauco acting as lessor

Reconciliation of Financial Lease Minimum Payments:

	06-30-2017
	Unaudited
	Gross		Interest		Present Value
Periods	ThU.S.$		ThU.S.$		ThU.S.$
Less than one year		1,323		—		1,323
Between one and five years		2,542		—		2,542
More than five years		—		—		—
Total		3,865		—		3,865
	12-31-2016
	Gross		Interest		Present Value
Periods	ThU.S.$		ThU.S.$		ThU.S.$
Less than one year		512		—		512
Between one and five years		353		—		353
More than five years		—		—		—
Total		865		—		865

Finance lease receivables are presented in the interim consolidated statements of financial position in line items “Trade and other current receivable” and “Trade and other non-current receivable” depending on their maturities stated above.

Arauco accounts for its lease contracts as finance leases. These lease contracts are for a term of less than five-years at market interest rates and leased assets are forestry machinery and equipment. They also include an early termination option, under general and special conditions stipulated in each contract.

Arauco holds leases as lessee and lessor, described in the previous tables, for which there are no impairment contingent payments or restrictions to report.

NOTE 9. REVENUE

	January – June				April – June
	Unaudited				Unaudited
	2017		2016		2017		2016
Classes of revenue	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenue from sales of goods		2,453,536		2,294,928		1,246,942		1,174,682
Revenue from rendering of services		60,130		58,383		32,988		32,604
Total		2,513,666		2,353,311		1,279,930		1,207,286

50

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

	January - June				April - June
	Unaudited				Unaudited
	2017		2016		2017		2016
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Employee expenses		268,069		259,700		135,779		137,603
Wages and salaries		258,434		252,935		130,986		134,233
Severance indemnities		9,635		6,765		4,793		3,370

	06-30-2017			12-31-2016
Discount rate		4.58	%		4.52	%
Inflation		2.79	%		2.79	%
Annual rate of wage growth		5.22	%		5.22	%
Mortality rate (1)		RV-2009			RV-2009

Sensitivities to assumptions	ThU.S.$
Discount rate
Increase in 100 bps		(5,558	)
Decrease in 100 bps		5,760
Wage growth rates
Increase in 100 bps		5,081
Decrease in 100 bps		(4,960	)

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of June 30, 2017 and December 31, 2016:

	06-30-2017			12-31-2016
	Unaudited
	ThU.S.$			ThU.S.$
Current		5,378			5,244
Non-current		61,845			60,084
Total		67,223			65,328
Reconciliation of the present value of severance indemnities obligations	06-30-2017			12-31-2016
	Unaudited
	ThU.S.$			ThU.S.$
Opening balance		65,328			56,433
Current service cost		2,699			5,334
Interest cost		1,485			2,957
(Gains) losses from changes in actuarial assumptions		(346	)		2,083
Actuarial gains and losses arising from experience		315			3,503
Benefits paid		(2,819	)		(7,871	)
Increase (decrease) for foreign currency exchange rates changes		561			2,889
Closing balance		67,223			65,328

51

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 11. BALANCES IN FOREIGN CURRENCY AND FOREIGN CURRENCY EXCHANGE RATE IMPACT IN PROFIT OR LOSS.

	06-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Total Current Assets		2,629,591		2,722,360
Cash and Cash Equivalents		512,723		592,253
U.S Dollar		376,086		524,426
Euro		3,439		2,357
Brazilian Real		30,016		47,696
Argentine Pesos		7,588		4,046
Other currencies		5,095		3,327
Chilean Pesos		90,499		10,401
Other current financial assets		4,361		5,201
U.S Dollar		3,339		4,879
Argentine Pesos		301		315
Other currencies		721		7
Other current non-financial assets		181,334		144,915
U.S Dollar		106,711		62,246
Euro		95		71
Brazilian Real		19,791		22,537
Argentine Pesos		7,071		12,261
Other currencies		3,650		3,500
Chilean Pesos		44,016		44,300
Trade and other current receivables		704,609		701,610
U.S Dollar		487,595		489,056
Euro		18,079		26,544
Brazilian Real		49,253		46,150
Argentine Pesos		28,091		15,137
Other currencies		19,988		16,620
Chilean Pesos		100,077		106,681
U.F.		1,526		1,422
Accounts receivable due from related companies		6,204		12,505
U.S Dollar		663		274
Brazilian Real		243		726
Chilean Pesos		4,830		10,548
U.F.		468		957
Current Inventories		846,975		852,612
U.S Dollar		799,497		812,748
Brazilian Real		47,478		39,864
Current biological assets		303,600		306,117
U.S Dollar		269,547		271,551
Brazilian Real		34,053		34,566
Current tax assets		67,328		104,088
U.S Dollar		10,936		6,199
Brazilian Real		3,666		5,798
Argentine Pesos		40		39
Other currencies		4,191		2,696
Chilean Pesos		48,495		89,356
Non-current assets or disposal groups classified as held for sale		2,457		3,059
U.S Dollar		2,457		3,059

52

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Total Non Current Assets		11,044,213		11,283,821
Other non-current financial assets		11,715		8,868
U.S Dollar		11,715		8,868
Other non-current non-financial assets		110,962		130,319
U.S Dollar		93,596		95,658
Brazilian Real		3,904		4,042
Argentine Pesos		12,313		9,900
Other currencies		684		636
Chilean Pesos		465		20,083
Trade and other non-current receivables		13,969		14,273
U.S Dollar		4,142		6,895
Other currencies		542		527
Chilean Pesos		6,792		5,753
U.F.		2,493		1,098
Accounts receivable due from related companies, non current		957		957
U.F.		957		957
Investments accounted for using equity method		347,923		446,548
U.S Dollar		125,769		124,324
Euro		168,761		156,990
Brazilian Real		53,361		165,203
Chilean Pesos		32		31
Intangible assets other than goodwill		90,972		89,497
U.S Dollar		89,825		88,394
Brazilian Real		1,050		1,026
Chilean Pesos		97		77
Goodwill		74,484		74,893
U.S Dollar		42,580		42,508
Brazilian Real		31,904		32,385
Property, plant and equipment		6,867,111		6,919,495
U.S Dollar		6,352,110		6,394,105
Brazilian Real		510,091		520,448
Chilean Pesos		4,910		4,942
Non-current biological assets		3,519,006		3,592,874
U.S Dollar		2,991,578		3,185,872
Brazilian Real		527,428		407,002
Deferred tax assets		7,114		6,097
U.S Dollar		4,597		4,134
Brazilian Real		2,231		1,697
Other currencies		53		52
Chilean Pesos		233		214

53

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

			06-30-2017
			Unaudited						12-31-2016
	Up to 90 days		From 91 days to 1 year		Total		Up to 90 days		From 91 days to 1 year		Total
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Total Liabilities, current		909,072		157,215		1,066,287		806,280		539,784		1,346,064
Other current financial liabilities		302,545		151,476		454,021		196,001		501,451		697,452
U.S Dollar		286,782		91,594		378,376		178,442		455,908		634,350
Brazilian Real		3,876		4,177		8,053		3,558		1,282		4,840
Argentine Pesos		10		9		19		11		29		40
Chilean Pesos		1,410		4,158		5,568		1,132		3,387		4,519
U.F.		10,467		51,538		62,005		12,858		40,845		53,703
Bank Loans		118,079		95,780		213,859		134,140		61,483		195,623
U.S Dollar		114,193		91,594		205,787		130,571		60,172		190,743
Brazilian Real		3,876		4,177		8,053		3,558		1,282		4,840
Argentine Pesos		10		9		19		11		29		40
Financial Leases		9,720		29,676		39,396		9,534		30,866		40,400
Chilean Pesos		1,410		4,158		5,568		1,132		3,387		4,519
U.F.		8,310		25,518		33,828		8,402		27,479		35,881
Other Loans		174,746		26,020		200,766		52,327		409,102		461,429
U.S Dollar		172,589		—		172,589		47,871		395,736		443,607
U.F.		2,157		26,020		28,177		4,456		13,366		17,822
Trade and other current payables		508,849		—		508,849		511,371		26,520		537,891
U.S Dollar		159,577		—		159,577		146,652		3,510		150,162
Euros		11,072		—		11,072		12,006		1,028		13,034
Brazilian Real		27,306		—		27,306		4,849		21,982		26,831
Argentine Pesos		23,803		—		23,803		31,661		—		31,661
Other currencies		7,957		—		7,957		12,244		—		12,244
Chilean Pesos		260,860		—		260,860		285,359		—		285,359
U.F.		18,274		—		18,274		18,600		—		18,600
Accounts payable to related companies		8,489		—		8,489		3,831		—		3,831
U.S Dollar		1,838		—		1,838		1,969		—		1,969
Chilean Pesos		6,651		—		6,651		1,862		—		1,862
Other current provisions		378		—		378		842		—		842
U.S Dollar		378		—		378		842		—		842
Current tax liabilities		2,774		2,013		4,787		1,641		—		1,641
U.S Dollar		362		—		362		448		—		448
Euros		571		—		571		7		—		7
Brazilian Real		1,068		—		1,068		—		—		—
Argentine Pesos		43		—		43		133		—		133
Other currencies		265		—		265		574		—		574
Chilean Pesos		465		2,013		2,478		479		—		479
Current provisions for employee benefits		5,258		120		5,378		5,214		30		5,244
Chilean Pesos		5,258		120		5,378		5,214		30		5,244
Other current non-financial liabilities		80,779		3,606		84,385		87,380		11,783		99,163
U.S Dollar		51,849		3,604		55,453		62,974		163		63,137
Euros		42		—		42		53		—		53
Brazilian Real		16,574		—		16,574		9,426		11,616		21,042
Argentine Pesos		2,198		—		2,198		3,474		—		3,474
Other currencies		3,926		—		3,926		3,202		—		3,202
Chilean Pesos		6,136		2		6,138		8,183		4		8,187
U.F.		54		—		54		68		—		68

54

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	From 13 months to 5 years ThU.S.$		06-30-2017 Unaudited More than  5 years ThU.S.$		Total ThU.S.$		From 13 months to 5 years ThU.S.$		12-31-2016 More than 5 years ThU.S.$		Total ThU.S.$
Total non-current liabilities		4,138,174		1,492,411		5,630,585		3,599,291		2,061,543		5,660,834
Other non-current financial liabilities		2,511,927		1,354,821		3,866,748		2,020,484		1,850,430		3,870,914
U.S Dollar		2,063,892		584,860		2,648,752		1,591,127		1,075,204		2,666,331
Brazilian Real		17,283		799		18,082		17,098		1,042		18,140
Chilean Pesos		11,553		—		11,553		11,151		—		11,151
U.F.		419,199		769,162		1,188,361		401,108		774,184		1,175,292
Bank Loans		619,707		94,185		713,892		626,384		92,351		718,735
U.S Dollar		602,424		93,386		695,810		609,286		91,309		700,595
Brazilian Real		17,283		799		18,082		17,098		1,042		18,140
Financial Leases		73,763		—		73,763		73,586		—		73,586
Chilean Pesos		11,553		—		11,553		11,151		—		11,151
U.F.		62,210		—		62,210		62,435		—		62,435
Other Loans		1,818,457		1,260,636		3,079,093		1,320,514		1,758,079		3,078,593
U.S Dollar		1,461,468		491,474		1,952,942		981,841		983,895		1,965,736
U.F.		356,989		769,162		1,126,151		338,673		774,184		1,112,857
Other non-current provisions		37,516		—		37,516		38,138		—		38,138
U.S Dollar		11		—		11		1		—		1
Brazilian Real		5,013		—		5,013		5,425		—		5,425
Argentine Pesos		32,489		—		32,489		32,712		—		32,712
Chileans Pesos		3		—		3		—		—		—
Deferred tax liabilities		1,466,363		137,590		1,603,953		1,479,596		151,469		1,631,065
U.S Dollar		1,356,025		137,590		1,493,615		1,412,506		131,406		1,543,912
Brazilian Real		110,338		—		110,338		67,090		20,063		87,153
Non-current provisions for employee benefits		61,845		—		61,845		60,084		—		60,084
Other currencies		177		—		177		144		—		144
Chilean Pesos		61,668		—		61,668		59,940		—		59,940
Other non-current non-financial liabilities		60,523		—		60,523		989		59,644		60,633
U.S Dollar		225		—		225		430		—		430
Brazilian Real		59,600		—		59,600		—		59,644		59,644
Argentine Pesos		245		—		245		349		—		349
Chilean Pesos		453		—		453		206		—		206
U.F.		—		—		—		4		—		4

55

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The table below sets forth the subsidiaries that have determined a functional currency other than the U.S. Dollar as follows:

Subsidiary	Country	Functional Currency
Arauco do Brasil S.A.	Brazil	Brazilian Real
Arauco Forest Brasil S.A.	Brazil	Brazilian Real
Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real
Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real
Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real
Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos
Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos
Forestal Nuestra Señora del Carmen S.A.	Argentina	Argentine Pesos
Forestal Talavera S.A.	Argentina	Argentine Pesos
Greeneagro S.A.	Argentina	Argentine Pesos
Leasing Forestal S.A.	Argentina	Argentine Pesos
Savitar S.A.	Argentina	Argentine Pesos
Flakeboard Company Limited	Canada	Canadian Dollar

The table below shows a detail per company of the effect in the period of the Reserve of Exchange Differences on translation:

	January - June Unadited					April - June Unadited
	2017 ThU.S.$			2016 ThU.S.$		2017 ThU.S.$			2016 ThU.S.$
Arauco Do Brasil S.A.		(6,584	)		79,584		(19,518	)		43,510
Arauco Forest Brasil S.A.		(6,886	)		73,261		(19,153	)		40,892
Arauco Florestal Arapoti S.A.		(1,819	)		20,587		(5,165	)		11,454
Sonae Arauco S.A.		11,228			—		9,061			—
Arauco Argentina S.A.		(588	)		5,592		(1,599	)		3,248
Flakeboard Company Limited		2,297			7,297		1,195			671
Others		62			68		4			4
Total reserve of exchange differences on translation		(2,290	)		186,389		(35,175	)		99,779

Effect of foreign exchange rates changes

	January - June					April - June
	Unadited					Unadited
	2017			2016		2017			2016
	ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$
Exchange differences recognized in profit or loss, except for those arising on financial instruments measured at fair value through profit or loss		(139	)		918		(1,600	)		(191	)
Reserve of exchange differences on translation (with Non-controlling interests)		(2,745	)		191,553		(36,466	)		102,646

56

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 12. BORROWING COSTS

Arauco capitalizes the cost of borrowing, on current investment projects, at effective interest rates.

	January - June						April - June
	Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		5.00	%		5.07	%		5.05	%		5.01	%
Amount of the capitalized interest cost, property, presented as plant and equipment		1,725			1,093			1,469			665

NOTE 13. RELATED PARTIES

Related Party Disclosures

Related parties are those entities defined in IAS 24 and under the rules of the Chilean SVS and the Chilean Corporations Law.

The receivable and payable amounts among related parties at the end of each period correspond to commercial and financing transactions denominated in Chilean Pesos, U.S. dollars and Brazilian Real, where collection or payment deadlines are shown in the following tables and in general do not bear interest, except for financing transactions.

As of the date of these interim consolidated financial statements, the main transactions with related parties are related to fuel purchases with Compañía de Petróleos de Chile S.A. and sodium chlorate purchases at EKA Chile S.A.

As of the date of these interim consolidated financial statements, there are neither provisions for doubtful accounts nor any guarantees granted or received related to the balances with related parties.

Name of Group’s Main Shareholders

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through Inversiones Angelini y Cia. Ltda.

Name of the Intermediate Controlling Entity that Produces Interim Consolidated Financial Statements for Public Use

Empresas Copec S.A.

57

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Compensation to Key Management Personnel

Compensation to key management personnel, including directors, managers and deputy managers, consist of a fixed monthly salary and an annual bonus subject to the results of the Company and the fulfillment of goals of the business as well as individual performance.

Pricing Strategy Terms and Conditions Corresponding to Transactions with Related Parties

Related party transactions are equitable in relation to other transactions regularly performed at market conditions, with mutual independence of the parties.

The table below sets forth information about the Relationship between the Parent Company and its Subsidiaries

				% Ownership interest						% Ownership interest
			Functional	06-30-2017						12-31-2016
ID N°	Company Name	Country	Currency	Direct		Indirect		Total		Direct		Indirect		Total
-	Agenciamiento y Servicios Profesionales S.A.	México	U.S. Dollar		0.0020		99.9970		99.9990		0.0020		99.9970		99.9990
-	Arauco Argentina S.A.	Argentina	U.S. Dollar		9.9753		90.0048		99.9801		9.9753		90.0048		99.9801
-	Arauco Australia Pty Ltd.	Australia	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
96547510-9	Arauco Bioenergía S.A.	Chile	U.S. Dollar		98.0000		1.9999		99.9999		98.0000		1.9999		99.9999
-	Arauco Colombia S.A.	Colombia	U.S. Dollar		1.4778		98.5204		99.9982		1.4778		98.5204		99.9982
-	Arauco do Brasil S.A.	Brazil	Brazilian Real		1.1624		98.8366		99.9990		1.1624		98.8366		99.9990
-	Arauco Europe Cooperatief U.A.	Netherlands	U.S. Dollar		0.4553		99.5438		99.9991		0.4614		99.5376		99.9990
-	Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real		—		79.9992		79.9992		—		79.9992		79.9992
-	Arauco Forest Brasil S.A.	Brazil	Brazilian Real		9.9971		90.0021		99.9992		10.1297		89.8694		99.9991
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
76620842-8	Arauco Nutrientes Naturales SPA	Chile	U.S. Dollar		—		99.9484		99.9484		—		99.9484		99.9484
-	Arauco Panels USA, LLC	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Perú S.A.	Perú	U.S. Dollar		0.0013		99.9977		99.9990		0.0013		99.9977		99.9990
-	Arauco Wood Products, Inc.	USA	U.S. Dollar		0.0004		99.9986		99.9990		0.0004		99.9986		99.9990
-	Araucomex S.A. de C.V.	México	U.S. Dollar		0.0005		99.9985		99.9990		0.0005		99.9985		99.9990
96657900-5	Consorcio Protección Fitosanitaria Forestal S.A.	Chile	U.S. Dollar		—		57.5404		57.5404		—		57.5404		57.5404
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9795		99.9795		—		99.9789		99.9789
-	Flakeboard America Limited	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Flakeboard Company Ltd.	Canadá	Canadian Dollar		—		99.9990		99.9990		—		99.9990		99.9990
85805200-9	Forestal Arauco S.A.	Chile	U.S. Dollar		99.9484		—		99.9484		99.9484		—		99.9484
93838000-7	Forestal Cholguán S.A.	Chile	U.S. Dollar		—		98.4744		98.4744		—		98.4744		98.4744
-	Forestal Concepción S.A.	Panamá	U.S. Dollar		—		—		—		0.0050		99.9940		99.9990
78049140-K	Forestal Los Lagos S.A.	Chile	U.S. Dollar		—		79.9587		79.9587		—		79.9587		79.9587
-	Forestal Nuestra Señora del Carmen S.A.	Argentina	Argentine pesos		—		99.9805		99.9805		—		99.9805		99.9805
-	Forestal Talavera S.A.	Argentina	Argentine pesos		—		99.9942		99.9942		—		99.9942		99.9942
-	Greenagro S.A.	Argentina	Argentine pesos		—		97.9805		97.9805		—		97.9805		97.9805
96563550-5	Inversiones Arauco Internacional Ltda.	Chile	U.S. Dollar		98.0186		1.9804		99.9990		98.0186		1.9804		99.9990
79990550-7	Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos		1.0000		98.9489		99.9489		1.0000		98.9489		99.9489
-	Leasing Forestal S.A.	Argentina	Argentine pesos		—		99.9801		99.9801		—		99.9801		99.9801
96510970-6	Maderas Arauco S.A. (ex Paneles Arauco S.A.)	Chile	U.S. Dollar		99.0000		0.9995		99.9995		99.0000		0.9995		99.9995
-	Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real		—		99.9961		99.9961		—		99.9934		99.9934
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real		—		99.9991		99.9991		—		99.9990		99.9990
-	Savitar S.A.	Argentina	Argentine pesos		—		99.9841		99.9841		—		99.9841		99.9841
76375371-9	Servicios Aéreos Forestales Ltda.	Chile	U.S. Dollar		0.0100		99.9890		99.9990		0.0100		99.9890		99.9990
96637330-K	Servicios Logísticos Arauco S.A.	Chile	U.S. Dollar		45.0000		54.9997		99.9997		45.0000		54.9997		99.9997

58

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The companies in the table below are classified as joint operations in accordance with IFRS 11. The assets, liabilities, income and expenses are recorded in relation to the Company’s ownership percentage in accordance with accounting standards applicable in each case.

ID N°	Company Name	Country	Functional Currency
-	Eufores S.A.	Uruguay	U.S. Dollar
-	Celulosa y Energía Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Zona Franca Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Forestal Cono Sur S.A.	Uruguay	U.S. Dollar
-	Stora Enso Uruguay S.A.	Uruguay	U.S. Dollar
-	El Esparragal Asociación Agraria de R.L.	Uruguay	U.S. Dollar
-	Ongar S.A.	Uruguay	U.S. Dollar
-	Terminal Logística e Industrial M’Bopicua S.A.	Uruguay	U.S. Dollar

There are no significant restrictions on the ability of subsidiaries to transfer funds to Arauco, in the form of cash dividends or repayment of loans and/or advances.

Employee Benefits Received On Account Of Salaries and Severance by Key Management Personnel

	January - June				April - June
	Unaudited				Unaudited
	2017		2016		2017		2016
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Salaries and bonuses		26,815		39,321		14,556		25,261
Per diem compensation to members of the Board of Directors		1,145		622		584		404
Termination benefits		2,724		412		1,288		111
Total		30,684		40,355		16,428		25,776

Related Party Receivables, Current

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Maturity	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Forestal Mininco S.A.	91.440.000-7	Common Stockholder	Chile	Chilean pesos	30 days		83		39
Eka Chile S.A.	99.500.140-3	Joint Venture	Chile	Chilean pesos	30 days		2,444		1,701
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	30 days		12		7,618
Unilin Arauco Pisos Ltda.	—	Joint Venture	Brazil	Brazilian Real	30 days		243		726
CMPC Celulosa S.A.	96.532.330-9	Common Stockholder	Chile	Chilean pesos	30 days		3		2
Fundación Educacional Arauco	71.625.000-8	Common director	Chile	Chilean pesos	30 days		2,288		1,188
Fundación Acerca Redes	65.097.218-K	Parent company is founder and contributor	Chile	U.S. Dollar	30 days		663		274
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	—		—		0
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	Sep-17		468		957
TOTAL							6,204		12,505

59

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Related Party Receivables, Non-Current

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Maturity	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	Sep-18		478		478
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	Sep-19		479		479
TOTAL							957		957

Related Party Payables, Current

Name of Related party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

06-30-2017 Unaudited ThU.S.$

12-31-2016 ThU.S.$

Compañía de Petróleos de Chile S.A.

99.520.000-7

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

6,614

1,758

Abastible S.A.

91.806.000-6

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

16

97

Empresa Nacional de Telecomunicaciones S.A.

92.580.000-7

Common Stockholder

Chile

Chilean pesos

30 days

2

—

Puerto Lirquén S.A.

96.959.030-1

Subsidiary of the Associate

Chile

U.S. Dollar

30 days

979

1,246

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of the Associate

Chile

U.S. Dollar

30 days

859

723

Adm. de ventas al detalle Arco Prime ltda.

77.215.640-5

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

3

5

Empresa Distrib. Papeles y Cartones S.A.

88.566.900-k

Common Stockholder

Chile

Chilean pesos

30 days

13

2

Air BP Copec

96.942.120-8

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

3

—

TOTAL

8,489

3,831

60

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Related Party Transactions

Purchases

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel		1,202		2,199
Empresas Copec S.A.	90.690.000-9	Controlling Parent	Chile	Chilean pesos	Management service		66		356
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel and other		31,114		39,732
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	U.S. Dollar	Transport and stowage		4,883		8,633
Puerto Lirquén S.A.	96.959.030-1	Subsidiary of the Associate	Chile	U.S. Dollar	Port services		3,108		7,311
EKA Chile S.A..	99.500.140-3	Joint Venture	Chile	Chilean pesos	Sodium chlorate		22,911		47,236
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Wood and ships		638		2,093
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos	Legal services		686		1,295
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common Stockholder	Chile	Chilean pesos	Telephone services		287		512
CMPC Maderas S.A.	95.304.000-K	Common Stockholder	Chile	Chilean pesos	Wood and logs		155		511
Forestal Mininco S.A.	91.440.000-7	Common Stockholder	Chile	Chilean pesos	Wood and logs		17		180
Red to Green S.A.(Ex-Sigma Servicios Informáticos S.A.)	86.370.800-1	Common director	Chile	Chilean pesos	Computer Services		94		249
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	Chilean pesos	Electrical Power		180		383

Sales

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Colbún S.A.	96.505.760-9	Common director	Chile	Chilean pesos	Electrical Power		257		5,999
EKA Chile S.A.	99.500.140-3	Joint venture	Chile	Chilean pesos	Electrical Power		10,663		16,326
Stora Enso Arapoti Industria de Papel S.A.	—	Subsidiary of the Associate	Brazil	Brazilian Real	Wood		—		1,149
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Harvesting services, Wood and chips		18,802		21,657
Forestal Mininco S.A.	91.440.000-7	Common Stockholder	Chile	Chilean pesos	Wood		—		47
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	Sale Land		—		1,914
Unilin Arauco Pisos Ltda.	—	Joint venture	Brazil	Brazilian Real	Wood		1,527		5,263

61

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 14. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

On August 2, 2016, our subsidiary Forestal Arauco S.A. incorporated the company Arauco Nutrientes Naturales SPA, with a capital contribution of ThU.S.$5,000 of which, as of June 30, 2017, Th.U.S.$3,000 had been paid. The corporate purpose of the company is the manufacture and sale of products made from extracts, fruits, and others.

The details of the subsidiaries included in the consolidation of Arauco are disclosed in Note 13.

NOTE 15. INVESTMENTS IN ASSOCIATES

At June 30 2017, there are no new investments in associates to report.

On March 31, 2016, our subsidiary Arauco do Brasil S.A. sold its stake at Stora Enso Arapoti Industria de Papel S.A. for ThU.S.$4,141. This transaction generated a loss of ThU.S.$10,369, as reflected in the Interim Consolidated Statements of Profit or Loss, in the line item “Other Expenses”.

The following tables set forth information about Investments in associates.

Name	Puertos y Logística S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Docking and warehousing operations for proprietary and third party use, cargo of all classes of goods, as well, as warehousing and transport operations.
Ownership interest (%)	20.2767%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$61,312	ThU.S.$61,505
Name	Inversiones Puerto Coronel S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Investments in movables and real estate, acquisition of companies, securities and investment instruments, investment management and development and/or participation in all kind of businesses and companies related to industrial, shipping, forestry and commercial activities.
Ownership interest (%)	50.0000%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$44,885	ThU.S.$43,559
Name	Servicios Corporativos Sercor S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Consulting services related to business management to Boards of Directors and Senior Management of all Arauco’s entities.
Ownership interest (%)	20.0000%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$240	ThU.S.$190

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Name	Genómica Forestal S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing forestry genomics, through the use of biotechnological, molecular and bioinformatics tools with the purpose of strengthening genetic programs so as to improve the competitive position of the Chilean forestry industry for priority tree species.
Ownership interest (%)	25.0000%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$(4)	ThU.S.$(1)
Name	Consorcio Tecnológico Bioenercel S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing of technologies which will promote the development of a biofuels industry in Chile, obtained from lingo-cellulosic materials. The future execution of this sustainable project is financed by the Innova Chile Committee.
Ownership interest (%)	20.0000%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$32	ThU.S.$31
Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	06-30-2017	12-31-2016
Carrying amount	ThU.S.$49,147	ThU.S.$160,490

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Summarized Financial Information of Associates

06-30-2017 Unaudited	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$		Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		86,810			29		3,763			—		6,976			4			18			97,600
Non-current		587,248			91,589		690			—		128,917			162			28			808,634
Total		674,058			91,618		4,453			—		135,893			166			46			906,234
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$		Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		37,072			82		2,547			—		813			—			9			40,523
Non-current		334,610			—		706			—		34,781			5			52			370,154
Equity		302,376			91,536		1,200			—		100,299			161			(15	)		495,557
Total		674,058			91,618		4,453			—		135,893			166			46			906,234
06-30-2017 Unaudited
Revenues		61,354			2,653		2,414			—		27,551			—			14			93,986
Expenses		(60,485	)		—		(2,149	)		—		(25,438	)		(7	)		(21	)		(88,100	)
Profit or loss (continuing operations)		869			2,653		265			—		2,113			(7	)		(7	)		5,886
Other comprehensive income		(1,254	)		—		—			—		98,186			—			—			96,932
Comprehensive income		(385	)		2,653		265			—		100,299			(7	)		(7	)		102,818
Dividends		—			—		—			—		—			—			—			—

64

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	Assets
12-31-2016	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		76,021			29		4,608			—			24,972			6		26			105,662
Non-current		572,831			88,936		668			—			415,083			153		63			1,077,734
Total		648,852			88,965		5,276			—			440,055			159		89			1,183,396
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		44,457			82		3,412			—			3,446			—		9			51,406
Non-current		301,065			—		912			—			109,079			6		85			411,147
Equity		303,330			88,883		952			—			327,530			153		(5	)		720,843
Total		648,852			88,965		5,276			—			440,055			159		89			1,183,396
03-31-2016 Unaudited
Revenues		55,549			1,594		2,321			492			21,807			—		—			81,763
Expenses		(43,930	)		—		(2,090	)		(6,320	)		(7,437	)		—		—			(59,777	)
Profit or loss (continuing operations)		11,619			1,594		231			(5,828	)		14,370			—		—			21,986
Other comprehensive income		(1,597	)		—		—			—			—			—		—			(1,597	)
Comprehensive income		10,002			1,594		231			(5,828	)		14370			—		—			20,369
Dividends		—			—		—			—			—			—		—			—

65

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of Investment in Associates and Joint Ventures

	06-30-2017 Unaudited			12-31-2016
	ThU.S.$			ThU.S.$
Opening balance as of January 1		446,548			264,812
Changes
Investment in joint ventures, Additions		—			153,135
Disposals, Investments in associates and joint ventures		—			(14,510	)
Share of profit (loss) in investment in associates		3,125			16,349
Share of profit (loss) in investment in joint ventures		8,445			7,590
Dividends Received, Investments in Associates		7,079			(5,320	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		13,424			20,634
Other increase (decrease) in investment and associates and joint ventures		(116,540	)		3,858
Total changes		(98,625	)		181,736
Ending balance		347,923			446,548

(*) In May of 2017, the associate Florestal Vale do Corisco S.A. performed a reimbursement of capital to its shareholders. This transaction did not generate effects in the income statement nor did it modify Arauco’s shareholding in Florestal Vale do Corisco S.A.

	06-30-2017 Unaudited		12-31-2016
	ThU.S.$		ThU.S.$
Carrying amount of associates accounted for using equity method		155,615		265,775
Carrying amount of joint ventures accounted for using equity method		192,308		180,773
Total investment accounted for using equity method		347,923		446,548

NOTE 16. INTERESTS IN JOINT ARRANGEMENTS

Investments and contributions made

On May 31, 2016, Inversiones Arauco Internacional Limitada, Arauco’s subsidiary, acquired 50% of the shares of Tableros de Fibras S.A, a Spanish subsidiary of SONAE INDUSTRIA, SGPS, S.A. (“Sonae”), which as of such date changed its name to “Sonae Arauco S.A.”. The price paid by Arauco for the acquisition of 50% of the shares of Sonae Arauco was the amount of €137,500,000 (equivalent to ThU.S.$153,135 at the acquisition date). This transaction generated goodwill of ThU.S 36,190, as shown in the Consolidated Statements of Financial Position as part of the investment.

Sonae Arauco produces and sells wood panels, of the type of MDF, PB and OSB, and sawn timber, through the operation of 2 panel plants and one sawmill in Spain; 2 panel plants and one resin plant in Portugal; 4 panel plants in Germany and 2 panel plants in South Africa.

In the aggregate, the production capacity of Sonae Arauco is of approximately 1.45 million m3 of MDF, 2.27 million m3 of particle boards, 460,000 m3 of OSB and 100,000 m3 of sawn timber.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2017 and December 31, 2016, Arauco has not carried out any contributions to Uruguayan companies Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A.

The investments in Uruguay qualify as a joint operation. In relation to “other rights and contractual conditions”, the joint operation has the primary objective of providing the parties an output. As established in the “Pulp Supply Agreement”, both Arauco and its partner have the obligation to acquire 100% of the yearly pulp produced by the joint operation. Arauco has recognized the assets, liabilities, income and expenses associated with its interest ownership, as of January 1, 2013, pursuant to IFRS 11.

Furthermore, Arauco holds a 50% ownership interest in Unilin Arauco Pisos Laminados Ltda., a Brazilian company, and in Eka Chile S.A. (“Eka”), a company that sells sodium chlorate to cellulose plants in Chile. There is a contractual agreement with these companies whereby Arauco has engaged in an economic activity subject to common control, which is classified as a joint venture.

The following tables set forth summarized financial information of the more significant interests in joint arrangements, which qualify as joint operations:

	06-30-2017 Unaudited				12-31-2016
Celulosa y Energía Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		186,370		225,994		173,258		182,834
Non-current		2,103,188		661,261		2,131,266		735,679
Equity				1,402,303				1,386,011
Total Joint Arrangement		2,289,558		2,289,558		2,304,524		2,304,524
Investment		701,152				693,006

	06-30-2017 Unaudited ThU.S.$			06-30-2016 Unaudited ThU.S.$
Income		331,328			322,688
Expenses		(312,716	)		(285,755	)
Joint Arrangement Net Income (Loss)		18,612			36,933

	06-30-2017 Unaudited				12-31-2016
Forestal Cono Sur S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		37,256		21,481		23,745		21,039
Non-current		168,614		1,350		178,236		1,381
Equity				183,039				179,561
Total Joint Arrangement		205,870		205,870		201,981		201,981
Investment		91,520				89,781

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		10,655			2,923
Expenses		(7,178	)		(1,954	)
Joint Arrangement Net Income (Loss)		3,477			969

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Eufores S.A. (consolidated)	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		183,794		192,345		178,644		200,525
Non-current		603,516		12,348		604,736		23,052
Equity				582,617				559,803
Total Joint Arrangement		787,310		787,310		783,380		783,380
Investment		291,309				279,902

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		164,412			133,264
Expenses		(141,598	)		(123,097	)
Joint Arrangement Net Income (Loss)		22,814			10,167

	06-30-2017 Unaudited				12-31-2016
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		5,255		91,147		4,397		82,331
Non-current		488,875		50,833		492,815		63,021
Equity				352,150				351,860
Total Joint Arrangement		494,130		494,130		497,212		497,212
Investment		176,075				175,930

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		13,395			12,528
Expenses		(13,105	)		(11,989	)
Joint Arrangement Net Income (Loss)		290			539

68

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following tables set forth summarized financial information of the more significant interests in joint ventures:

	06-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Unilin Arauco Pisos Ltda.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		7,247		4,245		7,900		3,549
Non-current		5,437		11		5,094		18
Equity				8,428				9,427
Total Joint Arrangement		12,684		12,684		12,994		12,994
Investment		4,214				4,714

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		7,579			—
Expenses		(8,292	)		(318	)
Joint Arrangement Net Income (Loss)		(713	)		(318	)
Other comprehensive income		—			—
Comprehensive income		(713	)		(318	)
Dividends		—			—

	06-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Eka Chile S.A.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		17,610		5,691		15,817		4,348
Non-current		31,584		4,841		31,690		5,021
Equity				38,662				38,138
Total Joint Arrangement		49,194		49,194		47,507		47,507
Investment		19,331				19,069

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		23,337			24,644
Expenses		(21,582	)		(21,837	)
Joint Arrangement Net Income (Loss)		1,755			2,807
Other comprehensive income		—			—
Comprehensive income		1,755			2,807
Dividends		—			—

69

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2017 Unaudited
	Assets		Liabilities		Assets		Liabilities
Sonae Arauco S.A.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		256,769		226,466		223,145		213,228
Non-current		644,784		337,562		616,467		312,404
Equity				337,525				313,980
Total Joint Arrangement		901,553		901,553		839,612		839,612
Net assets		134,806				120,800
Net asset adjustment (Goodwill)		33,957				36,190
Investment		168,763				156,990

	06-30-2017 Unaudited			06-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		485,644			—
Expenses		(469,618	)		—
Joint Arrangement Net Income (Loss)		16,026			—
Other comprehensive income		—			—
Comprehensive income		16,026			—
Dividends		—			—

(*) As of June 30, 2016, the Company did not present Financial Statements for purposes of disclosure.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 17. IMPAIRMENT OF ASSETS

Provisions for impairment of property, plant and equipment due to technical obsolescence have been recorded as of June 30, 2017 and December 31, 2016 respectively, as shown below:

Disclosure of Asset Impairment
Principal classes of Assets affected by Impairment and Reversal of Losses	Machinery and Equipment
Principal Facts and Circumstances that lead to Recognizing Impairment and Reversal of losses	Technical Obsolescence and Claim
	06-30-2017	12-31-2016
Information relevant to the sum of all impairment	ThU.S.$5,039	ThU.S.$5,923

This impairment provision is being analyzed to determine the definitive write-off corresponding to the related assets

Goodwill

Goodwill is allocated to the groups of cash-generating units that are expected to benefit from the synergies of the combination.

At the date of these interim consolidated financial statements, the balance of goodwill is ThU.S.$74,484 (ThU.S.$74,893, at December 31, 2016)

Of the total of goodwill, ThU.S.$39,766 (ThU.S.$39,694 as of December 31, 2016) are generated by the acquisition of “Flakeboard”, a company that, directly and/or through its subsidiaries, possesses and operates 7 panel plants, for which Arauco acquired and paid, on September 24, 2012, the price of ThU.S.$242,502 for the 100% interest ownership.

The recoverable amount for Flakeboard’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections covering a 5-year term, applying a real discount rate of 7.8% which reflects current market assessments for the Timber segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$31,904 (ThU.S.$32,385 as of December 31, 2016).

The recoverable amount for the Pien plant’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections based on the operational plan approved by the Administration, covering the period of total depreciation of the line, applying a 9% real discount rate that reflects current evaluations for the panel segment in Brazil.

As a result of the annual impairment test, the carrying value of the goodwill does not exceed their recoverable value, and therefore there is no need to recognize impairment losses.

As of June 30, 2017 and December 31, 2016, the variation of the balance in goodwill is only due to the translation adjustments as explained in the accounting policies.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 18. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES

The contingent liabilities for outstanding litigations are as follows:

Celulosa Arauco y Constitución S.A.

1. On August 25, 2005, the Chilean Servicio de Impuestos Internos (the “Chilean IRS”) issued tax resolutions No. 184 and No. 185 of 2005, and objected to certain income tax returns made by Arauco on April 16, 2001 and October 31, 2001, and furthermore, requested the reimbursement of the amounts returned in connection to tax losses, along with the amendment of the FUT (Tax Profits Fund) Registry balance. In consideration to the foregoing, the above mentioned tax resolutions ordered the restitution of the historical amount of $4,571,664,617 (equal to ThU.S.$ 6,882 as of June 30, 2017). On November 7, 2005, the Company requested a Review of the Supervision Action (Revisión de la Actuación Fiscalizadora, or “RAF”), which is an administrative review of the tax action brought by the Chilean IRS, and filed a claim disputing the above mentioned tax resolutions No. 184 and 185 of 2005. The RAF was resolved on January 9, 2009 by the Chilean IRS, partially sustaining the Company’s request, granting a discount to the total amount of $1,209,399,164 (equal to ThU.S.$ 1,821, as of June 30, 2017), resulting in a total disputed amount of $3,362,265,453 (equal to ThU.S.$ 5,061, as of June 30, 2017); consequently, on this date the claim corresponding to the sums not granted during the enforcement stage was filed. On February 19, 2010, the Court acknowledged receipt of the Company’s request. Subsequently, the tax authority issued a report and the Company commented on such report.

On September 26, 2014, Arauco requested the submission of this claim to the competent jurisdiction of the new Tax and Customs Courts. On October 10, 2014, Arauco’s request was granted. Currently the action is being considered by these new Courts under the Docket No. RUC 14-9-0002087-3. On March 20, 2015, the SII responded to the allegations submitted by Arauco against Liquidations No. 184 and 185 of 2005. On June 19, 2017, the Court issued the evidence production order, which was notified via certified letter on July 23, 2017. Arauco lodged a motion for reconsideration and a supplementary appeal, requesting the terms of the evidence production order to be modified. On July 7, 2017, the Court admitted the motion for reconsideration. Proceedings for the submission of evidence are currently ongoing.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and therefore as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

2. In connection with Licancel Plant, on June 22, 2011, the Company was notified of a civil claim for compensation of prejudice for an alleged tort liability, filed by twelve fishermen of the Mataquito River before the Court of First Instance, Guarantee and Family of Licantén under Docket number 73-2011. The case arose out of dead fish allegedly found in the Mataquito River on June 5, 2007 caused by the Licancel Plant. The plaintiffs seek to be compensated for alleged damages that they had from the aforementioned event, including loss of profits, pain and suffering and an alleged contractual liability, for a total of $2,695,560,000 (equal to ThU.S.$ 4,058 as of June 30, 2017).

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

On October 21, 2015 the Court issued a definitive first instance decision partially admitting the claim, sentencing Celulosa Arauco y Constitución S.A. to pay each claimant – as non-monetary damages – the sum of $5,000,000 (equal to ThU.S.$ 7, as of June 30, 2017) plus adjustments, in accordance with the variation of the Consumer Price Index, calculated as of the month of May 2007, through the month in which payment is made. On November 16, 2015, the defendant challenged the definitive decision through the submission of a cassation appeal based on formal aspects and an ordinary appeal. In turn, the plaintiff adhered to the appeal, seeking to have the amount of the non-monetary damages recognized by the first instance decision increased. On June 27, 2017, the Court of Appeals of Talca confirmed the ruling, declaring in addition that it increased the amount awarded as non-monetary damages to $10,000,000 (equal to ThU.S.$ 15 as of June 30, 2017) for each claimant, plus Consumer Price Index-based adjustments, calculated from the date of the first instance ruling (October 21, 2015) through the date of effective payment. On July 12, 2017, Arauco lodged a cassation appeal based on both procedural and substantial flaws. Pending. (Court of Appeals Docket No. 60-2016).

On August 4, 2017, the plaintiffs requested that the cassation appeals filed by Celulosa Arauco y Constitución S.A. be declared abandoned. Case pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

3. Through Res. Ex. N° 1 issued by the Superintendence of the Environment (“SMA”) on January 8, 2016, notified on January 14, 2016, the SMA formulated 11 charges against the Company, due to alleged breaches of certain Environmental Qualification Resolutions for the Valdivia Plant and of DS No. 90/2000. The 11 charges were classified as follows by the SMA: 1 critical, 5 severe, 5 minor.

On February 12, 2016, the Company submitted its defenses. The SMA shall analyze and rule on the defenses, and it may request new information or open a term for providing evidence. Once these proceedings have been discharged, the SMA will issue a resolution that either absolves or sanctions the Company. The resolutions issued by the SMA may be appealed before the Environmental Court.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company, and therefore as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

4. Through Res. Ex. N° 1 of the SMA, dated February 17, 2016 notified on February 23, 2016, the SMA formulated 8 charges against the company due to alleged breaches of certain Environmental Qualification Resolutions for the Nueva Aldea Plant. The 8 charges were qualified by the SMA as follows: 7 severe and 1 minor.

On March 15, 2016, the company submitted - within the established term - a compliance program which contains 30 actions and goals, related to each one of the 8 alleged infringements. On July 15, 2016, the Exempted Resolution No. 11 of the SMA was notified, which approved the compliance program and suspended the punitive proceedings. If the program is satisfactorily implemented, it would be possible to conclude the proceedings without applying any sanctions.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

On August 3, 2016, third-party complainants in the administrative proceeding filed a complaint appeal against Exempted Resolution No. 11 issued by the SMA, which approved the compliance program. On December 24, 2016, the Third Environmental Court rejected such complaint filed against Ex. Res. No. 11 SMA, which approved the compliance program. The petitioners did not file a cassation remedy.

Insofar as the compliance program is satisfactorily executed, no sanctions will be levied against the Company.

5. Through Exempted Resolution No. 1/File F-020-2016, dated May 6, 2016, the SMA formulated four charges against the company due to certain alleged breaches of the Environmental Qualification Resolutions of the Licancel Plant. The SMA classified the four charges as follows: 1 severe and 3 minor.

Regarding the 4 charges pressed by the Superintendence of the Environment against the Company through Exempted Resolution No. 1/Case File F-020-2016, dated May 6, 2016, for alleged infringements to the Environmental Qualification Resolutions of the Licancel Plant, we can inform the following.

On February 1, 2017, the Environment Superintendent issued Exempted Resolution No. 71, imposing a fine against the Company for the amount of 239 Annual Tax Units (UTA) (equivalent to ThU.S.$ 202, as of June 30, 2017).

• Regarding Charge No. 1, related to the disposal of solid industrial waste, particularly ashes in excess of the thresholds authorized by RCA No. 75/2004, a fine amounting to 3 UTA was applied (equivalent to ThU.S.$ 3, as of June 30, 2017).

• Regarding Charge No. 2, related to the failure to withdraw from the former treatment pond “pursuant to RCA No. 308/2006,” in the environmental inspections dated May of 2013 and February of 2015, a fine amounting to 234 UTA was applied (equivalent to ThU.S.$192, as of June 30, 2017).

• Regarding Charge No. 3, relaeted to exceeding the humidity percentages of the mud disposed of in the solid waste deposit, a fine amounting to 2 UTA was applied (equivalent to ThU.S.$ 2, as of June 30, 2017).

• Regarding Charge No. 4, related to the fact that the discharge point of the effluent was not built at the approved location, the Company was acquitted.

On February 13, 2017, the Company filed a motion for reconsideration, requesting the annulment of the fine or substantially decreasing it. This remedy is currently pending.

On August 7, 2017, a ruling was issued to resolve the reconsideration appeal, partially upholding the Company’s request regarding Charge No. 2, thus reducing the portion of the fine that corresponds to this charge, from 234 UTA to 177 UTA (equivalent to M

ThU.S.$149, as of June 30, 2017).

Additionally, regarding the total amount of the fine imposed for Charges Nos. 1, 2 and 3 (No. 4 had been rendered ineffective previously), the 25% reduction benefit was granted as a result of paying within the first 5 business days, and the total sum amounted to 136.5 UTA (equivalent to Th.U.S$ 115 as of June 30th, 2017). Case closed.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Since the Company’s position is grounded in solid legal arguments, and there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

6. Through Exempted Resolution No. 1/File F-031-2016, dated September 15, 2016, the SMA formulated three charges against the company due to certain alleged breaches of certain Environmental Qualification Resolutions of the Constitución Plant, and an alleged contravention of Law 19,300 resulting from a purported circumvention of the Environmental Assessment System. The SMA classified the three charges as follows: 1 severe and 2 minor.

On October 17, 2016, the company filed a Compliance Program containing 7 actions and objectives. On January 3, 2017 the SMA served its resolution approving the compliance program submitted by the Company. If the compliance program is executed satisfactorily, the proceedings would conclude without the application of any sanctions.

Since the Company’s position is grounded in solid legal arguments, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

Arauco Argentina S.A.

1. On December 14, 2007 the Federal Administration of Internal Revenue (Administración Federal de Ingresos Públicos)(“AFIP”) requested a determination, challenging the deductibility, as against Income Tax, of certain expenses, interests and exchange differences generated by Private Negotiable Obligations issued by the Company in 2001 and cancelled in 2007, for an amount of US$ 250,000,000.

This determination reached $417,908,207 Argentine Pesos (equivalent to ThU.S.$25,129 as of June 30, 2017) for principal, compensatory interest and fines.

On February 11, 2008, the Company appealed before the National Tax Court (Tribunal Fiscal de la Nación) (“TFN”), which upheld the State’s determination on February 2010. The Company appealed this decision before the National Chamber of Appeals for Federal Administrative Disputes.

Likewise, the Company requested an interim measure of relief before the Chamber of Appeals, so that the Chamber may order the suspension of the determination’s enforceability while the final judgment is pending. On May 13, 2010, Chamber I of the National Chamber of Appeals for Federal Administrative Disputes approved the request, subject to the pledge of collateral, which collateral was furnished by the Company by means of Insurance Policy No. 86058, issued by Zurich Argentina Cia. de Seguros S.A. for $633,616,741 Argentine Pesos (equivalent to ThU.S.$ 38,101 as of June 30, 2017).

The judgment of the Chamber of Appeals, issued in December 2012, was contrary to the company’s interests. The Company filed an Ordinary Appeal before the Supreme Court of Justice, which was authorized by the Chamber of Appeals, and an Extraordinary Appeal, which was duly noted by the Chamber for the relevant procedural phase.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

During this entire process, the Company, in consultation with its external legal advisors maintained their opinion that the Company had behaved within the limits of the law in its deduction of the interests, expenses and exchange differences that was challenged by the State, and that there were good change that this determination issued by the AFIP would be rendered without effect.

On July 22, 2016, Congress passed law No. 27,260, whose Title II, Book II establishes an Exceptional Regularization Regime for Tax, Social Security and Customs Obligations, for obligations that have been the subject matter of judicial proceedings (henceforth, the “Regularization Regime”).

The introduction of the Regularization Regime entails an exemption from the applicable fines as well as a portion of the interests. In order to enjoy these benefits, the taxpayer must unconditionally accept its counterparty’s claim in relation to the regularized obligations, as well as desist from and withdraw any action and right, including restitution actions, bearing the expense of litigation costs and expenses.

The legal counselors that have been intervening in the different stages of litigation have highlighted the very important economic advantages offered by the Regularization Regime in light of the contingency inherent to any judicial case.

On September 7, 2016, the Company materialized its application to the Regularization Regime before the AFIP, in connection to the obligations claimed in consideration to the adjustment conducted by the State regarding the Income Tax Statements filed between the years 2001 and 2004 and reported this situation to the Nation’s Supreme Court, consequently abandoning the Ordinary Appeal that had been promptly filed.

As of this date, the updated amount for the contingency amounted to approximately $891,758,132 Argentine Pesos (equal to ThU.S.$ 53,623 as of June 30, 2017), corresponding to principal, interest and fines. The Company decided to pay in cash, and the balance that was finally paid amounted to $ 248,503,504 Argentine Pesos (equal to ThU.S.$ 14,943 as of June 30, 2017). Additionally, the Company shall assume the payment of all litigation costs and trial expenses, the sum of which was undetermined as of the date of these financial statements. On November 1, 2016, the Nation’s Supreme Court of Justice declared the above mentioned remedy’s abandonment and returned the file to the court of origin. On November 30, 2016, the First Chamber of the National Appeals Court declared that the case file as returned. On April 18, 2017, Chamber I of the National Chamber declared that the Company had abandoned its actions and rights, including its repetition rights, thus condoning the fine and the corresponding interests. Additionally, it ordered the deferral of the fees regulation until payment of the state attorneys has been decided before the lower court, ordering the reimbursement of the Surety Insurance. The contingency insurance policy has been redeemed and returned to the insurance company.

2. Pursuant to law No. 25,080, the former Secretary of Agriculture, Livestock, Fishing and Foodstuffs, the enforcement agency referred to in the law approved, by Res. No. 952/2000, the forestry and industrial-forestry projects submitted by Arauco Argentina S.A. In the context of these projects, the Company afforested: 1) 4,777 hectares during 2000, in observance of its committed yearly plan; and 2) 23,012 hectares between 2000 and 2006 as a part of the multi-year afforestation plan. Likewise, a sawmill was built with installed capacity to produce 250,000 m3 of sawn timber per year.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

On January 11, 2001, Arauco Argentina S.A. submitted an expansion for the approved industrial-forestry project. The expansion was approved via Res. No. 84/03 issued by the former Secretary of Agriculture, Livestock, Fishing and Foodstuffs. In accordance with the assumed obligations, the Company built a MDF board (panels) plant and afforested 8,089 hectares between 2001 and 2006.

Additionally, the Company filed yearly forestry plans between years 2007 and 2015 for its local operations in the Provinces of Misiones and Buenos Aires.

In March, 2005, Note No. 145/05 of the Undersecretary of Agriculture, Livestock and Afforestation suspended the benefit that exempted Arauco Argentina S.A. from paying export duties under Law No. 25,080. This measure is currently under discussion by the Company. On November 8, 2006, the V Chamber of the National Appeals Court for Adversarial Administrative and Federal Matters issued a ruling ordering Arauco Argentina S.A. to continue to enjoy an exemption from paying the exportation duties, in the same manner and scope it had prior to the suspension ordered by Note No. 145/05, if the clearance of merchandise is performed pursuant to the guarantee regime established in article 453, subsection a) of the Customs Code, for the exempted tax obligation. The judicial measure became effective beginning on March of 2007 by collateralization through the granting of bond (caución) policies for each shipment permits exempted from payment of export duty. The company maintains an assignment of funds equivalent to $389,824,000 Argentine Pesos (ThU.S.$ 23,441 as June 30, 2017) for guaranteed export duties, which appears under not current provisions. Additionally, the Company filed a restitution claim for a total amount of US$6,555,207, plus interests accrued from the service of the claim, corresponding to export duties between March 2005 and March 2007, as a result of the application of Note 145/05 issued by the Undersecretary of Agriculture, Livestock and Afforestation. Both the underlying issue and the restitution claim have yet to be resolved.

On the other hand, in April 2016, the Secretary of Agriculture, Livestock and Fishing issued Resolution No.154 – E/2016, that requires that the holders of enterprises that have received the fiscal benefits envisaged by Law No. 25,080, establish collateral to cover a third of the duration of the project, with a minimum term of five years. During May of 2017, the Company modified the duly established collateral in accordance to the terms of said Resolution, for which reason the security was ultimately established at an amount of $276,508,024 (MUS$16,627 as of June 30, 2017).

Arauco Argentina S.A. believes that it has complied with all of the obligations imposed upon it by the system set forth under Law No. 25,080.

Arauco do Brasil S.A.

On November 8, 2012, the Brazilian tax authorities issued an Infringement Notice against one of our Brazilian subsidiaries, Arauco do Brasil S.A., for allegedly unpaid taxed owed by said company during the period from 2006 to 2010. Specifically, the tax authorities (i) objected to the deductibility of certain payments made, and expenses incurred (including the amortization of premiums, interest and litigation costs) by Arauco do Brasil between 2005 and 2010, and, (ii) argued that Arauco do Brasil made certain insufficient payments regarding the Brazilian Corporate Tax (“IRPJ”) and the Corporate Contribution over Net Profits (“CSLL”) during 2010.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

On July 20, 2015, Arauco do Brasil was notified of the first-level administrative ruling which partially upheld the Infringement, at the estimated amount of R$ 164,159,000 (MUS$ 49,656 as of June 30, 2017). Against this ruling, a Voluntary Appeal was filed seeking to revoke the Infringement Notice before the Brazilian Administrative Tax Council (Conselho Administrativo de Recursos Fiscais de Brasil or “CARF”), which is the second administrative level. The CARF’s decision was issued on May 16, 2017, and took into consideration certain arguments presented by the Company regarding the agios, but preserving other charges. Administratively, it is possible that the parties can file a Special Remedy. If the current scenario remains in place, it is estimated that the claim will amount to R$57,278,771 (MUS$17,326, as of June 30, 2017), plus correction increments.

The company believes that its challenge against the Infringement Notice is based on sound legal grounds and that a reasonable possibility exists that this matter will be resolved in favor of the company. Otherwise, as the next step, the Company will challenge the Infringement Notice before the Brazilian Justice Courts.

Forestal Arauco S.A.

1. Maquinarias y Equipos Klenner Limitada filed a civil damages claim before the First Civil Court of Valdivia, Case File number C-375-2015, against Forestal Arauco S.A. The claim seeks compensation for alleged damages brought as a result of the termination of a service provision contract that took place on February 9, 2010. The plaintiff valued the damages in the amount of $4,203,216,164 (equivalent to ThU.S.$ 6,327, as of June 30, 2017).

On November 14, 2016, the lower court issued a ruling partially upholding the claim, convicting Forestal Arauco S.A. to pay the sum of $115,026,673 (equivalent to ThU.S.$ 173 as of June 30, 2017) as general damage, and the sum of $607,849,413 (equivalent to ThU.S.$ 915 as of June 30, 2017) for loss profit, rejecting the claim for alleged moral damage, all without ordering the payment of litigation expenses.

Forestal Arauco S.A. challenged the ruling filing a cassation remedy based on procedural violations as well as an appeal. The plaintiff also challenged the ruling through an appeal. All remedies still have pending hearings and final resolutions before the Court of Appeals of Valdivia. Currently, the remedies have been under agreement pending the issuance of the resolution, since April 25, 2017. (Court entry Case File No. 779-2016).

On August 14th, 2017, the Court of Appeals of Valdivia revoked the first instance ruling that had partially upheld the claim lodged by Maquinarias y Equipos Klenner Limitada against Forestal Arauco S.A., and instead issued a decision that integrally dismissed said claim. This ruling is not yet final and enforceable. Case pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

2. On April 28, 2015, the company was notified of and answered the action for recovery submitted in ordinary proceedings by Mr. Rodrigo Huanquimilla Arcos and Mr. Mario Andrades Rojas, attorneys at law, on behalf of 24 members of the Arcos succession, who claiming to be owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, request that Forestal Celco S.A., currently Forestal Arauco S.A., be sentenced to return the above mentioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. The company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

The Court ordered that this trial be joined with those entertained under Case File C-54-2015, suspending the proceeding and ordering the parties to appoint a joint representative to act on behalf of both parties. The attorneys for both claimant parties conferred reciprocal powers to each other, and thus the Court deemed they had fulfilled the legal requirement.

On December 9, 2016, the Court summoned the parties for the issuance of the ruling. On February 24, 2017, the first instance final ruling was notified, which dismissed the claim in its entirety, and imposed the payment of court costs. On March 8, 2017, the claimant appealed against the first instance decision. Currently, the case is pending before the Court of Appeals, and the decree declaring that the case is ready to be heard by the Court was issued on April 12. Pending (Court of Appeals of Talca Case File No. 949-2017).

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

3. On April 6, 2015, the company was notified through a rogatory letter regarding the claim submitted by Mr. Gustavo Andrés Ochagavía Urrutia, attorney at law, acting on behalf of 23 members of the Arcos succession, who claim to be the owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, requesting that Forestal Celco S.A., currently Forestal Arauco S.A., be ordered to return the above mentioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. They base their claim in that Forestal Celco S.A., currently Forestal Arauco S.A., is allegedly in possession but does not own the real property in question. On April 28, 2014, the company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

On January 8, 2016, the defendant requested a consolidation of the proceedings with Case file 334-2014, as well as the suspension of the proceedings until this request is decided upon. The Court ordered this case file to be joined with the proceedings of case file No. C-334-2014 of the Civil Court of Constitución.

On February 24, 2017, the final ruling of the lower court was notified, completely dismissing the claim, with litigation costs. On March 8, 2017, the plaintiff filed an appeal against the lower court final ruling. Currently, the case is pending before the Court of Appeals, with the decree declaring that the case is ready to be heard by the Court being issued on April 12. Pending (Court of Appeals of Talca Case File No. 949-2017).

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of June 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

At the end of each reporting period there are no other contingencies that might significantly affect the Company’s financial, position or results of operations.

Provisions recorded as of June 30, 2017 and December 31, 2016 are as follows:

	06-30-2017
Classes of Provisions	Unaudited ThU.S.$		12-31-2016 ThU.S.$
Provisions, Current		378		842
Provisions for litigations		378		427
Other provisions		—		415
Provisions, non-Current		37,516		38,138
Provisions for litigations		14,060		14,696
Other provisions		23,456		23,442
Total Provisions		37,894		38,980

	06-30-2017 Unaudited
Movements in Provisions	Litigations ThU.S.$(*)			Other Provisions (**) ThU.S.$			Total ThU.S.$
Opening balance		15,123			23,857			38,980
Changes in provisions
Increase in existing provisions		621			14			635
Used provisions		(787	)		—			(787	)
Increase (decrease) in foreign currency exchange		(511	)		—			(511	)
Other Increases (Decreases)		(8	)		(415	)		(423	)
Total Changes		(685	)		(401	)		(1,086	)
Closing balance		14,438			23,456			37,894

(*) The increase in legal claims is composed mainly of ThU.S.$447 and ThU.S$167 (Brazilian and Argentine subsidiaries respectively) for civil and labor judgments.

(**) The change in Other Increases (Decrease) in Other Provisions is due to a reversal of the existing provisions, corresponding to the Punta Pereira Customs-Free Zone.

	12-31-2016
Movements in Provisions	Litigations ThU.S.$(*)			Other Provisions ThU.S.$			Total ThU.S.$
Opening balance		11,400			23,999			35,399
Changes in provisions
Increase in existing provisions		5,363			1			5,364
Used provisions		(998	)		(39	)		(1,037	)
Increase (decrease) in foreign currency exchange		(609	)		—			(609	)
Other Increases (Decreases)		(33	)		(104	)		(137	)
Total Changes		3,723			(142	)		3,581
Closing balance		15,123			23,857			38,980

(*) The increase in legal claims is composed mainly of ThU.S.$ 863 and ThU.S.$ 2,255 (Brazilian and Argentine subsidiaries respectively) in connection with civil and labor lawsits, and ThU.S.$1,490 from Arauco Argentina in connection of fees in lawsuits

(**) The change in Other Increases (Decreases) in Other Provisions is due to a reversal of the existing provisions of ThU.S$ 100 of Arauco Argentina.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Provisions for litigations are related to labor and tax claims whose payment period is uncertain. Other provisions mainly include the recognition of a liability related to investments in associates and joint ventures accounted under the equity method with net asset deficiency at the end of the reporting period.

NOTE 19. INTANGIBLE ASSETS

	06-30-2017
Classes of Intangible Assets, Net	Unaudited ThU.S.$			12-31-2016 ThU.S.$
Intangible assets, net		90,972			89,497
Computer software		28,724			26,370
Water rights		5,697			5,689
Customer		49,226			50,982
Other identifiable intangible assets		7,325			6,456
Classes of intangible Assets, Gross		167,631			159,025
Computer software		78,790			72,008
Water rights		5,697			5,689
Customer		72,011			71,275
Other identifiable intangible assets		11,133			10,053
Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(76,659	)		(69,528	)
Accumulated amortization and impairment, intangible assets		(76,659	)		(69,528	)
Computer software		(50,066	)		(45,638	)
Customer		(22,785	)		(20,293	)
Other identifiable intangible assets		(3,808	)		(3,597	)

Reconciliation of the carrying amount of intangible assets at the beginning and end of each reporting period balances

	06-30-2017
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rights ThU.S.$		Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		26,370			5,689		50,982			6,456			89,497
Changes
Additions		6,650			8		—			1,088			7,746
Disposals		—			—		—			—			—
Amortization		(4,205	)		—		(2,383	)		(200	)		(6,788	)
Increase (decrease) in foreign currency conversion		35			—		627			23			685
Others Increases (Decreases)		(126	)		—		—			(42.00	)		(168	)
Changes Total		2,354			8		(1,756	)		869			1,475
Closing Balance		28,724			5,697		49,226			7,325			90,972

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	12-31-2016
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rights ThU.S.$		Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		21,251			5,485		55,265			6,111			88,112
Changes
Additions		12,935			204.00		—			1,718			14,857
Disposals		(1	)		—		—			—			(1	)
Amortization		(8,368	)		—		(4,770	)		(1,414	)		(14,552	)
Increase (decrease) in foreign currency conversion		178			—		487			41			706
Others Increases (Decreases)		375			—		—			—			375
Changes Total		5,119			204		(4,283	)		345			1,385
Closing Balance		26,370			5,689		50,982			6,456			89,497

	Years of Useful life (Average)
Computer Software		5
Customer		15
Brands		7

The amortization of customer and computer software is presented in the Interim Consolidated Statements of Profit or Loss under the “Administrative Expenses” line item.

NOTE 20. BIOLOGICAL ASSETS

Biological assets comprise forestry plantations, mainly radiata and taeda pine, and to a lesser extent eucalyptus. The plantations are located in Chile, Argentina, Brazil and Uruguay, with a total surface of 1.7 million hectares as of June 30, 2017 out of which 1 million hectares are used for forestry planting, 431 thousand hectares are native forest, 193 thousand hectares are used for other purposes and 76 thousand hectares not yet planted.

As of June 30, 2017, the production volume of logs totaled 10.1 million cubic meters (9.5 million cubic meters as of June 30, 2016).

Measurements of fair value of Arauco’s biological assets are classified as Level 3, due to the fact that inputs are not observable. However, this information reflects the assumptions that market participants would use in pricing the asset, including assumptions about risk.

These unobservable inputs were developed using the best information available and includes internal data from Arauco. These unobservable inputs can be adjusted if the available information indicates that other market participants would use different information or there is something specific in Arauco that is not available to other market participants.

The main considerations in determining the fair value of biological assets include the following:

• Arauco uses discounted expected future cash flows of its forest plantations, which are based on a harvest projection date for all existing plantations.

• Current forestry plantations are projected based on a net volume that will not decrease, with a minimum growth equivalent to the current supply demand.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

• Future plantations are not considered.

• The harvest of forestry plantations supplies raw materials for all other products that Arauco produces and trades. By directly controlling the development of forests that will be processed, Arauco ensures high quality timber for each of its products.

• Expected cash flows are determined in terms of harvest and expected sale of forestry products, associated with the demand from the Company’s own industrial centers and sales to third parties at market prices. Sales margin of the different products that are harvested in the forest is also considered in the valuation. The changes in the value of the plantations pursuant to the criteria defined above are accounted for in the results for the fiscal year, as established in IAS 41. These changes are presented in the Interim Consolidated Statements of Profit or Loss under the line item Other income per function, which as of June 30, 2017 amounted to ThU.S.$67,282 (ThU.S.$98,874 as of June 30, 2016). The appraisal of biological assets resulted in a greater cost of the lumber sold in comparison to the real incurred cost, which is presented included in the cost of sales which as of June 30, 2017 amounted to ThU.S.$98,892 (ThU.S.$98,455 as of June 30, 2016).

• Forestry plantations are harvested according to the needs of Arauco’s production plants.

• The discount rates used are 8% in Chile, Brazil and Uruguay, and 12% in Argentina.

• It is expected that prices of harvested timber are constant in real terms based on market prices.

• Cost expectations with respect to the lifetime of the forests are constant based on estimated costs included in the projections made by Arauco.

• The average crop age by species and country is:

	Chile		Argentina		Brazil		Uruguay
Pine		24		15		15		—
Eucalyptus		12		10		7		10

The following table sets forth changes in fair value of biological assets considering variations in significant assumptions considered in calculating the fair value of the assets:

		ThU.S.$
Discount rate	0.5		(105,417	)
	-0.5		111,148
Margins (%)	10		371,072
	-10		(371,072	)

The adjustment to fair value of biological assets is recorded in the Interim Consolidated Statements of Profit or Loss, under the line item Other Income or Other Expenses, depending on whether it corresponds to profits or losses.

Forestry plantations classified as current Biological assets are those to be harvested and sold within twelve months after the reporting period.

83

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources, allows to minimize such risks.

Detail of Biological Assets Pledged as Security

As of June 30, 2017, there are no forestry plantations pledged as security.

Detail of Biological Assets with Restricted Ownership

As of the date of these interim consolidated financial statements, there are no biological assets with restricted ownership.

No significant government grants have been received.

Current and Non-Current Biological Assets

As of the date of these interim consolidated financial statements, the Current and Non-current biological assets are as follows:

	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Current		303,600		306,117
Non-current		3,519,006		3,592,874
Total		3,822,606		3,898,991

Reconciliation of carrying amount of biological assets

Movement	06-30-2017 Unaudited ThU.S.$
Opening Balance		3,898,991
Changes in Biological Assets
Additions		206,141
Decreases due to Sales		(192	)
Decreases due to Harvest		(168,750	)
Gain (losses) arising from changes in fair value less costs to sale		67,282
Increases (decreases) in Foreign Currency Translation		(6,999	)
Loss of forest due to fires		(173,867	)
Total Changes		(76,385	)
Closing Balance		3,822,606
Movement	12-31-2016 ThU.S.$
Opening Balance		3,826,597
Changes in Biological Assets
Additions		137,439
Decreases due to Sales		(1,351	)
Decreases due to Harvest		(326,494	)
Gain (losses) arising from changes in fair value less costs to sale		208,562
Increases (decreases) in Foreign Currency Translation		69,068
Loss of forest due to fires		(15,193	)
Other Increases (decreases)		363
Total Changes		72,394
Closing Balance		3,898,991

As of the date of these interim consolidated financial statements, there are no disbursements related to the acquisition of biological assets.

84

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 21. ENVIRONMENTAL MATTERS

Environment Management

For Arauco, sustainability means management strategy. This strategy incorporates values, commitments and standards, that together with the adoption of best practices as well as the use of the latest available technologies, seek to continuously improve the Company’s environmental management. It is the environmental department and each of its specialists that ensure these guidelines are met and are put in to practice in everyday company operations.

All of Arauco’s production units have certified environmental management systems, which reinforce the Company’s commitment to environmental performance and ensure the traceability of all raw materials used.

Arauco uses several supplies in its productive processes such as wood, chemical products, and water, etc., which in turn produce liquid and gas emissions. As a way to make the Company’s environmental management more efficient, significant progress has been made to reduce consumption and emissions.

Environmental investments have been made related to the control of atmospheric emissions, process improvements, water and waste management, as well as effluent treatment, in order to improve the environmental performance of all of Arauco’s business units.

These investments are reflected in Arauco’s financial statements in Properties, Plants and Equipment, when they refer to disbursement in executed major constructions and reflected in Expenses when they refer to improvements or handling not directly associated to investment projects.

Detail information of disbursements related to the environment

As of June 30, 2017 and December 31, 2016 Arauco has made and / or has committed the following disbursements by major environmental projects:

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

06/30/2017		Disbursements undertaken 2017					Committed Disbursements
Company	Name of project	State of project	Amount ThU.S.$		Asset Expense	Asset/expense destination item	Amount ThU.S.$		Estimated date
Arauco Do Brasil S.A.	Environmental improvement studies	In process		338	Assets	Property, plant and equipment		1,211		2017
Arauco Do Brasil S.A.	Environmental improvement studies	In process		—	Expense	Administration expenses		1,570		2017
Celulosa Arauco Y Constitucion S.A.	Investment projects for the control and management of gas emissions from industrial process	In process		1,474	Assets	Property, plant and equipment		7,932		2017
Celulosa Arauco Y Constitucion S.A.	Environmental improvement studies	In process		16,631	Assets	Property, plant and equipment		21,560		2018
Celulosa Arauco Y Constitucion S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		23,216	Assets	Property, plant and equipment		41,234		2017
Celulosa Arauco Y Constitucion S.A.	Environmental improvement studies	In process		14,209	Expense	Operating cost		17,475		2017
Arauco Argentina S.A.	Construction emisario	In process		21	Assets	Property, plant and equipment		818		2017
Arauco Argentina S.A.	Expansion of solid industrial waste dumpsite for management of these in the future	In process		96	Assets	Property, plant and equipment		28		2017
Arauco Argentina S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		—	Assets	Property, plant and equipment		5,940		2017
Maderas Arauco S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		223	Expense	Administration expenses		223		2017
Maderas Arauco S.A.	Expansion of solid industrial waste dumpsite for management of these in the future	In process		599	Expense	Operating cost		100		2017
Maderas Arauco S.A.	Environmental improvement studies	In process		89	Assets	Property, plant and equipment		332		2017
Forestal Arauco S.A.	Environmental improvement studies	In process		577	Expense	Administration expenses		961		2017
Celulosa y energía Punta Pereira S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		358	Assets	Property, plant and equipment		12		2017
Forestal los Lagos S.A.	Environmental improvement studies	In process		101	Expense	Operating cost		166		2017
		TOTAL		57,932				99,562

86

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

12-31-2016

Disbursements undertaken 2016

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Arauco Do Brasil S.A.

Environmental improvement studies

In process

285

Assets

Property, plant and equipment

417

2017

Arauco Do Brasil S.A.

Environmental improvement studies

In process

385

Expense

Administration expenses

1,231

2017

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

1,585

Assets

Property, plant and equipment

1,396

2017

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

476

Assets

Property, plant and equipment

8,085

2018

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

611

Assets

Property, plant and equipment

20,658

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

1,271

Assets

Property, plant and equipment

—

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

1,218

Assets

Property, plant and equipment

14,736

2018

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

51,703

Assets

Property, plant and equipment

64,450

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

26,990

Expense

Operating cost

4,180

2018

Celulosa Arauco Y Constitucion S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

Finished

144

Assets

Property, plant and equipment

—

Arauco Argentina S.A.

Construction emisario

In process

8

Assets

Property, plant and equipment

824

2017

Arauco Argentina S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

187

Assets

Property, plant and equipment

124

2017

Arauco Argentina S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

183

Assets

Property, plant and equipment

6,112

2017

Maderas Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

Finished

1,332

Expense

Operating cost

—

Maderas Arauco S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

Finished

465

Expense

Administration expenses

—

Maderas Arauco S.A.

Environmental improvement studies

In process

1,217

Assets

Property, plant and equipment

304

2017

Forestal Arauco S.A.

Environmental improvement studies

In process

643

Expense

Administration expenses

946

2017

Forestal Los Lagos S.A.

Environmental improvement studies

In process

225

Expense

Operating cost

18

2017

TOTAL

88,928

123,481

87

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 22. NON-CURRENT ASSETS HELD FOR SALE

Arauco decided to sell assets in previous years corresponding mainly to sawmills in Chile and remains committed to its sales plan.

The following table sets forth information on the main types of non-current assets held for sale:

	06-30-2017 Unaudited		12-31-2016
	ThU.S.$		ThU.S.$
Land		160		160
Buildings		1,122		1,122
Property, plant and equipment		1,175		1,777
Total		2,457		3,059

As of June 30, 2017 and December 31, 2016, there were no significant effects on results related to the sale of assets held for sale.

88

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of June 30, 2017 and December 31, 2016, are displayed in the table below. Regarding those instruments valued at an amortized cost, as estimation of their fair value is displayed for informational purposes.

	June 2017 Unaudited				December 2016
Financial Instruments Thousands of dollars	Carrying amount		Fair Value		Carrying amount		Fair Value
Fair value through profit or loss (held for trading) (1)		73,539		73,539		198,582		198,582
Derivatives		3,459		3,459		3,166		3,166
Mutual funds (2)		70,080		70,080		195,416		195,416
Loans and Accounts Receivables		1,168,382		1,168,382		1,126,182		1,126,182
Cash and cash equivalents (amortized cost)		442,643		442,643		396,837		396,837
Cash		183,827		183,827		149,446		149,446
Time deposits		175,636		175,636		247,391		247,391
Agreements		83,180		83,180		—		—
Accounts Receivable (net)		718,578		718,578		715,883		715,883
Trade and other receivables		607,899		607,899		600,589		600,589
Lease receivable		3,865		3,865		764		764
Other receivables		106,814		106,814		114,530		114,530
Accounts receivable due from related parties		7,161		7,161		13,462		13,462
Other Financial Assets (5)		12,617		12,617		10,903		10,903
Financial liabilities at amortized cost (3)		4,765,894		5,003,754		5,022,725		5,158,789
Bonds issued denominated in U.S. Dollars		2,053,317		2,140,025		2,321,980		2,480,063
Bonds issued denominated in U.F. (4)		1,154,329		1,274,444		1,130,679		1,078,934
Bank Loans in U.S. Dollars		901,452		936,931		891,338		926,070
Bank borrowing denominated in U.S. Dollars		26,299		26,299		23,020		23,020
Financial leasing		113,159		108,717		113,986		108,980
Trade and other payables		508,849		508,849		537,891		537,891
Accounts payable to related parties		8,489		8,489		3,831		3,831
Financial liabilities at fair value through profit or loss		26		26		336		336
Hedging Liabilities		72,187		72,187		87,027		87,027

(1) Assets measured at fair value through profit or loss other than mutual funds classified as cash equivalents, are presented in the line item “other financial assets” in the interim consolidated statement of financial position.

(2) Although mutual funds are measured at fair value through profit or loss for purposes of the interim consolidated statement of financial position mutual funds are classified as “Cash and cash equivalents” due to the are highly liquid short term investment.

(3) Financial liabilities measured at amortized cost, other than “Trade and other payables” and derivatives are presented in the interim consolidated statement of financial position in the line item “Other financial liabilities” as current and non-current based on their maturity.

(4) The Unidad de Fomento (“UF”) is a unit of account that is linked to, and is adjusted daily to reflect changes in the Chilean consumer price index.

(5) Includes guarantee fund for derivatives which correspond to the collateral under swap agreements.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.2 Fair Value Hierarchy of Financial Assets and Liabilities

The assets and liabilities measured at fair value in the consolidated statements of financial position as of June 30, 2017, have been measured based on the valuation methodologies provided in IAS 39. The methodologies applied for each financial instrument are classified according to their hierarchy as follows:

• Level 1: Securities or quoted prices in active markets for identical assets and liabilities

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

	Fair Value		Fair value
Financial Instruments	June 2017 ThU.S.$		Level 1 ThU.S.$		Level 2 ThU.S.$		Level 3 ThU.S.$
Fair value through profit or loss (held for trading)
Derivatives		3,459				3,459
Mutual Funds		70,080		70,080
Other financial assets		12,617		1,197		11,420
Financial liabilities measured at amortized cost
Bonds issued denominated in U.S. Dollars		2,140,025		2,140,025
Bonds issued denominated in U.F. (4)		1,274,444		1,274,444
Bank loans in U.S. Dollars		936,931				936,931
Bank borrowing denominated in U.S. Dollars		26,299				26,299
Financial leasing		108,717				108,717
Financial liabilities at fair value through profit or loss		26				26
Hedging liabilities		72,187				72,187

90

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.3 Explanation of the valuation of Financial Instruments.

Cash and cash equivalent and accounts receivable

The carrying amount of accounts receivable cash and cash equivalents (including mutual funds), and other financial assets and liabilities approximate their fair value due to the short-term nature of such instruments.

Derivative financial instruments

Interest rate and currency swaps are valued under the cash flow discount method at the rate applicable according to the transaction’s risk, using an internal methodology based on the information obtained from Bloomberg. In this particular case, given that cross currency swaps correspond to future flows in UF and future flows in Dollars, Arauco calculates the current value of such flows by using 2 discount curves: the UF zero coupon curve and the Dollar zero coupon.

The fair value of the interest rate swap contracts is calculated by reference to the rate differential between the agreed upon rate and the market rate as of the end date of these financial statements.

The fair value of the currency forward contracts is calculated by reference to the current forward exchange rates of contracts with similar maturity profiles.

Financial Liabilities

The fair value of bonds issued was determined with reference to quoted market prices as they have standard terms and conditions.

The fair value of bank borrowings and financial leases were determined based on discounted cash flow analysis, applying the corresponding discount yield curves to the remaining term to maturity.

Disclosures of the fair value of financial liabilities at amortized cost are determined via the use of discounted cash flows, calculated over variables of the observable markets as of the date of informing the interim consolidated financial statements, and correspond to Level 2 of the fair value hierarchy.

91

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following table shows the compliance with the financial covenants (level of indebtedness, detailed in section 23.9.3), for the bonds issued prior to the year 2015, as required by domestic indentures (Chile):

	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Interest bearing loans, current (a)		453,834		697,000
Other financial liabilities, current		454,021		697,452
Hedging liabilities current + Financial liabilities at fair value through profit or loss current		187		452
Interest bearing loans, non-current (b)		3,794,722		3,784,003
Other financial liabilities, non-current		3,866,748		3,870,914
Hedging liabilities non-current + Financial liabilities at fair value through profit or loss non-current		72,026		86,911
Financial debt total (c)		4,248,556		4,481,003
Cash and cash equivalents		512,723		592,253
Other financial assets current		4,361		5,201
Total, Cash (d)		517,084		597,454
Net Financial Debt (e)		3,731,472		3,883,549
Non-controlling interests		6,933,253		6,955,251
Equity attributable to owners of parent		43,679		44,032
Total, Equity (f)		6,976,932		6,999,283
Debt to equity ratio (g)		0.53		0.55

(a) Other Current Financial Liabilities – (Current Hedge Liabilities + Financial Liabilities with changes in current results)

(b) Other Non-Current Financial Liabilities – (Non-current Hedge Liabilities + Financial Liabilities with changes in non-current results)

(c) Interest bearing loans, current + Interest bearing loans, non-current

(d) Cash and Cash Equivalents + Other Current Financial Assets

(e) Total Financial Debt – Total Cash

(f) Equity attributable to owners of controlling parent + Non-controlling interests

(g) Net Financial Debt / Total Equity

Note: As of June 30, 2017 the amount for the financial Liabilities with changes in non-current profits and losses is zero, the current hedging liabilities amount is ThU.S.$ 161, and Financial liabilities at fair value through profit or loss amount is ThU.S.$ 26

92

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following table shows the compliance with the financial covenants (level of indebtedness, detailed in section 23.9.3), for the bonds issued after year 2015, as required by domestic indentures (Chile):

	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Other financial liabilities (a)		4,320,769		4,568,366
Other financial liabilities, current		454,021		697,452
Other financial liabilities, non-current		3,866,748		3,870,914
Financial liabilities at fair value through profit or loss		26		336
Hedging liabilities (b)		72,187		87,027
Swaps		71,928		86,895
Forward		259		132
Financial debt total (c)		4,248,556		4,481,003
Cash and cash equivalents		512,723		592,253
Total, Cash (d)		512,723		592,253
Net Financial Debt (e)		3,735,833		3,888,750
Non-controlling interests		6,933,253		6,955,251
Equity attributable to owners of parent		43,679		44,032
Total, Equity (f)		6,976,932		6,999,283
Debt to equity ratio (g)		0.54		0.56

(a) Other Financial Liabilities current + Other Financial Liabilities non-current

(b) Swaps + Forwards + Options

(c) Other financial liabilities +Financial liabilities at fair value through profit or loss + Hedging liabilities

(d) Cash and Cash Equivalents + Other Current Financial Assets

(e) Total Financial Debt – Total Cash

(f) Equity attributable to owners of controlling parent + Non-controlling interests

(g) Net Financial Debt / Total Equity

93

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth the reconciliation between the financial liabilities and the statement of financial position as of June 30, 2017 and December 31, 2016:

Thousands of dollars	June 2017 - Unaudited
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		174,559		26,020		200,579		1,746,430		1,260,636		3,007,066		3,207,645
Bank borrowing		118,079		95,780		213,859		619,707		94,185		713,892		927,751
Financial Leasing		9,720		29,676		39,396		73,763		—		73,763		113,159
Swap and Forward		187		—		187		72,027		—		72,027		72,214
Other Financial Liabilities, Total (a)		302,545		151,476		454,021		2,511,927		1,354,821		3,866,748		4,320,769
Thousands of dollars	June 2017 - Unaudited
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		508,849		—		508,849		—		—		—		508,849
Accounts payable to related companies		8,489		—		8,489		—		—		—		8,489
Accounts Payable, Total (b)		517,338		—		517,338		—		—		—		517,338
Total Pasivos financieros (a) + (b)		819,883		151,476		971,359		2,511,927		1,354,821		3,866,748		4,838,107
Thousands of dollars	December 2016
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		51,874		409,102		460,976		1,233,603		1,758,079		2,991,682		3,452,658
Bank borrowings		134,140		61,483		195,623		626,384		92,351		718,735		914,358
Financial leasing		9,534		30,866		40,400		73,586		—		73,586		113,986
Swap and Forward		453		—		453		86,911		—		86,911		87,364
Other Financial Liabilities, Total (a)		196,001		501,451		697,452		2,020,484		1,850,430		3,870,914		4,568,366
Thousands of dollars	December 2016
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		511,371		26,520		537,891		—		—		—		537,891
Accounts payable to related companies		3,831		—		3,831		—		—		—		3,831
Accounts Payable, Total (b)		515,202		26,520		541,722		—		—		—		541,722
Financial Liabilities, Total (a) + (b)		711,203		527,971		1,239,174		2,020,484		1,850,430		3,870,914		5,110,088

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.4 Derivative Instruments

Hedging instruments recorded as of June 30, 2016 are cash flow hedges. Arauco uses derivatives for hedging purposes, such as cross currency swaps, currency and commodity forwards, interest rate swaps, and options. Depending on the fair value of each instrument, the position could be either an asset or a liability, and they are listed in the Statement of Financial Position under Other Non-Current Financial Assets or Other Non-current Financial Liabilities, respectively. The effects for the period are presented under Equity as Other Comprehensive Income or the Statement of Comprehensive Income as Finance Income or Finance Costs, net of differences in exchange rate of the hedged items and the deferred tax.

A summary of the derivative financial instruments included in the Statements of Financial Position as of June 30, 2017 and December 31, 2016, is presented below:

Financial Instruments	June 2017 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		2,739
Derivative-Uruguay (1)		2,738
Forward- Colombia		1
Hedging Assets		1,006
Derivative-Uruguay (1)		996
Cross Currency Swaps		10
Financial liabilities at fair value through profit or loss		(26	)
Forward-Colombia		—
Derivative-Uruguay (1)		(26	)
Hedging Liabilities		(331	)
Cross Currency Swaps		(72	)
Derivative-Uruguay (1)		(259	)

(1) Include Swap and Forward from Uruguay tables.

Financial Instruments	December 2016 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		3,166
Derivative-Uruguay (1)		3,159
Forward-Colombia		7
Hedging Assets		8,658
Derivative-Uruguay (1)		2,029
Cross Currency Swaps		6,629
Financial liabilities at fair value through profit or loss		(336	)
Forward-Colombia		(267	)
Derivative-Uruguay (1)		(69	)
Hedging Liabilities		(87,027	)
Cross Currency Swaps		(86,895	)
Derivative-Uruguay (1)		(132	)

(2) Include Swap and Forward from Uruguay tables.

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.4.1. Chile

Cross currency swaps

Arauco is exposed to the risk of variability in cash flows from changes in foreign exchange rates and inflation, mainly due to balances of assets denominated in U.S. Dollars and other currencies differente from the functional currency, which causes mismatches that could affect operating results.

Below are the cross currency swaps that Arauco has as of June 30, 2017 and December 31, 2016 to cover the exposure to the exchange rate risk generated from bonds denominated in UF:

Bond	Institution	Amount U.S.$		Amount UF		Starting date		Ending date		June 2017 Market Value ThU.S.$			December 2016 Market Value ThU.S.$
F	Deutsche - U.K.		43,618,307		1,000,000		10-30-2011		10-30-2021		(3,961	)		(4,703	)
F	JP Morgan - N.A.		43,618,307		1,000,000		10-30-2011		10-30-2021		(3,854	)		(4,584	)
F	Deutsche - U.K.		37,977,065		1,000,000		04-30-2014		04-30-2019		2,736			1,782
F	BBVA - Chile		38,426,435		1,000,000		10-30-2014		04-30-2023		1,293			558
F	BBVA - Chile		38,378,440		1,000,000		10-30-2014		04-30-2023		1,619			908
F	Santander - Chile		37,977,065		1,000,000		10-30-2014		04-30-2023		2,131			1,427
F	BCI - Chile		37,621,562		1,000,000		10-30-2014		04-30-2023		2,646			1,952
J	Corpbanca - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(4,382	)		(5,505	)
J	BBVA - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(4,382	)		(5,505	)
J	Deutsche - U.K.		42,864,859		1,000,000		09-01-2010		09-01-2020		(4,457	)		(5,590	)
J	Santander - Spain		42,873,112		1,000,000		09-01-2010		09-01-2020		(4,347	)		(5,463	)
J	BBVA - Chile		42,864,257		1,000,000		09-01-2010		09-01-2020		(4,218	)		(5,318	)
P	Corpbanca - Chile		46,474,122		1,000,000		05-15-2012		11-15-2021		(5,867	)		(6,355	)
P	JP Morgan - N.A.		47,163,640		1,000,000		11-15-2012		11-15-2021		(5,761	)		(6,157	)
P	BBVA - Chile		42,412,852		1,000,000		11-15-2013		11-15-2023		(2,062	)		(2,548	)
P	Santander - Chile		41,752,718		1,000,000		11-15-2013		11-15-2023		(1,086	)		(1,591	)
P	Deutsche - U.K.		41,752,718		1,000,000		11-15-2013		11-15-2023		(1,061	)		(1,564	)
R	Santander - Chile		128,611,183		3,000,000		10-01-2014		04-01-2024		(12,331	)		(13,815	)
R	JP Morgan - U.K.		43,185,224		1,000,000		10-01-2014		04-01-2024		(3,601	)		(4,039	)
R	Corpbanca - Chile		43,277,070		1,000,000		10-01-2014		04-01-2024		(3,595	)		(4,026	)
Q	BCI - Chile		43,185,224		1,000,000		10-01-2014		04-01-2021		(2,662	)		(3,524	)
Q	BCI - Chile		43,196,695		1,000,000		10-01-2014		04-01-2021		(2,598	)		(3,443	)
S	Santander - Chile		201,340,031		5,000,000		11-15-2016		11-15-2026		(1,733	)		(3,165	)
											(61,504	)		(80,266	)

Arauco has a high percentage of its assets in U.S. dollars, it needs to minimize the risk of the exchange rate, as it holds debt in pesos, adjustable to reflect inflation. The objective of this position in the swap is to eliminate the uncertainty of the exchange rate, exchanging the flows derived from obligations expressed in adjustable pesos of the bonds described above, with flows in U.S. dollars (Arauco’s functional currency), at a fixed and determined exchange rate as of the agreement’s execution date.

Through an effectiveness test, and pursuant to IAS 39, we were able to validate that the aforementioned hedging instruments are highly effective within an acceptable range for Arauco, for the purposes of eliminating the uncertainty of the exchange rate in the commitments derived from the hedged object.

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.4.2. Colombia

Forward contracts that are in force and effect, executed by Arauco Colombia as of June 30, 2017 and December 31, 2016 are detailed in the following table:

Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		June 2016 Market Value ThU.S.$
USDCOP		Corpbanca Colombia		5,000		04/12/2017		10/07/2017		234
USDCOP		BBVA Colombia		7,000		05/12/2017		08/09/2017		247
USDCOP		BBVA Colombia		6,000		06/14/2017		09/08/2017		240
										721

Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		December 2016 Market Value ThU.S.$
USDCOP		BBVA Colombia		5,000		10/28/2016		01/11/2017		7
USDCOP		BBVA Colombia		4,000		11/18/2016		02/09/2017		(255	)
USDCOP		BBVA Colombia		7,000		12/13/2016		03/10/2017		(12	)
										(260	)

23.4.3. Uruguay

Forward

As of June 30, 2017 and December 31, 2016 Arauco Uruguay maintains the following forward contracts in force and for the purposes of ensuring an exchange rate for sale of dollars:

Exchange rate	Institution		Notional ThU.S.$		June 2017 Market Value ThU.S.$
UYUUSD		Banco Santander Uy		20,400		1,742
UYUUSD		Citibank U.K.		2,000		187
UYUUSD		HSBC Uruguay		10,200		783
						2,712

Exchange rate	Institution		Notional ThU.S.$		December 2016 Market Value ThU.S.$
UYUUSD		Banco Santander Uy		16,600		1,633
UYUUSD		Citibank U.K.		3,200		150
UYUUSD		HSBC Uruguay		10,750		1,256
						3,039

Additionally, it holds forward agreements to guarantee an Euro purchase exchange rate:

Exchange rate	Institution		Notional ThU.S.$		March 2017 Market Value ThU.S.$
EURUSD		Citibank U.K.		216		12
						12

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Arauco Uruguay’s profits and losses also face exposure to the price variation of certain fuels, as occurs with Fuel Oil N°6, which is used during the cellulose manufacturing process. In order to minimize this risk, the volatility of future flows associated to the purchase of Fuel Oil No. 6 for years 2017, 2018 and part of 2019 has been limited, through forwards of this commodity. The agreements that are in force and effect as of June 30, 2017 and December 31, 2016 are detailed below:

Exchange rate	Institution		Notional ThU.S.$		June 2017 Market Value ThU.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		5,899		370
Fuel Oil N°6		DNB Bank ASA		2,538		(16	)
Fuel Oil N°6		Citibank U.K.		314		45
						399

Exchange rate	Institution		Notional ThU.S.$		December 2016 Market Value ThU.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		5,508		1,059
Fuel Oil N°6		DNB Bank ASA		2,661		156
Fuel Oil N°6		Citibank U.K.		378		83
						1,298

Swap

In addition, Arauco in Uruguay maintains an Interest Rate Swap in force and effect, a derivative instrument which purpose is to set the interest rate of a variable rate debt in the same currency (USD). The valuation off this instrument as of June 30, 2017 and December 31, 2016 is shown below:

Exchange rate	Institution	Notional ThU.S.$		June 2017 Market Value ThU.S.$
USD	DNB Bank ASA		54,857		325

Exchange rate	Institution	Notional ThU.S.$		December 2016 Market Value ThU.S.$
USD	DNB Bank ASA		59,077		650

Note: the amount value and market value on the tables in section 23.4.3 represents 50% of the total, reflecting the stake held by Arauco in its Uruguayan subsidiaries.

23.5 Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In the consolidated statements of financial position they are included in line items “Cash and cash equivalents” (certain components of cash and cash equivalents), “Trade and Other Current/Non-Current Receivables” and ”Accounts receivable due from related parties”.

Loans and receivables are measured at amortized cost using the effective interest method and are tested for impairment. Financial assets that are classified as loans and receivables are: cash and cash-equivalents, time deposits, repurchase agreements, trade and other current/non-current receivables, and accounts receivable due from related parties.

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2017 and December 31, 2016 there are provisions for impairment of ThU.S.$ 15,784 and ThU.S.$ 16,644, respectively.

	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Loans and Accounts Receivables		1,168,382		1,126,182
Cash and cash equivalents		442,643		396,837
Cash		183,827		149,446
Time Deposits		175,636		247,391
Agreements		83,180		—
Trade and other receivables (net)		725,739		729,345
Trade and other receivables		607,899		600,589
Lease receivable		3,865		764
Other receivables		106,814		114,530
Accounts receivable due from related parties		7,161		13,462

23.5.1. Cash and Cash Equivalents

Includes cash on hand, bank checking account balances and time deposits and other short term highly liquid investments with an original maturity of three months or less. They are short-term, highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value.

The composition of cash and cash equivalents (including the balance of mutual funds displayed in this note as valuation, instruments at fair value with profit or loss) at June 30, 2017 and December 31, 2016, classified by origin coins is as follow:

	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Cash and Cash Equivalents		512,723		592,253
US Dollar		376,086		524,426
Euro		3,439		2,357
Other currencies		42,699		55,069
Chilean pesos		90,499		10,401

23.5.2 Time Deposits and Repurchase Agreements: The investment objective of time deposits and repurchase agreements is to maximize in the short-term the amounts of cash surpluses. These instruments are authorized by Arauco’s Investment Policy, which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

23.5.3 Trade and Other Receivables: These represent enforceable rights for Arauco resulting from the normal course of the business.

23.5.4 Other Receivables: These correspond to receivables from sales, services or loans that are not considered within the normal course of the business.

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The provision for doubtful accounts is presented as a deduction of trade and other receivables. The provision for doubtful accounts is established based on an analysis of the age of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed for example when there is objective evidence that Arauco will not receive payments under the original sale terms and when the customer is a party to a bankruptcy court agreement or cessation of payments, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

23.5.5 Accounts receivable due from related parties: Represent enforceable rights for Arauco resulting from the normal course of business, calling normal to the line of business, activity or purpose of exploitation and financing, and which Arauco owns a non-controlling ownership of the counterparty.

The following table sets forth trade and other current/non-current receivables classified by currencies as of June 30, 2017 and December 31, 2016:

	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Trades and other current receivables		704,609		701,610
US Dollar		487,595		489,056
Euros		18,079		26,544
Other currencies		97,332		77,907
Chilean pesos		100,077		106,681
U.F.		1,526		1,422
Accounts receivable from related parties, current		6,204		12,505
US Dollar		663		274
Other currencies		243		726
Chilean pesos		4,830		10,548
U.F.		468		957
Trade and other non-current receivables		13,969		14,273
US Dollar		4,142		6,895
Other currencies		542		527
Chilean pesos		6,792		5,753
U.F.		2,493		1,098

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.6 Total Financial Liabilities

Arauco’s financial liabilities to the date of these consolidated financial statements are as follows:

Financial Liabilities	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Total Financial Liabilities		4,838,834		5,110,088
Financial liabilities at fair value through profit or loss (held for trading)		26		336
Hedging liabilities		72,187		87,027
Financial liabilities measured at amortized cost		4,765,621		5,022,725

The following table sets forth the current portion of the non-current bank borrowings and debt issued as of June 30, 2017 and

	June 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Bank borrowings - current portion		89,200		88,028
Bonds issued - current portion		72,861		62,506
Total		162,061		150,534

23.7 Financial Liabilities Measured at Amortized Cost

Financial liabilities correspond to non-derivative financial instruments with contractual cash-flow payments that can be either fixed or variable.

Also, this category includes those non-derivative financial liabilities for services or goods delivered to Arauco at the end of each reporting period that have not yet been paid. These amounts are not insured and are generally paid within thirty days after being recognized.

At the end of each reporting period, Arauco includes in this category bank borrowings, bonds issued denominated in U.S. Dollars and in UF, trade and other payables.

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

	Currency		06-30-2017		12-31-2016		06-30-2017		12-31-2016
			Unaudited				Unaudited
			Amortized Cost ThU.S.$				Fair Value ThU.S.$
Total Financial Liabilities				4,765,894		5,022,725		5,003,754		5,158,789
Bonds Issued		U.S. Dollar		2,053,317		2,321,980		2,140,025		2,480,063
Bonds Issued		U.F.		1,154,328		1,130,679		1,274,444		1,078,934
Bank borrowings		U.S. Dollar		901,597		891,338		936,931		926,070
Bank borrowings		Other currencies		26,154		23,020		26,299		23,020
Financial Leasing		U.F.		96,039		98,316		92,262		94,052
Financial Leasing		Chilean pesos		17,121		15,670		16,455		14,928
Trades and Other Payables		U.S. Dollar		159,577		150,162		159,577		150,162
Trades and Other Payables		Euro		11,072		13,034		11,072		13,034
Trades and Other Payables		Other currencies		59,066		70,736		59,066		70,736
Trades and Other Payables		Chilean pesos		260,860		285,359		260,860		285,359
Trades and Other Payables		U.F.		18,274		18,600		18,274		18,600
Related party payables		U.S. Dollar		1,838		1,968		1,838		1,968
Related party payables		Chilean pesos		6,651		1,863		6,651		1,863

The financial liabilities at amortized cost presented in the consolidated statements of financial positions as of June 30, 2017 and December 31, 2016 are as follows:

	June 2017 Unaudited ThU.S.$
	Current		Non Current		Total
Other financial liabilities		453,834		3,794,722		4,248,556
Trade and other payables		508,576		—		508,849
Accounts payable to related parties		8,489		—		8,489
Total Financial Liabilities Measured at Amortized Cost		970,899		3,794,722		4,765,621
	December 2016
	Current		ThU.S.$ Non Current		Total
Other financial liabilities		697,000		3,784,003		4,481,003
Trade and other payables		537,891		—		537,891
Accounts payable to related parties		3,831		—		3,831
Total Financial Liabilities Measured at Amortized Cost		1,238,722		3,784,003		5,022,725

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.8 Cash Flow Hedges Reserve Reconciliation

The following table sets forth the reconciliation balances of cash flow hedges presented in Other Comprehensive Income:

	January - June						April - June
	Unaudited						Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		12,293			(53,404	)		11,197			1,992
Gains (losses) on cash flow hedges		3,425			11,242			(14,285	)		5,256
Recycle of cash flow hedges to profit or loss		(8,740	)		(8,119	)		(6,453	)		(5,503	)
Income tax		(1,275	)		(2,990	)		(1,858	)		(3,618	)
Recycle of income tax		2,228			1,948			7,037			3,954
Closing balance		7,931			(51,323	)		(4,362	)		2,081

23.9 Capital Disclosures

23.9.1 Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco’s policies on capital management have the objective of:

a) Ensuring business continuity and normal operations in the long term;

b) Ensuring funding for new investments to achieve sustainable growth over time;

c) Keeping adequate capital structure considering all economic cycles that impact the business and the nature of the industry; and

d) Maximizing the Company’s value and providing an adequate return to shareholders.

23.9.2 Qualitative Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco determines and manages its capital structure based on its carrying amount of equity plus its financial debt (bank borrowings and bonds issued).

23.9.3 Quantitative Information on Capital Management

The following table sets forth the financial covenants that the Company has to comply with as part of the terms of certain of its obligations:

Instrument	June 2017 ThU.S.$		December 2016 ThU.S.$		Interest coverage >= 2,0x	Debt level (1) <= 1,2x
Domestic bonds		1,154,329		1,130,679	N/A	✓
Syndicate Loan		299,251		298,967	✓	✓

N/R: Not required for the financial obligation

(1) Debt to equity ratio (financial debt divided by equity plus non-controlling interests)

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2017 and December 31, 2016, Arauco has complied with all of its financial covenants.

The following table sets forth the credit ratings of our debt instruments as of June 30, 2017, are as follows:

Instrument	Standard & Poor’s	Fitch Ratings	Moody’s	Feller Rate
Local bonds	-	AA -	-	AA -
Foreign bonds	BBB -	BBB	Baa3	-

Capitalization requirements are established based on the Company’s financial needs and on maintaining an adequate liquidity level and complying with financial covenants established in current debt arrangements. The Company manages its capital structure and makes adjustments based on the prevailing economic conditions in order to mitigate the risks associated with adverse market conditions, and based on opportunities that may arise to improve the Company’s level of liquidity.

The capitalization of Arauco as of June 30, 2017 and December 31, 2016 is as follows:

	June 2017
	Unaudited		December 2016
	ThU.S.$		ThU.S.$
Equity		6,976,932		6,999,283
Bank borrowings		927,751		914,358
Financial leasing		113,159		113,986
Bonds issued		3,207,646		3,452,659
Capitalization		11,225,488		11,480,286

23.10 Risk Management

Arauco’s financial instruments are exposed to various financial risks: credit risk, liquidity risk and market risk (including exchange rate risks, interest rate risks and price risks).

Arauco’s overall risk management program focuses on uncertainty in financial markets and aims to minimize potential adverse effects on Arauco’s financial profitability.

Arauco’s financial risk management is overseen by the Corporate Finance Department. This department identifies, assesses and hedges financial risks in close collaboration with Arauco’s operational units.

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

23.10.1 Type of Risk: Credit Risk

Description

Credit risk refers to financial uncertainty at different periods of time relating to the fulfillment of obligations with counterparties, at the time of exercising the contract rights to receive cash or other financial assets on behalf of Arauco.

Explanation of Credit Risk Exposure and How This Risk Arises

Arauco’s exposure to credit risk is directly related to each of its customer’s individual abilities to fulfill their contractual commitments, reflected in trade receivables.

Accounts exposed to credit risk are: trade receivable, financial lease debtors and other debtors.

Arauco does not have a securitized portfolio.

	June 2017
	Unaudited		December 2016
	ThU.S.$		ThU.S.$
Current Receivables
Trade receivables		605,907		598,597
Financial lease receivables		1,323		411
Other debtors		97,379		102,602
Net subtotal		704,609		701,610
Trade receivables		615,924		609,102
Financial lease receivables		1,424		512
Other debtors		103,045		108,640
Gross subtotal		720,393		718,254
Provision for doubtful trade receivables		10,017		10,505
Provision for doubtful lease receivables		101		101
Provision for doubtful other debtors		5,666		6,038
Subtotal Bad Debt		15,784		16,644
Non-Current Receivables
Trade receivables		1,992		1,992
Financial lease receivables		2,542		353
Other debtors		9,435		11,928
Net Subtotal		13,969		14,273
Trade receivables		1,992		1,992
Financial lease receivables		2,542		353
Other debtors		9,435		11,928
Gross subtotal		13,969		14,273
Provision for doubtful trade receivables		—		—
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		—		—

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

The Credit and Collections Sub-Division, dependent from the Treasury Division, is the area entrusted with minimizing the credit risk of the accounts receivable, supervising the delinquency of the accounts. The regulations and procedures applicable for the control and administration of the Arauco Group can be found in the Corporate Credit Policy.

As of June 30, 2017, Arauco’s balance for commercial Debtors was ThU.S.$ 615,838 of which, according to the agreed sales conditions, 62.39% corresponded to sales on credit (open account), 31.39% to sales with letters of credit and 6.25% to other types of sales, distributed in 2,431 debtors. The client with the largest Open Account debt represented 3.16% of the total accounts receivable as of that date.

Below we provide detail regarding accounts receivable, classified in tranches.

June 30, 2017 - Unaudited
Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S$		579,730			19,985			814			1,304			58			1,663			247			30			5			12,088			615,924
%		94.12	%		3.24	%		0.13	%		0.21	%		0.01	%		0.27	%		0.04	%		0.00	%		0.00	%		1.98	%		100	%
December 31, 2016
Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S$		562,386			31,106			257			881			39			18			21			11			64			14,319			609,102
%		92.33	%		5.11	%		0.04	%		0.14	%		0.01	%		0.00	%		0.00	%		0.00	%		0.01	%		2.36	%		100	%

Arauco does not conduct rescheduling or renegotiations with its clients that imply an amendment to the maturity of the invoices and, should it be necessary, any debt renegotiation with a client shall be analyzed on a case-by-case basis and subjected to the approval of the Corporate Finance Division.

Regarding the provisions from non-enforceable accounts, below we provide detail for the movements as of June 30, 2017 and December 31, 2016:

	06-30-2017
	Unaudited			12-31-2016
	ThU.S.$			ThU.S.$
Opening balance		(16,644	)		(19,860	)
Impairment losses recognized on receivables		(90	)		(3,950	)
Reversal of impairment losses		950			7,166
Closing balance		(15,784	)		(16,644	)

Currently there is a policy for provisions for doubtful accounts receivable under IFRS for all the Arauco group companies.

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Explanation regarding the Sales Risk with Letters of Credit

The sales with letters of credit mainly occur in markets in Asia and the Middle East. Periodically, a credit assessment is conducted regarding the banks that issue the letters of credit with the purpose of obtaining their score over the basis of risk-qualification ratings, country-specific risk and financial statements. The decision of approving the issuing bank or asking for confirmation of the letter of credit is made in consideration to this assessment.

Explanation of the Sales Risk with Credit Line

Sales on credit are subject to the credit limit for each customer. The approval or rejection of a credit limit for all term sales is conducted by the Corporate Credit Sub-Division, as well as by the Credit and Collections area for North America, Brazil and Argentina, which report to the Corporate Finance Division. The regulations and procedures applicable for the correct control and risk management over the sales on credit are ruled by the Credit Policy.

A procedure that must be applied by all the companies of the Arauco group has been established for the approval and/or modification of client credit lines. Credit line requests are entered to the SAP that analyzes all available information. Afterwards, the same are either approved or rejected in each one of the internal committees of each company belonging to the Arauco group, depending on the maximum amount authorized by the Credit Policy. Lines of credit are renewed during this internal process on a yearly basis.

All sales are automatically controlled by a credit verification system, which has been configured to block any orders from clients who are delinquent in a given percentage of a debt and/or from clients whose line of credit, as of the time of the product’s shipping, has been exceeded or is overdue.

In order to minimize the credit risk for term or Open Account sales, it is Arauco’s policy to take out insurance to cover the export sales of companies Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Forestal Arauco S.A., and Arauco do Brasil S.A., as well as the domestic sales of Arauco México S.A. de C.V., Arauco Wood Inc, Arauco Colombia S.A., Arauco Perú S.A., Arauco Panels USA LLC, Flakeboard Company Ltd., Flakeboard America Ltd., Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Arauco Florestal Arapoti, Arauco Forest Brasil S.A. and Arauco do Brasil S.A. Arauco works with credit insurance company Continental (AA- rating, as per risk rating companies Humphreys and Fitch Ratings). In order to cover the export sales and domestic sales of Arauco Argentina S.A., the preferred credit insurance company is Insur (a subsidiary of Continental in Argentina). Both companies grant a 90% coverage over the amount of each invoice, without deductibles, for registered clients and of 85% for non-registered clients. (Non-registered clients are those whose lines range between ThU.S.$ 5 and ThU.S.$ 70 (equivalent currency of their invoicing) of the local sales of companies Arauco Perú S.A., Arauco Colombia S.A., Arauco México S.A. de C.V., Arauco Do Brasil S.A., Arauco Argentina S.A. and Maderas Arauco S.A. Lines in excess of the aforesaid amounts correspond to registered clients.

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

As another way of minimizing risk and supporting a line of credit approved by the Credit Committee, Arauco holds guarantees such as mortgages, pledges, Standby letters of credit, bank performance bonds, checks, promissory notes, loans or any other that could be required under the laws of each country. The total amount held in guarantees amounts to MU.S.$100.8, effective as of June 30, 2017, as summarized in the following chart. The procedure for guarantees is regulated by Arauco’s Policy on Guarantees, whose purpose is to control their accounting, due date and custody.

Guarantees Arauco Group (ThU.S.$)
Guarantees Debtors (received from clients)
Certificate of deposits	12,449	12.4	%
Standby	6,872	6.8	%
Promissory notes	67,561	67.0	%
Finance	2,621	2.6	%
Mortgage	8,881	8.8	%
Pledge	2,190	2.2	%
Promissory notes	200	0.2	%
Total Guarantees	100,774	100.0	%

The maximum exposure to credit risk is limited to the value at amortized cost of the Debtors’ account for sales registered as of the date of this report, minus the percentage of sales insured by the aforementioned credit insurance companies and the guarantees granted in favor of Arauco.

In summary, the open account debt covered by the various insurance policies and guarantees amounts to 99.2% and, therefore, Arauco’s portfolio exposure amounts to 0.8%.

Secured Open Accounts Receivable	ThU.S.$		%
Total open accounts receivable		534,404		100.0
Secured receivables(*)		530,129		99.2
Unsecured receivables		4,275		0.8

(*) Insured Debt is deemed to be the portion of accounts receivable that is covered by a credit company or by guarantees such as standby letters of credit, mortgages, performance bonds, among others

Investment Policy:

Arauco has an Investment Policy which identifies and limits the financial instruments and the entities into which the Arauco companies, in particular Celulosa Arauco y Constitucion S.A., are authorized to invest. The Company’s Treasury Department is centralized with operations in Chile. The Head Office is responsible for carrying out investments, cash flow surplus investments, and short and long term debt subscriptions. Exceptions to this rule are specific investments made through other companies where authorization is required from the Chief Financial Officer.

For financial instruments, the only permitted investments are fixed income investments with adequate liquidity. Each instrument has defined classifications and limits, depending on duration and type of issuer.

Regarding intermediaries (such as banks, securities brokers and dealers of mutual funds that are bank affiliates), a scoring methodology is used to determine the relative degree of risk of each intermediary based on their financial position and assign score points that result

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

in a credit risk rating to each intermediary. Arauco uses this scoring system to determine its investment limits for each intermediary.

The required information to evaluate the various criteria are obtained from published financial statements from the banks under evaluation and from the credit risk ratings of short and long term debt securities obtained from rating agencies authorized by the Superintendence of Banks and Financial Institutions (Fitch Ratings Chile, Humphreys and Feller Rate).

The criteria evaluated are: Capital and Reserves, Current Ratio, Return on equity, Net Income to Operating income Ratio, Debt to Equity Ratio and the Credit Risk rating of each entity.

Any necessary exceptions regarding investment limits in each particular instrument or entity must have the authorization from Arauco’s Chief Financial Officer.

23.10.2 Type of Risk: Liquidity Risk

Description

This risk corresponds to Arauco’s ability to fulfill its financial obligations upon maturity.

Explanation of Liquidity Risk Exposure and How This Risk Arises

Arauco’s exposure to liquidity risk is mainly from its obligations to bondholders, banks and financial institutions, creditors and other payables. Liquidity risk may arise if Arauco is unable to meet the net cash flow requirements, which sustain its operations under both normal and exceptional circumstances.

Explanation of Objectives, Policies and Processes for Risk Management, and Measurement Methods

The Financial Management Department monitors on an ongoing basis the Company’s cash flow forecasts based on short and long term forecasts and available financing alternatives. In order to manage the risk level of financial assets, Arauco follows its investment policy.    

The following tables detail Arauco’s liquidity analysis for its financial liabilities as of June 30, 2017 and December 31, 2016. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities:

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June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

June 30, 2017 - Unaudited						Maturity														Total				Total
Tax ID	Name		Currency		Name - country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
93.458.000-1		Scotiabank- Chile		U.S. dollar	Celulosa Arauco y Constitución S.A.		—		—		300,694		—		—		—		—		—		300,694		1.70%		Libor + 0,70%
—		Banco Frances- Argentina		U.S. dollar	Arauco Argentina S.A.		5,029		—		—		—		—		—		—		5,029		—		1.50%		1.50%
—		Banco Macro- Argentina		Argentine Pesos	Arauco Argentina S.A.		10		9		—		—		—		—		—		19		—		15.25%		15.25%
—		Banco Santander Rio		U.S. dollar	Arauco Argentina S.A.		—		10,013		—		—		—		—		—		10,013		—		1.08%		1.08%
—		Banco Macro- Argentina		U.S. dollar	Arauco Argentina S.A.		—		5,014		—		—		—		—		—		5,014		—		1.40%		1.40%
—		Interamerican Development Bank		U.S. dollar	Zona Franca Punta Pereira		1,178		1,028		2,431		2,366		2,298		2,226		3,203		2,206		12,524		3.48%		Libor + 2,05%
—		Interamerican Development Bank		U.S. dollar	Zona Franca Punta Pereira		2,980		2,783		5,928		5,756		2,811		—		—		5,763		14,495		3.23%		Libor + 1,80%
—		BBVA		U.S. dollar	Zona Franca Punta Pereira		—		16,005		—		—		—		—		—		16,005		—		3.16%		Libor + 1,75%
—		Citibank		U.S. dollar	Zona Franca Punta Pereira		2		2,500		—		—		—		—		—		2,502		—		3.22%		Libor + 1,75%
—		Scotiabank		U.S. dollar	Zona Franca Punta Pereira		2,502		—		—		—		—		—		—		2,502		—		1.60%		1.60%
—		Banco Interamericano de Desarrollo		U.S. dollar	Celulosa y Energia Punta Pereira		4,761		4,151		9,820		9,550		9,278		8,979		12,938		8,912		50,565		3.48%		Libor + 2,05%
—		Banco Interamericano de Desarrollo		U.S. dollar	Celulosa y Energia Punta Pereira		12,048		11,245		23,964		23,256		11,353		—		—		23,293		58,573		3.23%		Libor + 1,80%
—		Finnish Export Credit		U.S. dollar	Celulosa y Energia Punta Pereira		25,375		20,947		50,610		50,001		48,551		47,570		47,085		46,322		243,817		3.20%		3.20%
—		Dnb Nor Bank		U.S. dollar	Celulosa y Energia Punta Pereira		53		—		—		—		—		—		—		53		—		0.00%		Libor + 2%
—		Banco Republica Oriental de Uruguay		U.S. dollar	Eufores S.A.		24,746		12,561		—		—		—		—		—		37,307		—		3.08%		Libor + 1,75%
—		Citibank		U.S. dollar	Eufores S.A.		4		—		—		—		—		—		—		4		—		3.43%		Libor + 2%
—		Banco HSBC- Uruguay		U.S. dollar	Eufores S.A.		1,202		—		—		—		—		—		—		1,202		—		2.91%		Libor + 1,75%
—		Banco Itau - Uruguay		U.S. dollar	Eufores S.A.		10,132		5,004		—		—		—		—		—		15,136		—		3.08%		Libor + 1,75%
—		Heritage		U.S. dollar	Eufores S.A.		1,351		—		—		—		—		—		—		1,351		—		3.03%		Libor + 1,75%
—		Banco Santander		U.S. dollar	Eufores S.A.		22,730		—		—		—		—		—		—		22,730		—		3.06%		Libor + 1,75%
—		Banco ABC - Brasil		Real	Arauco Do Brasil S.A.		7		4		—		—		—		—		—		11		—		2.50%		2.50%
—		Banco Santander		Real	Arauco Do Brasil S.A.		22		66		89		89		2		—		—		88		180		9.50%		9.50%
—		Banco Bradesco		Real	Arauco Do Brasil S.A.		3,404		1,426		—		—		—		—		—		4,830		—		9.50%		9.50%
—		Banco Votorantim		Real	Arauco Do Brasil S.A.		12		—		—		—		—		—		—		12		—		5.50%		5.50%
—		Banco Alfa		Real	Arauco Do Brasil S.A.		6		31		74		74		74		43		—		37		265		11.25%		Tljp+2%+ spread 1,75%
—		Banco Santander		Real	Arauco Do Brasil S.A.		1		7		10		10		10		2		—		8		32		9.34%		Tljp+2%+ spread 2%
—		Banco Itau		Real	Arauco Florestal Arapoti S.A.		2		3		—		—		—		—		—		5		—		2.50%		2.50%
—		Banco Itau		Real	Arauco Florestal Arapoti S.A.		13		38		29		—		—		—		—		51		29		3.50%		3.50%
—		Banco Bradesco		Real	Arauco Florestal Arapoti S.A.		11		33		44		15		—		—		—		44		59		6.00%		6.00%
—		Banco Votorantim		Real	Arauco Florestal Arapoti S.A.		35		—		—		—		—		363		363		35		726		5.00%		5.00%
—		Banco Safra		Real	Arauco Florestal Arapoti S.A.		22		65		65		—		—		—		—		87		65		6.00%		6.00%
—		Banco Safra		Real	Arauco Florestal Arapoti S.A.		7		20		27		27		25		—		—		27		79		10.00%		10.00%
—		Banco Santander		Real	Arauco Florestal Arapoti S.A.		11		907		—		—		—		—		—		918		—		9.50%		9.50%
—		Banco Santander		Real	Arauco Florestal Arapoti S.A.		7		37		45		42		12		2		—		44		101		9.89%		9.89%
—		Banco Bradesco		Real	Arauco Forest Brasil S.A.		20		57		63		—		—		—		—		77		63		5.90%		5.91%
—		Banco Alfa		U.S. dollar	Arauco Forest Brasil S.A.		2		7		9		9		9		—		—		9		27		8.08%		Cesta+2%+spread 1,8%
—		Banco Alfa		Real	Arauco Forest Brasil S.A.		6		17		22		22		22		—		—		23		66		11.30%		Tljp+2%+Spread 1,8%
—		Banco Itau - Brasil		Real	Arauco Forest Brasil S.A.		4		5		—		—		—		—		—		9		—		2.50%		2.50%
—		Banco Votorantim - Brasil		Real	Arauco Forest Brasil S.A.		208		516		687		57		—		322		322		724		1,388		8.76%		Tljp+1,8%+Spread 2%
—		Banco Votorantim - Brasil		U.S. dollar	Arauco Forest Brasil S.A.		34		101		134		11		—		—		—		135		145		7.58%		Cesta+1,3%+spread 2%
—		Banco Bndes Subcrédito A-B-D		Real	Arauco Forest Brasil S.A.		3		—		—		—		342		456		114		3		912		9.82%		Tljp + 2,91%
—		Banco Bndes Subcrédito C		U.S. dollar	Arauco Forest Brasil S.A.		4		—		—		—		96		145		48		4		289		7.19%		Cesta+2,91%
—		Banco Santander		Real	Arauco Forest Brasil S.A.		22		945		111		92		71		69		—		967		343		9.72%		9.72%
—		Bndes Subcrédito E-I		Real	Mahal Emprendimientos Pat. S.A.		20		—		2,252		3,002		751		—		—		20		6,005		9.91%		Tljp + 2,91%
—		Bndes Subcrédito F-J		Real	Mahal Emprendimientos Pat. S.A.		13		—		1,351		1,801		450		—		—		13		3,602		10.91%		Tljp + 3,91%
—		Bndes Subcrédito G-K		U.S. dollar	Mahal Emprendimientos Pat. S.A.		60		—		1,358		2,037		679		—		—		60		4,074		7.19%		Cesta + 2,91%
—		Bndes Subcrédito H-L		Real	Mahal Emprendimientos Pat. S.A.		18		—		1,501		2,001		500		—		—		18		4,002		12.61%		Tljp + 5,11%
—		Banco Santander		Real	Mahal Emprendimientos Pat. S.A.		—		—		13		27		27		13		—		—		80		11.50%		Tljp+2%+Spread 2%
—		Banco Santander		U.S. dollar	Mahal Emprendimientos Pat. S.A.		—		—		6		13		13		6		—		—		38		8.32%		Cesta+2%+Spread 2%
—		Banco Santander		Real	Novo Oeste Gestao de Ativos Florestais S.A.		2		—		12		28		28		17		—		2		85		11.00%		Tljp+2%+Spread 2%
—		Banco Santander		U.S. dollar	Novo Oeste Gestao de Ativos Florestais S.A.		—		—		5		13		13		6		—		—		37		8.28%		Tljp+2%+Spread 2%
—		Banco del Estado de Chile		U.S. dollar	Flakeboard Company Ltd		—		235		1,656		1,294		3,091		4,891		33,185		235		44,117		3.00%		Libor + 1,34%
					Total		118,079		95,780		403,010		101,593		80,506		65,110		97,258		213,859		747,477

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Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

June 30, 2017 - Unaudited				Maturity														Total				Total
Tax ID	Name	Currency	Name - country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		1,407		17,219		25,444		24,679		23,913		154,953		1,407		246,208		4.24	%		4.21	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		563		6,949		10,268		9,959		9,650		62,529		563		99,355		4.25	%		4.21	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-J		2,157		—		6,471		6,471		203,855		—		—		2,157		216,797		3.23	%		3.22	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		994		7,949		7,949		7,949		17,115		234,215		994		275,177		3.96	%		3.96	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		—		20,667		21,894		21,297		20,699		—		—		20,667		63,890		2.96	%		2.98	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-R		—		1,790		7,162		7,162		7,162		7,162		292,827		1,790		321,475		3.57	%		3.57	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-S		—		599		4,788		4,788		4,788		4,788		213,251		599		232,403		2.44	%		2.89	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. dollar	Yankee Bonds 2019		15,205		—		36,250		516,515		—		—		—		15,205		552,765		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. dollar	Yankee Bonds 2a Emisión		127,717		—		—		—		—		—		—		127,717		—		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. dollar	Yankee 2021		8,889		—		20,000		20,000		417,335		—		—		8,889		457,335		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. dollar	Yankee 2022		11,215		—		23,750		23,750		23,750		517,466		—		11,215		588,716		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. dollar	Yankee 2024		9,375		—		22,500		22,500		22,500		22,500		558,974		9,375		648,974		4.52	%		4.50	%
			Total		174,558		26,020		174,932		666,144		742,676		602,594		1,516,749		200,578		3,703,095

111

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

June 30, 2017				Maturity														Total				Total
Tax ID	Name	Currency	Name - country Leases	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate	Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		191		1,119		586		586		475		476		—		1,310		2,123	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,710		4,497		3,994		3,995		1,733		1,734		—		6,207		11,456	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		678		2,003		2,358		2,358		614		615		—		2,681		5,945	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,155		9,814		8,398		8,398		4,457		4,457		—		12,969		25,710	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,341		4,120		1,343		1,343		—		—		—		5,461		2,686	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		1,235		3,965		5,011		5,012		2,133		2,134		—		5,200		14,290	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		46		108		—		—		—		—		—		154		—	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		562		1,682		1,187		1,187		303		304		—		2,244		2,981	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos.	Banco Credito e Inversiones		726		2,135		2,839		2,839		841		842		—		2,861		7,361	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Scotiabank		76		233		309		309		296		297		—		309		1,211	—	—
			Total		9,720		29,676		26,025		26,027		10,852		10,859		—		39,396		73,763

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties , within a period not exceeding 30 days.

112

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

December 31, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate	Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Scotiabank- Chile		—		36		302,242		—		—		—		—		36		302,242	1.63%	1.63%
—	Arauco Argentina S.A.	U.S. Dollar	Banco Galicia- Argentina		5,031		—		—		—		—		—		—		5,031		—	2.00%	2.00%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Macro- Argentina		11		29		—		—		—		—		—		40		—	15.25%	15.25%
—	Zona Franca Punta Pereira	U.S. Dollar	Interamerican Development Bank		1,178		1,027		2,450		2,387		2,324		2,256		4,302		2,205		13,719	Libor + 2.05%	Libor + 2.05%
—	Zona Franca Punta Pereira	U.S. Dollar	Interamerican Development Bank		2,990		2,782		5,997		5,830		5,664		—		—		5,772		17,491	Libor + 1.80%	Libor + 1.80%
—	Zona Franca Punta Pereira	U.S. Dollar	BBVA		16,176		—		—		—		—		—		—		16,176		—	3.23%	Libor + 2%
—	Zona Franca Punta Pereira	U.S. Dollar	Citibank		—		2,501		—		—		—		—		—		2,501		—	2.95%	Libor + 1.75%
—	Zona Franca Punta Pereira	U.S. Dollar	Scotiabank		2,501		—		—		—		—		—		—		2,501		—	1.60%	1.60%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Banco Interamericano de Desarrollo		4,768		4,143		9,895		9,637		9,379		9,096		17,371		8,911		55,378	3.30%	Libor + 2.05%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Banco Interamericano de Desarrollo		12,104		11,237		24,249		23,568		22,888		—		—		23,341		70,705	3.05%	Libor + 1.80%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Finnish Export Credit		25,474		20,774		43,915		44,538		45,209		45,882		70,166		46,248		249,710	3.20%	3.20%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Dnb Nor Bank		89		—		—		—		—		—		—		89		—	Libor + 2.00%	Libor + 2.00%
—	Eufores S.A.	U.S. Dollar	Banco Republica Oriental de Uruguay		24,733		12,563		—		—		—		—		—		37,296		—	Libor + 1.75%	Libor + 1.75%
—	Eufores S.A.	U.S. Dollar	Citibank		5		—		—		—		—		—		—		5		—	Libor + 2.00%	Libor + 2.00%
—	Eufores S.A.	U.S. Dollar	Banco HSBC- Uruguay		1,202		—		—		—		—		—		—		1,202		—	Libor + 2.00%	Libor + 2.00%
—	Eufores S.A.	U.S. Dollar	Banco Itau - Uruguay		10,135		5,003		—		—		—		—		—		15,138		—	Libor + 2.00%	Libor + 2.00%
—	Eufores S.A.	U.S. Dollar	Heritage		1,351		—		—		—		—		—		—		1,351		—	Libor + 2.00%	Libor + 2.00%
—	Eufores S.A.	U.S. Dollar	Banco Santander		22,735		—		—		—		—		—		—		22,735		—	Libor + 2.00%	Libor + 2.00%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco ABC - Brazil		7		18		—		—		—		—		—		25		—	2.50%	2.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Itau		2,713		321		—		—		—		—		—		3,034		—	9.50%	9.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Votorantim		13		25		—		—		—		—		—		38		—	5.50%	5.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		2		46		100		100		57		7		—		48		264	9.34%	9.34%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		2		6		1		—		—		—		—		8		1	2.50%	2.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		13		38		51		4		—		—		—		51		55	3.50%	3.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		11		33		44		37		—		—		—		44		81	6.00%	6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		400		—		—		—		—		—		—		400		—	8.75%	8.75%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		17		—		—		—		—		369		369		17		738	5.00%	5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		22		66		88		22		—		—		—		88		110	6.00%	6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		8		21		27		27		27		11		—		29		92	10.00%	10.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		1		16		16		16		8		—		—		17		40	9.00%	9.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		5		18		30		30		19		8		—		23		87	9.22%	9.22%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		20		57		77		23		—		—		—		77		100	5.91%	5.91%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Alfa		—		5		9		9		9		5		—		5		32	7.94%	7.94%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Alfa		—		12		23		23		23		11		—		12		80	11.30%	11.30%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Itau -Brazil		4		12		1		2		—		—		—		16		3	2.50%	2.50%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim - Brazil		195		520		694		405		—		327		327		715		1,753	8.59%	8.59%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Votorantim - Brazil		35		101		134		78		—		—		—		136		212	7.44%	7.44%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bndes Subcrédito A-B-D		4		—		—		—		114		460		346		4		920	9.82%	9.82%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Bndes Subcrédito C		4		—		—		—		24		144		120		4		288	7.05%	7.05%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Santander		1		32		—		—		—		—		—		33		—	9.32%	9.32%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco John Deere		62		41		41		32		10		—		—		103		83	6.00%	6.00%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito E-I		23		—		758		3,030		2,272		—		—		23		6,060	8.91%	8.91%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito F-J		16		—		454		1,818		1,363		—		—		16		3,635	9.91%	9.91%
—	Mahal Emprendimientos Pat. S.A.	U.S. Dollar	Bndes Subcrédito G-K		60		—		339		2,037		1,697		—		—		60		4,073	7.05%	7.05%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito H-L		19		—		504		2,020		1,514		—		—		19		4,038	11.11%	11.11%
			Total		134,140		61,483		392,139		95,673		92,601		58,576		93,001		195,623		731,990

113

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

December 31, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		1,931		11,587		29,091		27,486		33,383		180,490		1,931		282,037		4.24	%		4.21	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		2,115		—		6,344		6,344		203,030		—		—		2,115		215,718		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		996		7,794		7,794		7,794		7,794		242,571		996		273,747		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		586		9,839		21,758		21,172		20,586		10,073		—		10,425		73,589		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		1,755		—		7,022		7,022		7,022		7,022		290,572		1,755		318,660		3.57	%		3.57	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-S		—		600		4,695		4,695		4,695		4,695		210,785		600		229,565		2.44	%		2.89	%
—	Arauco Argentina S.A.	U.S. Dollar	Bono 144 A – Argentina		—		270,787		—		—		—		—		—		270,787		—		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		15,205		—		36,250		534,254		—		—		—		15,205		570,504		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2nd Emission		2,734		124,949		—		—		—		—		—		127,683		—		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		8,889		—		20,000		20,000		20,000		406,926		—		8,889		466,926		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		11,215		—		23,750		23,750		23,750		23,750		504,895		11,215		599,895		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		9,376		—		22,500		22,500		22,500		22,500		569,625		9,376		659,625		4.52	%		4.50	%
			Total		51,875		409,102		161,700		676,622		336,863		516,143		1,998,938		460,977		3,690,266

December 31, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Lease	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		237		1,616		—		1,179		—		1,201		—		1,853		2,380		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,571		4,970		—		7,731		—		4,259		—		6,541		11,990		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		645		2,008		—		5,092		—		2,035		—		2,653		7,127		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,294		10,861		—		16,861		—		8,906		—		14,155		25,767		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,673		5,030		—		4,663		—		183		—		6,703		4,846		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		982		2,994		—		7,501		—		2,824		—		3,976		10,325		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		46		138		—		61		—		—		—		184		61		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		439		1,317		—		2,418		—		929		—		1,756		3,347		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		647		1,932		—		5,053		—		2,690		—		2,579		7,743		—		—
			Total		9,534		30,866		—		50,559		—		23,027		—		40,400		73,586

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties, within a period not exceeding 30 days.

114

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Guarantees

As of the date of these interim consolidated financial statements, Arauco has financial assets of approximately MU.S.$55 that have been pledged to third parties (beneficiaries), as direct guarantee. If Arauco does not fulfill its obligations, the guarantors could execute the guarantees.

As of June 30, 2017, the total assets pledged as an indirect guarantee were MU.S.$470. In contrast to direct guarantees, indirect guarantees are given to secure obligations assumed by a third party.

On September 29, 2011, Arauco entered into a Security Agreement under which it granted a non-joint guarantee limited to 50% of the obligations of the Uruguayan companies (joint ventures) Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A., under the IDB Facility Agreement in the amount of up to MU.S.$454 and the Finnevera Guaranteed Facility Agreement in the amount of up to MU.S.$900. Both loan agreements were signed with the International Development Bank. Such guarantee is included in the table below, under indirect guarantees.

Direct and indirect guarantees granted by Arauco:

DIRECT

Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	129	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	230	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	313	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	488	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	209	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	100	National Customs Service
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	134	Bank Bradesco S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	224	Bank Santander S.A.
Arauco Forest Brasil S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	645	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	3,539	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Mortgage Industrial Plant of Jaguariaíva of Arauco do Brasil	—	U.S. Dollar	46,343	BNDES
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	199	Bank Votorantim S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	104	Bank ABC Brasil S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	209	Bank Santander S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	206	Bank Alfa S.A.
Arauco Florestal Arapoti S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	727	Bank Votorantim S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	201	Bank Itaú BBA S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	389	Bank Safra S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	185	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
		Total		54,695

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Amounts in thousands of U.S. dollars, except as indicated

INDIRECT

Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Suretyship not supportive and cumulative	—	U.S. Dollar	451,409	Joint Ventures (Uruguay)
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	U.S. Dollar	4,362	Arauco Forest Brasil y Mahal (Brasil)
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Brazilian Real	14,522	Arauco Forest Brasil y Mahal (Brasil)
		Total		470,293

23.10.3 Type of Risk: Market Risk – Exchange Rate

Description

Market risk arises from the probability of being affected by losses from fluctuations in currencies exchange rates in which assets and liabilities are denominated, in a functional currency other than the functional currency of Arauco.

Explanation of Currency Risk Exposure and How This Risk Arises

Arauco is exposed to the foreign currency risk from currency fluctuations arising from sales, purchases and obligations undertaken in foreign currencies, such as the Chilean Peso, Euro, Brazilian Real or other foreign currencies. In the case of significant exchange rate variations, the Chilean Peso is the currency that represents the main currency risk. See Note 11 for details assets and liabilities classified by currency.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco performs sensitivity analyses to measure the effect of this variable on equity and net result.

Sensitivity analysis considers a variation of +/- 10% of the exchange rate over the Chilean Peso. This fluctuation range is considered possible given current market conditions as of the date of these financial statements. With all other variables at a constant rate, a U.S. Dollar exchange rate variation of +/- 10% in relation to the Chilean Peso would mean a change in the net income year after tax +/- 3.45% (equivalent to ThU.S.$ -/+ 10,426), and +/- 0.09% of equity (equivalent to ThU.S.$ -/+ 6,256).

Additionally, a sensitivity analysis is carried out assuming a variation of +/- 10% in the closing exchange rate on the Brazilian Real, which is considered a possible range of fluctuation given the market conditions as of the date of these financial statements. With all the other variables constant, a variation of +/- 10% in the exchange rate of the dollar on the Brazilian Real would mean a variation on the net income after tax +/- 0.84% (equivalent to ThU.S.$ 2,531) and a change on the equity of +/- 0.02% (equivalent to ThU.S.$ -/+ 1,519).

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Amounts in thousands of U.S. dollars, except as indicated

23.10.4 Type of Risk: Market Risk – Interest rate risk

Description

Interest rate risk refers to the sensitivity of the value of financial assets and liabilities in terms of interest rate fluctuations.

Explanation of Interest Rate Risk Exposure and How This Risk Arises

Arauco is exposed to risks due to interest rate fluctuations for bonds issued, bank borrowings and financial instruments that bear interest at a variable rate.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco completes its risk analysis by reviewing its exposure to changes in interest rates. As of June 30, 2017, 14.7% our financial debt accrues interest at variable rates. A change of +/- 10% in the interest rate is considered a possible range of fluctuation. Such market conditions would affect the income after tax at rate of +/- 0.29% (equivalent to ThU.S.$-/+ 891) and +/- 0.01% (equivalent to ThU.S.$-/+ 535) on equity.

	June 2017 Unaudited ThU.S.$		Total
Fixed rate		3,626,419		85.4	%
Bonds issued		3,207,646
Bank borrowings (*)		305,614
Financial leasing		113,159
Variable rate		622,137		14.6	%
Bonds issued		—
Loans with Banks		622,137
Total		4,248,556		100.0	%
	December 2016 ThU.S.$		Total
Fixed rate		3,903,942		87.1	%
Bonds issued		3,452,659
Bank borrowings (*)		337,297
Financial leasing		113,986
Variable rate		577,061		12.9	%
Bonds issued		—
Bank borrowings		577,061
Total		4,481,003		100.0	%

(*) Includes variable rate bank borrowings changed by fixed rate swaps.

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Amounts in thousands of U.S. dollars, except as indicated

23.10.5 Type of Risk: Market Risk – Price of Pulp Risks

Description

Pulp prices are determined by world and regional market conditions. Prices fluctuate based on demand, production capacity, commercial strategies adopted by large-scale forestry companies, pulp and paper producers and by the availability of substitutes.

Explanation of Price Risk Exposure and How This Risk Arises

Pulp prices are reflected in revenue from sales and directly affect the net income for the period.

As of June 30, 2017, revenue due to pulp sales accounted for 45.8% of total sales. Pulp prices are fixed on a monthly basis in accordance with the market. Forward contracts or other financial instruments are not used for pulp sales.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

This risk is approached in different ways. Arauco has a team of specialists who perform periodic market and competition analyses, providing tools to analyze and evaluate trends and adjust forecasts. Similarly, Arauco performs price financial sensitivity analysis in order to take the necessary safeguards to confront different scenarios in the best possible manner.

Sensitivity analysis considers a variation of +/- 10% in the average pulp price, a possible fluctuation range given current market conditions at the date of the closing balance. With all other variables constant, a variation of +/- 10% in the average pulp price would mean a variation of +/- 57.35% (equivalent to ThU.S.$ 173,510) on the income for the year after tax and +/- 1.49% (equivalent to ThU.S.$104,106) on equity.

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NOTE 24. REPORTABLE SEGMENTS

The main products that generate revenue for each reportable segment are described as follows: /

• Pulp: The main products sold by this reportable segment are long fiber bleached pulp (BSKP), short fiber bleached pulp (BHKP), long fiber raw pulp (UKP), and pulp fluff.

• Timber: The range of products sold by this reportable segment are plywood panels, MDF panels (medium density fiberboard), Hardboard Panels, PB Panels (agglomerated different sizes of sawn wood and remanufactured products such as moldings, precut pieces and finger joints.

• Forestry: This reportable segment produces and sells sawn logs, pulpable logs, posts and chips made from owned forests of Radiata and Taeda pine, eucalyptus globulus and nitens forests. Additionally, purchases logs and woodchip from third parties, which it sells to its other reportable segment.

Pulp

The Pulp reportable segment uses wood exclusively from pine and eucalyptus plantations for the production of different classes of wood cellulose or pulp. Bleached pulp is mainly used as raw material for producing printing and writing paper, as well as toilet paper and high quality wrapping paper. Unbleached pulp is used to produce packing paper, filters, fiber cement products, dielectric paper and others. On the other hand, fluff pulp is mainly used in the production of diapers and female hygiene products.

Arauco has seven plants, five in Chile, one in Argentina and one in Uruguay and they have a total production capacity of approximately 3.9 million tons per year. Pulp is sold in more than 45 countries, mainly in Asia and Europe.

Timber

The Panels reportable segment produces a wide range of panel products and several kinds of moldings aimed at the furniture, decoration and construction industries. It consists of 17 industrial plants: 5 in Chile, 2 in Argentina, 2 in Brazil, and 8 plants around USA and Canada. The Company has a total annual production capacity of 6.7 million cubic meters of PBO, MDF, Hardboards, plywood and moldings.

Through the Sonae Arauco joint venture (Note 16), it manufactures and commercializes MDF, PB and OSB wood panels, as well as sawn lumber, by operating 2 panel plants and one sawmill in Spain; 2 panel plants and one resin plant in Portugal; 4 panel plants in Germany and 2 panel plants in South Africa.

In total, Sonae Arauco’s production capacity is approximately 1.48 million m3 of MDF, 2.33 million m3 of PB, 516,000 m3 of OSB and 101,000 m3 of sawn lumber.

The Sawn Timber reportable segment produces a wide range of wood and remanufactured products with different kinds of uses and appearances, which include a wide variety of uses in the furniture, packing, construction and refurbishing industries.

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Amounts in thousands of U.S. dollars, except as indicated

With 8 saw mills in operation (7 in Chile and 1 in Argentina), the Company has a production capacity of 3 million cubic meters of sawn wood.

Furthermore, the Company has 5 remanufacturing plants, 4 in Chile and 1 in Argentina. These plants reprocess sawn wood and produce high quality remanufactured products, such as finger joint and solid moldings as well as precut pieces.

Forestry

The Forestry reportable segment is Arauco’s core business. It provides raw materials for all products manufactured and sold by the Company. By directly controlling the growth of the forests to be processed, Arauco guarantees itself quality wood for each of its products.

Arauco holds forestry assets distributed throughout Chile, Argentina, Brazil and Uruguay, reaching 1.7 million hectares as of June 30, 2016, of which 1 million hectares are used for plantations, 431 thousand hectares for native forests, 193 thousand hectares for other uses and 76 thousand hectares are to be planted.

Arauco’s principal plantations consist of radiata and taeda pine and eucalyptus to a lesser degree. These are species that have fast growth rates and short harvest cycles compared with other long fiber commercial woods.    

Arauco has no customers representing 10% or more of its revenues.

Below, please find summarized information concerning the assets, liabilities and profits and losses at the end of each period, by segments. The profit (loss) of each segment informed takes into consideration that taxes and income and financial costs have not been allocated to the various segments, and are shown as part of the Corporate’s segment:

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Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2017	Pulp ThU.S.$		Forestry ThU.S.$			Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,151,260		48,769			1,292,744		20,893		0			2,513,666			0			2,513,666
Revenues from transactions with other operating segments		20,883		534,955			3,127		16,019		0			574,984			(574,984	)		0
Finance income		0		0			0		0		12,317			12,317			0			12,317
Finance costs		0		0			0		0		(117,617	)		(117,617	)		0			(117,617	)
Net finance costs		0		0			0		0		(105,300	)		(105,300	)		0			(105,300	)
Depreciation and amortizations		117,674		10,441			68,399		1,789		3,466			201,769			0			201,769
Sum of significant income accounts		576		70,193			261		0		0			71,030			0			71,030
Sum of significant expense accounts		0		173,867			1,557		0		0			175,424			0			175,424
Profit (loss) of each reportable segment		243,598		(165,849	)		115,815		5,545		(160,314	)		38,795			0			38,795
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0			0		0		3,125			3,125			0			3,125
Joint ventures		0		0			7,567		0		878			8,445			0			8,445
Income tax expense		0		0			0		0		(11,820	)		(11,820	)		0			(11,820	)
Geographical information on revenues
Revenue – Chilean entities		754,011		34,724			646,971		308		0			1,436,014			0			1,436,014
Revenue – Foreign entities		397,249		14,045			645,773		20,585		0			1,077,652			0			1,077,652
Total Ordinary Income		1,151,260		48,769			1,292,744		20,893		0			2,513,666			0			2,513,666

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Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2017	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property, plant and equipment and biological assets		78,922		103,429		68,456		174		1,100		252,081		0			252,081
Acquisition and contribution of investments in associates and joint venture		0		0		0		0		0		0		0			0
Period ended June 30, 2017	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,028,870		5,359,656		2,499,161		53,125		773,746		13,714,558		(40,754	)		13,673,804
Segments assets (excluding deferred tax assets)		5,028,870		5,359,656		2,499,161		53,125		766,632		13,707,444		(40,754	)		13,666,690
Deferred tax assets		0		0		0		0		7,114		7,114		0			7,114
Investments accounted through equity method
Associates		0		49,146		0		0		106,469		155,615		0			155,615
Joint Ventures		0		0		172,977		0		19,331		192,308		0			192,308
Segment liabilities		484,901		143,442		295,591		12,205		5,760,733		6,696,872		0			6,696,872
Segments liabilities (excluding deferred tax liabilities)		484,901		143,442		295,591		12,205		4,156,780		5,092,919		0			5,092,919
Deferred tax liabilities		0		0		0		0		1,603,953		1,603,953		0			1,603,953
Geographical information on non-current assets
Chile		2,536,715		3,280,001		693,672		22,788		141,067		6,674,243		(6,292	)		6,667,951
Foreign countries		1,722,071		1,559,628		1,048,779		22,349		23,435		4,376,262		0			4,376,262
Non-current assets, Total		4,258,786		4,839,629		1,742,451		45,137		164,502		11,050,505		(6,292	)		11,044,213

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Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,067,282		47,051		1,226,945			12,033			0			2,353,311			0			2,353,311
Revenues from transactions with other operating segments		20,129		555,111		3,120			16,716			0			595,076			(595,076	)		0
Finance income		0		0		0			0			17,897			17,897			0			17,897
Finance costs		0		0		0			0			(135,770	)		(135,770	)		0			(135,770	)
Net finance costs		0		0		0			0			(117,873	)		(117,873	)		0			(117,873	)
Depreciation and amortizations		118,729		9,516		66,288			1,325			3,159			199,017			0			199,017
Sum of significant income accounts		4		107,035		143			0			0			107,182			0			107,182
Sum of significant expense accounts		0		0		11,352			0			0			11,352			0			11,352
Profit (loss) of each reportable segment		167,556		68,641		73,316			(1,717	)		(197,409	)		110,387			0			110,387
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0		0			0			8,786			8,786			0			8,786
Joint ventures		0		0		(159	)		0			1,404			1,245			0			1,245
Income tax expense		0		0		0			0			(39,552	)		(39,552	)		0			(39,552	)
Geographical information on revenues
Revenue – Chilean entities		877,051		26,525		628,470			316			0			1,532,362			0			1,532,362
Revenue – Foreign entities		190,231		20,526		598,475			11,717			0			820,949			0			820,949
Total Ordinary Income		1,067,282		47,051		1,226,945			12,033			0			2,353,311			0			2,353,311

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Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property, plant and equipment and biological assets		75,410		96,574		44,670		1,268		1,273		219,195		0			219,195
Acquisition and contribution of investments in associates and joint venture		0		0		153,135		0		0		153,135		0			153,135
Year ended December 31, 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,077,300		5,492,364		2,515,092		30,970		932,059		14,047,785		(41,604	)		14,006,181
Segments assets (excluding deferred tax assets)		5,077,300		5,492,364		2,515,092		30,970		925,962		14,041,688		(41,604	)		14,000,084
Deferred tax assets		0		0		0		0		6,097		6,097		0			6,097
Investments accounted through equity method
Associates		0		160,490		0		0		105,285		265,775		0			265,775
Joint Ventures		0		0		161,703		0		19,070		180,773		0			180,773
Segment liabilities		277,474		161,091		311,667		11,836		6,244,830		7,006,898		0			7,006,898
Segments liabilities (excluding deferred tax liabilities)		277,474		161,091		311,667		11,836		4,613,765		5,375,833		0			5,375,833
Deferred tax liabilities		0		0		0		0		1,631,065		1,631,065		0			1,631,065
Geographical information on non-current assets (**)
Chile		2,572,702		3,509,727		721,418		27		135,808		6,939,682		(3,575	)		6,936,107
Foreign countries		1,740,559		1,525,190		1,016,633		23,040		42,292		4,347,714		0			4,347,714
Non-current assets, Total		4,313,261		5,034,917		1,738,051		23,067		178,100		11,287,396		(3,575	)		11,283,821

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Amounts in thousands of U.S. dollars, except as indicated

Quarter April-June 2017	Pulp ThU.S.$		Forestry ThU.S.$			Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		587,656		29,134			652,729		10,411		0			1,279,930			0			1,279,930
Revenues from transactions with other operating segments		10,519		271,513			1,678		8,231		0			291,941			(291,941	)		0
Finance income		0		0			0		0		5,904			5,904			0			5,904
Finance costs		0		0			0		0		(57,745	)		(57,745	)		0			(57,745	)
Net finance costs		0		0			0		0		(51,841	)		(51,841	)		0			(51,841	)
Depreciation and amortizations		57,668		4,080			32,429		896		1,735			96,808			0			96,808
Sum of significant income accounts		10		26,029			150		0		0			26,189			0			26,189
Sum of significant expense accounts		0		(4,494	)		596		0		0			(3,898	)		0			(3,898	)
Profit (loss) of each reportable segment		143,736		(8,441	)		60,956		3,445		(115,629	)		84,067			0			84,067
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0			0		0		(290	)		(290	)		0			(290	)
Joint ventures		0		0			3,260		0		469			3,729			0			3,729
Income tax expense		0		0			0		0		(37,442	)		(37,442	)		0			(37,442	)
Geographical information on revenues
Revenue – Chilean entities		382,746		21,111			316,660		79		0			720,596			0			720,596
Revenue – Foreign entities		204,910		8,023			336,069		10,332		0			559,334			0			559,334
Total Ordinary Income		587,656		29,134			652,729		10,411		0			1,279,930			0			1,279,930

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Amounts in thousands of U.S. dollars, except as indicated

Quarter April-June 2017	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property, plant and equipment and biological assets		44,859		48,026		38,437			107			820			132,249			0			132,249
Acquisition and contribution of investments in associates and joint venture		0		0		0			0			0			0			0			0
Quarter April-June 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		541,451		24,801		635,205			5,829			0			1,207,286			0			1,207,286
Revenues from transactions with other operating segments		10,872		281,773		1,759			8,716			0			303,120			(303,120	)		0
Finance income		0		0		0			0			6,585			6,585			0			6,585
Finance costs		0		0		0			0			(65,485	)		(65,485	)		0			(65,485	)
Net finance costs		0		0		0			0			(58,900	)		(58,900	)		0			(58,900	)
Depreciation and amortizations		61,348		4,707		36,222			610			1,578			104,465			0			104,465
Sum of significant income accounts		0		54,326		121			0			0			54,447			0			54,447
Sum of significant expense accounts		0		0		983			0			0			983			0			983
Profit (loss) of each reportable segment		79,114		20,771		52,388			(964	)		(93,841	)		57,468			0			57,468
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0		0			0			5,511			5,511			0			5,511
Joint ventures		0		0		(107	)		0			589			482			0			482
Income tax expense		0		0		0			0			(12,185	)		(12,185	)		0			(12,185	)
Geographical information on revenues
Revenue – Chilean entities		454,478		14,192		316,938			154			0			785,762			0			785,762
Revenue – Foreign entities		86,973		10,609		318,267			5,675			0			421,524			0			421,524
Total Ordinary Income		541,451		24,801		635,205			5,829			0			1,207,286			0			1,207,286

126

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Quarter April-June 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$		Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property, plant and equipment and biological assets		22,951		45,464		32,053		1,062		705		102,235		0		102,235
Acquisition and contribution of investments in associates and joint venture		0		0		153,135		0		0		153,135		0		153,135

127

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The following is a breakdown of the cash flows by segment, which data is presented in a complementary manner, as required pursuant to local requirements:

Period ended June 30, 2017	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		377,880			98,698			175,156			3,501			(169,275	)		485,960			0		485,960
Cash flows (used in) investing activities		(78,767	)		(87,453	)		(72,099	)		(817	)		(5,031	)		(244,167	)		0		(244,167	)
Cash flows from (used in) Financing Activities		(43,059	)		(1,727	)		2,030			0			(276,417	)		(319,173	)		0		(319,173	)
Net increase (decrease) in Cash and Cash Equivalents		256,054			9,518			105,087			2,684			(450,723	)		(77,380	)		0		(77,380	)
Period ended June 30, 2016	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		341,291			123,926			165,971			3,366			(180,835	)		453,719			0		453,719
Cash flows (used in) investing activities		(77,393	)		(73,889	)		(202,834	)		(1,268	)		(2,148	)		(357,532	)		0		(357,532	)
Cash flows from (used in) Financing Activities		(28,948	)		(14,005	)		(35,953	)		0			10,048			(68,858	)		0		(68,858	)
Net increase (decrease) in Cash and Cash Equivalents		234,950			36,032			(72,816	)		2,098			(172,935	)		27,329			0		27,329

128

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Quarter April-June 2017 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		206,599			58,654			99,728			2,142			(61,927	)		305,196			0		305,196
Cash flows (used in) investing activities		(44,869	)		(32,469	)		(38,366	)		(473	)		(8,888	)		(125,065	)		0		(125,065	)
Cash flows from (used in) Financing Activities		0			(1,424	)		4,875			0			(275,214	)		(271,763	)		0		(271,763	)
Net increase (decrease) in Cash and Cash Equivalents		161,730			24,761			66,237			1,669			(346,029	)		(91,632	)		0		(91,632	)
Quarter April-June 2016	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		129,552			68,146			105,527			852			(77,521	)		226,556			0		226,556
Cash flows (used in) investing activities		(23,105	)		(24,342	)		(188,797	)		(1,062	)		(6,833	)		(244,139	)		0		(244,139	)
Cash flows from (used in) Financing Activities		0			(21,121	)		(3,788	)		0			(79,456	)		(104,365	)		0		(104,365	)
Net increase (decrease) in Cash and Cash Equivalents		106,447			22,683			(87,058	)		(210	)		(163,810	)		(121,948	)		0		(121,948	)

129

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

Information required by geographic area:

2017 Unaudited	Geographical area
	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues		1,436,014		228,865		157,563		413,323		277,901		2,513,666
Revenues 4th Quarter		720,596		121,804		81,220		213,241		143,069		1,279,930
Non-current Assets		6,663,109		956,221		1,195,958		435,249		1,786,562		11,037,099

2016 Unaudited	Geographical area
	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues		1,532,362		169,745		175,317		390,320		85,567		2,353,311
Revenues 4th Quarter		785,762		82,910		94,501		206,017		38,096		1,207,286
Non-current Assets		6,931,755		960,596		1,186,538		397,924		1,800,911		11,277,724

130

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 25. OTHER NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

Current non-financial assets	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Roads to amortize current		70,937		41,812
Prepayment to amortize (insurance + others)		34,473		23,086
Recoverable taxes (Relating to purchases)		62,098		71,357
Other current non-financial assets		13,826		8,660
Total		181,334		144,915
Non current non-financial assets	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Roads to amortize, non current		102,880		121,894
Guarantee values		3,094		3,302
Recoverable taxes (Relating to purchases)		1,599		1,493
Other non-current non-financial assets		3,389		3,630
Total		110,962		130,319
Current non-financial liabilities	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Provision of minimum dividend (1)		53,671		60,312
ICMS tax payable		12,833		14,856
Other tax payable		13,581		16,202
Other Current non-financial liablilities		4,300		7,793
Total		84,385		99,163

(1) Provision includes a minimum dividend of subsidiary minority.

Non-current non-financial liabilities	06-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
ICMS tax payable		58,622		58,606
Other non-current non-financial liablilities		1,901		2,027
Total		60,523		60,633

131

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 26. DISTRIBUTABLE NET PROFIT AND EARNINGS PER SHARE

Distributable net profit

As a general policy, the Board of Directors of Arauco agreed that the net profit to be distributed as dividend is determined based on realized net gains/(losses) of any relevant variations in the value of unrealized assets and liabilities, which are excluded from the calculation of net profit during the period such changes are made.

As a result of the foregoing, for purposes of determining the distributable net profit of the Company, which is the same considered for calculating the minimum dividend required and additional dividend, the following unrealized gains/losses are excluded from the net profit for the year:

1) Unrealized gains/losses relating to the fair value recorded for forestry assets under IAS 41, adding them back to distributable net profit when they are realized through sale or disposed of by other means.

2) Those generated through the acquisition of entities. These results will be added back to net profit when they are realized through sale.

The deferred taxes associated with the amounts described in 1) and 2) above are also excluded.

The following table details the adjustments made for the determination of distributable net profit as June 30, 2017 and 2016 in order to determine the provision of 40% of the distributable net profit for each year:

	Distributable Net Income ThU.S.$
Net profit attributable to owners of parent at 06-30-2017		38,391
Adjustments:
Biological Assets
Unrealized gains/losses		(67,157	)
Realized gains/losses		190,024
Deferred income taxes		(29,684	)
Total adjustments		93,183
Distributable Net Profit at 06-30-2017		131,574

	Distributable Net Income ThU.S.$
Net Profit attributable to owners of parent at 06-30-2016		109,084
Adjustments:
Biological Assets
Unrealized gains/losses		(97,619	)
Realized gains/losses		98,545
Deferred income taxes		(679	)
Total adjustments		247
Distributable Net Profit at 06-30-2016		109,331

132

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

The Company expects to maintain its policy of distributing 40% of its net distributable profit as dividends for all future fiscal years, but will also consider the alternative of distributing a provisional dividend at year end.

As of June 30, 2017 in the Interim Classified Statements of Financial Position, under the line item Other non-current non-financial liabilities for an amount of ThU.S.$84,385, a total of ThU.S.$52,630 correspond to a provision for the minimum dividend for the 2017 period.

Basic and diluted earnings per share

Basic and diluted earnings per share are calculated by dividing the profit or loss attributable to ordinary equity holders of parent by the weighted average number of ordinary shares outstanding. Arauco does not have any shares with potential dilutive effect.

	January-June				April-June
	Unaudited
	2017 ThU.S.$		2016 ThU.S.$		2017 ThU.S.$		2016 ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		38,391		109,084		83,999		56,910
Weighted average of number of shares		113,159,655		113,159,655		113,159,655		113,159,655
Basic and diluted earnings per share (in U.S.$ per share)		0.3392640		0.9639831		0.7423052		0.5029178

133

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

June 30, 2017

Amounts in thousands of U.S. dollars, except as indicated

NOTE 27. SUBSEQUENT EVENTS

The issuance of these interim consolidated financial statements for the period between January 1 and June 30, 2017 were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Meeting No.574 held August 23, 2017.

Subsequent to June 30, 2017 and until the date of issuance of these interim consolidated financial statements, there have been no financial or other events to report.

134

Celulosa Arauco y Constitución S.A.

Second Quarter 2017 Results

August 24, 2017

1

HIGHLIGHTS

REVENUES U.S.$ 1,279.9 MILLION

Arauco’s revenues reached U.S.$ 1,279.9 million during the second quarter of 2017, a 3.7% increase compared to the U.S.$ 1,233.7 million obtained in the first quarter of 2017.

NET INCOME U.S.$ 84.1 MILLION

Net income reached U.S.$ 84.1 million, an increase of U.S.$ 129.3 million compared to the loss of U.S.$ 45.3 million obtained in the first quarter of 2017.

ADJUSTED EBITDA U.S.$ 334.6 MILLION

Adjusted EBITDA reached U.S.$ 334.6 million, an increase of 14.7% or U.S.$ 42.9 million compared to the U.S.$ 291.7 million obtained during the first quarter of 2017.

NET FINANCIAL DEBT/ LTM ADJUSTED EBITDA

Net Financial Debt / LTM⁽¹⁾ Adjusted EBITDA ratio reached 3.3x in this quarter, a decrease compared to the 3.5x obtained in the first quarter of 2017.

(1) LTM = Last Twelve Months

CAPEX

CAPEX reached U.S.$ 132.2 million, an increase of 10.4% or U.S.$ 12.4 million compared to the U.S.$ 119.8 million during the first quarter of 2017.

Conference Call

Monday, August 28^th, 2017

12:00 Santiago Time

11:00 Eastern Time (New York)

Please Dial:

+1 (844) 839 2184 from USA

+1 (412) 317 2505 from other countries Password: Arauco

For further information, please contact:

Marcelo Bennett

marcelo.bennett@arauco.cl

Phone: (562) 2461 7309

Fernanda Paz Vásquez

fernanda.vasquez@arauco.cl

Phone: (562) 2461 7494

investor_relations@arauco.cl

For more details on Arauco’s financial statements please refer to www.svs.cl or www.arauco.cl

Readers are referred to the documents filed by Arauco with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F that identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Arauco on the date hereof and Arauco does not assume any obligation to update such statements. References herein to “U.S.$” are to United States dollars. Discrepancies in any table between totals and sums of the amounts listed are due to rounding. This report is unaudited.

2

OVERVIEW

During this quarter, Arauco attained an outstanding Adjusted EBITDA margin, reaching 26.1%. Just like last quarter, the main driver of the increase was the upswing in pulp prices which started in November of last year and continued throughout the first semester of 2017. Our wood products segment also increased sales during the quarter, although the Adjusted EBITDA remained quite stable when compared to last quarter.

Pulp demand remained seasonally strong despite the beginning of the summer months in the Northern hemisphere. In Asia, even though some correction in prices were seen during the last month of the quarter, the market seems optimistic that prices will continue to rise despite this dip in price levels. From the supply side, disruptions in production alleviated pulp price pressures. Europe advanced in catching up to prices in Asia, but pulp margins still remain weak in comparison and therefore producers continue shipping their volumes to the Asian market.

Our wood products segment regained traction in terms of pricing as well as sales volume, apart from sawn timber products and plywood which overall had a slight decline in sales volume. North America continues to be a solid market despite the ongoing competition coming from Latin American markets. The Brazilian market persists strained as uncertainty continues in local economics and politics.

Higher cash from operations, which increased U.S.$ 124.4 million compared to last quarter, enabled Arauco to reach a Free Cash Flow of U.S.$ 116.3 million during this quarter.

In U.S. Million	Q2 2017			Q1 2017			Q2 2016			QoQ			YoY			YTD 2017			YTD 2016			YoY Acum
Revenue		1,279.9			1,233.7			1,207.3			3.7	%		6.0	%		2,513.7			2,353.3			6.8	%
Net income		84.1			-45.3			57.5			285.7	%		46.3	%		38.8			110.4			-64.9	%
Adjusted EBITDA		334.6			291.7			283.4			14.7	%		18.1	%		626.2			536.2			16.8	%
Adjusted EBITDA Margin		26.1	%		23.6	%		23.5	%		10.6	%		11.4	%		24.9	%		22.8	%		9.3	%
LTM Adj. EBITDA		1,142.2			1,091.0			1,149.9			4.7	%		-0.7	%		1,142.2			1,149.9			-0.7	%
CAPEX		132.2			119.8			255.4			10.4	%		-48.2	%		252.1			372.3			-32.3	%
Net Financial Debt		3,735.8			3,821.0			3,902.9			-2.2	%		-4.3	%		3,735.8			3,902.9			-4.3	%
Net Financial Debt /
LTM Adj. EBITDA		3.3x			3.5x			3.4x			-6.6	%		-3.6	%		3.3x			3.4x			0.0	%

Adjusted EBITDA and EBITDA Margin

(In U.S.$ Million)

3

INCOME STATEMENT

Net income for the second quarter of 2017 was U.S.$ 84.1 million, an increase of U.S.$ 129.3 million compared to the U.S.$ -45.3

million obtained in the first quarter of this year.

In U.S.$ Million	Q2 2017			Q1 2017			QoQ
Revenues		1,279.9			1,233.7			3.7	%
Cost of sales		(877.7	)		(871.6	)		0.7	%
Distribution costs		(128.1	)		(124.0	)		3.3	%
Administrative expenses		(127.2	)		(120.4	)		5.7	%
Other income		32.6			48.3			-32.5	%
Other expenses		(8.1	)		(193.1	)		-95.8	%
Financial income		5.9			6.4			-7.9	%
Financial costs		(57.7	)		(59.9	)		-3.6	%
Participation in (loss) profit in associates and joint ventures accounted through equity method		3.4			8.1			-57.7	%
Exchange rate differences		(1.6	)		1.5			-212.0	%
Income before income tax		121.5			(70.9	)		271.4	%
Income tax		(37.4	)		25.6			-246.1	%
Net income		84.1			(45.3	)		285.7	%

Revenues reached U.S.$ 1,279.9 million during the second quarter of 2017 compared with the U.S.$ 1,233.7 million in the previous

quarter, as a result of an increase in sales from our pulp, wood products and forestry sector. Forestry revenues increased with higher

sales volume from our wood products segment. Revenues from our pulp segment increased as average prices surged 11.0% compared

to last quarter, partially offset by a 7.0% less sales volume. Energy sales increased by 7.4% compared to last quarter, thanks to higher

sales volume coming from our plants. The following table shows a breakdown of our revenue sales distributed by business segment:

In U.S.$ Million	Q2 2017		Q1 2017		QoQ
Pulp(*)		587.7		563.6		4.3	%
Wood Products(*)		652.7		640.0		2.0	%
Forestry		29.1		19.6		48.4	%
Others		10.4		10.5		-0.7	%
Total		1,279.9		1,233.7		3.7	%

(*) Pulp and Wood division sales include energy

Sales by Business Segment 2Q 2017

4

Cost of sales for the second quarter of the year reached U.S.$ 877.7 million, U.S.$ 6.1 million or 0.7% higher than the U.S.$ 871.6 million obtained in the first quarter of 2017. In absolute terms, cost of electricity increased by U.S.$ 4.7 million this quarter since there was a higher output of energy during the quarter. The largest decrease in absolute terms during the quarter was depreciation and amortization, which declined by U.S.$ 5.8 million, due to lower pulp sales volume.

In U.S.$ Million	Q2 2017		Q1 2017		QoQ
Timber		189.9		186.8		1.7	%
Forestry costs		151.5		149.6		1.2	%
Depreciation and amortization		89.9		95.6		-6.0	%
Maintenance costs		65.5		64.0		2.4	%
Chemical costs		128.2		125.3		2.3	%
Sawmill services		25.4		28.7		-11.5	%
Other raw materials and indirect costs		88.5		86.7		2.0	%
Energy and fuel		43.4		44.6		-2.6	%
Cost of electricity		13.9		9.2		51.7	%
Wage, salaries and severance indemnities		81.6		81.1		0.5	%
Cost of Sales		877.7		871.6		0.7	%

Administrative expenses overall increased by 5.7% or U.S.$ 6.8 million. In general, all items remained fairly stable, with wage, salaries and severance indemnities increasing slightly by U.S.$ 3.2 million due to a small reversal of a provision in the first quarter in Chile after bonus payments, and changes in actuarial losses.

In U.S.$ Million	Q2 2017		Q1 2017		QoQ
Wage, salaries and severance indemnities		53.3		50.1		6.4	%
Marketing, advertising, promotion and publications expenses		2.7		2.4		12.7	%
Insurance		5.0		4.2		17.5	%
Depreciation and amortization		6.7		7.6		-11.7	%
Computer services		8.2		6.7		21.6	%
Lease rentals (offices, warehouses and machinery)		4.1		3.9		6.2	%
Donations, contributions, scholarships		1.5		2.4		-39.0	%
Fees (legal and technical advisories)		8.1		9.2		-12.4	%
Property taxes, patents and municipality rights		5.1		4.3		18.3	%
Other administration expenses		32.6		29.6		10.3	%
Administrative Expenses		127.2		120.4		5.7	%

5

Distribution costs increased 3.3% or U.S.$ 4.1 million, due to higher freights and other shipping and freight costs which altogether increased U.S.$ 3.8 million. This increase is in line with the increase in sales volume from our wood segment. All other items fluctuated less the U.S.$ 1.0 million.

In U.S.$ Million	Q2 2017		Q1 2017		QoQ
Commissions		3.0		3.5		-15.2	%
Insurance		0.8		0.8		2.5	%
Other selling costs		5.5		4.9		11.2	%
Port services		7.5		7.3		3.4	%
Freights		95.3		93.2		2.3	%
Other shipping and freight costs		16.1		14.4		11.8	%
Distribution Costs		128.1		124.0		3.3	%

As a percentage, administrative expenses and distribution costs combined were 19.9% of sales, remaining stable compared to the 19.8% in the previous quarter, and a downward trend compared to 20.2% in the quarter before that.

Other income fell 32.5% or U.S.$ 15.7 million this quarter. Gain from changes in fair value of biological assets decreased U.S.$ 19.2 million this quarter, due to adjustments to the calculation of this item for this year. The rest of the items did not suffer any major fluctuations.

In U.S.$ Million	Q2 2017		Q1 2017		QoQ
Gain from changes in fair value of biological assets		24.0		43.3		-44.5	%
Net income from insurance compensation		0.2		0.1		253.7	%
Leases received		1.2		1.0		18.8	%
Gains on sales of assets		2.8		2.0		43.6	%
Access easement		0.4		0.0		960.5	%
Other operating results		3.9		2.0		98.0	%
Other Income		32.6		48.3		-32.5	%

6

Other expenses fell overall 95.8% or U.S.$ 185.1 million. After the forest fires at the beginning of the year, a provision for forestry fire losses was made for U.S.$ 178.4 million during the first quarter, taking into account an estimation of how much of the forests could be recovered in the process. During the second quarter, the expense for forestry fire losses was corrected by U.S.$ 4.5 million, dependent on the damage that was really found as our teams scoured the sites.

In U.S.$ Million	Q2 2017			Q1 2017		QoQ
Depreciation		0.4			0.9		-50.2	%
Legal payments		1.1			0.9		32.6	%
Impairment provision property, plant and equipment and others		1.8			1.0		80.1	%
Plants stoppage operating expenses		1.1			1.0		9.6	%
Project expenses		(0.0	)		0.7		-102.0	%
Gain (loss) from asset sales		2.0			0.6		260.6	%
Loss of assets		0.0			3.7		—
Provision for forestry fire losses		(4.5	)		178.4		-102.5	%
Other taxes		1.9			1.9		1.7	%
Research and development expenses		0.8			0.7		11.3	%
Fines, readjustments and interest		0.2			0.3		-43.0	%
Other expenses (donations, repayments insurance)		3.2			3.2		0.1	%
Other expenses		8.1			193.1		-95.8	%

Foreign exchange differences showed a loss of U.S.$ 1.6 million, a U.S.$ 3.1 million difference when compared to the previous quarter that ended at a gain of U.S.$ 1.5 million. The average of the Chilean peso against the U.S. dollar during the second quarter depreciated 1.4% when compared to the first quarter. The average of the Argentine peso also depreciated by 0.6% against the U.S. dollar when compared to last quarter, and 7.8% when levels at the end of March were compared to the end of June. These depreciations decrease our cash and cash equivalents when converted to U.S. dollar.

7

ADJUSTED EBITDA

Adjusted EBITDA for the second quarter of 2017 was U.S.$ 334.6 million, 14.7% or U.S.$ 42.9 million higher than the US$ 291.7 million reached during the previous quarter. In terms of Adjusted EBITDA by business, during the second quarter of the year we had an increase in our pulp and wood divisions of 26.9% and 0.4% respectively, partially offset by a 1.4% decline in our forestry division. Pulp prices overall continued their positive trend during the second quarter, reaching a higher average compared to last quarter. Wood products increased prices in both panels and sawn timber, and increased sales volume except for sawn timber which had a slight decrease of approximately 0.6% during the quarter due to lower plywood sales. Our forestry EBITDA remained fairly stable despite an increase in sales volume and higher margins, as administrative expenses within this segment increased.

In U.S.$ Million	Q2 2017			Q1 2017			Q2 2016			QoQ			YoY
Net Income		84.1			(45.3	)		57.5			-285.7	%		46.3	%
Financial costs		57.7			59.9			65.5			-3.6	%		-11.8	%
Financial income		(5.9	)		(6.4	)		(6.6	)		-7.9	%		-10.3	%
Income tax		37.4			(25.6	)		12.2			-246.1	%		207.3	%
EBIT		173.4			(17.4	)		128.6			-1,094.3	%		34.8	%
Depreciation & amortization		96.8			105.0			104.5			-7.8	%		-7.3	%
EBITDA		270.2			87.5			233.0			208.7	%		15.9	%
Fair value cost of timber harvested		91.3			70.5			96.5			29.5	%		-5.4	%
Gain from changes in fair value of biological assets		(24.0	)		(43.3	)		(48.4	)		-44.5	%		-50.4	%
Exchange rate differences		1.6			(1.5	)		0.2			-212.0	%		756.5	%
Others (*)		(4.5	)		178.4			2.1			-102.5	%		-317.7	%
Adjusted EBITDA		334.6			291.7			283.4			14.7	%		18.1	%

(*) Includes provision from forestry fire losses.

Adjusted EBITDA Variation by Business Segment Q1 2017 – Q2 2017

(In U.S.$ Million)

8

FORESTRY BUSINESS

The Adjusted EBITDA for our forestry business reached U.S.$ 58.6 million during this quarter, which translates to a 1.4% or U.S.$ 0.9 million decrease compared to the previous quarter.

Adjusted EBITDA for Forestry Business

(In U.S.$ Million)

During the second quarter, our forestry production was 6.2 million m3, a 13.0% increase compared to the 5.4 million m3 produced in the previous quarter. Sales volume increased by 4.8% from 7.2 million m3 to 7.5 million m3.

Production, Purchases and Sales Volume

(In Thousand m³)

9

PULP BUSINESS

The Adjusted EBITDA for our pulp business reached U.S.$ 204.7 million during this quarter, which translates to a 26.9% increase or U.S.$ 43.4 million compared to the previous quarter.

Adjusted EBITDA for Pulp Business

(In U.S.$ Million)

Global Pulp Demand Change Q1 2017 – Q2 2017     Production and Sales Volume (In Thousand AdT)   Even though the first months of summer usually bring slower global pulp demand, pulp prices continued their positive rally during the second quarter. The second line at the OKI Mill ramped up during April, but with little to no impact in prices. This was supported by a lower production in the CMPC Guaiba Mill, which encountered operational issues back in February and operated at only 80% during the quarter. World inventories remained balanced, with long fiber inventories increasing two days compared to the last quarter to 31 days, and short fiber decreasing by one day to 37 days. Arauco sold less sales volume Q-o-Q as many storm surges hit the Chilean coast, delaying some ships to embark and consequently lagging sales invoiced.   In Asia, paper prices continued increasing thanks to a dynamic paper market, supported by sporadic production downtimes of some paper producers. Short fiber prices increased between 6% and 7%, or U.S.$ 40 per ton, during the quarter. On the other hand, long fiber prices showed an upward trend during the first two months of the quarter, with a 3% or U.S.$ 20 per ton gain. However, long fiber prices corrected by 1% during the month of June, mainly due to seasonally weaker demand. Other Asian countries such as Korea have followed suit in terms of price movements; prices for both fibers have increased, with a slight correction in long fiber prices in June.   European markets showed the highest increase in pulp prices this quarter, with a gain in short fiber prices of approximately 16%. Many paper producers decided to take the risk of buying pulp spot thinking that the market would be more favorable to them. Nevertheless, unexpected downtimes in pulp mills have given way to higher pulp prices each month. Now many paper producers are looking to extend their contracts up to the end of next year in order to close their exposure to short-term pulp prices. When compared to Asian markets, margins continue subdued despite the price recovery. Pulp producers therefore continue to export volume to Asia, which in turn clears the way for larger price hikes in Europe.   Markets in Latin America remained stable throughout the quarter, following international price trends. Venezuela continued subdued, where Arauco has not sold any pulp volume during the first part of the year.

The ramp-up of the Klabin mill continues to affect prices in Brazil, and we have decided to increase exports of fluff to other markets such as the Middle East, where countries like Turkey have shown better margins than selling locally in Argentina.

Pulp production remained fairly stable in comparison to last quarter, and increased by 6.4% compared to the same quarter of last year. Despite the forest fires during the first quarter of the year, wood supply has not been obstructed. Mills must take the added precaution of monitoring closely incoming wood so as to not contaminate the pulp with bits of charcoal. We had maintenance stoppages in Line 1 of our Arauco Mill during the end of March and beginning of April, and Montes del Plata during the month of May.

10

WOOD PRODUCTS BUSINESS

The Adjusted EBITDA for our wood products business reached U.S.$ 94.6 million during this quarter, which translates to a 0.4% increase or U.S.$ 0.4 million compared to the previous quarter.

Adjusted EBITDA for Wood Product Business

(In U.S.$ Million)

Production and Sales Volume: Panels(1) (In Thousand m3) Production and Sales Volume: Sawn Timber(2) (In Thousand m3)

Composite panel sales slightly increased this quarter when compared to last quarter. MDF increased its sales volume by 0.7% and prices by 1.1% when compared to the first quarter of 2017, while PB increased its sales volume by 6.4% and prices by 3.0%. In North America, demand was stable. Disruptions in market production volumes after an MDF mill exploded in North Carolina enabled Brazilian imports to permeate the market with renewed strength, without detriment to price levels. In Mexico, MDF sales remained subdued as supply from new MDF plants as well as higher imports intensified competition. On the other hand, PB prices rose throughout the quarter, reflecting a healthy demand in our design lines. Latin American sales were mixed. The Brazilian market continued constrained after a tumultuous economic and political crisis. Although demand for panels seemed to be in good condition, prices in some local markets continued pressured. Despite all these setbacks, Arauco was able to slightly increase prices and sales volume within this country. The Argentine market has shown promise, boosted by increased sales of our valued added products. In Chile, lower economic activity principally affected melamine sales. Prices and sales volume in Colombia were pressured as more supply came from local and international producers. In contrast, the market in Peru has shown sustaining levels of growth.

Production and Sales Volume: Plywood (In Thousand m3)

Sawn timber markets showed recovery in total sales, mainly boosted by higher prices compared to the first quarter, and higher sales volume of 1.9% when plywood is not taken into account. Compared to last year, however, prices remain at higher levels. Asian and Middle Eastern markets particularly have shown improvement. In Korea, we were able to push through price hikes, while the Chinese market was stimulated by an increase in demand for furniture in the United States. In the Middle East, the appreciation of the euro decreased incoming competition from Europe, therefore increasing margins. Remanufactured product sales volume likewise remained stable compared to last quarter. The North American market was also active, enabling price hikes in various products. Supply and demand seemed to be in balance, giving way to a stable outlook for the rest of the year. Plywood prices continued the positive trend seen during the first quarter, increasing by 3.3%, although in detriment of sales volume which decreased 10.2%. A healthy level of demand in the North American market endured, and preliminary tests to launch new products were successful thus far. In Europe, we have also been able to increase prices, thanks to the strengthening of the construction sector.

(1) Includes HB, MDF, OSB, PB

(2) Includes sawn timber, kilned sawn timber, remanufactured wood products, pallets

Note: Sales include trading

11

CAPITAL EXPENDITURES

U.S.$ Million	Q2 2017		Q1 2017		Q2 2016		YTD 2017		YTD 2016
Cash flows used to purchase in associates		—		—		153.1		—		153.1
Purchase and sales of property, plant and equipment		88.2		69.0		65.8		157.3		145.4
Purchase and sales of intangible assets		3.1		4.6		1.1		7.7		1.6
Purchase of other long-term assets		40.9		46.1		35.4		87.1		72.1
Total CAPEX		132.2		119.8		255.4		252.1		372.3

During this quarter, capital expenditures increased by U.S.$ 12.4 million or 10.4% compared to the first quarter of 2017. There were two programmed maintenance stoppages during the second quarter: Line 1 of our Arauco Mill, which disbursed approximately U.S.$ 9.9 million; and the Montes del Plata Mill, which disbursed approximately U.S.$ 6.0 million. The water treatment plant continues its construction phase, with expenditures of U.S.$23.6 million during the quarter. This project has still to disburse approximately U.S.$ 43.5 million additionally until completion. The Grayling Project is also advancing and disbursed about U.S.$ 32.5 million during the quarter, accumulating of U.S.$43.3 million for this year and U.S.$ 60.0 million since the beginning of the project. Plantation CAPEX across all countries amounted to U.S.$ 40.9 million. The remaining CAPEX pertains to sustaining business investments.

12

FREE CASH FLOW

We had a favorable free cash flow during this quarter, increasing U.S.$ 53.5 million compared to last quarter. The increase in EBITDA kept driving cash from operations upwards, surpassing last quarter as well as the second quarter of last year. Therefore, cash from operations almost doubled compared to last quarter, increasing U.S.$ 124.4 million. Cash used by investment activities rose due to higher CAPEX as the Grayling Project gains full traction and continues its construction phase. In addition, cash used by financing activities during this quarter was U.S.$ 59.6 million, as compared to U.S.$ 0.8 million from last quarter. This difference is primarily due to the seasonal payment of dividends to our shareholders.

U.S.$ Million	Q2 2017			Q1 2017			Q2 2016
Adjusted EBITDA		334.6			291.7			283.4
Working Capital Variation		5.2			(20.6	)		39.2
Interest paid and received		(34.0	)		(70.4	)		(22.4	)
Income tax paid		(0.8	)		(12.8	)		(21.4	)
Other cash inflows (outflows)		0.3			(7.2	)		(52.2	)
Cash from Operations		305.2			180.8			226.6
Capex		(132.2	)		(119.8	)		(255.4	)
Proceeds from investment activities		2.9			0.7			5.7
Other inflows of cash, net		4.3			(0.0	)		5.5
Cash from (used in) Investment Activities		(125.1	)		(119.1	)		(244.1	)
Dividends paid		(59.7	)		(0.8	)		(100.3	)
Other inflows of cash, net		0.1			0.0			0.4
Cash from (used in) Financing Activities - Net of Proceeds and Repayments		(59.6	)		(0.8	)		(99.8	)
Effect of exchange rate changes on cash and cash equivalents		(4.2	)		2.0			6.6
Free Cash Flow		116.3			62.9			(110.8	)

Net Debt Variation Q1 2017 – Q2 2017

(In U.S.$ Million)

13

FINANCIAL DEBT AND CASH

Arauco’s financial debt as of June 30, 2017 reached U.S.$ 4,248.6 million, a decrease of 4.1% or U.S.$ 180.9 million when compared to March 31, 2017. This decrease is mainly due to the payment of a Yankee bullet bond in Arauco Argentina for U.S.$ 270.0 million. Our consolidated net financial debt decreased 2.2% or U.S.$ 85.1 million when compared with March 2017, while cash and cash equivalents decreased by U.S.$ 95.8 million.

Our leverage, measured as Net Financial Debt/LTM Adjusted EBITDA, decreased compared to last quarter from 3.5 times to 3.3 times.

	June		March		June
In U.S.$ Million	2017		2017		2016
Short term financial debt		453.8		673.7		647.8
Long term financial debt		3,794.7		3,755.8		3,782.5
TOTAL FINANCIAL DEBT		4,248.6		4,429.5		4,430.3
Cash and cash equivalents		512.7		608.5		527.4
NET FINANCIAL DEBT		3,735.8		3,821.0		3,902.9
LTM Adjusted EBITDA		1,142.2		1,091.0		1,149.9

Net Financial Debt and Leverage

(In U.S.$ Million)

Debt by Currency	Debt by Instrument

(*) UF is a Chilean monetary unit indexed to inflation.

14

Financial Debt Profile

For the remainder of the year, Arauco has U.S.$ 381.0 million in financial obligations (including accrued interest). Bank obligations for the year sum up a total of U.S.$ 190.5 million, which include the following maturities: U.S.$ 149.0 million of loans in Montes del Plata, U.S.$ 17.1 million in leasing in Chile, U.S.$ 20.1 million from our Argentine subsidiaries, and U.S.$ 4.1 million from our Brazilian subsidiaries. Bond amortizations include U.S.$ 125.0 million in a Yankee bond due in September, and the first amortization equivalent to U.S.$ 10.0 million for our local bond BARAU-Q in October. The remaining years have not undergone any major changes in financial obligations as compared to the previous quarter.

Financial Obligation by Year

(In U.S.$ Million)

Cash

Our cash position was U.S.$ 512.7 million at the end of the second quarter, which is a U.S.$ 95.8 million or 15.7% decrease compared to the end of the first quarter of 2017. Cash provided by operating activities increased U.S.$ 124.4 million, as receipts from sales of goods and rendering of services increased by U.S.$ 45.7 million, and seasonally lower interests paid which increased cash by U.S.$ 36.3 million. This increase in cash was offset by higher CAPEX which augmented U.S.$ 12.4 million, and seasonal payment of dividends of U.S.$ 59.7 million. Additionally, during the quarter, we paid off our Alto Paraná Bond, which amounted to U.S.$ 270.0 million, in June.

Cash by Currency	Cash by Instrument

15

SECOND QUARTER AND SUBSEQUENT EVENTS AND NEWS

MAPA and Dissolving Pulp Projects Receive Favorable Rulings in Court

In February 2014, the environmental study for the MAPA Project, located in our Arauco Mill, was approved by the Environmental Assessment Service (SEA). However, in March of that same year, a group of communities filed a constitutional act (recurso de protección) against the SEA, claiming they had not been duly consulted during the approval process of this project. After various proceedings, in May 2017 the Supreme Court ruled in favor of the project.

In the case of the dissolving pulp project located at the Valdivia Mill, in March 2015, the SEA approved the environmental impact statement submitted by Arauco. However, in November 2015 and similar to the MAPA project, a group of communities filed a constitutional act (recurso de protección) against the SEA, among others, claiming they had not been duly consulted during the process of approval. After various proceedings, in July 2017 we reached a settlement with the communities, and the Supreme Court accepted the withdrawal of the communities’ claim.

Both projects are subject to technical and feasibility studies as well as the approval of the Board of Directors before going forward.

Grayling Project on Schedule

The Grayling Project continues its course on schedule and within budget. As of June 2017, the progress was at a 15% completion. Currently, the various civil works contracts are being executed, while the construction of the principal building is ongoing. This building must be finished before the crude winter hits the area, where temperatures can reach 20°C below zero. During the winter months, the assembly of the internal equipment will take place. The external equipment will be set up during August and September of this year. The particleboard mill located in Grayling, Michigan, U.S.A., will cost approximately U.S.$ 400.0 million to construct and will have a capacity of 800,000 m3 per year. Rollout of the first panel is estimated to occur during late 2018.

16

FINANCIAL STATEMENTS

Income Statement

In U.S.$ Million	Q2 2017			Q1 2017			Q2 2016			YTD 2017			YTD 2016
Revenues		1,279.9			1,233.7			1,207.3			2,513.7			2,353.3
Cost of sales		(877.7	)		(871.6	)		(879.9	)		(1,749.3	)		(1,711.8	)
Gross profit		402.3			362.1			327.3			764.4			641.5
Other income		32.6			48.3			61.7			80.9			119.8
Distribution costs		(128.1	)		(124.0	)		(121.9	)		(252.1	)		(234.4	)
Administrative expenses		(127.2	)		(120.4	)		(131.5	)		(247.5	)		(236.6	)
Other expenses		(8.1	)		(193.1	)		(12.9	)		(201.2	)		(33.4	)
Financial income		5.9			6.4			6.6			12.3			17.9
Financial costs		(57.7	)		(59.9	)		(65.5	)		(117.6	)		(135.8	)
Participation in (loss) profit in associates and joint ventures accounted through equity method		3.4			8.1			6.0			11.6			10.0
Exchange rate differences		(1.6	)		1.5			(0.2	)		(0.2	)		0.9
Income before income tax		121.5			(70.9	)		69.7			50.6			149.9
Income tax		(37.4	)		25.6			(12.2	)		(11.8	)		(39.6	)
Net income		84.1			(45.3	)		57.5			38.8			110.4
Profit attributable to parent company		84.0			(45.6	)		56.9			38.4			109.1
Profit attributable to non-parent company		0.1			0.3			0.6			0.4			1.3

17

Balance Sheet

In U.S.$ Million	Q2 2017		Q1 2017		Q2 2016
Cash and cash equivalents		512.7		608.5		527.4
Other financial current assets		4.4		4.2		10.7
Other current non-financial assets		181.3		170.6		158.4
Trade and other receivables-net		704.6		724.0		667.8
Related party receivables		6.2		10.0		3.7
Inventories		847.0		825.6		908.5
Biological assets, current		303.6		299.9		324.9
Tax assets		67.3		103.3		80.2
Non-Current Assets classified as held for sale		2.5		2.9		2.8
Total Current Assets		2,629.6		2,749.0		2,684.4
Other non-current financial assets		11.7		15.9		3.4
Other non-current and non-financial assets		111.0		109.1		129.2
Non-current receivables		14.9		17.3		17.8
Investments accounted through equity method		347.9		461.2		437.3
Intangible assets		91.0		90.8		84.8
Goodwill		74.5		75.8		75.5
Property, plant and equipment		6,867.1		6,898.1		6,945.1
Biological assets, non-current		3,519.0		3,446.6		3,578.3
Deferred tax assets		7.1		6.7		3.9
Total Non-Current Assets		11,044.2		11,121.4		11,275.5
TOTAL ASSETS		13,673.8		13,870.4		13,959.9
Other financial liabilities, current		454.0		674.3		649.5
Trade and other payables		508.8		506.5		583.4
Related party payables		8.5		7.4		7.3
Other provisions, current		0.4		0.4		0.8
Tax liabilities		4.8		2.7		9.7
Current provision for employee benefits		5.4		5.3		5.3
Other non-financial liabilities, current		84.4		109.4		79.5
Total Current Liabilities		1,066.3		1,306.1		1,335.5
Other non-current financial liabilities		3,866.7		3,821.4		3,927.3
Other provisions, non-current		37.5		38.8		36.1
Deferred tax liabilities		1,604.0		1,591.0		1,636.8
Non-current provision for employee benefits		61.8		61.1		60.3
Other non-financial liabilities, non-current		60.5		62.8		59.9
Total Non-Current Liabilities		5,630.6		5,575.1		5,720.5
Non-parent participation		43.7		45.2		43.7
Net equity attributable to parent company		6,933.3		6,944.0		6,860.1
TOTAL LIABILITIES AND EQUITY		13,673.8		13,870.4		13,959.9

18

Cash Flow Statement

U.S.$ Million	Q2 2017			Q1 2017			Q2 2016			YTD 2017			YTD 2016
Receipts from sales of goods and rendering of services		1,367.3			1,321.7			1,263.6			2,689.0			2,572.0
Other cash receipts (payments)		56.5			63.9			68.4			120.4			132.7
Payments of suppliers and personnel (less)		(1,081.4	)		(1,119.8	)		(1,064.6	)		(2,201.3	)		(2,125.6	)
Interest paid and received		(34.0	)		(70.4	)		(22.4	)		(104.4	)		(90.8	)
Income tax paid		(0.8	)		(12.8	)		(21.4	)		(13.6	)		(34.7	)
Other (outflows) inflows of cash, net		(2.3	)		(1.8	)		3.0			(4.2	)		0.0
Net Cash Provided by (Used in) Operating Activities		305.2			180.8			226.6			486.0			453.7
Capital Expenditures		(132.2	)		(119.8	)		(255.4	)		(252.1	)		(372.3	)
Other investment cash flows		7.2			0.7			11.2			7.9			14.8
Net Cash Provided by (Used in) Investing Activities		(125.1	)		(119.1	)		(244.1	)		(244.2	)		(357.5	)
Proceeds from borrowings		72.6			5.0			158.5			77.6			367.0
Repayments of borrowings		(284.8	)		(51.6	)		(163.0	)		(336.4	)		(335.6	)
Dividends paid		(59.7	)		(0.8	)		(100.3	)		(60.5	)		(100.3	)
Other inflows of cash, net		0.1			0.0			0.4			0.1			0.0
Net Cash Provided by (Used in) Financing Activities		(271.8	)		(47.4	)		(104.4	)		(319.2	)		(68.9	)
Total Cash Inflow (Outflow) of the Period		(91.6	)		14.3			(121.9	)		(77.4	)		27.3
Effect of exchange rate changes on cash and cash equivalents		(4.2	)		2.0			6.6			(2.2	)		0.0
Cash and Cash equivalents at beginning of the period		608.5			592.3			642.7			592.3			500.0
Cash and Cash Equivalents at end of the Period		512.7			608.5			527.4			512.7			527.4

19

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Celulosa Arauco y Constitución, S.A.
	(Registrant)
Date: September 20, 2017	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer