Form 6-K

6-K 1 d226312d6k.htm FORM 6-K Form 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Report of Foreign Private Issuer

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

of the Securities Exchange Act of 1934

For the month of November 2021

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 Statements		1
2.	Unaudited Interim Consolidated Statements of Financial Position		6
3.	Unaudited Interim Consolidated Statements of Profit or Loss		8
4.	Unaudited Interim Consolidated Statements of Comprehensive Income		9
5.	Unaudited Interim Consolidated Statements of Changes in Equity		10
6.	Unaudited Interim Consolidated Statements of Cash Flow		11
7.	Unaudited Notes to the Interim Consolidated Financial Statements		12
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2021

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

1. ANALYSIS OF FINANCIAL POSITION

Interim Statement of Financial Position

The principal components of assets and liabilities at the end of each period are as follows:


Assets	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$		Variation ThU.S.$
Current assets		4,285,748		3,544,325		741,423
Non-current assets		12,691,369		12,483,994		207,375

Total assets		16,977,117		16,028,319		5.92	%


Liabilities	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$		Variation ThU.S.$
Current liabilities		1,860,712		1,097,593		763,119
Non-current liabilities		7,312,525		7,515,091		(202,566	)
Non–parent participation		25,748		30,913		(5,165	)
Net equity attributable to parent company		7,778,132		7,384,722		393,410

Total net equity and liabilities		16,977,117		16,028,319		5.92	%

As of September 30, 2021, total assets increased MU.S.$ 949 compared to December 31, 2020, equivalent to a 5.92% variation. This variation was driven mainly by an increase in property, plants & equipment resulting from the investment in the MAPA project, accounts receivable from sales to national and foreign customers, cash in banks and term deposit, which was partially offset by decreases in current tax assets and biological assets.

In turn, total liabilities increased by MU.S.$ 561 principally due to a determination and registration of dividend provisions (see Note 26)

The main financial and operational indicators related to the Statement of Financial position as of the dates and for the periods indicated below are as follows:


Liquidity ratios	09-30-2021		12-31-2020
Current Liquidity (current assets / current liabilities)		2.30		3.23
Acid ratio ((current assets-inventories, biological assets) / current liabilities)		1.55		2.10


Debt indicators	09-30-2021		12-31-2020
Debt to equity ratio (total liabilities / equity)		1.18		1.16
Short-term debt to total debt (current liabilities / total liabilities)		0.20		0.13
Long-term debt to total debt (non-current liabilities / total liabilities)		0.80		0.87

	09-30-2021		09-30-2020
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		7.75		0.72


Activity ratio	09-30-2021		12-31-2020
Inventory turnover-time (cost of sales / inventories + current biological assets)		2.74		2.68
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		3.58		3.46
Inventory permanence-days ((inventories + biological assets) /cost of sales)		131.45		134.30
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		100.66		104.08

As of September 30, 2021, the short-term debt to total debt ratio represented 20% of total liabilities (13% as of December 31, 2020).

Our financial expenses coverage ratio increased from 0.72 to 7.75, mainly due to the profits before taxes generated for the period ended September 30, 2021, compared to a loss before taxes generated in the same period of 2020.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2021

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

Interim Statement of Profit or Loss

Profit before income tax

We recorded a profit before income tax of approximately MU.S.$ 1,150 compared to a loss of approximately MU.S.$ 57 in the same period of 2020. The variation of MU.S.$ 1,207 is explained by the factors described in the following table:


Item	MU.S.$
Gross margin		1,030
Distribution and Administrative Expenses		(145	)
Other income and expenses		248
Others		74

Net change in profit (loss) before income tax		1,207

The main indicators related to the accounts in our statements of profit or loss and the details of revenues and operation costs are as follows:


Revenues	09-30-2021 ThU.S.$		09-30-2020 ThU.S.$
Pulp		2,047,958		1,513,880
Wood		2,559,203		1,865,991
Other		190		82

Total revenues		4,607,351		3,379,953

On January 1, 2021 we discontinued the reporting of our forestry operations as a business segment, and included those operations as part of the pulp segment. This is in line with Arauco´s current reality and with the way in which the management views the progress of business.

The new segments reported are Pulp and wood products, consistent with Arauco´s focus on end customers. For more information, see Notes 2 and 24 to the Interim Consolidated Financial Statements Report as of September 30, 2021.


Sales costs	09-30-2021 ThU.S.$		09-30-2020 ThU.S.$
Wood		569,827		606,919
Forestry work and other services		412,113		338,396
Depreciation and amortization		332,442		344,371
Other operating costs		1,394,004		1,221,778

Total sales costs		2,708,386		2,511,464


Profitability index	09-30-2021		12-31-2020
Profitability on equity		14.29		0.34
Profitability on assets		6.59		0.16
Return on operating assets		9.20		(3.90	)


Profitability ratios	09-30-2021			09-30-2020
Income per share (U.S.$) (1)		6.8786			(0.4354	)
Profit after tax (ThU.S.$) (2)		815,314			(49,594	)
Gross margin (ThU.S.$)		1,898,965			868,489
Finance costs (ThU.S.$)		(170,443	)		(202,099	)

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

(2)	Includes non-controlling interest.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2021

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


EBITDA	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Profit (loss)		815,314			(49,594	)
Finance costs		170,443			202,099
Finance income		(22,612	)		(23,683	)
Income tax expense		335,106			(7,726	)
EBIT		1,298,251			121,096
Depreciation and amortization		367,418			378,637
EBITDA		1,665,669			499,733
Cost at fair value of the harvest		245,276			228,072
Gain from changes in fair value of biological assets		(124,531	)		(130,004	)
Exchange difference		2,858			16,186
Others*		63,735			77,063
Adjusted EBITDA		1,853,007			691,049

*	Considers loss of forest due to fires and theft and impairment provision for industrial property, plant and equipment.

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 the 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. MARKET SITUATION

During the third quarter, pulp demand remained stable, with some minor price declines in some markets towards the end of the quarter, due to the low season in the northern hemisphere. Customers in every market, but mainly in Asia, have been affected by the rise in logistics costs, which made them reduce their exports and concentrate in the domestic market. World inventories for both fibers increased between June and August 2021, short fiber increased by 8 days and long fiber by 6 days.

In China, pulp demand started to decline towards the end of the third quarter because mills in all type of industries had to reduce their operating rate or stop their production lines due to the government limiting energy consumption in several provinces in the country. The tissue industry started to improve, with some producers achieving some price increases to their final products. The P&W industry remained relatively stable during the quarter, with some producers trying to implement price increases. Long fiber prices remained steady through the quarter, however, short fiber prices decreased. The spread between the long and short fiber, after decreasing for several quarters, began to increase considerably, reaching US$205 at the end of September 2021.

In Europe, pulp demand continued positively throughout the quarter, price remained unchanged at a high level, which caused the price spread with China to increase towards the end of the quarter. The tissue industry started the quarter weak, however, during the quarter it began to improve in both the At-Home and Away-from-Home segments. The P&W industry remained strong, with very good demand for their products, and producers were able to implement price increases for their final products. By the end of the quarter, some producers in the paper industry started to be affected by high energy prices, and to a lesser extent, high chemical prices.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2021

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

The dissolving pulp market remained steady, with prices slightly declining due to lower demand. The viscose market, after remaining stable during the first months of the quarter, began to deteriorate due to increases in some of their costs.

Production during the third quarter was higher than Q2, but slightly lower compared to the same period of 2020. During the quarter we had the programmed maintenance stoppage of the Licancel mill, in Chile.

Wood Products Business

Panels

Revenues increased when compared to the second quarter, mainly as a result of a 10.8% increase in average prices. Sales volume increased 2.3%.

During the third quarter, demand continued at high levels. The foregoing is explained by an strong demand for products of home improvement and remodeling. We observed this for most of our products, such as MDF, PB and mouldings.

Sawn timber

During the third quarter sales volume decreased by 2.0% while average prices increased by 14.9%.

During the beginning of the third quarter, we observed strong demand and prices especially for remanufactured wood products. Sawn Timber demand decreased somewhat by mid-quarter, especially in China.

Plywood

Sales volume increased by 6.5% during the third quarter, coupled with an increase in average prices of 9.5%. Higher demand in markets such as Chile, Europe, Oceania and the US, despite some effects arising from logistical issues leading to some shipping delays.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2021

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

4. ANALYSIS OF INTERIM CASH FLOW

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


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Positive (negative) Cash flow
Net cash flows from operating activities		1,397,646			804,684
Cash flows from (used in) financing activities:
Issuance of shares		200,000			250,000
Obtaining and paying loans and bonds		(249,196	)		(90,122	)
Payment of lease liabilities		(52,600	)		(55,731	)
Dividends paid		(167	)		(394	)
Others		(1,487	)		(8,938	)
Cash flows from (used in) investment activities:
Purchase and sale of property, plant and equipment		(922,003	)		(1,097,274	)
Purchase and sale of biological assets		(132,010	)		(150,200	)
Purchase and sale of intangible assets		(3,382	)		(10,165	)
Additions (disposals), investments in subsidiaries, joint ventures and associates		43,155			(15,252	)
Dividends received		1,454			4,042
Others		(1,633	)		2,236

Positive (negative) net cash flow		279,777			(367,114	)

Our cash flow from operating activities increased to MU.S.$ 1,398 for the current period (compared to the positive balance of MU.S.$ 805 for the same period in 2020), resulting mainly from higher revenue from customer collections and tax refunds available in the current period.

The cash flow from financing activities shows a negative balance of MU.S.$ 103 for the current period (compared to the positive balance of MU.S.$ 95 for the same period in 2020). The decrease is attributable to the increase in financial debts in the previous period compared to the current period.

Regarding the cash flow from investment activities, the balance decreased to MU.S.$ 1,014 (compared to MU.S.$ 1,267 for the same period of 2020), mainly due to lower disbursements made for the purchase of property, plant and equipment and the sale of the participation in the subsidiary Forestal Los Lagos SpA of MU.S.$ 48 in the current period.

5. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of September 30, 2021 a ratio of fixed rate debt to total consolidated debt of approximately 94.2%, which we believe is consistent with industry standards.

Regarding variations in prices of pulp and forestry products, since the risks of price fluctuation are limited/can be managed without hedging, the Company does not participate in futures trading, which allows it to maintain one of the lowest cost structures in the industry, thes risks are bounded.

The Company and most of its subsidiaries maintain their accounting records and prepare their financial statements in U.S. dollars. Most of their revenues (and accordingly accounts receivable) are denominated in U.S. dollars, and most financial liabilities are either denominated in U.S. dollars or are covered by exchange rate swaps. As a result, exposure to exchange rate fluctuations has decreased significantly.

The Interim Consolidated Financial Statements as of September 30, 2021, include a detailed analysis of the risks associated with the business of Arauco (see Note 23).

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


			09-30-2021		12-31-2020
	Note		ThU.S.$		ThU.S.$
Assets
Current Assets
Cash and cash equivalents		5-23		1,323,459		1,064,714
Other current financial assets		23		16,450		1,763
Other current non-financial assets		25		174,865		168,597
Trade and other current receivables		23		1,248,167		737,381
Accounts receivable from related companies		13		7,334		6,274
Current inventories		4		1,081,162		938,279
Current biological assets		20		315,035		302,710
Current tax assets		6		104,793		320,730
Total Current Assets other than assets or disposal groups classified as held for sale				4,271,265		3,540,448
Non-Current Assets or disposal groups classified as held for sale		22		14,483		3,877
Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners				14,483		3,877
Total Current Assets				4,285,748		3,544,325
Non-Current Assets
Other non-current financial assets		23		9,386		28,982
Other non-current non-financial assets		25		99,408		113,214
Trade and other non-current receivables		23		14,934		16,606
Investments accounted for using equity method		15-16		333,251		316,939
Intangible assets other than goodwill		19		94,238		102,090
Goodwill		17		58,105		59,567
Property, plant and equipment		7		8,749,631		8,325,304
Right of use assets		8		192,434		219,134
Non-current biological assets		20		3,134,735		3,296,117
Deferred tax assets		6		5,247		6,041
Total Non-Current Assets				12,691,369		12,483,994
Total Assets				16,977,117		16,028,319

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)


			09-30-2021			12-31-2020
	Note		ThU.S.$			ThU.S.$
Equity and Liabilities
Liabilities
Current Liabilities
Other current financial liabilities		23		475,340			307,136
Current lease liabilities		8-23		52,498			63,640
Trade and other current payables		23		705,335			626,504
Accounts payable to related companies		13		7,600			3,739
Other current provisions		18		387			386
Current tax liabilities		6		94,308			44,672
Current provisions for employee benefits		10		5,872			6,786
Other current non-financial liabilities		25		519,372			44,730

Total Current Liabilities other than assets included in disposal groups classified as held for sale				1,860,712			1,097,593
Total Current Liabilities				1,860,712			1,097,593
Non-Current Liabilities
Other non-current financial liabilities		23		5,446,642			5,714,728
Non-current lease liabilities		8-23		125,130			148,115
Other non-current provisions		18		28,787			30,450
Deferred tax liabilities		6		1,564,459			1,463,886
Non-current provisions for employee benefits		10		67,866			74,609
Other non-current non-financial liabilities		25		79,641			83,303
Total Non-Current Liabilities				7,312,525			7,515,091
Total Liabilities				9,173,237			8,612,684
Equity
Issued capital		3		803,618			603,618
Retained earnings				8,227,270			7,889,901
Other reserves				(1,252,756	)		(1,108,797	)
Equity attributable to parent company				7,778,132			7,384,722
Non-controlling interests				25,748			30,913
Total Equity				7,803,880			7,415,635
Total Equity and Liabilities				16,977,117			16,028,319

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS


			January - September						July - September
			2021			2020			2021			2020
	Note		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Statements of profit or loss
Revenue		9		4,607,351			3,379,953			1,705,070			1,202,913
Cost of sales		3		(2,708,386	)		(2,511,464	)		(923,429	)		(867,850	)
Gross profit				1,898,965			868,489			781,641			335,063
Other income		3		405,568			175,623			285,192			52,779
Distribution costs		3		(486,457	)		(389,826	)		(182,387	)		(129,581	)
Administrative expenses		3		(424,980	)		(376,396	)		(137,825	)		(122,668	)
Other expense		3		(123,473	)		(141,426	)		(53,017	)		(33,132	)
Profit from operating activities				1,269,623			136,464			693,604			102,461
Finance income		3		22,612			23,683			8,178			4,164
Finance costs		3		(170,443	)		(202,099	)		(52,263	)		(64,395	)
Share of profit of associates and joint ventures accounted for using equity method		3-15		31,486			818			20,270			1,306
Gains (losses) on exchange differences on translation				(2,858	)		(16,186	)		10,838			13,898
Profit before income tax				1,150,420			(57,320	)		680,627			57,434
Income Tax		6		(335,106	)		7,726			(169,100	)		(21,385	)
Net Profit				815,314			(49,594	)		511,527			36,049

Net profit attributable to
Net profit attributable to parent company				813,993			(49,320	)		511,081			36,157
Net profit attributable to non-controlling interests				1,321			(274	)		446			(108	)
Net Profit				815,314			(49,594	)		511,527			36,049

Basic and diluted earnings per share (in U.S.$ per share)
Basic and diluted earnings per share from continuing operations				6.8786037			(0.4353879	)		4,2523338			0.3195220
Basic and diluted earnings per share				6.8786037			(0.4353879	)		4,2523338			0.3195220

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


			January - September						July - September
			2021			2020			2021			2020
	Note		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Net profit				815,314			(49,594	)		511,527			36,049
Components of other comprehensive income that will not be reclassified to profit or loss before tax:
Other comprehensive income before tax gains losses on remeasurements of defined benefit plans		10		497			(465	)		(732	)		(11	)
Other Comprehensive Income that will not be reclassified to profit or loss before tax				497			(465	)		(732	)		(11	)
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		(59,248	)		(285,017	)		(83,984	)		(3,625	)
Other Comprehensive Income before tax exchange differences on translation				(59,248	)		(285,017	)		(83,984	)		(3,625	)
Cash flow hedges
Gains (losses) on cash flow hedges, before tax		23		(125,091	)		(16,556	)		(75,351	)		50,317
Recycle of cash flow hedges to profit or loss before tax		23		(10,137	)		(53,065	)		—			(32,211	)
Other Comprehensive Income before tax Cash flow hedges				(135,228	)		(69,621	)		(75,351	)		18,106
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax				1,048			(6,512	)		(1,139	)		(590	)
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax				1,048			(6,512	)		(1,139	)		(590	)
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax				(193,428	)		(361,150	)		(160,474	)		13,891
Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss before tax
Income tax relating to remeasurements of defined benefit plans of other comprehensive income				(95	)		125			198			6
Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss before tax				(95	)		125			198			6
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss before tax
Income tax relating to cash flow hedges of other comprehensive income		6		41,546			17,589			24,414			(3,838	)
Income tax relating to share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss				(230	)		1,356			240			119
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss				41,316			18,945			24,654			(3,719	)
Other comprehensive income (loss)				(151,710	)		(342,545	)		(136,354	)		10,167
Comprehensive income (loss)				663,604			(392,139	)		375,173			46,216

Comprehensive Income (loss) attributable to
Comprehensive income (loss), attributable to Owners of parent company				668,612			(385,674	)		376,274			47,123
Comprehensive income (loss), attributable to Non-controlling interests				(5,008	)		(6,465	)		(1,101	)		(907	)
Total comprehensive income (loss)				663,604			(392,139	)		375,173			46,216

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


09-30-2021	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial losses on defined benefit plans ThU.S.$			Other Reserves ThU.S.$			Total other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent ThU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01-01-2021		603,618		(1,081,320	)		(37,007	)		(19,725	)		29,255			(1,108,797	)		7,889,901			7,384,722			30,913			7,415,635
Changes in Equity:
Comprehensive income
Net profit		—		—			—			—			—			—			813,993			813,993			1,321			815,314
Other comprehensive income, net of tax		—		(52,919	)		(93,682	)		402			818			(145,381	)		—			(145,381	)		(6,329	)		(151,710	)
Comprehensive income		—		(52,919	)		(93,682	)		402			818			(145,381	)		813,993			668,612			(5,008	)		663,604
Issue of equity		200,000		—			—			—			—			—			—			200,000			—			200,000
Dividends		—		—			—			—			—			—			(475,058	)		(475,058	)		(157	)		(475,215	)
Increase (decrease) from transfers and other changes		—		—			—			—			1,422			1,422			(1,566	)		(144	)		—			(144	)
Changes in equity		200,000		(52,919	)		(93,682	)		402			2,240			(143,959	)		337,369			393,410			(5,165	)		388,245
Closing balance at 09-30-2021		803,618		(1,134,239	)		(130,689	)		(19,323	)		31,495			(1,252,756	)		8,227,270			7,778,132			25,748			7,803,880


09-30-2020	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial losses on defined benefit plans ThU.S.$			Other Reserves ThU.S.$			Total other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent ThU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01-01-2020		353,618		(902,387	)		9,010			(19,511	)		20,024			(892,864	)		7,873,650			7,334,404			35,011			7,369,415
Changes in Equity:		—		—			—			—			—			—			—			—			—			—
Comprehensive income		—		—			—			—			—			—			—			—			—			—
Net profit		—		—			—			—			—			—			(49,320	)		(49,320	)		(274	)		(49,594	)
Other comprehensive income, net of tax		—		(278,822	)		(52,032	)		(344	)		(5,156	)		(336,354	)		—			(336,354	)		(6,191	)		(342,545	)
Comprehensive income		—		(278,822	)		(52,032	)		(344	)		(5,156	)		(336,354	)		(49,320	)		(385,674	)		(6,465	)		(392,139	)
Issue of equity		250,000		—			—			—			—			—			—			250,000			—			250,000
Dividends		—		—			—			—			—			—			—			—			1,076			1,076
Increase (decrease) from transfers and other changes		—		—			—			—			4,968			4,968			(4,968	)		—			—			—
Changes in equity		250,000		(278,822	)		(52,032	)		(344	)		(188	)		(331,386	)		(54,288	)		(135,674	)		(5,389	)		(141,063	)
Closing balance at 09-30-2020		603,618		(1,181,209	)		(43,022	)		(19,855	)		19,836			(1,224,250	)		7,819,362			7,198,730			29,622			7,228,352

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS


	January - September
	2021			2020
	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		4,491,787			3,549,835
Other cash receipts from operating activities		383,655			581,366
Classes of cash payments
Payments to suppliers for goods and services		(2,862,068	)		(2,513,900	)
Payments to and on behalf of employees		(446,516	)		(426,345	)
Other cash payments from operating activities		(126,990	)		(256,680	)
Interest paid		(167,578	)		(180,193	)
Interest received		21,612			12,954
Income taxes paid		103,929			36,263
Other inflows (outflows) of cash, net		(185	)		1,384
Net Cash flow from Operating Activities		1,397,646			804,684


Cash flows from (used in) Investing Activities
Cash flow used in obtaining control of subsidiaries and other businesses		47,988			—
Cash flow used in the purchase of non-controlling interests		(33	)		(3	)
Other cash payments to acquire interests in joint ventures		(4,800	)		(15,249	)
Loans to related entities		(1,071	)		—
Proceeds from sale of property, plant and equipment		14,989			415
Purchase of property, plant and equipment		(936,992	)		(1,097,689	)
Purchase of intangible assets		(3,382	)		(10,165	)
Proceeds from sales of other long-term assets		29,010			7,411
Purchase of other non-current assets		(161,020	)		(157,611	)
Dividends received		1,454			4,042
Other inflows (outflows) of cash, net		(562	)		2,236
Cash flows used Investing Activities		(1,014,419	)		(1,266,613	)


Cash flows from (used in) Financing Activities
Total issuance of shares		200,000			250,000
Total loanss obtained		56,184			389,827
Debt obtained in long-term		51,184			239,827
Debt obtained in short-term		5,000			150,000
Repayments of loans		(305,380	)		(479,949	)
Payments of lease liabilities		(52,600	)		(55,731	)
Dividends paid		(167	)		(394	)
Other outflows of cash, net		(1,487	)		(8,938	)
Cash flows from (used in) Financing Activities		(103,450	)		94,815

Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		279,777			(367,114	)
Effect of exchange rate changes on cash and cash equivalents		(21,032	)		(30,240	)

Net increase (decrease) of Cash and Cash Equivalents		258,745			(397,354	)
Cash and cash equivalents, at the beginning of the period		1,064,714			1,560,012
Cash and cash equivalents, at the end of the period		1,323,459			1,162,658

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020 AND AS OF DECEMBER 31, 2020

NOTE 1. PRESENTATION OF INTERIM 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 Chilean Commission for the Financial Market (“CMF”) as No. 042 on June 14, 1982. Additionally, the Company is registered as a non-accelerated filer in the Securities and Exchange Commission (SEC) of the United States of America.

The Company’s head office address is El Golf Avenue 150, 14^thfloor, 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 and wood products.

As of September 30, 2021, Arauco is controlled by Empresas Copec S.A., tax identification number 90,690,000-9, which owns 99,978048% 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 CMF.

Moreover, Empresas Copec S.A. is controlled by the public corporation AntarChile S.A., tax identification number 96,556,310-5, which owns 60,8208% of Empresas Copec S.A. Furthermore, the ultimate shareholders of AntarChile S.A. and, consequently, of Empresas Copec S.A., are Mr. Roberto Angelini Rossi, tax identification number 5,625,652-0, and Mrs. Patricia Angelini Rossi, tax identification number 5,765,170-9.

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

Presentation of Interim Consolidated Financial Statements

The Consolidated Financial Statements presented by Arauco are comprised by the following:

•

Interim Consolidated Statements of Financial Position as of September 30, 2021 and as of December 31, 2020.

•

Interim Consolidated Statements of Profit or Loss for the periods ended September 30, 2021 and 2020.

•

Interim Consolidated Statements of Comprehensive Income for the periods ended September 30, 2021 and 2020.

•

Interim Consolidated Statements of Changes in Equity for the periods ended September 30, 2021 and 2020.

•

Interim Consolidated Statements of Cash Flows for the periods ended September 30, 2021 and 2020.

•

Explanatory disclosures (notes).

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Period Covered by the Interim Consolidated Financial Statements

Periods ended September 30, 2021 and 2020.

Date of Approval of the Interim Consolidated Financial Statements

These interim consolidated financial statements were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Meeting No. 659 on November 12, 2021.

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)

ThCLP$ - Thousands of Chilean Pesos

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 wood operating segment, 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 currency used to finance operations is mainly the U.S. Dollar.

The presentation currency of the 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.$).

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Summary of significant accounting policies

a) Basis for preparation of the 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 they represent the explicit and unreserved adoption of IFRS.

The interim consolidated financial statements have been prepared on a 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 interim consolidated 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 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.

The measurement of the fair value of the biological assets is determined using a discounted cash flow model. Our cash flow projections include significant judgments and assumptions relating to discount rates, estimated growth of the forests and sales margins. This valuation is performed on the basis of each identifiable farm block and for each type of tree. The main considerations used to calculate the valuation of forest plantations and a sensitivity analysis are presented in Note 20.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

- 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.

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 the 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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

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 these interim consolidated financial statements and non-controlling interest is presented in the interim consolidated statement of financial position within equity.

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, Mexican Pesos, Canadian Dollars, Chilean Pesos and Argentine Pesos as their functional currencies. For consolidation purposes, the financial statements of those subsidiaries have been prepared in accordance with IFRS and translated 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 personnel responsible for making such decisions are the Executive Vice-president and the Chief Executive Officer who are the highest authorities for making decisions and are supported by the Vice-presidents of each segment.

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

•

Pulp

•

Wood products

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

(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 interim consolidated 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-on-hand, deposits held on demand at financial entities 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

Initial classification

Arauco classifies its financial assets into the following categories: fair value through profit or loss and amortized cost.

Arauco does not have financial assets at fair value through other comprehensive income.

The classification is based on the business model used to manage the assets and the characteristics of their contractual cash flows.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Management determines the classification of its financial assets at the time of their initial recognition.

(a) Financial assets at fair value through profit or loss: these instruments are initially measured at fair value. Net income and losses, including any income from interest or dividends, are registered in the profit or loss of the period. Financial assets are classified in the category of financial assets at fair value through profit or loss when they are maintained for negotiation or designated in their initial registration as assets at fair value through profit or loss. A financial asset can be classified in this category if it is acquired mainly for the purposes of being sold in the short-term. Gain or losses of assets held for negotiations are registered in the consolidated statements of Profit or Loss, and the related interest is registered independently as financial income. Derivatives are classified as acquired for negotiation also unless they are designated as hedging instruments.

(b) Assets measured at amortized cost: they are initially registered at the fair value of the transaction, adding or subtracting the transaction costs that are directly attributable to the issuance of the financial asset or financial liability. The financial asset is maintained within a business model, the objective of which is to maintain financial assets to obtain contractual cash flows and the contractual conditions of the asset give rise, on specified dates, to cash flows that are solely payments of principal and interests (“SPPI”) over the amount of the outstanding principal.

Subsequent measurement

Financial instruments are subsequently measured at fair value through profit or loss or amortized cost.

The classification is based on two criteria: i) the Company’s business model for the management of financial instruments, and ii) whether the contractual cash flows related to the financial instruments represent “Solely Payments of Principal and Interests”.

a) Financial assets at fair value through profit or loss: these instruments are subsequently measured at fair value. Net earnings and losses, including income from interests and dividends, are registered as profits or losses for the period. These instruments are held for negotiation and they are mainly acquired to be sold in the short term. Derivatives are also classified as held for negotiation, unless they are registered as hedging instruments. Financial instruments of this type are classified as Other Current and Non-Current Financial Assets. They are subsequently valuated by determining their fair value, registering changes in value in the interim interim consolidated statements of Profit or Loss, in the items of Financial Income or Financial Costs.

b) Financial assets measured at amortized cost: These instruments are subsequently measured at amortized cost minus accumulated amortizations, using the effective interest method and adjusted by loss allowance and volume discounts, in the case of financial assets. Financial income and expenses, foreign exchange income and losses, and impairment are registered in results. Any earnings or losses due to initial or subsequent reductions of the value of the asset are registered in the statement of profit or loss of the period. Loans and receivables are non-derivative financial instruments with fixed or determinable payments not traded in any active market. They are registered at amortized cost, registering accrued conditions directly in profit or loss.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Arauco measures accumulated losses in a quantity equivalent to expected credit losses during the lifelong commitment. Expected credit losses are based on contractual cash flow differences based on the allowance of each contract and the cash flows that Arauco expects. The difference is then discounted based on an approximation of the asset’s original effective interest rate. The asset’s carrying value is reduced as the allowance is used, and the loss is recognized in sales expenses in the interim consolidated statements of profit or loss. When an account receivable cannot be collected, it is regularized against the allowance account for receivables. Subsequent recoveries of previously impaired amounts are recognized as a debit in selling expenses.

Derivative financial instruments are explained in Note 1 h).

Financial liabilities

Arauco classifies its financial liabilities as follows: fair value through profit or loss, derivatives designated as effective hedging instruments and amortized costs.

Management determines the classification of its financial liabilities upon initial recognition. Financial liabilities are derecognized when the obligation is cancelled, settled or expired. When an existing financial liability is replaced with another of the same provider under substantially different terms, or where the terms of an existing liability are substantially amended, such exchange or modification is treated as a write-off of the original liability, with a new liability being recognized, and the difference between the respective carrying amounts is recognized in the interim consolidated statement of profit or loss.

Financial liabilities are initially recognized at fair value, and in the case of loans, they include the costs directly attributable to the transaction. The subsequent measurement of the financial liabilities depends on their classification:

Financial Liabilities at fair value through profit or loss

Financial liabilities are included in the category of financial liabilities at fair value through profit or loss when they are held for trading or originally designated at fair value through profit or loss. Income and losses from liabilities held for trading are recognized in profit or loss. This category includes non-designated derivatives for hedging accounting.

Financial Liabilities at amortized cost

Other financial liabilities are subsequently valued at their amortized cost based on the effective interest rate method. The amortized cost is calculated taking into account any premium or acquisition discount and includes the costs of transactions that are an integral part of the effective interest rate. This category includes Commercial Accounts Payable and Other Accounts Payable, lease liabilities, as well as the loans included in Other Current and Non-Current Financial Liabilities.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 and there are no instruments with speculation objectives.

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, 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.

-Fair Value Hedges

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.

-Cash flow hedges

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

i)	Inventories

Inventories are measured at the lower of cost or 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.

j)	Non-current assets held for sale

Arauco 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 interim consolidated statements of financial position are the subject of active sale efforts which are estimated to be highly probable.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 IFRS 9.

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.

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 business combination achieved in each stage (“step acquisition”), recognizing the effects of remeasurement of previously held equity in the acquiree in the interim consolidated statements of profit or loss.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 statement 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.

If the acquisition cost is lower than the fair value of the net assets of the associate acquired, the difference is recognized directly in statement of profit or loss in line Other gains (losses).

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Goodwill recognized in subsidiaries Arauco Canada Ltd. and Arauco do Brasil S.A., generated on subsidiaries acquisitions whose functional currency is different from the functional currency of the parent company and presentation of these financial statements, are translated into U.S. Dollars at the closing exchange rate.

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 IFRS 16 for recognizing leases in a manner consistent with contracts with similar features and akin circumstances.

At the beginning of a contract, Arauco assesses whether the contract is, or if it contains, a lease. A contract is, or contains, a lease if it transfers the right to control the use of a given asset for a certain period of time, in exchange for consideration.

As of the initial date for recording a lease, Arauco, as lessee, recognizes an asset by the right of use at cost.

The cost of the asset for right of use comprises:

The amount of the initial measurement of the lease liability. This measurement is at present value of the payments for leases that have not been disbursed as of that date. Payments for leases are discounted using the incremental interest rate for financial loans;

Payments for leases performed prior to or as of the initiation date, minus the lease incentives that have been received;

The initial direct costs incurred by the lessee; and

An estimation of the costs to be incurred by the lessee when dismantling and eliminating the underlying asset, restoring the location where the same is located, or restoring the underlying asset to the condition required under the terms and conditions of the lease, unless such costs are incurred in order to produce inventories. The lessee assumes obligations stemming from such costs either at the commencement date, or as a result of having used the underlying asset during a specific period.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

After the initial recognition date, Arauco, as lessee, recognizes its asset for right of use by applying the cost model, minus the accumulated depreciation and impairment losses, and adjusted for remeasurement of the liability for lease.

At the beginning, Arauco in the capacity of lessee, recognizes the lease liability at present value of the lease payments that have not been disbursed as of that date. Lease payments are discounted using the incremental interest rate for financial loans.

After the initial recognition date, Arauco, as lessee, recognizes a liability for leases by increasing the book value, so as to reflect the interest over the liability for lease, reducing the amount in order to reflect the payments for leases that have been performed and once again recognizing the book value, so as to reflect the remeasurement and also to reflect the essential fixed payments for leases that have been revised.

Arauco presents the assets by right of use in the Interim Consolidated Statement of Financial Position and are further disclosed in Note 8. Likewise, lease liabilities are presented in the Interim Consolidated Statement of Financial Position and further disclosed in Note 23.

IFRS 16 maintains substantially the accounting requirements of the lessor from IAS 17. Therefore, Arauco has continued to classify its leases as operational or financial, as the case may be.

Income from operating leases in which Arauco is the lessor are recognized on a straight-line basis during the term of the lease. Initial direct costs are added to the book value of the underlying asset and are recognized as expenses during the term of the lease on the same basis as the lease income. Leased assets are included within the statement of financial position, in property, plant and equipment. Arauco did not make adjustments with respect to assets that maintains as a lessor, as a result of IFRS 16 adoption.

When assets are leased under a financial lease, the present value of lease payments are recognized as financial accounts receivable. The difference between the gross receivable and the present value of such amount, is recognized as financial return on capital.

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 its relative reasonable values, payments and considerations associated with the lease, from the rest of the elements incorporated into the contract.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

q)	Biological Assets

IAS 41 requires that biological assets, such as standing trees, are measured at fair value less cost to sell in the interim 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 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 statements of profit or loss.

r)	Income 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.

Deferred taxes are recognized in accordance with the standards established in IAS 12 - Income Tax.

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

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, under which, it is probable that an outflow of resources will be required to settle the obligation; and when 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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

t)	Revenue recognition

Revenues are valued at fair value of the consideration received or to be received, derived from them. Arauco analyses and takes under consideration all relevant facts and circumstances to apply the five-step model established under IFRS 15 to customer contracts: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) recognise revenue. Additionally, Arauco evaluates the incremental costs of obtaining a contract and the costs incurred to comply with a contract. Arauco recognizes revenues when the steps established in IFRS have been satisfactorily complied with.

Accounts receivable are recognized when control over goods or services has been transferred to the customer, because at this point of the time collection is unconditional and the passage of time is only needed to receive payment.

(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 committed 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. Revenue from the sale of goods are recognized when there is no obligation unsatisfied that could affect the customer’s acceptance of the product. The delivery is effective when the products are sent to the specific location, the risks of obsolescence and loss have been transferred to the customer and when Arauco has objective evidence that all acceptance criteria have been satisfied.

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. 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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

(ii)	Revenue recognition from Rendering of Services

Revenue from the rendering of services is recognized as long as the performance obligation have been satisfied.

Revenue is recognized considering the stage of completion of the transaction at the date of the reporting period, when Arauco has the enforceable right of payment from the rendering of the services.

There is no significant financing component, given that sales are made with a reduced average collection period, which is in line with market practice.

Arauco mainly provides power supply services which are transacted principally in the spot market of the Sistema Eléctrico Nacional (SEN) (“National Electrical System”). According to current regulations, the prices on that market called “Marginal Costs” are calculated by the Coordinador Eléctrico Nacional (CEN) (“National Electrical Coordinator”) 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 SEN.

Arauco provides other non-core services such as port services and pest control whose revenues are derived from fixed price service contracts are recognized considering the stage of completion of the services rendered at the date of reporting, generally 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 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.

On September 28, 2021, Arauco update the dividend policy of the Company, establishing that in respect of fiscal year 2021, it will be distributed among the shareholders an amount equivalent to the 40% of the cash income for such year capable of being distributed as dividends, excluding from the calculation of such cash income the extraordinary benefits that the Company will obtain, through its subsidiary Forestal Arauco S.A., for the sale of several real estate to Vista Hermosa Inversiones Forestales SpA, a transaction that was informed to the stock market through a Material Fact (Hecho Esencial). For the following fiscal years, it will be distributed to the shareholders an amount equivalent to the 40% of the cash income of each fiscal year, capable of being distributed as dividends. In any event, the Board of Directors will be able to distribute and pay interim dividends to the shareholders, as long as it is projected a year end with positive financial results and the availability of cash of the Company permit it so.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

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 the interim consolidated statement of profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

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.

An allowance for doubtful accounts is established based on a measurement of expected losses using a simplified approach.

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.

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 line item “Trade and other current payables” in the interim consolidated statements of financial position.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

z)	Recent accounting pronouncements

a) Standards, interpretations and amendments that are mandatory for the first time for annual periods beginning on January 1, 2021:


Amendments and improvements	Content	Mandatory application for annual periods beginning on or after
IFRS 9, IAS 39, IFRS 7, IFRS 4 y IFRS 16	Reference interest rate reform (IBOR). These amendments provide specific simplifications regarding reference rate reform. The Phase 2 amendments address issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one.	January 1, 2021

IFRS 16	Lease concessions As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to lessees. In May 2020, the IASB published an amendment to IFRS 16 that provided an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification. On 31 March 2021, the IASB published an additional amendment to extend the date of the practical expedient from 30 June 2021 to 30 June 2022. Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event or condition that triggers the reduced payment occurs.	January 1, 2021

The amendments above do not have an impact on Arauco Interim Consolidated Financial Statements during its initial application period.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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:


Amendments and improvements	Content	Mandatory application for annual periods beginning on or after
IFRS 10 y IAS 28-Amendments	Asset sale or contribution between an investor and an associate or joint venture.	Indeterminate
IAS 1	Presentation of Financial Statements Clarifies that liabilities will be classified as current or non-current depending on the rights at the end of the reporting period. The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’ of a liability.	January 1, 2023
Reference to the Conceptual Framework - Amendments to IFRS 3	Business combinations. Update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.	January 1, 2022
IAS 16 Amendment	Properties, plant and equipments Prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.	January 1, 2022
IAS 37 Amendment	Provisions, contingent liabilities and contingent Specify which costs a company includes when assessing whether a contract will be loss-making.	January 1, 2022
Annual Improvements to IFRS Standards 2018–2020	IFRS 9 Financial Instruments Addresses which fees should be included in the 10% test for derecognition of financial liabilities.	January 1, 2022
	IFRS 16 Leases Amendment to example 13 to remove the illustration of the lessor’s payments for lease improvements.
	NIIF 1: First-time Adoption of International Financial Reporting Standards Allows entities that have valued their assets and liabilities at their book values in their parent company’s accounts to also value cumulative translation differences using the amounts reported by the parent company.
	IAS 41 Agriculture Elimination of the requirement for entities to exclude tax cash flows when measuring fair value under IAS 41.
IAS 1 and IAS 8	Presentation of financial statements’, on classification of liabilities clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (for example, the receipt of a waiver or a breach of covenant). The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’ of a liability. To IAS 1, Practice statement 2 and IAS 8, aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies.	January 1, 2023
IAS 12	Deferred tax related to assets and liabilities arising from a single transaction require companies to recognise deferred tax on transactions that, on initial recognition give rise to equal amounts of taxable and deduct able temporary differences.	January 1, 2023

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Arauco estimates that the adoption of the standards, amendments and interpretations described above will not have a significant impact on Arauco’s Consolidated Financial Statements during its initial application period.

NOTE 2. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES

Changes to accounting policies

On January 1, 2021, we discontinued the reporting of our forestry operations as a business segment, and included those operations as part of the pulp segment. This is in line with Arauco’s current reality and with the way in which the management views the progress of the business. Thus, the new segments are: Pulp and and wood products, which demonstrates Arauco’s focus on its end customers.

The comparative information in the tables in Note 24 Reportable Segments has been restated as of December 31, 2020 and September 30, 2020 due to the merger of the pulp and forestry businesses. This reformulation of the Company’s segments did not produce changes in Arauco’s Consolidated Financial Statements (Statement of Financial Position, Statement of Income, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows and Notes to the statements financial statements, except for the Note 24).

Changes to accounting estimates

As of September 30, 2021, there have been no changes in the methodologies for calculating the accounting estimates with respect to the 2020 financial year.

NOTE 3. DISCLOSURE OF OTHER INFORMATION

a)	Disclosure of information on Issued Capital

Between April and May of 2021, a capital increase of ThU.S$ 200,000 which amounts to 3,250,975 shares was wholly subscribed and paid-in by the shareholders.

As of September 24, 2020, a capital increase of ThU.S.$ 250,000 which amounts to 4,063,720 shares was wholly subscribed and paid-in by the shareholders.

As of September 30, 2021, the shareholders composition according to the amount of shares owned is as follows:


Shareholders	%
Empresas Copec S.A.		99.97804761	%
Chilur S.A.		0.02054047	%
Administradora Sintra Ltda.		0.00132808	%
AntarChile S.A.		0.00008384	%
		100.00000000	%

At the date of these interim consolidated financial statements the share capital of Arauco is ThU.S.$ 803,618.

100% of Capital corresponds to ordinary shares.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


	09-30-2021	12-31-2020
Description of Ordinary Capital Share Types	100% of Capital corresponds to ordinary shares
Number of Authorized Shares by Type of Capital in Ordinary Shares	120,474,350	117,223,375
Nominal Value of Shares by Type of Capital in Ordinary Shares	U.S.$ 6.6704 per share	U.S.$ 5.1493 per share
Amount of Capital in Shares by Type of Ordinary Shares that Constitute Capital	ThU.S.$ 803,618	ThU.S.$ 603,618

	09-30-2021	12-31-2020
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	120,474,350	117,223,375

b)	Dividends paid

As of September 30, 2021 and as of December 31, 2020, no dividends were paid.

In 2021, Arauco update the dividend policy of the Company, establishing that in respect of fiscal year 2021, it will be distributed among the shareholders an amount equivalent to the 40% of the cash income for such year capable of being distributed as dividends, excluding from the calculation of such cash income the extraordinary benefits that the Company will obtain, through its subsidiary Forestal Arauco S.A., for the sale of several real estate to Vista Hermosa Inversiones Forestales SpA.

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

The hedging reserve includes the cash flow hedge reserve and the costs of hedging reserve. The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

d)	Other items in the Consolidated 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 for the periods ended September 30, 2021 and 2020 are as follows:


	January - September						July - September
	2021 ThU.S.$			2020 ThU.S.$			2021 ThU.S.$			2020 ThU.S.$
Classes of Other Income
Other Income, Total		405,568			175,623			285,192			52,779
Gain from changes in fair value of biological assets (note 20)		124,531			130,004			41,451			41,861
Net income from insurance compensation		847			2,378			241			272
Revenue from export promotion		1,134			718			392			210
Lease income		1,177			1,396			452			612
Gain on sales of assets		237,245			3,015			233,597			799
Access easement		295			411			134			376
Recovery of tax credits		6			21,133			—			—
Compensations received		7,018			964			—			14
Gain on sales of associates		20,381			—			—			—
Other operating results		12,934			15,604			8,925			8,635

Classes of Other Expenses by activity
Total of Other Expenses by activity		(123,473	)		(141,426	)		(53,017	)		(33,132	)
Provision Legal expenses		(7,115	)		(3,770	)		(943	)		(951	)
Impairment provision for property, plant and equipment and others		(42,812	)		(53,364	)		(30,980	)		(841	)
Operating expenses related to staff restructuring or from plants stoppage or closed		(4,941	)		(23,749	)		(1,328	)		(2,679	)
Expenses related to projects		(16,206	)		(10,755	)		(4,809	)		(3,980	)
Loss of asset sales		(7,579	)		(7,257	)		(4,377	)		(4,047	)
Loss and repair of assets		(692	)		(5,213	)		(198	)		(1,058	)
Loss of forest due to fires		(21,669	)		(19,183	)		(4,166	)		(13,986	)
Other Taxes		(13,668	)		(12,128	)		(3,657	)		(3,608	)
Research and development expenses		(2,879	)		(2,093	)		(842	)		(815	)
Fines, readjustments and interests		(189	)		(441	)		(96	)		236
Loss on sale of permanent investments		(431	)		—			—			—
Loss of tax credits		(396	)		—			(141	)		—
Other expenses		(4,896	)		(3,473	)		(1,480	)		(1,403	)

Classes of financing income
Financing income, total		22,612			23,683			8,178			4,164
Financial income from mutual funds - term deposits		21,071			11,246			7,866			3,179
Financial income resulting from swap - forward instruments		39			835			—			168
Other financial income		1,502			11,602			312			817

Classes of financing costs
Financing costs, Total		(170,443	)		(202,099	)		(52,263	)		(64,395	)
Interest expense, Banks loans		(17,701	)		(22,549	)		(7,029	)		(6,774	)
Interest expense, Bonds		(103,068	)		(129,119	)		(29,090	)		(41,427	)
Interest expense, other financial instruments		(17,776	)		(24,830	)		(6,813	)		(7,459	)
Interest expence for right-of-use		(6,294	)		(7,129	)		(1,882	)		(2,299	)
Other financial costs		(25,604	)		(18,472	)		(7,449	)		(6,436	)

Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		31,486			818			20,270			1,306
Investments in associates		389			4,532			250			902
Joint ventures		31,097			(3,714	)		20,020			404

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 – September				July – September
	2021		2020		2021		2020
*Cost of sales ()**	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Timber		569,827		606,919		159,780		216,527
Forestry labor costs and other services		412,113		338,396		155,941		122,921
Depreciation and amortization		300,318		300,352		96,061		101,188
Depreciation for right of use		32,124		44,019		10,217		13,933
Maintenance costs		195,724		167,418		68,055		54,637
Chemical costs		389,615		328,163		144,127		110,320
Sawmill Services		79,701		72,307		26,044		22,859
Other Raw Materials		182,254		159,561		72,673		59,962
Other Indirect costs		93,540		85,818		34,994		30,379
Energy and fuel		142,540		127,269		56,848		43,541
Cost of electricity		30,284		24,477		8,202		7,336
Staff expenses		280,346		256,765		90,487		84,247
Total		2,708,386		2,511,464		923,429		867,850

(*)	Total amount is comprised of the cost of inventory sales for ThU.S.$ 2,631,561 (ThU.S.$ 2,440,006 as of September 30, 2020) and the cost of rendering services for ThU.S.$ 76,825 (ThU.S.$ 71,458 as of September 30, 2020).


	January – September				July – September
	2021		2020		2021		2020
Distribution cost	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Selling costs		27,764		27,644		10,109		9,205
Commissions		10,635		10,003		3,438		3,607
Insurance		2,911		2,846		937		646
Provision for doubtful accounts		519		1,063		219		426
Other selling costs		13,699		13,732		5,515		4,526
Shipping and freight costs		458,693		362,182		172,278		120,376
Port services		37,493		29,673		13,946		11,141
Freights		388,068		298,588		146,736		97,099
Depreciation for right of use		1,813		1,238		602		413
Other shipping and freight costs (internment, warehousing, stowage, customs and other costs)		31,319		32,683		10,994		11,723
Total		486,457		389,826		182,387		129,581


	January – September				July – September
	2021		2020		2021		2020
Administrative expenses	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Wages and salaries		182,074		157,236		59,212		52,967
Marketing, advertising, promotion and publications expenses		9,213		6,745		3,241		1,781
Insurances		17,909		17,885		6,105		7,082
Depreciation and amortization		27,689		24,984		9,652		8,753
Depreciation for right of use		5,102		6,160		1,631		1,993
Computer services		24,800		24,167		6,500		7,255
Lease rentals (offices, other property and vehicles)		4,765		3,904		1,539		843
Donations, contributions, scholarships		4,616		9,647		1,553		896
Fees (legal and technical advisors)		28,657		27,293		10,441		9,085
Property taxes, city permits and rights		19,035		14,455		6,322		4,968
Cleaning services, security services and transportation		25,410		19,745		8,433		8,450
Third-party variable services (maneuvers, logistics)		32,284		27,425		10,357		9,148
Basic services (electricity, telephone)		15,264		5,743		3,705		2,145
Maintenance and repair		5,802		4,228		2,088		1,369
Seminars, courses, training materials		1,927		1,232		843		367
Travels, clothing and safety equipment, environmental expenses, audits and others		20,433		25,547		6,203		5,566
Total		424,980		376,396		137,825		122,668

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

e)	Auditor Fees and Number of Employees


Auditors fees	09-30-2021 ThU.S.$		09-30-2020 ThU.S.$
Audit services		1,747		1,815
Other services
Tax services		616		865
Others		100		183
TOTAL		2,463		2,863


Number of employees	N°
		17,551		18,119

NOTE 4. INVENTORIES


Components of Inventory	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
Raw materials		77,163		83,267
Production supplies		144,673		129,065
Work in progress		56,233		64,449
Finished goods		611,573		460,419
Spare Parts		191,520		201,079
Total Inventories		1,081,162		938,279

Inventories recognized as cost of sales as of September 30, 2021 were ThU.S.$ 2,631,561 (ThU.S.$ 2,440,006 as of September 30, 2020).

In order to have inventories recorded at net realizable value as of September 30, 2021, a net decrease of inventories was recognized associated with an higher provision of obsolescence of ThU.S.$ 24,410 (decrease of ThU.S.$ 18,834 as of September 30, 2020). As of September 30, 2021, the amount of obsolescence provision is ThU.S.$ 56,010 (ThU.S.$ 31,600 as of December 31, 2020).

As of September 30, 2021, there were inventory write-offs of ThU.S.$ 635 (ThU.S.$ 1,321 as of September 30, 2020) which are presented in the interim consolidated statements of profit or loss within Cost of sales.

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

As of the date of these interim consolidated financial statements, no inventories were pledged as security.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, bank checking account balances, time deposits 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 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.


Components of Cash and Cash Equivalents	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
Cash on hand		124		99
Bank checking account balances		651,464		357,354
Time deposits		544,030		507,519
Mutual funds		127,841		199,742
Total		1,323,459		1,064,714

The risk classification of the Company’s mutual funds as of September 30, 2021 and as of December 31, 2020 is shown below.


	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
AAAfm		60,139		137,534
No classification		67,702		62,208
Total Mutual Funds		127,841		199,742

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Changes in Financial Liabilities


		09-30-2021
		Borrowings from banks			Hedging liabilities			Bonds and promissory notes			Other financial liabilities, Total
		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance January 1			1,274,260			39,660			4,707,944			6,021,864
Cash flows	(+) Borrowings obtained		56,184			—			—			56,184
	(-) Borrowings paid		(278,661	)		128			(26,847	)		(305,380	)
	(-) Commissions paid		(1,945	)		—			—			(1,945	)
	(-) Interest paid		(9,188	)		(11,415	)		(140,092	)		(160,695	)
(+) Accrued interest			10,217			10,034			151,505			171,756
(+/-) Inflation adjustment			(33,043	)		—			(110,627	)		(143,670	)
(+/-) Changes in fair value			—			274,463			—			274,463
(+/-) Other non-cash movements			3,342			—			6,063			9,405
Closing balance			1,021,166			312,870			4,587,946			5,921,982


		12-31-2020
		Borrowings from banks			Hedging liabilities			Bonds and promissory notes			Other financial liabilities, Total
		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance January 1			947,022			134,275			4,831,743			5,913,040
Cash flows	(+) Borrowings obtained		412,077			—			—			412,077
	(-) Borrowings paid		(257,551	)		(37,127	)		(225,796	)		(520,474	)
	(-) Commissions paid		(9,113	)		—			—			(9,113	)
	(-) Interest paid		(29,515	)		(32,189	)		(194,512	)		(256,216	)
(+) Accrued interest			26,174			33,613			204,678			264,465
(+/-) Inflation adjustment			51,510			—			83,809			135,319
(+/-) Changes in fair value			—			(58,898	)		—			(58,898	)
(+/-) Other non-cash movements			133,656			(14	)		8,022			141,664
Closing balance			1,274,260			39,660			4,707,944			6,021,864


		Lease liabilities
		09-30-2021			12-31-2020
		ThU.S.$			ThU.S.$
Opening balance January 1			211,755			271,025
Cash flows	(-) Borrowings paid		(52,600	)		(75,233	)
Cash flows	(-) Interest paid		(6,883	)		(9,428	)
(+) Accrued interest			7,024			10,021
(+/-) Inflation adjustment			(12,544	)		4,394
(+) Increase due to new leases liabilities			32,933			16,760
(+/-) Other movements			(2,057	)		(5,784	)
Closing balance			177,628			211,755

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 27% in Chile, 35% in Argentina and Mexico, 34% in Brazil, 25% in Uruguay and 21% in the United States (federal tax).

In 2021, Argentinian Republic published in the Official Gazette of Argentina the law No. 27,630, which replaced the fixed rate paid by Argentine companies on their corporate income tax periods starting in 2021. It provides a progressive scale of rates, where a 25% rate will be applied to companies with a net taxable income of up to 5,000,000 Argentine pesos (AR$) (approximately ThU.S.$ 51 as of September 30, 2021), a 30% rate will be applied to companies with a net taxable income ranging between AR$ 5,000,000 and AR$ 50,000,000 (approximately ThU.S.$ 506 as of September 30, 2021), and a 35% rate will be applied to companies with a net taxable incomes surpassing AR$ 50,000,000. This new regulation generated a loss of ThU.S.$ 49,000 in Arauco Argentina S.A. in income tax. The rate applied to Arauco Argentina S.A. in 2020 was 30%.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Deferred Tax Assets

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


	09-30-2021			12-31-2020
Deferred Tax Assets	ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		4,707			5,042
Deferred tax Assets relating to Accrued Liabilities		7,941			8,107
Deferred tax Assets relating to Post-Employment benefits		19,827			22,026
Deferred tax Assets relating to Property, Plant and equipment		31,972			24,397
Deferred tax Assets relating to Impairment provision		9,025			14,193
Deferred tax Assets relating to Financial Instruments		120,347			79,765
Deferred tax Assets relating to Tax Loss Carryforward		145,649			126,405
Deferred tax Assets relating to Inventories		15,800			7,964
Deferred tax Assets relating to Provisions for Income		23,098			7,905
Deferred tax Assets relating to Allowance for Doubtful Accounts		2,140			2,427
Deferred tax Assets relating to Intangible revaluation		2,825			3,713
Deferred tax Assets relating to tax credits		12,267			20,898
Deferred tax Assets relating to Other Deductible Temporary Differences		28,515			20,018
Total Deferred Tax Assets		424,113			342,860

Offsetting presentation		(418,866	)		(336,819	)

Net Effect		5,247			6,041

Certain subsidiaries of Arauco mainly in Chile, Brazil, Argentina and USA, as of the date of these interim consolidated financial statements, present tax losses for which we record as deferred tax assets, given our the projection of future profits, will allow the recovery of these assets. The total amount of these tax losses is ThU.S.$ 865,886 (ThU.S.$ 622,621 at December 31, 2020).

In addition, as of the closing date of these interim consolidated financial statements there are ThU.S.$ 145,723 (ThU.S.$ 152,898 at December 31, 2020) of non-recoverable tax losses from subsidiaries in USA and from joint operations, 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:


	09-30-2021			12-31-2020
Deferred Tax Liabilities	ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		1,201,489			1,020,282
Deferred tax Liabilities relating to Financial Instruments		25,360			26,755
Deferred tax Liabilities relating to Biological Assets		634,773			644,348
Deferred tax Liabilities relating to Inventory		49,467			32,567
Deferred tax Liabilities relating to Prepaid Expenses		39,403			42,319
Deferred tax Liabilities relating to Intangible		13,522			14,826
Deferred tax Liabilities relating to Other Taxable Temporary Differences		19,311			19,608
Total Deferred Tax Liabilities		1,983,325			1,800,705

Offsetting presentation		(418,866	)		(336,819	)

Net Effect		1,564,459			1,463,886

The effect of this period in current and deferred tax liabilities related to financial hedging instruments corresponds to a credit of ThU.S.$ 41,546 as of September 30, 2021 (credit of ThU.S.$ 17,589 as of September 30, 2020), which is presented net in Reserves for Cash Flow Hedges in the interim Consolidated Statement of Changes in Equity.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Reconciliation of deferred tax assets and liabilities


	Opening Balance 01-01-2021		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income			Decrease through loss of control in subsidiary			Increase (decrease) Net exchange differences			Closing balance 09-30-2021
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S$
Deferred tax Assets relating to Provisions		5,042		(293	)		—			—			(42	)		4,707
Deferred tax Assets relating to Accrued Liabilities		8,107		(133	)		—			(24	)		(9	)		7,941
Deferred tax Assets relating to Post-Employment benefits		22,026		(2,035	)		(95	)		(56	)		(13	)		19,827
Deferred tax Assets relating to Property, Plant and equipment		24,397		7,575			—			—			—			31,972
Deferred tax Assets relating to Impairment provision		14,193		(4,860	)		—			—			(308	)		9,025
Deferred tax Assets relating to Financial Instruments		79,765		(849	)		41,652			—			(221	)		120,347
Deferred tax Assets relating to Tax Loss Carryforward		126,405		20,468			—			(207	)		(1,017	)		145,649
Deferred tax Assets relating to Inventories		7,964		7,855			—			—			(19	)		15,800
Deferred tax Assets relating to Provisions for Income		7,905		15,203			—			—			(10	)		23,098
Deferred tax Assets relating to Allowance for Doubtful Accounts		2,427		(281	)		—			—			(6	)		2,140
Deferred tax Assets relating to Intangible revaluation		3,713		(749	)		—			—			(139	)		2,825
Deferred tax Assets relating to tax credits		20,898		(8,631	)		—			—			—			12,267
Deferred tax Assets relating to Other Deductible Temporary Differences		20,018		8,733			—			4			(240	)		28,515
Total Deferred Tax Assets		342,860		42,003			41,557			(283	)		(2,024	)		424,113


	Opening Balance 01- 01-2021		Deferred tax (Income) Expenses			Deferred tax of items charged to other comprehensive income			Decrease through loss of control in subsidiary			Increase (decrease) Net exchange differences			Closing balance 09- 30-2021
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S$
Deferred tax Liabilities relating to Property, Plant and Equipment		1,020,282		183,364			—			(121	)		(2,036	)		1,201,489
Deferred tax Liabilities relating to Financial Instruments		26,755		(1,501	)		106			—			—			25,360
Deferred tax Liabilities relating to Biological Assets		644,348		(3,740	)		—			(2,946	)		(2,889	)		634,773
Deferred tax Liabilities relating to Inventory		32,567		18,263			—			(1,395	)		32			49,467
Deferred tax Liabilities relating to Prepaid Expenses		42,319		(2,913	)		—			—			(3	)		39,403
Deferred tax Liabilities relating to Intangible		14,826		(1,065	)		—			—			(239	)		13,522
Deferred tax Liabilities relating to Other Taxable Temporary Differences		19,608		187			—			(179	)		(305	)		19,311
Total Deferred Tax Liabilities		1,800,705		192,595			106			(4,641	)		(5,440	)		1,983,325


	Opening Balance 01-01-2020		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income		Increase (decrease) Net exchange differences			Closing balance 12-31-2020
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$			ThU.S$
Deferred tax Assets relating to Provisions		5,749		(267	)		—		(440	)		5,042
Deferred tax Assets relating to Accrued Liabilities		7,182		937			—		(12	)		8,107
Deferred tax Assets relating to Post-Employment benefits		20,378		1,598			68		(18	)		22,026
Deferred tax Assets relating to Property, Plant and equipment		16,609		7,788			—		—			24,397
Deferred tax Assets relating to Impairment provision		20,169		(4,598	)		—		(1,378	)		14,193
Deferred tax Assets relating to Financial Instruments		68,390		(1,641	)		13,685		(669	)		79,765
Deferred tax Assets relating to Tax Loss Carryforward		133,221		2,605			—		(9,421	)		126,405
Deferred tax Assets relating to Inventories		12,460		(4,363	)		—		(133	)		7,964
Deferred tax Assets relating to Provisions for Income		6,631		1,295			—		(21	)		7,905
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,349		(1,545	)		—		(377	)		2,427
Deferred tax Assets relating to Intangible revaluation		6,044		(1,042	)		—		(1,289	)		3,713
Deferred tax Assets relating to tax credits		19,460		1,438			—		—			20,898
Deferred tax Assets relating to Other Deductible Temporary Differences		16,161		5,096			—		(1,239	)		20,018
Total Deferred Tax Assets		336,803		7,301			13,753		(14,997	)		342,860


	Opening Balance 01-01-2020		Deferred tax (Income) Expenses			Deferred tax of items charged to other comprehensive income		Increase (decrease) Net exchange differences			Closing balance 12- 31-2020
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$			ThU.S$
Deferred tax Liabilities relating to Property, Plant and Equipment		900,415		128,933			—		(9,066	)		1,020,282
Deferred tax Liabilities relating to Financial Instruments		25,630		986			139		—			26,755
Deferred tax Liabilities relating to Biological Assets		642,221		20,239			—		(18,112	)		644,348
Deferred tax Liabilities relating to Inventory		38,251		(5,711	)		—		27			32,567
Deferred tax Liabilities relating to Prepaid Expenses		41,338		989			—		(8	)		42,319
Deferred tax Liabilities relating to Intangible		17,942		(1,118	)		—		(1,998	)		14,826
Deferred tax Liabilities relating to Other Taxable Temporary Differences		25,126		(2,846	)		—		(2,672	)		19,608
Total Deferred Tax Liabilities		1,690,923		141,472			139		(31,829	)		1,800,705

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:


	09-30-2021						12-31-2020
	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		278,464			—			216,455			—
Deferred Tax Assets - Tax loss carryforward		145,649			—			126,405			—
Deferred Tax Liabilities		—			1,983,325			—			1,800,705
Total		424,113			1,983,325			342,860			1,800,705


	January - September						July - September
	2021			2020			2021			2020
Detail of Temporary Difference Income and Loss Amounts	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred Tax Assets		21,535			17,855			17,771			3,108
Deferred Tax Assets - Tax loss carryforward		20,468			51,081			(77,473	)		19,973
Deferred Tax Liabilities		(192,595	)		(20,541	)		(27,355	)		(6,844	)
Total		(150,592	)		48,395			(87,057	)		16,237

Income Tax Expense

Income tax expense consists of the following:


	January – September						July - September
Income Tax composition	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Current income tax expense		(180,887	)		(41,271	)		(79,331	)		(36,534	)
Tax benefit from tax credits, used to reduce current tax expense		5,026			3,552			—			—
Prior period current income tax adjustments		(2,788	)		1,226			(59	)		(76	)
Other current benefit tax (expenses)		(5,865	)		(4,176	)		(2,653	)		(1,012	)
Current Tax Expense, Net		(184,514	)		(40,669	)		(82,043	)		(37,622	)
Deferred tax expense relating to origination and reversal of temporary differences		(171,060	)		(2,686	)		(9,584	)		(3,736	)
Tax benefit arising from tax credits used to reduce deferred tax expense		20,468			51,081			(77,473	)		19,973
Total deferred Tax benefit (expense), Net		(150,592	)		48,395			(87,057	)		16,237
Income Tax benefit (expense), Total		(335,106	)		7,726			(169,100	)		(21,385	)

The following table presents the current income tax expense detailed by foreign and domestic (Chile) companies at September 30, 2021 and 2020:


	January – September						July - September
	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Foreign current income tax expense		(93,184	)		2,132			(39,904	)		(11,197	)
Domestic current income tax expense		(91,330	)		(42,801	)		(42,139	)		(26,425	)
Total current income tax expense		(184,514	)		(40,669	)		(82,043	)		(37,622	)
Foreign deferred tax benefit (expense)		(53,254	)		(14,907	)		(3,266	)		(325	)
Domestic deferred tax benefit (expense)		(97,338	)		63,302			(83,791	)		16,562
Total deferred tax benefit (expense)		(150,592	)		48,395			(87,057	)		16,237
Total income tax benefit (expense)		(335,106	)		7,726			(169,100	)		(21,385	)

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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

The reconciliation of income tax expense is as follows:


	January - September						July - September
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Statutory domestic (Chile) income tax rate		27.0	%		27.0	%		27.0	%		27.0	%
Tax Expense at statutory tax rate		(310,613	)		15,476			(183,769	)		(15,508	)
Tax effect of foreign tax rates		(7,829	)		(2,061	)		(4,183	)		(420	)
Tax effect of revenues exempt from taxation		43,652			3,720			17,714			1,324
Tax effect of not deductible expenses		(16,853	)		(13,069	)		(3,109	)		(9,420	)
Tax rate effect of previously unrecognized tax loss		—			—			—			(11,066	)
Tax rate effect of previously unrecognized tax benefits in P&L		—			14,301			—			14,301
Tax effect of a new evaluation of deferred tax assets		8,993			(1,787	)		4,539			(1,009	)
Tax effect of changes in tax rates		(45,980	)		—			(886	)		—
Tax Effect of tax provided in excess in prior periods		(2,788	)		1,226			(59	)		(76	)
Other tax rate effects		(3,688	)		(10,080	)		653			489
Total adjustments to tax expense at applicable tax rate		(24,493	)		(7,750	)		14,669			(5,877	)
Tax benefit (expense) at effective tax rate		(335,106	)		7,726			(169,100	)		(21,385	)

Current tax assets and liabilities

The current tax assets and liabilities balances are as follow:


Current tax Assets	09-30-2021 ThU.S.$			12-31-2020 ThU.S.$
Monthly Provisional Payments (MPP)		415			17,540
Income tax receivable		94,876			298,093
Fixed assets tax credits		—			10
Provision tax income		(2,038	)		(928	)
Other tax receivables		11,540			6,015
Total		104,793			320,730


Current tax Liabilities	09-30-2021 ThU.S.$			12-31-2020 ThU.S.$
Provision tax income (First category)		145,341			81,368
Monthly Provisional Payments (MPP)		(69,611	)		(43,232	)
Other tax payables		18,578			6,536
Total		94,308			44,672

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 7. PROPERTY, PLANT AND EQUIPMENT


Property, Plant and Equipment, Net	09-30-2 021 ThU.S.$			12-31-2020 ThU.S.$
Construction work in progress		2,570,372			1,944,578
Land		884,846			930,372
Buildings		2,190,785			2,248,784
Plant and equipment		2,937,121			3,026,136
Information technology equipment		23,981			26,166
Fixtures and fittings		13,549			16,627
Motor vehicles		13,872			15,055
Other property, plant and equipment		115,105			117,586
Total Net		8,749,631			8,325,304

Property, Plant and Equipment, Gross
Construction work in progress		2,570,372			1,944,578
Land		884,846			930,372
Buildings		4,462,124			4,420,293
Plant and equipment		7,094,418			7,027,942
Information technology equipment		104,401			102,632
Fixtures and fittings		49,263			50,209
Motor vehicles		59,605			59,515
Other property, plant and equipment		132,647			135,199
Total Gross		15,357,676			14,670,740

Accumulated depreciation and impairment
Buildings		(2,271,339	)		(2,171,509	)
Plant and equipment		(4,157,297	)		(4,001,806	)
Information technology equipment		(80,420	)		(76,466	)
Fixtures and fittings		(35,714	)		(33,582	)
Motor vehicles		(45,733	)		(44,460	)
Other property, plant and equipment		(17,542	)		(17,613	)
Total		(6,608,045	)		(6,345,436	)

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

As of September 30, 2021, there are no significant assets pledged as collateral to be disclosed in these interim consolidated financial statements.

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


	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
Amount committed for the acquisition of property, plant and equipment		322,130		542,230

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 September 30, 2021 and as of December 31, 2020:


	Construction work in progress			Land			Buildings			Plant and equipment			IT Equipment			Fixtures and fittings			Motor vehicles			Other Property, Plant and Equipment			TOTAL
Reconciliation of Property, Plant and Equipment	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance 01-01-2021		1,944,578			930,372			2,248,784			3,026,136			26,166			16,627			15,055			117,586			8,325,304
Changes
Additions		808,823			74			4,603			11,327			454			119			255			3,127			828,782
Disposals		(149	)		(25,150	)		(583	)		(15,490	)		(166	)		(4	)		(290	)		(205	)		(42,037	)
Withdrawals		(1,179	)		—			(1,409	)		(3,930	)		(5	)		—			(13	)		(4,039	)		(10,575	)
Depreciation		—			—			(103,497	)		(216,112	)		(4,857	)		(2,355	)		(2,475	)		(887	)		(330,183	)
Impairment loss recognized in profit or loss		—			(44	)		(4,669	)		10,300			(74	)		—			(19	)		—			5,494
Increase (decrease) through net exchange differences		(165	)		(4,963	)		(5,253	)		(7,669	)		77			130			(8	)		(329	)		(18,180	)
Reclassification of assets held for sale		—			55			949			206			—			—			—			—			1,210
Increase (decrease) through transfers from construction in progress		(181,536	)		822			51,907			126,315			2,386			(961	)		1,215			(148	)		—
Reclassification from lease to Property, plant and equipment		—			—			—			7,251			—			—			152			—			7,403
Decrease due to loss of control in subsidiary		—			(16,320	)		(47	)		(1,213	)		—			(7	)		—			—			(17,587	)
Total changes		625,794			(45,526	)		(57,999	)		(89,015	)		(2,185	)		(3,078	)		(1,183	)		(2,481	)		424,327
Closing balance 09-30-2021		2,570,372			884,846			2,190,785			2,937,121			23,981			13,549			13,872			115,105			8,749,631


Reconciliation of Property, Plant and Equipment	Construction work in progress			Land			Buildings			Plant and equipment			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 01-01-2020		1,128,431			971,061			2,247,996			3,139,761			20,906			13,421			14,922			111,685			7,648,183
Changes
Additions		1,258,602			3,449			5,149			38,618			906			1,602			1,553			12,839			1,322,718
Disposals		—			(14,957	)		(545	)		(8,323	)		(5	)		(1	)		(197	)		(1,583	)		(25,611	)
Withdrawals		(418	)		(782	)		(1,540	)		(3,986	)		(97	)		(30	)		(6	)		(46	)		(6,905	)
Depreciation		—			—			(139,971	)		(286,740	)		(6,572	)		(3,009	)		(4,325	)		(1,149	)		(441,766	)
Impairment loss recognized in profit or loss		—			—			(22,176	)		(36,032	)		(480	)		—			(107	)		—			(58,795	)
Increase (decrease) through net exchange differences		(4,102	)		(28,405	)		(21,954	)		(55,349	)		(288	)		(190	)		(309	)		(4,709	)		(115,306	)
Increase (decrease) through transfers from construction in progress		(437,935	)		6			181,825			235,776			11,796			4,834			3,149			549			—
Reclassification from lease to Property, plant and equipment		—			—			—			2,411			—			—			375			—			2,786
Total changes		816,147			(40,689	)		788			(113,625	)		5,260			3,206			133			5,901			677,121
Closing balance 12-31-2020		1,944,578			930,372			2,248,784			3,026,136			26,166			16,627			15,055			117,586			8,325,304

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

The depreciation expense for the period ending September 30, 2021 and 2020 is as follows:

January - September

July - September

2021

2020

2021

2020

Depreciation for the year

ThU.S.$

Cost of sales

300,318

300,352

96,061

102,420

Administrative expenses

14,191

13,556

4,986

4,667

Other expenses

372

1,885

153

284

Total

314,881

315,793

101,200

107,371

Depreciation charged to profit or loss statement differs from the movement of the period for Property, Plant and Equipment. This is mainly due to the periodic cost processes in which a portion of the depreciation charge remains in Inventories. Furthermore, this deviation is also affected by the conversion differences corresponding to companies that use a functional currency other than U.S. dollars.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 8. LEASES

Arauco acting as lessee

In the application of IFRS 16, Arauco chose not to apply the requirements to recognize a liability and an asset for right of use for leases which term ends within 12 months from January 1, 2019 and for leases in which the underlying asset is of low value ThU.S.$ 5.

Lease liabilities and their maturity are presented in Notes 11 and 23.

Right of use assets


	09-30-2021			12-31-2020
	ThU.S.$			ThU.S.$

Property, Plant and Equipment by right of use, Net
Land		73,218			60,761
Buildings		21,386			19,954
Plant and equipment		18,235			24,035
Information technology equipment		284			380
Fixtures and fittings		274			698
Motor vehicles		64,154			92,951
Other property, plant and equipment		14,883			20,355
Total Net		192,434			219,134

Property, Plant and Equipment by right of use, Gross
Land		92,974			74,047
Buildings		32,002			30,443
Plant and equipment		31,369			67,662
Information technology equipment		882			798
Fixtures and fittings		1,512			1,636
Motor vehicles		168,567			168,808
Other property, plant and equipment		20,640			21,574
Total Gross		347,946			364,968

Accumulated depreciation and impairment by right of use
Land		(19,756	)		(13,286	)
Buildings		(10,616	)		(10,489	)
Plant and equipment		(13,134	)		(43,627	)
Information technology equipment		(598	)		(418	)
Fixtures and fittings		(1,238	)		(938	)
Motor vehicles		(104,413	)		(75,857	)
Other property, plant and equipment		(5,757	)		(1,219	)
Total		(155,512	)		(145,834	)

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Reconciliation of Property, Plant and Equipment by Right of Use

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment by right of use as of September 30, 2021 and as of December 31, 2020:


Reconciliation of Property, Plant and Equipment by right of use	Land ThU.S.$			Buildings ThU.S.$			Plant and equipment 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 01-01-2021		60,761			19,954			24,035			380			698			92,951			20,355			219,134
Changes
Additions		19,370			11,539			1,578			127			—			319			—			32,933
Withdrawals		(15	)		(2,976	)		—			—			—			(211	)		—			(3,202	)
Depreciation		(6,795	)		(4,090	)		(6,046	)		(202	)		(300	)		(28,888	)		(1,593	)		(47,914	)
Increase (decrease) through net exchange differences		(103	)		13			(441	)		(3	)		—			1			—			(533	)
Increase (decrease) through others		—			—			—			—			—			—			(7,403	)		(7,403	)
Reclassification from lease to Property, plant and equipment		—			(3,054	)		(891	)		(18	)		(124	)		(18	)		3,524			(581	)
Total changes		12,457			1,432			(5,800	)		(96	)		(424	)		(28,797	)		(5,472	)		(26,700	)
Closing balance 09-30-2021		73,218			21,386			18,235			284			274			64,154			14,883			192,434


Reconciliation of Property, Plant and Equipment by right of use	Land ThU.S.$			Buildings ThU.S.$			Plant and equipment 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 01-01-2020		67,804			25,940			44,753			574			1,138			126,587			17,583			284,379
Changes
Additions		5,543			1,601			—			203			—			5,663			3,750			16,760
Withdrawals		(474	)		(33	)		(5,087	)		—			—			(862	)		(435	)		(6,891	)
Depreciation		(7,032	)		(6,224	)		(17,455	)		(270	)		(481	)		(38,885	)		(2,802	)		(73,149	)
Increase (decrease) through net exchange differences		(5,080	)		200			540			(63	)		41			(297	)		—			(4,659	)
Increase (decrease) through others		—			(1,530	)		1,284			(64	)		—			745			5,045			5,480
Reclassification from lease to Property, plant and equipment		—			—			—			—			—			—			(2,786	)		(2,786	)
Total changes		(7,043	)		(5,986	)		(20,718	)		(194	)		(440	)		(33,636	)		2,772			(65,245	)
Closing balance 12-31-2020		60,761			19,954			24,035			380			698			92,951			20,355			219,134

The depreciation expense for the period ending September 30, 2021 and 2020 Property, Plant and Equipment by right of use is as follows:


	January - September				July - Septemeber
Depreciation for the period	2021 ThU.S.$		2020 ThU.S.$		2021 ThU.S.$		2020 ThU.S.$
Cost of sales		32,124		44,019		10,217		13,933
Distribution costs		1,813		1,238		602		413
Administrative expenses		5,102		6,160		1,631		1,993
Total		39,039		51,417		12,450		16,339

Depreciation charged to profit or loss statement differs from the movement of the period for Property, Plant and Equipment for right of use. This is mainly due to the periodic cost processes in which a portion of the depreciation charge remains in the Inventories. Furthermore, this deviation is also affected by the conversion differences of the companies with a functional currency other than U.S. dollars.

Additionally, Arauco has recognized directly in the interim consolidated statement of profit or loss, the following leases excluded from Right of use assets:


	January – September				July - September
	2021 ThU.S.$		2020 ThU.S.$		2021 ThU.S.$		2020 ThU.S.$
Expenses from payments of variable leases		105,307		100,902		31,494		35,582
Expenses from low value leases		2,343		3,000		797		655
Expenses from short-term leases		17,056		24,079		1,674		2,147
Total		124,706		127,981		33,965		38,384

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Arauco acting as lessor

IFRS 16 substantially maintains the accounting requirements of the lessor of IAS 17. Consequently, Arauco has continued to classify its leases as operating or financial.

Reconciliation of Financial Lease Minimum Payments:


	09-30-2021
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		54		54		—
Between one and five years		—		—		—
More than five years		—		—		—
Total		54		54		—


	12-31-2020
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		121		12		109
Between one and five years		26		—		26
More than five years		—		—		—
Total		147		12		135

Financial 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 financial 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 - September

July - September

Classes of revenue

2021
ThU.S.$

2020
ThU.S.$

2021
ThU.S.$

2020
ThU.S.$

Revenue from sales of goods

4,535,316

3,324,674

1,679,431

1,186,123

Revenue from rendering of services

72,035

55,279

25,639

16,790

Total

4,607,351

3,379,953

1,705,070

1,202,913

The reportable segments revenues by business area and by geographical area are presented in Note 24.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

January - September

July - September

2021
ThU.S.$

2020
ThU.S.$

2021
ThU.S.$

2020
ThU.S.$

Employee expenses

499,664

437,995

168,625

147,436

Wages and salaries

485,629

425,889

165,123

142,090

Severance indemnities

14,035

12,106

3,502

5,346


	09-30-2021			12-31-2020
Discount rate		1.81	%		1.81	%
Inflation		3.40	%		3.00	%
Annual rate of wage growth		5.22	%		5.22	%
Mortality rate (1)		RV-2014			RV-2014

(1)

For the purposes of determining the technical reserves, Chilean annuity providers are required by law to utilize the mortality tables specified by the CMF (Chilean Commission for the Financial Market). The most recent table is the RV-2014, which is based on Chilean pensioner experience from 2006-2013 (SP & SVS, 2013). The mortality tables distinguish between males and females.


Sensitivities to assumptions	ThU.S.$
Discount rate
Increase in 100 bps		(5,994	)
Decrease in 100 bps		5,742

Wage growth rates
Increase in 100 bps		5,694
Decrease in 100 bps		(5,002	)

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of September 30, 2021 and as of December 31, 2020:


	09-30-2021 ThU.S.$			12-31-2020 ThU.S.$
Current		5,872			6,786
Non-current		67,866			74,609
Total		73,738			81,395


Reconciliation of the present value of severance indemnities obligations	09-30-2021 ThU.S.$			12-31-2020 ThU.S.$
Opening balance		81,395			75,429
Current service cost		4,260			6,298
Interest cost		2,553			3,802
(Gains) losses from changes in actuarial assumptions		(1,917	)		159
Actuarial gains and losses arising from experience		1,564			124
Benefits paid		(3,164	)		(8,323	)
Decrease due to sale of subsidiary		(393	)		—
Increase (decrease) for foreign currency exchange rates changes		(10,560	)		3,906
Closing balance		73,738			81,395

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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.


September 30, 2021	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Assets
Current Assets
Cash and Cash Equivalents		855,584		5,590		177,294		81,214		51,011		5,100		147,666		—		1,323,459
Other current financial assets		16,450		—		—		—		—		—		—		—		16,450
Other current non-financial assets		45,389		83		22,045		9,945		1,083		6,074		90,246		—		174,865
Trade and other current receivables		1,002,907		9,967		52,481		21,748		36,813		4,761		116,988		2,502		1,248,167
Accounts receivable due from related companies		—		—		—		—		—		—		7,334		—		7,334
Current Inventories		973,985		—		74,685		—		32,453		—		38		—		1,081,162
Current biological assets		251,007		—		64,028		—		—		—		—		—		315,035
Current tax assets		301		—		168		—		664		948		102,712		—		104,793
Non-current assets or disposal groups classified as held for sale		3,145,624		15,640		390,701		112,907		122,024		16,883		464,984		2,502		4,271,265
Non-current assets or disposal groups classified as held for sale		14,395		—		15		—		73		—		—		—		14,483

Total Current Assets		3,160,019		15,640		390,716		112,907		122,097		16,883		464,984		2,502		4,285,748

Non-Current Assets
Other non-current financial assets		9,386		—		—		—		—		—		—		—		9,386
Other non-current non-financial assets		1,638		—		7,246		199		772		8		89,545		—		99,408
Trade and other non-current receivables		12,112		—		1		—		—		—		2,781		40		14,934
Investments accounted for using equity method		77,332		207,067		28,188		—		—		—		20,664		—		333,251
Intangible assets other than goodwill		86,077		—		1,404		—		647		—		6,110		—		94,238
Goodwill		41,523		—		16,582		—		—		—		—		—		58,105
Property, plant and equipment		8,278,377		—		344,872		—		126,036		—		346		—		8,749,631
Right of use assets		160,141		—		32,293		—		—		—		—		—		192,434
Non-current biological assets		2,906,500		—		228,235		—		—		—		—		—		3,134,735
Deferred tax assets		4,820		—		—		—		427		—		—		—		5,247

Total Non-Current Assets		11,577,906		207,067		658,821		199		127,882		8		119,446		40		12,691,369

Total Assets		14,737,925		222,707		1,049,537		113,106		249,979		16,891		584,430		2,542		16,977,117


September 30, 2021	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Liabilities
Current Liabilities
Other current financial liabilities		358,856		68,790		704		—		—		—		—		46,990		475,340
Current lease liabilities		9,484		92		4,562		—		1,314		86		28,240		8,720		52,498
Trade and other current payables		199,663		13,885		79,824		19,219		26,678		7,184		324,979		33,903		705,335
Accounts payable to related companies		7,262		—		—		—		—		—		338		—		7,600
Other current provisions		387		—		—		—		—		—		—		—		387
Current tax liabilities		2,403		9,090		8,984		28,468		10,220		—		35,143		—		94,308
Current provisions for employee benefits		—		—		—		—		—		—		5,872		—		5,872
Other current non-financial liabilities		481,882		52		25,295		2,616		2,574		1,051		5,902		—		519,372

Total Liabilities, current		1,059,937		91,909		119,369		50,303		40,786		8,321		400,474		89,613		1,860,712

Non-Current Liabilities
Other non-current financial liabilities		3,947,635		481,442		—		—		—		—		—		1,017,565		5,446,642
Non-current lease liabilities		71,015		186		19,189		—		2,263		119		18,541		13,817		125,130
Other non-current provisions		—		—		2,827		25,960		—		—		—		—		28,787
Deferred tax liabilities		1,483,479		—		76,732		—		4,248		—		—		—		1,564,459
Non-current provisions for employee benefits		—		—		—		—		930		—		66,936		—		67,866
Other non-current non-financial liabilities		22		—		79,592		13		—		—		14		—		79,641

Total non-current liabilities		5,502,151		481,628		178,340		25,973		7,441		119		85,491		1,031,382		7,312,525

Total Liabilities		6,562,088		573,537		297,709		76,276		48,227		8,440		485,965		1,120,995		9,173,237

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


December 31, 2020	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Assets
Current Assets
Cash and Cash Equivalents		773,822		3,891		127,459		62,149		43,049		5,334		49,010		—		1,064,714
Other current financial assets		1,763		—		—		—		—		—		—		—		1,763
Other current non-financial assets		19,802		92		28,253		5,886		572		6,147		107,845		—		168,597
Trade and other current receivables		542,296		10,448		38,362		9,757		30,856		5,999		96,847		2,816		737,381
Accounts receivable due from related companies		369		—		829		—		—		—		5,076		—		6,274
Current Inventories		847,161		—		63,935		—		27,183		—		—		—		938,279
Current biological assets		246,637		—		56,073		—		—		—		—		—		302,710
Current tax assets		29,069		752		2,384		1,732		3,471		667		282,655		—		320,730
Non-current assets or disposal groups classified as held for sale		2,460,919		15,183		317,295		79,524		105,131		18,147		541,433		2,816		3,540,448
Non-current assets or disposal groups classified as held for sale		3,815		—		15		—		47		—		—		—		3,877

Total Current Assets		2,464,734		15,183		317,310		79,524		105,178		18,147		541,433		2,816		3,544,325

Non-Current Assets
Other non-current financial assets		28,982		—		—		—		—		—		—		—		28,982
Other non-current non-financial assets		1,739		—		17,346		431		692		102		92,904		—		113,214
Trade and other non-current receivables		13,637		—		40		—		—		—		2,859		70		16,606
Investments accounted for using equity method		78,108		184,191		32,402		—		—		—		22,238		—		316,939
Intangible assets other than goodwill		95,231		—		1,675		—		22		—		5,162		—		102,090
Goodwill		42,210		—		17,357		—		—		—		—		—		59,567
Property, plant and equipment		7,838,893		—		349,877		—		136,188		—		346		—		8,325,304
Right of use assets		190,252		—		28,882		—		—		—		—		—		219,134
Non-current biological assets		3,038,157		—		257,960		—		—		—		—		—		3,296,117
Deferred tax assets		4,449		—		1,168		—		424		—		—		—		6,041

Total Non-Current Assets		11,331,658		184,191		706,707		431		137,326		102		123,509		70		12,483,994

Total Assets		13,796,392		199,374		1,024,017		79,955		242,504		18,249		664,942		2,886		16,028,319


December 31, 2020	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Liabilities
Current Liabilities
Other current financial liabilities		230,230		32,697		753		—		—		—		—		43,456		307,136
Current lease liabilities		13,687		84		3,292		—		426		148		32,554		13,449		63,640
Trade and other current payables		153,860		11,924		80,607		11,336		26,400		7,485		298,908		35,984		626,504
Accounts payable to related companies		236		—		—		—		—		—		3,503		—		3,739
Other current provisions		386		—		—		—		—		—		—		—		386
Current tax liabilities		152		—		5,298		—		190		24		39,008		—		44,672
Current provisions for employee benefits		—		—		—		—		—		—		6,786		—		6,786
Other current non-financial liabilities		6,616		58		25,726		4,118		2,382		1,319		4,511		—		44,730

Total Liabilities, current		405,167		44,763		115,676		15,454		29,398		8,976		385,270		92,889		1,097,593

Non-Current Liabilities
Other non-current financial liabilities		4,070,126		498,484		657		—		—		—		—		1,145,461		5,714,728
Non-current lease liabilities		74,135		230		14,833		—		218		171		44,604		13,924		148,115
Other non-current provisions		—		—		4,238		26,212		—		—		—		—		30,450
Deferred tax liabilities		1,388,713		—		68,788		—		6,385		—		—		—		1,463,886
Non-current provisions for employee benefits		—		—		—		—		1,069		—		73,540		—		74,609
Other non-current non-financial liabilities		29		—		83,249		14		—		—		11		—		83,303

Total non-current liabilities		5,533,003		498,714		171,765		26,226		7,672		171		118,155		1,159,385		7,515,091

Total Liabilities		5,938,170		543,477		287,441		41,680		37,070		9,147		503,425		1,252,274		8,612,684

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


	09-30-2021						12-31-2020
	Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$		Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$
Total Liabilities, current		1,528,342		332,370		1,860,712		765,176		332,417		1,097,593

Other current financial liabilities		192,258		283,082		475,340		63,605		243,531		307,136
U.S Dollar		130,218		228,638		358,856		63,509		166,721		230,230
Euros		35,188		33,602		68,790		—		32,697		32,697
Brazilian Real		76		628		704		96		657		753
U.F.		26,776		20,214		46,990		—		43,456		43,456
								—

Bank Loans		127,799		123,671		251,470		30,774		184,660		215,434
U.S Dollar		92,535		89,441		181,976		30,678		151,306		181,984
Euros		35,188		33,602		68,790		—		32,697		32,697
Brazilian Real		76		628		704		96		657		753

Other Loans		64,459		159,411		223,870		32,831		58,871		91,702
U.S Dollar		37,683		139,197		176,880		32,831		15,415		48,246
U.F.		26,776		20,214		46,990		—		43,456		43,456

Current lease liabilities		14,302		38,196		52,498		18,631		45,009		63,640
U.S Dollar		3,080		6,404		9,484		4,675		9,012		13,687
Euros		23		69		92		23		61		84
Brazilian Real		1,281		3,281		4,562		823		2,469		3,292
Mexican Pesos		316		998		1,314		293		133		426
Other currencies		38		48		86		37		111		148
Chilean Pesos		6,958		21,282		28,240		8,578		23,976		32,554
U.F.		2,606		6,114		8,720		4,202		9,247		13,449

Trade and other current payables		699,249		6,086		705,335		585,428		41,076		626,504
U.S Dollar		199,620		43		199,663		153,856		4		153,860
Euros		13,885		—		13,885		11,924		—		11,924
Brazilian Real		74,030		5,794		79,824		39,596		41,011		80,607
Argentine Pesos		19,219		—		19,219		11,336		—		11,336
Mexican Pesos		26,429		249		26,678		26,339		61		26,400
Other currencies		7,184		—		7,184		7,485		—		7,485
Chilean Pesos		324,979		—		324,979		298,908		—		298,908
U.F.		33,903		—		33,903		35,984		—		35,984

Accounts payable to related companies		7,600		—		7,600		3,739		—		3,739
U.S Dollar		7,262		—		7,262		236		—		236
Chilean Pesos		338		—		338		3,503		—		3,503

Other current provisions		387		—		387		384		2		386
U.S Dollar		387		—		387		384		2		386
Current tax liabilities		89,896		4,412		94,308		42,580		2,092		44,672

U.S Dollar		2,403		—		2,403		152		—		152
Euro		9,090		—		9,090
Brazilian Real		5,033		3,951		8,984		5,298		—		5,298
Argentine Pesos		28,468		—		28,468
Mexican Pesos		10,220		—		10,220		190		—		190
Other currencies		—		—		—		24		—		24
Chilean Pesos		34,682		461		35,143		36,916		2,092		39,008
Current provisions for employee benefits		5,278		594		5,872		6,079		707		6,786

Chilean Pesos		5,278		594		5,872		6,079		707		6,786
Other current non-financial liabilities		519,372		—		519,372		44,730		—		44,730

U.S Dollar		481,882		—		481,882		6,616		—		6,616
Euros		52		—		52		58		—		58
Brazilian Real		25,295		—		25,295		25,726		—		25,726
Argentine Pesos		2,616		—		2,616		4,118		—		4,118
Mexican Pesos		2,574		—		2,574		2,382		—		2,382
Other currencies		1,051		—		1,051		1,319		—		1,319
Chilean Pesos		5,902		—		5,902		4,511		—		4,511

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


	09-30-2021								12-31-2020
	From 13 months to 3 years ThU.S.$		From 3 years to 5 years ThU.S.$		More than 5 years ThU.S.$		Total ThU.S.$		From 13 months to 3 years ThU.S.$		From 3 years to 5 years ThU.S.$		More than 5 years ThU.S.$		Total ThU.S.$
Total non-current liabilities		2,173,223		463,876		4,675,426		7,312,525		1,789,288		971,281		4,754,522		7,515,091

Other non-current financial liabilities		1,108,449		403,400		3,934,793		5,446,642		726,206		919,591		4,068,931		5,714,728
U.S Dollar		902,705		195,000		2,849,930		3,947,635		515,399		706,525		2,848,202		4,070,126
Euros		126,983		128,943		225,516		481,442		122,891		125,247		250,346		498,484
Brazilian Real		—		—		—		—		657		—		—		657
U.F.		78,761		79,457		859,347		1,017,565		87,259		87,819		970,383		1,145,461

Bank Loans		220,237		323,943		225,516		769,696		473,233		335,247		250,346		1,058,826
U.S Dollar		93,254		195,000		—		288,254		349,685		210,000		—		559,685
Euros		126,983		128,943		225,516		481,442		122,891		125,247		250,346		498,484
Brazilian Real		—		—		—		—		657		—		—		657

Other Loans		888,212		79,457		3,709,277		4,676,946		252,973		584,344		3,818,585		4,655,902
U.S Dollar		809,451		—		2,849,930		3,659,381		165,714		496,525		2,848,202		3,510,441
U.F.		78,761		79,457		859,347		1,017,565		87,259		87,819		970,383		1,145,461
Non-current lease liabilities		53,234		26,684		45,212		125,130		85,964		21,906		40,245		148,115
U.S Dollar		19,322		13,643		38,050		71,015		22,935		15,787		35,413		74,135
Euros		174		12		—		186		168		62		—		230
Brazilian Real		7,575		7,800		3,814		19,189		5,452		4,842		4,539		14,833
Mexican Pesos		1,874		389		—		2,263		218		—		—		218
Other currencies		116		3		—		119		141		30		—		171
Chilean Pesos		18,038		503		—		18,541		44,604		—		—		44,604
U.F.		6,135		4,334		3,348		13,817		12,446		1,185		293		13,924

Other non-current provisions		28,787		—		—		28,787		30,450		—		—		30,450
Brazilian Real		2,827		—		—		2,827		4,238		—		—		4,238
Argentine Pesos		25,960		—		—		25,960		26,212		—		—		26,212

Deferred tax liabilities		877,866		5,848		680,745		1,564,459		840,171		—		623,715		1,463,886
U.S Dollar		802,734		—		680,745		1,483,479		764,998		—		623,715		1,388,713
Brazilian Real		70,884		5,848		—		76,732		68,788		—		—		68,788
Mexican Pesos		4,248		—		—		4,248		6,385		—		—		6,385

Non-current provisions for employee benefits		67,856		—		10		67,866		74,336		273		—		74,609
Mexican Pesos		920		—		10		930		796		273		—		1,069
Chilean Pesos		66,936		—		—		66,936		73,540		—		—		73,540

Other non-current non-financial liabilities		37,031		27,944		14,666		79,641		32,161		29,511		21,631		83,303
U.S Dollar		22		—		—		22		29		—		—		29
Brazilian Real		36,982		27,944		14,666		79,592		32,107		29,511		21,631		83,249
Argentine Pesos		13		—		—		13		14		—		—		14
Chilean Pesos		14		—		—		14		11		—		—		11

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 Canada Ltd.	Canada	Canadian Dollar
Arauco do Brasil S.A.	Brazil	Brazilian Real
Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real
Arauco Forest Brasil S.A.	Brazil	Brazilian Real
Arauco Industria de Mexico, S.A. de C.V.	Mexico	Mexican pesos
Arauco Industria de Paineis S.A.	Brazil	Brazilian Real
Arauco Quimica S.A. de C.V.	Mexico	Mexican pesos
Arauco Serviquimex, S.A. de C.V.	Mexico	Mexican pesos
Araucomex Servicios, S.A. de C.V.	Mexico	Mexican pesos
Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos
Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real
Leasing Forestal S.A.	Argentina	Argentine pesos
Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real
Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real
ODD Industries SpA	Chile	Chilean pesos
Tablered Araucomex, S.A. de C.V.	Mexico	Mexican pesos

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


	January - September						July - September
	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Arauco do Brasil S.A.		(16,320	)		(117,130	)		(31,040	)		(9,405	)
Arauco Forest Brasil S.A.		(14,267	)		(107,600	)		(26,607	)		(8,246	)
Sonae Arauco S.A.		(11,373	)		7,224			(4,724	)		6,999
Arauco Florestal Arapoti S.A.		(3,117	)		(26,992	)		(5,930	)		(1,935	)
Arauco Industria México S.A. de C.V.		(4,552	)		(30,678	)		(6,246	)		5,498
Arauco Canada Ltd.		106			(2,774	)		(4,437	)		4,228
Others		(3,396	)		(872	)		(3,453	)		47

Total reserve of exchange differences on translation		(52,919	)		(278,822	)		(82,437	)		(2,814	)

Effect of foreign exchange rates changes


	January - September						July - September
	2021			2020			2021			2020
	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		7,569			(9,886	)		12,857			17,666

Reserve of exchange differences on translation (with Non-controlling interests)		(59,248	)		(285,017	)		(83,984	)		(3,625	)

NOTE 12. BORROWING COSTS

Arauco capitalizes interest at effective rate on current investment projects.

At the date of issuance of these interim consolidated financial statements, Arauco has capitalized financial interest related to the modernization and extension of Planta Arauco (MAPA).


	January – September						July - September
	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		4.75	%		4.63	%		4.75	%		4.64	%
Amount of the capitalized interest cost, property, plant and equipment		54,788			30,173			22,521			12,191

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 13. RELATED PARTIES

Related Party Disclosures

Related parties are those entities defined in IAS 24 and under the rules of the Chilean Commission for the Financial Market 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 accounts of doubtful collection nor any guarantees granted or received related to the balances with related parties.

Name of Group’s Main Shareholders

The ultimate shareholders of Arauco, direct and indirectly, are Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi.

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

Empresas Copec S.A.

Compensation to Key Management Personnel

Compensation to key management personnel, including directors, managers and deputy managers, consist of a fixed monthly salary, and managers and deputy managers also receive 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

Transactions carried out with related parties are intended to contribute to the corporate interest, are adjusted in price, terms and conditions to those prevailing in the market at the time of approval, and meet the requirements and procedures set forth in the law.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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


			Functional	% Ownership interest 09-30-2021						% Ownership interest 12-31-2020
ID N°	Company Name	Country	Currency	Direct		Indirect		Total		Direct		Indirect		Total
-	Agenciamiento y Servicios Profesionales S.A.	Mexico	U.S. Dollar		0.0020		99.9970		99.9990		0.0020		99.9970		99.9990
-	Arauco Argentina S.A.	Argentina	U.S. Dollar		9.9707		90.0093		99.9800		9.9707		90.0093		99.9800
-	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		1.9990		99.9990		98.0000		1.9990		99.9990
-	Arauco Canada Ltd.	Canada	Canadian Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	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		1.0681		98.9309		99.9990		1.0681		98.9309		99.9990
-	Arauco Europe Cooperatief U.A.	Netherlands	U.S. Dollar		0.5215		99.4775		99.9990		0.5215		99.4775		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		10.0809		89.9182		99.9991		10.0809		89.9182		99.9991
-	Arauco Industria de México, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Industria de Paineis Ltda.	Brazil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco North America, Inc.	United States	U.S. Dollar		0.0001		99.9989		99.9990		0.0001		99.9989		99.9990
76620842-8	Arauco Nutrientes Naturales SPA(*)	Chile	U.S. Dollar		—		—		—		—		99.9484		99.9484
-	Arauco Perú S.A.	Perú	U.S. Dollar		0.0013		99.9977		99.9990		0.0013		99.9977		99.9990
-	Arauco Química S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Serviquimex, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Wood (China) Company Limited	China	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Araucomex S.A. de C.V.	Mexico	U.S. Dollar		0.0005		99.9985		99.9990		0.0005		99.9985		99.9990
-	Araucomex Servicios, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
96657900-5	Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos		—		56.4474		56.4474		—		57.0831		57.0831
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9984		99.9984		—		99.9984		99.9984
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		—		98.5811		98.5811		—		98.5683		98.5683
78049140-K	Forestal Los Lagos S.A.(**)	Chile	U.S. Dollar		—		—		—		—		79.9587		79.9587
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	U.S. Dollar		1.0000		98.9489		99.9489		1.0000		98.9489		99.9489
-	Leasing Forestal S.A.	Argentina	Argentine pesos		—		99.9800		99.9800		—		99.9800		99.9800
-	Maderas Arauco Costa Rica S.A.	Costa Rica	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
96510970-6	Maderas 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		—		99.9990		99.9990		—		99.9990		99.9990
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
76860724-9	ODD Industries SpA	Chile	Chilean Pesos		—		86.6151		86.6151		—		86.6151		86.6151
-	Prime-Line,Inc.	United States	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
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
-	Tablered Araucomex, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990

(*)	This company was merged in March of 2021 (see note 14).

(**)	The stake in this company was sold in March of 2021 (see note 14).

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.


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

According to 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, we state the following:

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Long-term debt with related entities—Mutual Agreement with Arauco Argentina S.A.

On June 5, 2017, Arauco signed a mutual agreement with its subsidiary Arauco Argentina S.A, pursuant to which this Company received an amount of U.S.$ 250,000,000, which accrues accrues a interest at the LIBOR interest rate for 180 days plus a fixed spread of 5.20%, with payments every six months on June 1 and December 1 of each year.

During 2020, the Central Bank of the Argentine Republic established certain foreign exchange controls, preventing Arauco Argentina S.A. from making two principal payments for ThU.S.$ 12,500 each, both due during 2020. Under those circumstances, Arauco agreed to reschedule the maturity of the principal repayments that became due in 2020 to May 30, 2021. The principal amount rescheduled will accrue interest at LIBOR rate until the moment of its total or partial payment. As of September 30, 2021, the total principal outstanding under the mutual agreement was ThU.S.$ 160,000.

Employee Benefits for Key Management Personnel


	January – September				July – September
	2021		2020		2021		2020
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Salaries and bonuses		58,401		47,380		18,701		15,598
Per diem compensation to members of the Board of Directors		1,834		1,648		592		561
Termination benefits		2,234		3,042		239		824
Total		62,469		52,070		19,532		16,983

Related Party Receivables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

09-30-2021
ThU.S.$

12-31-2020
ThU.S.$

Forestal Mininco S.A.

91.440.000-7

Common Stockholder

Chile

Chilean pesos

30 days

Eka Chile S.A.

99.500.140-3

Joint Venture

Chile

Chilean pesos

30 days

2,510

1,251

Forestal del Sur S.A.

79.825.060-4

Associate of a subsidiary’s
minority shareholder

Chile

Chilean pesos

—

575

Unilin Arauco Pisos Ltda.

—

Joint Venture

Brazil

Brazilian
Real

30 days

—

829

CMPC Maderas S.A.

95.304.000-K

Common Stockholder

Chile

Chilean pesos

30 days

—

CMPC Pulp S.A.

96.532.330-9

Common Stockholder

Chile

Chilean pesos

30 days

981

866

Fundación Educacional Arauco

71.625.000-8

Parent company is founder
and contributor

Chile

Chilean pesos

30 days

562

—

Fundación Acerca Redes

65.097.218-K

Parent company is founder
and contributor

Chile

Chilean pesos

30 days

1,036

968

Sonae Arauco Portugal S.A.

—

Subsidiary of a Joint
Venture

Portugal

U.S. Dollar

—

369

E2E S.A.

76.879.577-0

Joint Venture

Chile

Chilean pesos

10-may-21

457

460

E2E S.A.

76.879.577-0

Joint Venture

Chile

Chilean pesos

27-Apr-21

435

—

E2E S.A.

76.879.577-0

Joint Venture

Chile

Chilean pesos

28-Oct-21

287

288

E2E S.A.

76.879.577-0

Joint Venture

Chile

Chilean pesos

31-Jul-23

648

—

E2E S.A.

76.218.856-2

Joint Venture

Chile

Chilean pesos

30 days

319

639

TOTAL

7,334

6,274

Related Party Payables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

09-30-2021
ThU.S.$

12-31-2020
ThU.S.$

Compañía de Petróleos de Chile S.A.

99.520.000-7

Common controlling
parent

Chile

Chilean pesos

30 days

6,924

2,657

Abastible S.A.

91.806.000-6

Common controlling
parent

Chile

Chilean pesos

30 days

139

Fundación Educacional Arauco

71.625.000-8

Parent company is
founder and
contributor

Chile

Chilean pesos

—

694

Red to Green S.A.

86.370.800-1

Common
Stockholder

Chile

Chilean pesos

30 days

—

Empresa Nacional de Telecomunicaciones S.A.

92.580.000-7

Common
Stockholder

Chile

Chilean pesos

30 days

Servicios Corporativos Sercor S.A.

96.925.430-1

Associate

Chile

Chilean pesos

30 days

—

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of an
associate

Chile

U.S. Dollar

30 days

338

236

Adm. de Ventas al Detalle Arco Prime Ltda.

77.215.640-5

Common controlling
parent

Chile

Chilean pesos

30 days

Woodtech S.A.

76.724.000-7

Associate of
controlling parent

Chile

Chilean pesos

30 days

221

—

Air BP Copec S.A.

96.942.120-8

Joint venture of
controlling parent

Chile

Chilean pesos

30 days

—

TOTAL

7,600

3,739

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

09-30-2021
ThU.S.$

12-31-2020
ThU.S.$

Abastible S.A.

91.806.000-6

Common controlling parent

Chile

Chilean
pesos

Fuel

1,815

2,113

Compañía de Petróleos de Chile S.A.

99.520.000-7

Common controlling parent

Chile

Chilean
pesos

Fuel and
other

60,661

48,983

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of the Associate

Chile

U.S.
Dollar

Transport,
stowage and
port services

6,630

17,506

EKA Chile S.A.

99.500.140-3

Joint Venture

Chile

Chilean
pesos

Sodium
chlorate

31,397

38,633

Forestal del Sur S.A.

79.825.060-4

Associate of a subsidiary’s
minority shareholder

Chile

Chilean
pesos

Wood and
chips

433

4,495

Portaluppi, Guzman y Bezanilla Abogados Ltda.

78.096.080-9

Common director

Chile

Chilean
pesos

Legal
services

586

703

Empresa Nacional de Telecomunicaciones S.A.

92.580.000-7

Common Stockholder

Chile

Chilean
pesos

Telephone
services

190

229

Colbún S.A.

96.505.760-9

Common Stockholder

Chile

Chilean
pesos

Electrical
Power

296

Colbún Transmisión S.A.

76.218.856-2

Common Stockholder

Chile

Chilean
pesos

Electrical
Power

415

399

Woodtech S.A.

76.724.000-7

Indirect associate of
controlling parent

Chile

Chilean
pesos

Wood
volumen
measurement
services

1,070

1,362

Inversiones Siemel S.A.

94.082.000-6

Common Stockholder

Chile

Chilean
pesos

Rentals

279

Elemental S.A.

76.659.730-0

Associate of controlling
parent

Chile

Chilean
pesos

Services and
other
purchases

364

Servicios Corporativos Sercor S.A.

96.925.430-1

Associate

Chile

Chilean
pesos

Other
purchases

176

242

Sales and other transactions

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Transaction
Descriptions

09-30-2021
ThU.S.$

12-31-2020
ThU.S.$

EKA Chile S.A.

99.500.140-3

Joint venture

Chile

Chilean
pesos

Electrical
Power

16,701

16,559

Forestal del Sur S.A.

79.825.060-4

Associate of a subsidiary’s
minority shareholder

Chile

Chilean
pesos

Harvesting
services,
wood and
chips

7,329

21,146

CMPC Pulp S.A.

96.532.330-9

Common Stockholder

Chile

Chilean
pesos

Wood and
chips

6,955

7,849

CMPC Tissue S.A.

96.529.310-8

Common Stockholder

Chile

Chilean
pesos

Pulp

425

3,681

Unilin Arauco Pisos Ltda.

—

Joint venture

Brazil

Brazilian
Real

Wood

—

4,623

E2E S.A.

76.879.577-0

Joint venture

Chile

Chilean
pesos

Loan

1,100

E2E S.A.

76.879.577-0

Joint venture

Chile

Chilean
pesos

Wood,
plywood
and boards

302

471

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 14. INVESTMENTS IN SUBSIDIARIES

On March 26, 2021, Arauco Nutrientes Naturales SpA was merged into the subsidiary Forestal Arauco S.A. This operation had no effect on Arauco´s results or on any of the companies that participated on this merger.

On March 10, 2021, Arauco through the subsidiary Forestal Arauco S.A. sold its total stake in the company Forestal Los Lagos SpA (ex S.A.) for ThU.S.$ 48,000. This operation generated a profit of ThU.S.$ 20,381 that is presented in Other income.

On December 2020, through its subsidiary Maderas Arauco S.A., Arauco acquired the 86.6155% of ODD Industries SpA, a pioneer company in the field of industrial artificial intelligence with ethical purposes. Arauco’s objective is to move forward with the implementation of artificial intelligence seeking to develop tools to mitigate climate change, among others. The price paid as of December 31, 2020 for the shares acquired and subscribed in this operation was ThU.S.$ 5,064 out of a total of ThU.S.$ 9,157.

Arauco carried out the initial recognition of the acquisition based on the information available as of that date, performing a preliminary determination about the allocation of the fair values during the acquisition of the same. The amounts of acquired assets and liabilities are deemed to be provisional amounts and could be adjusted during the measurement period of this acquisition, in order to reflect new information obtained based on facts and circumstances that existed as of the acquisition date and which, if known, would have affected the measurement of the amounts recognized as of that date.

NOTE 15. INVESTMENTS IN ASSOCIATES

As of September 30, 2021 and as of December 31, 2020, there were no new investments in associates to report.

The following tables set forth information about Investments in associates.


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%
	09-30-2021	12-31-2020
Carrying amount accounted for using equity method	ThU.S.$ 55,019	ThU.S.$ 56,314

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%
	09-30-2021	12-31-2020
Carrying amount accounted for using equity method	ThU.S.$ 246	ThU.S.$ 187



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%
	09-30-2021	12-31-2020
Carrying amount accounted for using equity method	ThU.S.$ 5	ThU.S.$ 7

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%
	09-30-2021	12-31-2020
Carrying amount accounted for using equity method	ThU.S.$ 1	ThU.S.$ 1

Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	09-30-2021	12-31-2020
Carrying amount accounted for using equity method	ThU.S.$ 28,188	ThU.S.$ 29,205

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Summarized Financial Information of Associates


	Assets
09-30-2021	Inversiones Puerto Coronel S.A. ThU.S.$			Serv.Corporativos Sercor 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		1			3,065			4,639			—			13			7,718
Non-current		111,858			2,735			71,735			6			50			186,384
Total		111,859			5,800			76,374			6			63			194,102


	Liabilities and Equity
	Inversiones Puerto Coronel S.A. ThU.S.$			Serv.Corporativos Sercor 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		54			2,190			165			—			7			2,416
Non-current		—			2,381			18,681			4			34			21,100
Equity		111,805			1,230			57,527			2			22			170,586
Total		111,859			5,801			76,373			6			63			194,102


09-30-2021
Income		—			3,543			6,442			—			—			9,985
Other income / expenses		(2,606	)		(3,108	)		(3,166	)		(1	)		(2	)		(8,883	)
Profit or loss (continuing operations)		(2,606	)		435			3,276			(1	)		(2	)		1,102

Other comprehensive income		—			—			—			—			—			—
Comprehensive income		(2,606	)		435			3,276			(1	)		(2	)		1,102
Dividends received		—			—			1,307			—			—			1,307


	Assets
12-31-2020	Inversiones Puerto Coronel S.A. ThU.S.$			Serv.Corporativos Sercor 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		114,463			4,155			3,725			1			18			122,362
Non-current		1			3,444			76,129			11			57			79,642
Total		114,464			7,599			79,854			12			75			202,004


	Liabilities and Equity
	Inversiones Puerto Coronel S.A. ThU.S.$			Serv.Corporativos Sercor 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		54			4,029			699			—			8			4,790
Non-current		—			2,634			19,554			5			39			22,232
Equity		114,410			936			59,601			7			28			174,982
Total		114,464			7,599			79,854			12			75			202,004


09-30-2020
Income		—			3,408			4,782			—			—			8,190
Other income / expenses		7,041			(3,073	)		(2,816	)		—			(2	)		1,150

Profit or loss (continuing operations)		7,041			335			1,966			—			(2	)		9,340

Other comprehensive income		—			—			—			—			—			—
Comprehensive income		7,041			335			1,966			—			(2	)		9,340
Dividends received		—			—			1,148			—			—			1,148

Reconciliation of Investment in Associates and Joint Ventures


	09-30-2021			12-31-2020
	ThU.S.$			ThU.S.$
Opening balance as of January 1 Changes		316,939			293,118
Investment in joint ventures, additions (*)		4,800			20,129
Disposals, investment in associates and joint ventures (**)		(3,197	)		(943	)
Share of profit (loss) in investment in associates		389			4,821
Share of profit (loss) in investment in joint ventures		31,097			(2,504	)
Dividends Received, Investments in Associates		(1,900	)		(4,357	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		(15,647	)		8,351
Other increase (decrease) in investment and associates and joint ventures		770			(1,676	)
Total changes		16,312			23,821
Closing balance		333,251			316,939

(*)	During the first semester of 2021 Maderas Arauco S.A. made two capital contribution to E2E S.A., the first one was on January 8, 2021 for ThCLP$ 1,600,000 for160 shares, and the second was made on June 22, 2021 in the amount of ThCLP$ 1,900,000 for 190 shares, both equivalents to ThU.S.$ 4,800.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

(**)	ThU.S.$ 3,197 account for the carrying amount of investment in Unilin Arauco Pisos Ltda., which was sold on January 12, 2021.


	09-30-2021		12-31-2020
	ThU.S.$		ThU.S.$
Carrying amount of associates accounted for using equity method		83,460		85,714
Carrying amount of joint ventures accounted for using equity method		249,791		231,225
Total investment accounted for using equity method		333,251		316,939

NOTE 16. INTERESTS IN JOINT ARRANGEMENTS

Investments and contributions made

On January 12, 2021 Arauco through its subsidiary Arauco do Brasil S.A. sold its total 50% stake in Unilin Arauco Pisos Ltda. This transaction generated a loss before taxes of ThU.S.$ 431.

On July 29, 2020 Arauco through its subsidiary Forestal Arauco S.A. entered into a shareholders agreement with respect to Agrícola El Paque SpA, which was established for the plantating, construction and integral management of agricultural projects. The capital contributed by Forestal Arauco S.A. was ThCLP$ 3,651,895 equivalent to ThU.S.$ 4,753.

Between January and February 2020, Arauco through its subsidiary Maderas Arauco S.A. has contributed ThCLP$ 12,000,000 (equivalent to ThU.S.$ 15,022) to E2E S.A., representing 50% of the interest in this company. Between January and July 2021 Arauco contributed ThCLP$ 3,500,000, equivalent to ThU.S.$ 4,800.

Between February and December 2020, Arauco through its subsidiary Arauco Bioenergía S.A. has contributed ThU.S.$ 354 to Parque Eólico Ovejera Sur SpA., representing 50% of the interest in this company.

As of September 30, 2021 and as of December 31, 2020, Arauco has not made 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.

Arauco holds a 50% interest in Sonae Arauco, which subsidiary produces and commercializes 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.

Furthermore, Arauco holds a 50% ownership in Eka Chile S.A. (“Eka”), a company that sells sodium chlorate to pulp plants in Chile. There is a contractual agreement with this company whereby Arauco has engaged in an economic activity subject to common control, which is classified as a joint venture.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 arrangements, which qualify as joint operations:


	09-30-2021				12-31-2020
Celulosa y Energía Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		359,031		193,747		262,446		163,887
Non-current		2,051,654		212,555		2,103,903		325,894
Equity		—		2,004,383		—		1,876,568
Total Joint Arrangement		2,410,685		2,410,685		2,366,349		2,366,349

Investment		1,002,192				938,284


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		640,992			472,897
Expenses		(419,420	)		(448,056	)
Joint Arrangement Net Income (Loss)		221,572			24,841


	09-30-2021				12-31-2020
Forestal Cono Sur S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		52,075		2,463		44,684		2,121
Non-current		164,379		8,990		170,028		10,637
Equity		—		205,000		—		201,954
Total Joint Arrangement		216,454		216,453		214,712		214,712

Investment		102,500				100,977


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		10,362			16,839
Expenses		(7,315	)		(16,771	)
Joint Arrangement Net Income (Loss)		3,047			68


	09-30-2021				12-31-2020
Eufores S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		159,961		230,548		115,971		192,443
Non-current		900,903		141,402		870,093		131,893
Equity		—		688,914		—		661,728
Total Joint Arrangement		1,060,864		1,060,864		986,064		986,064

Investment		344,457				330,864


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		177,971			180,760
Expenses		(150,643	)		(176,279	)
Joint Arrangement Net Income (Loss)		27,328			4,481


	09-30-2021				12-31-2020
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		6,489		103,729		6,233		107,131
Non-current		445,390		10,258		453,572		19,179
Equity		—		337,892		—		333,495
Total Joint Arrangement		451,879		451,879		459,805		459,805

Investment		168,946				166,748


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		13,606			13,706
Expenses		(9,209	)		(20,083	)
Joint Arrangement Net Income (Loss)		4,397			(6,377	)

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 accounted in for equity method:


	09-30-2021				12-31-2020
Unilin Arauco Pisos Ltda.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		—		—		8,050		4,995
Non-current		—		—		3,747		408
Equity		—		—		—		6,394
Total Joint Arrangement		—		—		11,797		11,797

Investment		—				3,197


	09-30-2021 ThU.S.$		09-30-2020 ThU.S.$
Income		—		11,568
Expenses		—		(10,917	)
Joint Arrangement Net Income (Loss)		—		651

Other comprehensive income		—		—
Comprehensive income		—		651
Dividends		—		—


	09-30-2021				12-31-2020
Eka Chile S.A.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		15,914		3,750		16,551		4,154
Non-current		36,400		4,431		35,599		4,782
Equity		—		44,133		—		43,214
Total Joint Arrangement		52,314		52,314		52,150		52,150

Investment		22,067				21,607


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		32,649			30,040
Expenses		(30,543	)		(27,092	)
Joint Arrangement Net Income (Loss)		2,106			2,948

Other comprehensive income		—			—
Comprehensive income		2,106			2,948
Dividends		594			2,895

09-30-2021

12-31-2020

Sonae Arauco S.A.

Assets
ThU.S.$

Liabilities
ThU.S.$

Assets
ThU.S.$

Liabilities
ThU.S.$

Current

283,014

326,341

258,058

276,127

Non-current

714,544

257,084

765,712

379,260

Equity

—

414,134

—

368,383

Total Joint Arrangement

997,558

997,559

1,023,770

Net assets

181,529

157,552

Net asset adjustment (Goodwill)

25,538

26,640

Investment

207,067

184,192


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		847,092			569,207
Expenses		(780,031	)		(577,901	)
Joint Arrangement Net Income (Loss)		67,061			(8,694	)

Other comprehensive income		—			—
Comprehensive income		67,061			(8,694	)
Dividends		—			—


	09-30-2021				12-31-2020
Agrícola El Paque SpA.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		1,598		560		4,562		69
Non-current		11,459		3,398		5,782		—
Equity		—		9,098		—		10,275
Total Joint Arrangement		13,057		13,056		10,344		10,344

Investment		4,549				5,138


	09-30-2021 ThU.S.$		09-30-2020 ThU.S.$
Income		—		—
Expenses		90		—
Joint Arrangement Net Income (Loss)		90		—

Other comprehensive income		—		—
Comprehensive income		90		—
Dividends		—		—

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


	09-30-2021				12-31-2020
Parque Eólico Ovejera del Sur SpA.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		58		123		367		27
Non-current		2,150		—		2,057		—
Equity		—		2,085		—		2,398
Total Joint Arrangement		2,208		2,208		2,424		2,425

Investment		1,043				1,199


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		—			—
Expenses		(15	)		(78	)
Joint Arrangement Net Income (Loss)		(15	)		(78	)

Other comprehensive income		—			—
Comprehensive income		(15	)		(78	)
Dividends		—			—


	09-30-2021				12-31-2020
E2E S.A.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		5,919		1,041		9,196		4,233
Non-current		27,719		3,202		27,045		1,407
Equity		—		29,394		—		30,601
Total Joint Arrangement		33,638		33,637		36,241		36,241

Investment		14,697				15,301


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		668			800
Expenses		(7,405	)		(1,556	)
Joint Arrangement Net Income (Loss)		(6,737	)		(756	)

Other comprehensive income		—			—
Comprehensive income		(6,737	)		(756	)
Dividends		—			—


	09-30-2021				12-31-2020
Agrícola San Gerardo SpA.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		950		30		603		387
Non-current		4,869		2,164		3,859		—
Equity		—		3,625		—		4,075
Total Joint Arrangement		5,819		5,819		4,462		4,462

Investment		1,813				2,038


	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Income		—			—
Expenses		(62	)		(156	)
Joint Arrangement Net Income (Loss)		(62	)		(156	)

Other comprehensive income		—			—
Comprehensive income		(62	)		(156	)
Dividends		—			—

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 17. IMPAIRMENT OF ASSETS

As a result of current market conditions in the United States generated by the decrease in prices, the impairment tests carried out at the CGU yielded an impairment provision of ThU.S.$ 14,918 relating to Property, Plant and Equipment and spare parts from Inventories corresponding to facilities of wood products in United States. For these calculations we used a discount rate of 8.7%. In the 2021 period, provisions associated with assets sold and recovered were reversed for a total of ThU.S.$ 10,911.

In addition, due to the modernization and expansion project of the Arauco Mill (Proyecto de Modernización y Ampliación de la Planta Arauco, or MAPA Project), as of September 30, 2021, we recorded an impairment provision due to a reduction in the useful lives for the CGU Line 1 of Arauco Mill (Pulp business) in an amount of ThU.S.$ 7,712 (ThU.S.$ 46,577 as of December 31, 2020). For this calculation, we used a discount rate of 6.1%. The Line 1 of the Arauco mill will be permanently shut down upon completion of the MAPA project.

Both impairment provision charges are presented in the consolidated statement of profit or loss under Other expenses and they constitue the main changes in the total CGU impairment provision as shown below:


Changes in CGU impairment provision	09-30-2021			12-31-2020
Changes in CGU impairment provision	ThU.S.$			ThU.S.$
Opening balance		218,764			180,209
Impairment loss recognized in profit or loss		9,543			62,701
Reversal of impairment loss in profit or loss		(17,978	)		(6,171	)
Increase (Decrease) in foreign exchange currency on translation		(2,825	)		(17,975	)

Closing balance		207,504			218,764

Changes in provisions for impairment of property, plant and equipment due to technical obsolescence are shown below:


Changes in impairment provision from impaired assets	09-30-2021			12-31-2020
Changes in impairment provision from impaired assets	ThU.S.$			ThU.S.$
Opening balance		8,088			8,135
Impairment loss recognized in profit or loss		2,050			1,262
Reverse of ompairment loss in profit or loss		(1,859	)		(1,204	)
Increase (Decrease) in foreign exchange currency on translation		189			(105	)

Closing balance		8,469			8,088

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.$ 58,105 (ThU.S.$ 59,567 on December 31, 2020), as shown below:


Goodwill	09-30-2021		12-31-2020
Goodwill	ThU.S.$		ThU.S.$
Arauco Canada Ltd. (Flakeboard Company Ltd)		40,791		40,793
Arauco do Brasil S.A. (Pien mill)		16,582		17,357
Arauco North America, Inc. (Prime-Line, Inc.)		732		732
Forestal Arauco S.A. (Forestal Los Lagos S.A.)		—		685

Closing balance		58,105		59,567

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Goodwill	09-30-2021			12-31-2020
Goodwill	ThU.S.$			ThU.S.$
Opening balance at January 1		59,567			65,751
Increase (decrease) due to business combination		(685	)		—
Increase (decrease) in foreign currency exchange		(777	)		(6,184	)

Closing balance		58,105			59,567

Of the total of goodwill, ThU.S.$ 40,791 (ThU.S.$ 40,793 as of December 31, 2020) were generated by the acquisition of “Flakeboard” (currently Arauco Canada Ltd.), 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 remaining balance of ThU.S.$ 732 corresponds to the acquisition of Prime-Line Inc, on September 1, 2019, for which Arauco North America Inc, a subsidiary of Arauco Canada Ltd. paid ThU.S.$ 18,880 for all the shares of said company.

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 7-year term, a period time, which is considered to represent the cyclicality of the business performance, applying a nominal discount rate of 7% which reflects current market assessments for the wood products segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$ 16,582 (ThU.S.$ 17,357 as of December 31, 2020).

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 covering a 5-year term based on the operational plan approved by the Administration, applying a 7.4% nominal discount rate that reflects current evaluations for the panel segment in Brazil.

As of September 30, 2021 and as of December 31, 2020, the carrying value of the goodwill of the plants did not exceed their recoverable value, and therefore there was no need to recognize impairment losses.

Sensitivity analysis on discount rate was made and no impairment provision was determined.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 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 with 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 as of October 31, 2002 of $4,571,664,617 Chilean Pesos (equal to ThU.S.$ 5,631 as of September 30, 2021). 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 $1,209,399,164 Chilean Pesos (equal to ThU.S.$ 1,490 as of September 30, 2021), resulting in a total disputed amount as of October of 2002 of $3,362,265,453 Chilean Pesos (equal to ThU.S.$ 4,141 as of as of September 30, 2021) plus fines and interests. On February 19, 2010, the Court acknowledged receipt of the Company’s request.

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 September 20, 2017, the Court issued its first instance decision confirming the liquidations.

On October 12, 2017, Arauco challenged the decision through an appeal, requesting the Court of Appeals of Santiago to revoke the first instance decision and uphold Arauco’s claim instead. On June 29, 2018, the Court of Appeals of Santiago issued a ruling on appeal, confirming the first instance decision. On July 19, 2018, Arauco lodged a cassation appeal based on formal and substantial flaws before the Supreme Court. (case file 24,758-2018).

On June 21, 2019, Celulosa Arauco y Constitución S.A. filed a claim before the Constitutional Court to declare the legal provision contemplated under section 53, paragraph 3 of the Tax Code unconstitutional and, as a consequence, inapplicable.

On October 29, 2019 the Constitutional Court accepted the claim filed by Celulosa Arauco y Constitución S.A., finding unconstitutional and declaring the inapplicability of section 53, paragraph 3 of the Tax Code in the context of the proceeding “Celulosa Arauco y Constitución S.A. with SII Large taxpayers”, which is in the Supreme Court docket as a result of a cassation appeal (based on form and content) under case file 24,758-2018.

Currently, the case is related in the Supreme 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 as of September 30, 2021, Arauco has not made any provision whatsoever in connection with this contingency.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

2. 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.

On December 15, 2017, the Superintendence of the Environment issued Exempted Resolution No. 1,487, closing the punitive administrative proceeding, absolving the company with regards to one of the charges and convicting for other 10 charges, applying a fine of 7,777 UTA (equal to ThU.S.$ 6,050 as of September 30, 2021). On December 22, 2017, the Company submitted a motion for reconsideration regarding Exempted Resolution No. 1,487, before the SMA, requesting that we be absolved of all infringements, with the exception of the charge specified under number 7 (late submission of the water quality report regarding the Cruces river). On March 23, 2018, the reconsideration appeal lodged by the company was rejected. On April 5, 2018, a judicial claim was submitted before the Third Environmental Court. On November 12, 2018, the case was in agreement, and the Minister Ms. Sibel Villalobos Volpi was appointed to draft the ruling.

On February 11, 2020 the judgment of the Third Environmental Court was notified, which partially accepted the legal claim of the Company, only as to the inadequate severity qualification of one of the charges. On February 28, 2020, both the Company and the SMA submitted cassation appeals based on form and content, to be heard and resolved by the Supreme 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 September 30, 2021, Arauco has not made any provision whatsoever in connection with this contingency.

Celulosa Arauco y Constitución S.A., Forestal Arauco S.A., Maderas Arauco S.A. and Servicios Logísticos Arauco S.A.

1. On August 13, 2018, Asociación Gremial de Dueños de Camiones de Constitución (ASODUCAM) filed a complaint seeking the performance of a contract and claiming compensation for damages against Celulosa Arauco y Constitución S.A., Forestal Arauco S.A., Maderas Arauco S.A. and Servicios Logísticos Arauco S.A., The complaint is based on alleged breaches of some agreements for the allocation, distribution and supply of cargo volumes for the years 2001 and 2005, initially executed by associates of ASODUCAM with Forestal Arauco S.A., and then, allegedly, with Servicios Logísticos Arauco S.A., in favor of the other two defendants, Celulosa Arauco and Constitución S.A. and Maderas Arauco S.A. The complaint seeks to enforce the contract, plus $575,000,000 Chilean Pesos (equal to ThU.S.$ 708 as of September 30, 2021) in compensation for damages. In the alternative, it claims (a) $11,189,270,050 Chilean Pesos (equivalent to ThU.S.$ 13,782 as of September 30, 2021), for actual damages; (b) $ 11,189,270,050 monthly during the entire course of the trial, until the termination of the contract is declared in the final ruling, for loss of profits, and (c) $5,000,000,000 Chilean Pesos (equivalent to ThU.S.$ 6,158 as of September 30, 2021) for moral damages.

On August 28, 2018 the claim was served upon Celulosa Arauco y Constitución S.A., Forestal Arauco S.A. and Maderas Arauco S.A., but notification for Servicios Logísticos Arauco S.A. is pending.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 September 30, 2021, Arauco has not made any provision whatsoever in connection with this contingency.

Forestal Arauco S.A.

1. On July 7, 2015 Inversiones Forestales Los Alpes Limitada and Forestal Neltume-Carrasco S.A. filed a claim against Forestal Arauco S.A. before the Civil Court of Angol (C-502-2015), in which they request that Forestal Arauco S.A. restitute the material possession of 1,855.9 hectares, which would be part of their property “Resto del Fundo Los Alpes”, which would have an area of approximately 2,700 hectares. Likewise, they requested that it be declared that the property is the exclusive domain of the actors, the restitution of the civil and natural fruits, in addition to the deteriorations that the property would have experienced, with litigation costs.

On May 29, 2019, the lawsuit was answered, and the counterclaim of the acquisitive prescription was filed.

On September 1, 2020, the court received the trial case, and its notification remains 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 September 30, 2021, Arauco has not made any provision whatsoever in connection with this contingency.

2. On August 2, 2019, the company was notified of a lawsuit for termination of contract and compensation for damages filed by “Sociedad Recuperadora de Fibra S.A.” before the First Court of Valdivia (Case C-2215-2019). In the lawsuit, the plaintiff questions the anticipated termination of a contract by Forestal Arauco. It also claims that the company would have breached various contractual obligations regarding to 2 groups of contracts:

A. (i) Aggregates Transport Contract and (ii) Production, Cargo, Storage and Construction Management Contract for Platforms and flooring.

B. (i) Contract for the Production of Aggregates, (ii) Contract for Long Freight Services for Aggregates and (iii) Contract for Construction Services for Granular floor and Short Freight for Aggregates.

Based on the foregoing, it requests payment of compensation for an amount of $3,486,187,431 Chilean Pesos (equivalent to ThU.S.$ 4,294 as of September 30, 2021).

On September 17, 2019, Forestal Arauco S.A. answered the claim and filed a counterclaim for compensation of damages which is in the process of a conciliation hearing, requesting that the main claimant be ordered to pay $421,723,281 Chilean Pesos (equivalent to ThU.S$ 519 as of September 30, 2021).

Through the resolution dated as of January 9, 2020, the court received the case to commence the production of evidence and the notification of such resolution was delivered to both parties.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Currently, the discovery period is suspended due to the health contingency.

3. On April 15, 2020, Forestal Arauco S.A. was notified of a civil claim for recovery (demanda reivindicatoria de cuota) filed by the company “Agrícola, Forestal, Transportes e Inversiones El Quillay SpA” before the Court of Constitución (Case C-298-2020). The plaintiff sues Forestal Arauco S.A. for the restitution of 3,424.59 hectares that it would be occupying, with respect to the following properties: (i) “Predio que formaba parte de la Hijuela Sur Poniente, de la Hijuela Sur del Fundo Quivolgo”, (ii) “Lomas de Quivolgo” and, (iii) “Hijuela Astillero”. It is the opinion of the plaintiff that the aforementioned piece of land would be part of the property called “Bodega de subdelegation de Quivolgo”, in respect of which the plaintiff would have rights and shares corresponding to 4.17% of said property. Likewise, the plaintiff requests to cancel the registration of the above-mentioned properties of Forestal Arauco S.A., deeming it as a bad-faith holder.

Currently, the discussion period is suspended due to the health contingency.

4. Forestal Arauco S.A. filed before the Court of Constitución (Case C-353-2019) a claim seeking compensation on the basis of non-contractual civil liability against Ricardo Guzmán Reyes, for damages caused as a result of illegal logging inside the land of Forestal Arauco called “Parte Sur-Poniente de la Hijuela Sur de la Hacienda Quivolgo” and “Lomas de Quivolgo”. Said damages are valued in $ 100,000,000 Chilean Pesos (equivalent to ThU.S$ 123 as of September 30, 2021).

On May 2, 2020, Mr. Ricardo Guzmán answered the lawsuit and filed a counterclaim for recovery in which he requests to Forestal Arauco S.A. the restitution of 3,424.59 hectares that it would be occupying, corresponding to the following properties owned by the latter: (i) “Predio que formaba parte de la Hijuela Sur Poniente, de la Hijuela Sur del Fundo Quivolgo”, (ii) “Lomas de Quivolgo” and, (iii) “Hijuela Astillero”. It is the opinion of the plaintiff that the aforementioned piece of land would be part of the property called “Bodega de subdelegation de Quivolgo”, from which would have rights and shares corresponding to 2.38% of said property. Likelywise, the plaintiff requests to cancel the registration of the properties before mentioned of Forestal Arauco S.A., deeming it as a bad-faith holder.

Through a resolution dated November 11, 2020, the court received the trial case, and both parties were notified.

Currently, the discovery period is suspended due to the health contingency.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

5. On May 11, 2020, Forestal Arauco S.A. was notified of a lawsuit of declaration of mere certainty filed against it by the company “Agrícola, Forestal, Transportes y Inversiones El Quillay SpA”, before the Court of Constitución (Case C-323-2020), in which the plaintiff claims that the property called “Predio que formaba parte de la Hijuela Sur Poniente, de la Hijuela Sur del Fundo Quivolgo” owned by Forestal Arauco S.A. would actually have an area of 498 hectares, and, consequently, that the defendant lacks the right of ownership over a portion of land corresponding to 1,768.20 hectares of said property. Based on the foregoing, the plaintiff requests the court to declare mere legal certainty regarding the foregoing and also to declare that said area is part of the property called “La Bodega de la Subdelegación de Quivolgo”, owned by the succession of Mr. José Arcos González in which it would have rights.

On July 29, 2021, the conciliation hearing, was held and an agreement was not reached by the parties. Currently, a decision on the case remains pending.

Arauco Argentina S.A.

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.

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 has filed yearly forestry plans between years 2007 and 2019 for its local operations in the provinces of Misiones and Buenos Aires.

On March 25, 2019, the Secretary of Agriculture, Livestock and Fishing approved the resolution No. 2019-55-APN-SECAGYP#MPYT, approving the annual forestry plan for 2007. In addition, said organism through the resolution No. 2019-114-APN-SECAGYP#MPYT approved the annual forestry plan for 2009 on June 12, 2019, and through the resolution No. 2019-228-APN-SECAGYP#MPYT approved the annual forestry plan for 2008 on November 29, 2019. For this reason, Arauco Argentina S.A. may compute the exemption in the income tax related to the forest appraisal on the plantations to be harvested from the lands included in those plans as from the 2019 period.

In March 2005, Note No. 145/05 of the Subsecretary 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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 (caution) policies for each shipment permits exempted from payment of export duty. The company maintains an assignment of funds equivalent to $ 2,160,896,000 Argentine Pesos (ThU.S.$ 21,887 as of September 30, 2021) for guaranteed export duties between 2007-2015, which appears under not current provisions. Additionally, the Company filed a restitution claim for a total amount of ThU.S.$ 6,555, 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. The Company’s claim is being heard under case file No. 21830/2006 before the Federal Contentious Administrative Court No. 4. On October 28, 2019, a judgment of first instance was issued in said case, rejecting the claim and imposing the litigation costs on Arauco. Against that judgment, the Company filed an appeal and expressed the corresponding arguments in December 2019. On November 5, 2020, the Chamber of Appeals considered the arguments made by Arauco and determined that a final ruling will be issued in the case.

On the other hand, Arauco Argentina S.A. currently has a guarantee at an amount of $435,952,315 Argentine Pesos (ThU.S.$ 4,416 as of September 30, 2021) in favor of the Secretary of Agriculture, Livestock and Fishing.

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.

The Federal Reserve of Brazil contested the amortization of goodwill resulting from acquisitions of Placas do Paraná, Tafibrás, Tafisa (now, Arauco do Brasil S.A.) y Dynea.

On July 20, 2015, Arauco do Brasil was notified of the first-level administrative ruling which partially upheld the infringement. 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 premium but preserving other charges. On September 27, 2018, Arauco do Brasil was notified of the CARF’s decision, for which Arauco do Brasil S.A. filed an appeal for declaration embargoes, to elicit clarifications from the CARF regarding certain points of the decision. On January 25, 2019, the CARF ruled that there were no clarifications or omissions to be made and, consequently, granted a term for filing the last remedy within the administrative realm (“Special Remedy”). This Special Remedy was submitted before the Upper Chamber of Fiscal Remedies of the CARF (CSRF) on February 11, 2019, reiterating the Company’s defense allegations regarding the matters and charges that remained in such process.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

On August 28, 2020, the Company was served with an intermediate decision in Grievance of Instrument, issued by CARF that divided the claim into two parts:

(i)

One part that remains awaiting the administrative decision in Special Remedy to the CSRF (the issue of the isolated fine of 50% and interests) with the estimated amount of R$ 29,250,417 (equivalent to ThU.S.$ 5,357 as of September 30, 2021) and that amount will be added interests and readjustments as of January 31, 2019 until the administrative discussion is finished.

(ii)

Second part that closes the administrative discussion (Comment of the contractual expenses deducted in the purchase of Tafisa; Comment of interests and legal expenses on debts paid in the amnesty program; payment of IRPJ and lower CSLL in the second part of 2010). Regarding this second part, the amount of R$ 31,774,176 (equivalent to ThU.S.$ 5,819 as of September 30, 2021) and to this amount interests and readjustments will be added as of August 28, 2020 until the final decision of the discussion court initiated on September 23, 2019, to continue answering that part of the claim. Thus, we enter with a Tax Debt Cancellation Action and we are introducing a guarantee for the suspension of any collection an to obtain the Certificates of Tax Compliance until the final decision of the trial. Currently we are starting to produce expert evidence in the case.

At the closing date, there are no other contingencies in which the Companies act as obligor, that may significantly affect their financial, economic or operational conditions.

Provisions recorded as of September 30, 2021 as of December 31, 2020 are as follows:


	09-30-2021		12-31-2020
Classes of Provisions	ThU.S.$		ThU.S.$
Provisions, Current		387		386
Provisions for litigations		387		386
Provisions, non-Current		28,787		30,450
Provisions for litigations		5,305		6,968
Other provisions		23,482		23,482

Total Provisions		29,174		30,836

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


	09-30-2021
	*Litigations ()**			Other Provisions		Total
Movements in Provisions	ThU.S.$			ThU.S.$		ThU.S.$
Opening balance		7,354			23,482		30,836
Changes in provisions
Increase in existing provisions		3,693			—		3,693
Used provisions		(1,169	)		—		(1,169	)
Increase (decrease) in foreign currency exchange		(4,322	)		—		(4,322	)
Other Increases (Decreases)		136			—		136
Total Changes		(1,662	)		—		(1,662	)
Closing balance		5,692			23,482		29,174

(*)	The increase in legal claims is comprised mainly by ThU.S.$ 1,239 (Brazilian subsidiaries) and THU.S.$ 14 (Argentina) in connection with civil and labor lawsuits


	12-31-2020
	*Litigations ()**			Other Provisions			Total
Movements in Provisions	ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		9,524			23,500			33,024
Changes in provisions
Increase in existing provisions		3,257			—			3,257
Used provisions		(2,832	)		—			(2,832	)
Increase (decrease) in foreign currency exchange		(2,240	)		—			(2,240	)
Other Increases (Decreases)		(355	)		(18	)		(373	)
Total Changes		(2,170	)		(18	)		(2,188	)
Closing balance		7,354			23,482			30,836

(*)	The increase in legal claims is comprised mainly by ThU.S.$ 3,045 and ThU.S.$ 212 (Brazilian and Argentine subsidiaries respectively) in connection with civil and labor lawsuits.

Provisions for litigations are related to labor and tax claims whose payment period is uncertain. Other provisions mainly include constitution of provision for the lawsuit of export duties (see Arauco Argentina’s contingent liability set forth in this note).

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 19. INTANGIBLE ASSETS


	09-30-2021			12-31-2020
Classes of Intangible Assets, Net	ThU.S.$			ThU.S.$
Intangible assets, net		94,238			102,090
Computer software		34,046			31,877
Water rights		6,109			5,684
Customer		31,144			35,092
Other identifiable intangible assets		22,939			29,437

Classes of intangible Assets, Gross		237,357			232,391
Computer software		127,206			116,315
Water rights		6,109			5,684
Customer		75,611			75,626
Other identifiable intangible assets		28,431			34,766

Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(143,119	)		(130,301	)
Accumulated amortization and impairment, intangible assets		(143,119	)		(130,301	)
Computer software		(93,160	)		(84,438	)
Customer		(44,467	)		(40,534	)
Other identifiable intangible assets		(5,492	)		(5,329	)

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


	09-30-2021
	Computer Software			Water Rights		Customer			Others			TOTAL
Reconciliation of intangible assets	ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		31,877			5,684		35,092			29,437			102,090
Changes
Additions		3,687			425		—			566			4,678
Disposals		(338	)		—		—			(266	)		(604	)
Amortization		(9,373	)		—		(3,960	)		(165	)		(13,498	)
Increase (Decrease) related to foreign currency translation		422			—		12			(3	)		431
Other Increases (Decreases)		7,771			—		—			(6,630	)		1,141
Changes Total		2,169			425		(3,948	)		(6,498	)		(7,852	)
Closing Balance		34,046			6,109		31,144			22,939			94,238


	12-31-2020
	Computer Software			Water Rights			Customer			Others			TOTAL
Reconciliation of intangible assets	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		39,065			5,966			39,981			21,240			106,252
Changes
Additions		6,084			—			—			4,461			10,545
Additions through business combination		—			—			—			5,162			5,162
Disposals		(10	)		—			—			—			(10	)
Amortization		(10,112	)		—			(5,120	)		(329	)		(15,561	)
Increase (Decrease) related to foreign currency translation		(277	)		—			231			(116	)		(162	)
Other Increases (Decreases)		(2,873	)		(282	)		—			(981	)		(4,136	)
Changes Total		(7,188	)		(282	)		(4,889	)		8,197			(4,162	)
Closing Balance		31,877			5,684			35,092			29,437			102,090


	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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

As of September 30, 2021 Arauco has a total surface of 1.6 million hectares of which 936 thousand hectares are used for forestry planting, 479 thousand hectares are native forest, 107 thousand hectares are used for other purposes and 72 thousand hectares not yet planted. Lands correspondening to native forest, lands used for other purposes and lans not yet planted are presented in Property, Plants & Equipments, Forest plantations are presented in Biological Assets.

For the period ended September 30, 2021, the production volume of logs totaled 15.4 million m3 (13.7 million m3 as of September 30, 2020).

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.

•

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 September 30, 2021 amounted to ThU.S.$ 124,531 (ThU.S.$ 130,004 as of September 30, 2020). 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 September 30, 2021 amounted to ThU.S.$ 160,640 (ThU.S.$ 146,128 as of September 30, 2020).

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

•

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

•

The discount rates used are 5.5% in Chile, 6.7% Brazil, 16.2% in Argentina and 6.5% in Uruguay.

•

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		(149,083	)
	-0.5		159,429
Margins (%)	10		442,060
	-10		(442,060	)

The significant unobservable input data used in the measurement of the fair value of biological assets are discount rates and sales margins of the different products that are harvested from the forest. Increases (decreases) in any of these input data considered in isolation would result in a smaller or greater fair value measurement.

The adjustment to fair value of biological assets minus sale costs 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.

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources, allow risks to be minimized.

As of the date of these Interim Consolidated Financial Statements, there are no committed disbursements for the acquisition of biological assets.

Detail of Biological Assets Pledged as Security

As of September 30, 2021, there are no forestry plantations pledged as security.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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:


	09-30-2021		12-31-2020
	ThU.S.$		ThU.S.$
Current		315,035		302,710
Non-current		3,134,735		3,296,117
Total		3,449,770		3,598,827

Reconciliation of carrying amount of biological assets


	09-30-2021
Movement	Current ThU.S.$			Non-current ThU.S.$			Total ThU.S.$
Opening Balance		302,710			3,296,117			3,598,827
Changes in real incurred cost		(2,742	)		(62,571	)		(65,313	)
Additions through acquisition and costs of new plantations		78			136,589			136,667
Sales		—			(71,633	)		(71,633	)
Harvest		(80,379	)		—			(80,379	)
Increases (decreases) in Foreign Currency Translation		(2,489	)		(12,153	)		(14,642	)
Loss of forest due to fires		—			(7,658	)		(7,658	)
Transfers to non-current assets held for sale		—			(6,787	)		(6,787	)
Transfers from non-current to current		83,145			(80,952	)		2,193
Decrease due to loss of control in subsidiary		(3,097	)		(19,977	)		(23,074	)
Changes in fair value		15,067			(98,811	)		(83,744	)
Gain (losses) arising from changes in fair value minus sale costs		—			124,531			124,531
Sales		—			(18,839	)		(18,839	)
Harvest		(162,595	)		—			(162,595	)
Loss of forest due to fires		—			(14,011	)		(14,011	)
Transfers to non-current assets held for sale		—			(4,461	)		(4,461	)
Transfers from non-current to current		179,426			(179,426	)		—
Decrease due to loss of control in subsidiary		(1,764	)		(6,605	)		(8,369	)
Total Changes		12,325			(161,382	)		(149,057	)
Closing balance		315,035			3,134,735			3,449,770


	12-31-2020
	Current			Non-current			Total
Movement	ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		275,792			3,393,634			3,669,426
Changes in real incurred cost		(1,140	)		(68,081	)		(69,221	)
Additions through acquisition and costs of new plantations		2,590			182,746			185,336
Sales		—			(47,110	)		(47,110	)
Harvest		(99,300	)		—			(99,300	)
Increases (decreases) in Foreign Currency Translation		(12,889	)		(85,393	)		(98,282	)
Loss of forest due to fires		(326	)		(9,535	)		(9,861	)
Transfers from non-current to current		108,786			(108,786	)		—
Other increases (decreases)		(1	)		(3	)		(4	)
Changes in fair value		28,058			(29,436	)		(1,378	)
Gain (losses) arising from changes in fair value minus sale costs		—			182,950			182,950
Sales		—			15,184			15,184
Harvest		(182,753	)		—			(182,753	)
Loss of forest due to fires		—			(16,759	)		(16,759	)
Transfers from non-current to current		210,811			(210,811	)		—
Total Changes		26,918			(97,517	)		(70,599	)
Closing balance		302,710			3,296,117			3,598,827

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 into practice in everyday company operations.

All 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 Arauco’s business units.

These investments are reflected in the Interim Consolidated Financial Statements as Properties, Plants and Equipment when they refer to disbursements in major works executed and are reflected in Expenses when they refer to improvements or management not directly associated with investment projects.

Detail information of disbursements related to the environment

As of September 30, 2021 and as of December 31, 2020 Arauco has made and / or has committed the following disbursements in major environmental projects:

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

09-30-2021

Disbursements undertaken 2021

Committed
Disbursements

State

Amount

Asset

Asset/expense

Amount

Estimated

Company

Name of project

of project

ThU.S.$

Expense

destination item

ThU.S.$

date

Celulosa Arauco y Constitucion S.A.

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

In process

129

Assets

Properties, plants
and equipments

929

2021

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

In process

12,500

Assets

Properties, plants
and equipments

14,812

2021

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

Finished

244

Assets

Properties, plants
and equipments

—

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

1,010

Assets

Properties, plants
and equipments

9,233

2021

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

In process

7,396

Expenses

Operating costs

4,158

2021

Celulosa Arauco y Constitucion S.A.

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

In process

—

Expenses

Operating costs

413

—

Celulosa Arauco y Constitucion S.A.

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

In process

7,402

Expenses

Operating costs

3,509

2021

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

—

Expenses

Operating costs

621

2021

Arauco Argentina S.A.

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

In process

1,367

Assets

Properties, plants
and equipments

1,003

2021

Arauco Argentina S.A.

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

In process

576

Assets

Properties, plants
and equipments

811

2021

Maderas Arauco S.A.

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

In process

471

Expenses

Operating costs

157

2021

Maderas Arauco S.A.

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

In process

905

Assets

Properties, plants
and equipments

210

2021

Forestal Arauco S.A.

Environmental improvement studies

In process

948

Expenses

Administration
expenses

546

2021

Celulosa y Energía Punta Pereira S.A.

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

Finished

223

Assets

Properties, plants
and equipments

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

548

Assets

Properties, plants
and equipments

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

1,874

Assets

Properties, plants
and equipments

—

Arauco North America, Inc

Environmental improvement studies

Finished

222

Assets

Properties, plants
and equipments

—

Arauco North America, Inc

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

Finished

205

Assets

Properties, plants
and equipments

—

Arauco North America, Inc

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

Finished

997

Assets

Properties, plants
and equipments

—

TOTAL

37,017

36,402

12-31-2020

Disbursements undertaken 2020

Committed
Disbursements

State

Amount

Asset

Asset/expense

Amount

Estimated

Company

Name of project

of project

ThU.S.$

Expense

destination item

ThU.S.$

date

Celulosa Arauco y Constitucion S.A.

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

In process

633

Assets

Properties, plants
and equipments

979

2021

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

In process

25,947

Assets

Properties, plants
and equipments

27,215

2021

Celulosa Arauco y Constitucion S.A.

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

Finished

1,750

Expenses

Operating costs

—

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

2,443

Assets

Properties, plants
and equipments

9,660

2021

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

Finished

10,693

Expenses

Operating costs

—

Celulosa Arauco y Constitucion S.A.

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

Finished

11,786

Expenses

Operating costs

—

Arauco Argentina S.A.

Construction emissary

In process

—

Assets

Properties, plants
and equipments

697

2021

Arauco Argentina S.A.

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

In process

702

Assets

Properties, plants
and equipments

10,368

2021

Arauco Argentina S.A.

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

In process

125

Assets

Properties, plants
and equipments

560

2021

Arauco Argentina S.A.

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

In process

1,453

Assets

Properties, plants
and equipments

2,147

2021

Maderas Arauco S.A.

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

In process

178

Expenses

Operating costs

—

Maderas Arauco S.A.

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

In process

464

Expenses

Operating costs

—

Maderas Arauco S.A.

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

In process

230

Assets

Properties, plants
and equipments

435

2021

Forestal Arauco S.A.

Environmental improvement studies

In process

324

Expenses

Administration
expenses

105

2021

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

1,983

Assets

Properties, plants
and equipments

836

2021

Celulosa y Energía Punta Pereira S.A.

Environmental improvement studies

Finished

221

Assets

Properties, plants
and equipments

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

547

Assets

Properties, plants
and equipments

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

667

Assets

Properties, plants
and equipments

—

Forestal Los Lagos S.A.

Environmental improvement studies

In process

179

Expenses

Operating costs

2021

Arauco North America, Inc

Environmental improvement studies

In process

784

Assets

Properties, plants
and equipments

—

Arauco North America, Inc

Environmental improvement studies

Finished

628

Assets

Properties, plants
and equipments

—

Arauco Industria de México, S.A.de C.V.

Investment projects for the control and management solid industrial waste dumpsite for management of these in the future

Finished

223

Expenses

Operating costs

—

TOTAL

61,960

53,071

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 22. NON-CURRENT ASSETS HELD FOR SALE

Arauco carried out a bidding process for the sale of forestry land (80,489 hectares), in which various domestic and foreign companies participated. In December 2020, bids were received from interested parties, and Arauco selected the proposal submitted by BTG Pactual Timberland Investment Group LLC, and also comprising British Columbia Investment Management Corporation and APG Asset Management N.V. (the “Consorcio”), as this offer contained the highest price and also proposed a working procedure to reach a final agreement within a reasonable period of time. This ongoing process involved the reclassification to assets held for the sale of land, biological assets and farm roads.

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


	09-30-2021		12-31-2020
	ThU.S.$		ThU.S.$
Land		2,385		2,415
Buildings		307		1,256
Property, plant and equipment		—		206
Forest		11,791		—
Farm roads		—		—
Total		14,483		3,877

As of September 30, 2021, a profit of ThU.S.$ 229,421 was generated from the sale of most of the aforementioned assets.

As of December 31, 2020, there were no significant effects on results related to the sale of assets held for sale.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of September 30, 2021 and as of December 31, 2020, are displayed in the table below. Regarding those instruments valued at an amortized cost, an estimation of their fair value is displayed for informational purposes.


	September 2021				December 2020
Financial Instruments Thousands of dollars	Carrying amount		Fair Value		Carrying amount		Fair Value
Financial assets at fair value through profit or loss (held for trading)		127,841		127,841		199,771		199,771
Derivatives (1)		—		—		29		29
Mutual funds (2)		127,841		127,841		199,742		199,742
Financial assets at amortized cost		2,478,233		2,478,233		1,625,235		1,625,235
Cash and cash equivalents (amortized cost)		1,195,618		1,195,618		864,972		864,972
Cash		651,588		651,588		357,453		357,453
Time deposits		544,030		544,030		507,519		507,519
Accounts Receivable (net)		1,263,101		1,263,101		753,987		753,987
Trade and other receivables		804,575		804,575		647,924		647,924
Lease receivable		—		—		135		135
Several debtors		354,519		354,519		6,392		6,392
Other receivables		44,291		44,291		57,800		57,800
Advance payments		59,716		59,716		41,736		41,736
Accounts receivable due from related parties		7,334		7,334		6,274		6,274
Other financial assets (3)		12,180		12,180		2		2
Hedging assets		13,656		13,656		30,714		30,714

Financial liabilities at amortized cost (4)		6,499,675		6,857,937		6,824,202		7,641,425
Bonds issued denominated in U.S. Dollars		3,523,391		3,853,271		3,519,027		3,970,081
Bonds issued denominated in U.F. (5)		1,064,555		1,075,752		1,188,917		1,458,106
Bank Loans in U.S. Dollars		470,230		482,103		741,669		770,551
Bank borrowing denominated in U.S. Dollars		550,936		556,248		532,591		600,689
Lease liabilities		177,628		177,628		211,755		211,755
Trade and other payables		705,335		705,335		626,504		626,504
Accounts payable to related parties		7,600		7,600		3,739		3,739
Financial liabilities at fair value through profit or loss		—		—		74		74
Hedging Liabilities		312,870		312,870		39,586		39,586

(1)	The derivatives are presented in the line item “other financial assets” in the consolidated statements of financial position.

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

(3)	Corresponds to the balance of assets from margin call for current derivatives (collateral).

(4)

Financial liabilities measured at amortized cost, other than “Trade and other payables”, “Accounts payable to related parties” and derivatives are presented in the consolidated statements of financial position in the line item “Other financial liabilities” as current and non-current based on their maturity.

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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 interim consolidated statements of financial position as of September 30, 2021, have been measured based on the valuation methodologies provided in IFRS 13. 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	September 2021 ThU.S.$		Level 1 ThU.S.$		Level 2 ThU.S.$		Level 3 ThU.S.$
Financial assets at fair value
Mutual Funds		127,841		127,841		—		—
Derivatives Guarantee Fund		12,180		—		12,180		—

Hedging assets		13,656		—		13,656		—

Hedging liabilities		312,870		—		312,870		—

At the closing date of these interim consolidated financial statements, there have been no transfers between the different hierarchy levels.

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

Arauco’s current derivatives are valued under the cash flow discount method. These flows are discounted at the rate applicable according to the transaction’s and counterparties’ risk, using an internal methodology based on the information obtained from Bloomberg.

Given thath our cross-currency swaps correspond to future flows in UF, U.S. dollars and Euros, Arauco calculates the current value of such flows by using the UF zero coupon curve, Dollar zero coupon and the Euro 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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

The fair value of zero cost collar contracts is calculated by reference to the price differential between the agreed price range and the market price of the hedge’s object.

The counterparty risk uses the Z-Spread obtained from the curve of the bonds issued by counterparties, and they are deducted from each flow as appropriate.

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 was 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.

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):


	September 2021		December 2020
	ThU.S.$		ThU.S.$
Interest bearing loans, current (a)		527,838		369,998
Other financial liabilities, current		475,340		307,136
Current Lease liabilities		52,498		63,640
Hedging liabilities current + Financial liabilities at fair value through profit or loss current		—		778
Interest bearing loans, non-current (b)		5,258,902		5,823,961
Other financial liabilities, non-current		5,446,642		5,714,728
Non-current lease liabilities		125,130		148,115
Hedging liabilities non-current + Financial liabilities at fair value through profit or loss non-current		312,870		38,882
Financial debt total (c)		5,786,740		6,193,959
Cash and cash equivalents		1,323,459		1,064,714
Other financial assets current		16,450		1,763
Total Cash (d)		1,339,909		1,066,477
Net Financial Debt (e)		4,446,831		5,127,482
Non-controlling interests		7,778,132		7,384,722
Equity attributable to owners of parent		25,748		30,913
Total Equity (f)		7,803,880		7,415,635
Debt to equity ratio (g)		0.57		0.69

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

(b)	Other Non-Current Financial Liabilities + Non-current Lease 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

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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):


	September 2021		December 2020
	ThU.S.$		ThU.S.$
Other financial liabilities (a)		5,921,982		6,021,864
Other financial liabilities, current		475,340		307,136
Other financial liabilities, non-current		5,446,642		5,714,728
Lease liabilities (b)		177,628		211,755
Current lease liabilities		52,498		63,640
Non-current lease liabilities		125,130		148,115
Financial liabilities at fair value through profit or loss		—		74
Hedging liabilities (c)		312,870		39,586
Swaps		312,566		38,251
Forward		304		1,335
Financial debt total (d)		5,786,740		6,193,959
Cash and cash equivalents		1,323,459		1,064,714
Total Cash (e)		1,323,459		1,064,714
Net Financial Debt (f)		4,463,281		5,129,245
Non-controlling interests		7,778,132		7,384,722
Equity attributable to owners of parent		25,748		30,913
Total Equity (g)		7,803,880		7,415,635
Debt to equity ratio (h)		0.57		0.69

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

(b)	Current lease liabilities + Non-current lease liabilities

(c)	Swaps + Forwards + Options

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

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

(f)	Total Financial Debt – Total Cash

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

(h)	Net Financial Debt / Total Equity

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

The following table sets forth a reconciliation between the financial liabilities and the consolidated statements of financial position as of September 30, 2021 and as of December 31, 2020:



Thousands of dollars	September 2021
Thousands of dollars	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		64,459		159,411		223,870		575,342		79,457		3,709,277		4,364,076		4,587,946
Bank borrowing		127,799		123,671		251,470		220,237		323,943		225,516		769,696		1,021,166
Swap and Forward		—		—		—		312,870		—		—		312,870		312,870

Other Financial Liabilities, Total (a)		192,258		283,082		475,340		1,108,449		403,400		3,934,793		5,446,642		5,921,982


	September 2021

Thousands of dollars	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Lease liabilities		14,302		38,196		52,498		53,234		26,684		45,212		125,130		177,628
Lease liabilities, Total (b)		14,302		38,196		52,498		53,234		26,684		45,212		125,130		177,628


	September 2021
Thousands of dollars	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		699,249		6,086		705,335		—		—		—		—		705,335
Accounts payable to related companies		7,600		—		7,600		—		—		—		—		7,600

Accounts Payable, Total (c)		706,849		6,086		712,935		—		—		—		—		712,935

Financial Liabilities, Total (a) + (b) + (c)		913,409		327,364		1,240,773		1,161,683		430,084		3,980,005		5,571,772		6,812,545


	December 2020
Thousands of dollars	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		32,053		58,871		90,924		214,092		584,344		3,818,584		4,617,020		4,707,944
Bank borrowing		30,774		184,660		215,434		473,233		335,247		250,346		1,058,826		1,274,260
Swap and Forward		778		—		778		38,882		—		—		38,882		39,660

Other Financial Liabilities, Total (a)		63,605		243,531		307,136		726,207		919,591		4,068,930		5,714,728		6,021,864


	December 2020
Thousands of dollars	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Lease liabilities		18,631		45,009		63,640		85,964		21,906		40,245		148,115		211,755

Lease liabilities, Total (b)		18,631		45,009		63,640		85,964		21,906		40,245		148,115		211,755


	December 2020
Thousands of dollars	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		585,428		41,076		626,504		—		—		—		—		626,504
Accounts payable to related companies		3,739		—		3,739		—		—		—		—		3,739

Accounts Payable, Total (c)		589,167		41,076		630,243		—		—		—		—		630,243

Financial Liabilities, Total (a) + (b) + (c)		671,403		329,616		1,001,019		812,171		941,497		4,109,175		5,862,843		6,863,862

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

23.4 Derivative Instruments

Hedging instruments recorded as of September 30, 2021 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 Interim Consolidated Statements of Financial Position under Other Non-Current Financial Assets or Other Non-Current Financial Liabilities, respectively. The effects for the period are presented in Interim Consolidated statement of changes in equity as Other Interim Comprehensive Income or the Statements 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 interim consolidated statements of financial position as of September 30, 2021, is presented below:


Financial Instruments	September 2021 Fair Value ThU.S.$			December 2020 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		—			29
Derivatives (1)		—			29

Hedging Assets		13,656			30,714
Derivatives (1)		13,656			4,343
Cross Currency Swaps		—			26,371

Financial liabilities at fair value through profit or loss		—			(74	)
Derivatives (1)		—			(74	)

Hedging Liabilities		(312,870	)		(39,586	)
Derivatives (1)		(346	)		(4,245	)
Cross Currency Swaps		(312,524	)		(35,341	)

(1)	Includes Swap, Zero Cost Collar, Forward and IRS from Chile, USA and Uruguay tables.

23.4.1. Chile

In order to cover the exposure to variation in cash flows associated with fluctuations in exchange rates, interest rates or commodity prices, Arauco Chile has the following derivatives as of September 30, 2021 and as of December 31, 2020:

Cross Currency Swaps

Cross currency swaps to cover the exposure to the exchange rate risk generated from bonds denominated in U.F.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Bond	Institution	Amount U.S.$		Amount U.F.		Starting date		Ending date		September 2021 Fair Value ThU.S.$			December 2020 Fair Value ThU.S.$
F	Deutsche Bank – UE		33,705,054		772,727		10-30-2011		10-30-2021		(5,282	)		(1,775	)
F	JP Morgan – N.A.		33,705,054		772,727		10-30-2011		10-30-2021		(5,257	)		(1,755	)
F	Scotiabank – Chile		29,693,153		772,727		10-30-2014		04-30-2023		(1,516	)		2,825
F	Scotiabank – Chile		29,656,067		772,727		10-30-2021		04-30-2023		(1,396	)		2,965
F	Scotiabank – Chile		28,033,642		727,273		10-30-2014		10-30-2029		(720	)		—
F	Santander – Chile		29,345,913		772,727		10-30-2014		04-30-2023		(815	)		3,341
F	BCI – Chile		28,000,018		727,273		10-30-2021		10-30-2029		(1,544	)		3,697
F	BCI – Chile		29,071,206		772,727		10-30-2014		04-30-2023		(668	)		—
F	Banco de Chile - Chile		29,345,914		772,727		04-30-2019		10-30-2029		(3,895	)		2,493
P	Itau – Chile		46,474,122		1,000,000		05-15-2012		11-15-2021		(9,563	)		(4,727	)
P	JP Morgan – N.A.		47,163,640		1,000,000		11-15-2012		11-15-2021		(10,172	)		(5,241	)
P	Scotiabank – Chile		42,412,852		1,000,000		11-15-2013		11-15-2023		(6,493	)		(94	)
P	Santander – Chile		41,752,718		1,000,000		11-15-2013		11-15-2023		(5,368	)		718
P	Deutsche – U.K.		41,752,718		1,000,000		11-15-2013		11-15-2023		(5,693	)		720
P	BCI – Chile		38,500,026		1,000,000		11-15-2021		11-15-2032		(2,865	)		—
P	BCI – Chile		38,496,778		1,000,000		11-15-2021		11-15-2032		(1,544	)		—
Q	BCI – Chile		—		—		—		—		—			(267	)
Q	BCI – Chile		—		—		—		—		—			(266	)
R	Santander – Chile		128,611,183		3,000,000		10-01-2014		###-##-####		(23,343	)		(3,812	)
R	JP Morgan – U.K.		43,185,224		1,000,000		10-01-2014		###-##-####		(8,060	)		(1,154	)
R	Itau - Chile		43,277,070		1,000,000		10-01-2014		###-##-####		(8,108	)		(1,208	)
S	Santander - Chile		201,340,031		5,000,000		11-15-2016		11-15-2026		(32,883	)		9,612
W	Goldman Sachs – N.A.		40,521,750		1,000,000		10-10-2018		10-10-2028		(11,707	)		(2,029	)
W	Scotiabank - Chile		40,537,926		1,000,000		10-10-2018		10-10-2028		(11,580	)		(1,939	)
W	Goldman Sachs – N.A.		40,066,555		1,000,000		10-10-2018		10-10-2028		(11,048	)		(1,390	)
X	Santander - Chile		118,400,504		3,000,000		10-10-2018		10-10-2038		(56,372	)		(2,675	)
X	Santander - Chile		97,971,786		2,500,000		10-10-2018		10-10-2038		(46,677	)		(1,955	)

											(272,569	)		(3,916	)

Series Q of bonds matured and had their final amortization on April 1,2021, resulting in the termination of the associated cross currency swaps which had the same expiration date.

Cross currency swaps contracts to cover the exposure to the risk of the exchange rate for bank contracts in Euro.


Institution	Amount U.S.$		Amount EUR		Starting date		Ending date		September 2021 Fair Value ThU.S.$			December 2020 Fair Value ThU.S.$
Santander - Chile		118,670,000		100,000,000		06-15-2021		12-15-2029		(7,352	)		(1,027	)
Banco de Chile - Chile		59,335,000		50,000,000		06-15-2021		12-15-2029		(4,034	)		(488	)
MUFG - N.A.		118,670,000		100,000,000		06-15-2021		12-15-2029		(8,108	)		(896	)
JP Morgan - N.A.		237,340,000		200,000,000		06-15-2021		12-15-2029		(16,402	)		(2,048	)
HSBC - N.A.		59,335,000		50,000,000		06-15-2021		12-15-2029		(4,059	)		(595	)

										(39,955	)		(5,054	)

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Zero Cost Collars

Zero cost collar to cover the exposure to the Fuel Oil No. 6 and Brent, instruments for oil used by our plants.


Commodity	Institution	Volume		Unit		Starting date		Ending date		September 2021 Fair Value ThU.S.$		December 2020 Fair Value ThU.S.$
Fuel Oil N°6	JP Morgan - N.A.		—		bbl		01-11-2020		04-30-2021		—		1,029
Fuel Oil N°6	Goldman Sachs - N.A.		—		bbl		01-22-2020		04-30-2021		—		516
Brent	BNP Paribas – E.U.		220,000		bbl		08-01-2021		07-31-2021		4,346		280
Brent	Goldman Sachs - N.A.		220,000		bbl		08-01-2021		07-31-2021		4,408		404

											8,754		2,229

Interest Rate Swap

Interest rate swap to fix the rate associated to loans with a variable rate.


Institution	Amount US$		Starting date		Ending date		September 2021 Fair Value ThU.S.$		December 2020 Fair Value ThU.S.$
Goldman Sachs - N.A.		100,000,000		03-27-2020		03-29-2021		—		(750	)
MUFG - N.A.		100,000,000		03-27-2020		03-29-2021		—		(737	)

								—		(1,487	)

Both Interest Rate Swaps covered portions of a credit for ThU.S.$ 200,000 that we prepay in March 2021. These derivatives were finished in that time.

Through an effectiveness test, and pursuant to IFRS 9, 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.

23.4.2. Uruguay

Forward

As of September 30, 2021 and as of December 31, 2020, Arauco through its subsidiaries as a joint operation (50%) in Uruguay maintains the following forward contracts in force and effect for the purposes of ensuring an exchange rate for sale of dollars:


Exchange rate	Institution		Notional September 2021 ThU.S.$		September 2021 Fair Value ThU.S.$		Notional December 2020 ThU.S.$		December 2020 Fair Value ThU.S.$
UYUUSD		Santander-Uruguay		3,655		194		12,160		947
UYUUSD		Santander-Uruguay		—		—		4,395		(179	)
UYUUSD		HSBC-Uruguay		8,615		435		8,055		366
UYUUSD		Itaú-Uruguay		12,350		524		—		—
EURUSD		HSBC-Uruguay		—		—		595		41

						1,153				1,175

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Arauco Uruguay’s profits and through its subsidiaries as a joint operation (50%), also face exposure to the price variation of certain fuels, as occurs with Fuel Oil N°6, which is used during the pulp manufacturing process. In order to minimize this risk, the volatility of future flows associated to the purchase of Fuel Oil No. 6 through forwards of this commodity. The agreements that are in force and effect as of September 30, 2021 and as of December 31, 2020, are detailed below:


Commodity	Institution		Notional September 2021 ThU.S.$		September 2021 Fair Value ThU.S.$		Notional December 2020 ThU.S.$		December 2020 Fair Value ThU.S.$
Fuel Oil N°6		JP Morgan - N.A.		8,544		2,575		3,274		541
Fuel Oil N°6		DNB Bank ASA		2,650		1,169		2,281		248
Fuel Oil N°6		JP Morgan - N.A.		—		—		3,786		(351	)
Fuel Oil N°6		DNB Bank ASA		—		—		2,642		(320	)

						3,744				118

Interest Rate Swap

In addition, Arauco through its subsidiaries as a joint operation (50%) 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 September 30, 2021 and as of December 31, 2020 is shown below:


Exchange rate	Institution		Notional ThU.S.$		September 2021 Fair Value ThU.S.$			December 2020 Fair Value ThU.S.$
USD		DNB Bank ASA		16,879		(299	)		(559	)

						(299	)		(559	)

23.4.3. United States

Interest Rate Swap

Arauco through its subsidiary in United States maintains an Interest Rate Swap with the purpose of setting the interest rate of a variable rate debt in the same currency (USD). The instrument was settled on September 2020 and the valuation off this instrument as of September 30, 2021 and as of December 31, 2020 is shown below:


Institution	Amount ThU.S.$		Starting date		Ending date		September 2021 Fair Value			December 2020 Fair Value
Institution	Amount ThU.S.$		Starting date		Ending date		ThU.S.$			ThU.S.$
JP Morgan - N.A.		100,000,000		04-28-2020		10-28-2023		(94	)		(474	)
Goldman Sachs N.A.		100,000,000		04-28-2020		10-28-2023		136			(486	)
JP Morgan - N.A.		100,000,000		04-28-2020		10-28-2023		(85	)		(463	)

								(42	)		(1,423	)

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

23.5 Cash equivalent, Loans and Receivables

The financial assets measured at amortized cost using the effective interest method and tested for impairment are: cash and cash equivalent, time deposits, repurchase agreements, trade and other current/non-current receivables (with third parties and from related parties)

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 from related parties”.

As of September 30, 2021 and as of December 31, 2020, there are provisions for impairment for ThU.S.$ 8,450 and ThU.S.$ 8,000, respectively.


	September 2021 ThU.S.$		December 2020 ThU.S.$
Financial assets at amortized cost		2,478,233		1,625,235
Cash and cash equivalents (Mutual Funds not included)		1,195,618		864,972
Cash		651,588		357,453
Time Deposits		544,030		507,519
Trade and other receivables (net)		1,270,435		760,261
Trade and other receivables		804,575		647,924
Lease receivable		—		135
Several debtors		354,519		6,392
Other receivables		44,291		57,800
Advance payments		59,716		41,736
Accounts receivable from related parties		7,334		6,274
Other financial assets		12,180		2

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 September 30, 2021 and as of December 31, 2020, classified by currency is as follows:


	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
Cash and Cash Equivalents		1,323,459		1,064,714
U.S. Dollars		855,584		773,822
Euro		5,590		3,891
Mexican pesos		51,011		43,049
Other currencies		263,608		194,942
Chilean pesos		147,666		49,010

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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.

The allowance 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 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 September 30, 2021 and as of December 31, 2020:


	09-30-2021 ThU.S.$		12-31-2020 ThU.S.$
Trades and other current receivables		1,248,167		737,381

U.S. Dollars		1,002,907		542,296
Euros		9,967		10,448
Mexican pesos		36,813		30,856
Other currencies		78,990		54,118
Chilean pesos		116,988		96,847
U.F.		2,502		2,816

Accounts receivable from related parties, current		7,334		6,274
U.S. Dollars		—		369
Other currencies		—		829
Chilean pesos		7,334		5,076

Trade and other non-current receivables		14,934		16,606
U.S. Dollars		12,112		13,637
Other currencies		1		40
Chilean pesos		2,781		2,859
U.F.		40		70

23.6 Financial Liabilities

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


Financial Liabilities	September 2021 ThU.S.$		December 2020 ThU.S.$
Total Financial Liabilities		6,812,545		6,863,862
Financial liabilities at fair value through profit or loss (held for trading)		—		74
Hedging Liabilities		312,870		39,586
Financial Liabilities Measured at Amortized Cost		6,499,675		6,824,202

The following table sets forth the current portion of the non-current bank borrowings and debt issued as of September 30, 2021 and as of December 31, 2020.


	September 2021 ThU.S.$		December 2020 ThU.S.$
Bank borrowings - current portion		158,255		123,087
Bonds issued - current portion		96,364		80,074
Total		254,619		203,161

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 these financial statements, Arauco includes in this category bank borrowings, bonds issued denominated in U.S. Dollars and in U.F., lease liabilities, and trade and other payables.


		09-30-2021		12-31-2020		09-30-2021		12-31-2020
	Currency	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
	Currency	Amortized Cost				Fair Value
Total Financial Liabilities			6,499,675		6,824,202		6,857,937		7,641,425
Bonds Issued	U.S. Dollar		3,523,391		3,519,027		3,853,271		3,970,081
Bonds Issued	U.F.		1,064,555		1,188,917		1,075,752		1,458,106
Bank borrowings	U.S. Dollar		470,230		741,669		482,103		770,551
Bank borrowings	Euro		550,232		531,181		556,248		600,689
Bank borrowings	Other currencies		704		1,410		—		—
Lease liabilities	U.F.		22,537		27,373		22,537		27,373
Lease liabilities	Chilean pesos		46,781		77,158		46,781		77,158
Lease liabilities	Mexican pesos		3,577		644		3,577		644
Lease liabilities	U.S. Dollar		80,499		87,822		80,499		87,822
Lease liabilities	Euro		278		314		278		314
Lease liabilities	Other currencies		23,956		18,444		23,956		18,444
Trades and Other Payables	U.S. Dollar		199,663		153,860		199,663		153,860
Trades and Other Payables	Euro		13,885		11,924		13,885		11,924
Trades and Other Payables	Mexican pesos		26,678		26,400		26,678		26,400
Trades and Other Payables	Other currencies		106,227		99,428		106,227		99,428
Trades and Other Payables	Chilean pesos		324,979		298,908		324,979		298,908
Trades and Other Payables	U.F.		33,903		35,984		33,903		35,984
Accounts payable to related parties	U.S. Dollar		7,262		236		7,262		236
Accounts payable to related parties	Chilean pesos		338		3,503		338		3,503

The financial liabilities at amortized cost presented in the interim consolidated statements of financial positions as of September 30, 2021 and as of December 31, 2020 are as follows:

September 2021
ThU.S.$

Current

Non-Current

Total

Other financial liabilities

475,340

5,133,772

5,609,112

Lease liabilities

52,498

125,130

177,628

Trade and other payables

705,335

—

705,335

Accounts payable to related parties

7,600

—

7,600

Total Financial Liabilities Measured at Amortized Cost

1,240,773

5,258,902

6,499,675

December 2020
ThU.S.$

Current

Non-Current

Total

Other financial liabilities

306,358

5,675,846

5,982,204

Lease liabilities

63,640

148,115

211,755

Trade and other payables

626,504

—

626,504

Accounts payable to related parties

3,739

—

3,739

Total Financial Liabilities Measured at Amortized Cost

1,000,241

5,823,961

6,824,202

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 the interim consolidated statements of comprehensive income:


	January – September						July – September
	2021			2020			2021			2020
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		(37,007	)		9,010			(79,752	)		(57,290	)
Gains (losses) on cash flow hedges, before tax		(125,091	)		(16,556	)		(75,351	)		50,317
Reclassification adjustments on cash flow hedges, before tax		(10,137	)		(53,065	)		—			(32,211	)
Income tax relating to cash flow hedges of other comprehensive income		41,546			17,589			24,414			(3,838	)
Closing balance		(130,689	)		(43,022	)		(130,689	)		(43,022	)

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

September 2021
ThU.S.$

December 2020
ThU.S.$

Interest
coverage
>= 2,0x

Debt level
(1)
<= 1,2x

Domestic bonds (Chile)

1,064,555

1,188,917

N/R

✓

Syndicate Loan

—

200,022

✓

Syndicate Loan - Grayling

286,535

300,121

✓

Syndicate ECA - MAPA

550,232

531,181

✓

N/R: Not required for the financial obligation

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

As of September 30, 2021 and as of December 31, 2020, Arauco has complied with all of its financial covenants.

The following table sets forth the credit ratings of our debt instruments as of September 30, 2021, are as follows:

Instrument

Standard
& Poor’s

Fitch
Ratings

Moody’s

Feller
Rate

Local bonds

—

Foreign bonds

BBB-

BBB

Baa3

—

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 September 30, 2021 and as of December 31, 2020 is as follows:


	September 2021		December 2020
	ThU.S.$		ThU.S.$
Equity		7,803,880		7,415,635
Bank borrowings		1,021,166		1,274,260
Lease liabilities		177,628		211,755
Bonds issued		4,587,946		4,707,944

Capitalization		13,590,620		13,609,594

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. The company is not actively involved in trading its financial assets for speculative purposes.

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.

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 receivables, financial lease debtors and other debtors.

Arauco does not have a securitized portfolio.


	September 2021		December 2020
	ThU.S.$		ThU.S.$
Current Receivables
Trade receivables		804,538		646,607
Financial lease receivables		—		109
Several debtors		343,284		2,329
Other debtors		41,955		53,589
Advance payments		58,390		34,747
Net subtotal		1,248,167		737,381

Trade receivables		808,064		649,680
Financial lease receivables		—		109
Several debtors		345,787		4,832
Other debtors		41,955		53,589
Advance payments		58,390		34,747
Gross subtotal		1,254,196		742,957

Provision for doubtful trade receivables		3,526		3,073
Provision for doubtful lease receivables		—		—
Provision for doubtful several debtors		2,503		2,503
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		6,029		5,576

Non-Current Receivables

Trade receivables		37		1,317
Financial lease receivables		—		26
Several debtors		11,235		4,063
Other debtors		2,336		4,211
Advance payments		1,326		6,989
Net Subtotal		14,934		16,606

Trade receivables		2,458		3,741
Financial lease receivables		—		26
Several debtors		11,235		4,063
Other debtors		2,336		4,211
Advance payments		1,326		6,989
Gross subtotal		17,355		19,030

Provision for doubtful trade receivables		2,421		2,424
Provision for doubtful lease receivables		—		—
Provision for doubtful several debtors		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		2,421		2,424

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 September 30, 2021, Arauco’s balance for commercial debtors was ThU.S.$ 810,522 of which, according to the agreed sales conditions, 59.66% corresponded to sales on credit (open account), 39.76% to sales with letters of credit and 0.58% to other types of sales. The client with the largest Open Account debt represented 1.972% of the total accounts receivable as of that date.

100

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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


September 30, 2021

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
N° Debtor		1,873			621			48			43			60			90			5			3			3			91			2,837
ThU.S.$		776,294			26,393			522			84			239			2,092			33			4			4			4,857			810,522
%		95.78	%		3.26	%		0.06	%		0.01	%		0.03	%		0.26	%		0.00	%		0.00	%		0.00	%		0.60	%		100	%

December 31, 2020

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
N° Debtor		1,597			547			51			52			12			7			2			3			7			81			2,359
ThU.S.$		625,225			21,502			474			96			636			11			70			72			299			5,036			653,421
%		95.68	%		3.29	%		0.07	%		0.01	%		0.10	%		0.00	%		0.01	%		0.01	%		0.05	%		0.78	%		100	%

Arauco applies the simplified approach regarding the expected losses from commercial debtors, which allows for the use of an estimate of expected credit losses over the instrument’s lifespan for all commercial accounts receivable. In order to establish this estimate, the commercial debtors have been grouped in relation to the corresponding risks for sales conditions as well as for tranches, including clients that are up-to-date or in default.


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
Letters of credit		321,186			998			20			—			—			—			—			—			—			38			322,242
Loss allowance provision		—			—			—			—			—			—			—			—			—			—			—
Expected loss rate		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%

Credit line		455,623			22,365			501			24			181			—			33			3			3			4,819			483,552
Loss allowance provision		—			—			15			2			18			—			3			3			4			4,819			4,864
Expected loss rate		0.00	%		0.00	%		2.99	%		8.33	%		9.94	%		0.00	%		9.09	%		100.00	%		133.330	%		100.00	%

Others		(515	)		3,030			1			60			58			2,092			—			1			1			—			4,728
Loss allowance provision		—			—			—			6			29			1,046			—			1			1			—			1,083
Expected loss rate		0.00	%		0.00	%		0.00	%		10.00	%		50.00	%		50.00	%		0.00	%		100.00	%		100.00	%		0.00	%

Trade receivables, total (ThU.S.$)		776,294			26,393			522			84			239			2,092			33			4			4			4,857			810,522
Allowance for doubtful accounts, total (ThU.S.$)		—			—			15			8			47			1,046			3			4			5			4,819			5,947

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 loss allowance for trade receivables and others, below we provide detail for the movements as of September 30, 2021 and as of December 31, 2020:


	September 2021			December 2020
	ThU.S.$			ThU.S.$
Opening loss allowance as at January 1		8,000			16,368
Increase in loan loss allowance recognised in profit or loss during the year		700			1,369
Receivables written off during the year as uncollectible		—			(6,970	)
Unused amount reversed		(250	)		(2,767	)
Closing balance		8,450			8,000

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

101

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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., Arauco Argentina S.A., and Arauco do Brasil S.A., as well as the domestic sales of Arauco Europe Coöperatief U.A., Arauco Argentina S.A., Araucomex S.A. de C.V., Arauco Industria de México, S.A. de C.V., Arauco Colombia S.A., Arauco Perú S.A., Arauco North America, Inc., Arauco Canada Ltd., Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Arauco Florestal Arapoti, Arauco Forest Brasil S.A., Arauco do Brasil S.A. and Arauco Industria de Paineis Ltda. Arauco works with credit insurance company Euler Hermes World Agency (Aa3 rating, as per risk rating companies Moody’s and AA by S&P). The company grant a 90% coverage over the amount of each invoice, without deductibles, for registered clients and of 90% for non-registered clients (*).

(*) Non-registered clients are those whose lines are under ThU.S.$ 100 (equivalent currency of their invoicing) of the credit sales for all companies in the Arauco group that have a valid insurance policy. The top lines are from nominated clients.

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 ThU.S.$ 105,419, effective as of September 30, 2021, 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.

102

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Guarantees Arauco Group (ThU.S.$)
Guarantees Debtors (received from clients)
Certificate of deposits	6,665	6.32	%
Standby	7,321	6.94	%
Promissory notes	81,828	77.62	%
Finance	5,943	5.64	%
Mortgage	2,140	2.03	%
Pledge	122	0.12	%
Promissory notes	1,400	1.33	%

Total Guarantees	105,419	100	%

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 95.5% and, therefore, Arauco’s portfolio exposure amounts to 4.5%.


Secured Open Accounts Receivable	ThU.S.$		%
Total open accounts receivable		509,044		100.0	%
Secured receivables (*)		486,137		9.5	%
Unsecured receivables		22,907		4.5	%

(*) 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 apply to short and long-term debt, and will be for 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 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).

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

103

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 Corporate Financial Management Division 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 September 30, 2021 and as of December 31, 2020. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities.

104

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


September 30, 2021					Maturity														Total
Tax ID	Name	Currency		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.		Euros	BNP Paribas / ECA		37,630		37,373		74,209		73,509		72,725		71,991		246,204		75,003		538,638		1.10%	1.06%
—	Zona Franca Punta Pereira S.A.		U.S. Dollars	Banco Interamericano de Desarrollo A		—		2,167		2,121		—		—		—		—		2,167		2,121		2.20%	Libor 6M +2.05%
—	Zona Franca Punta Pereira S.A.		U.S. Dollars	Banco BBVA		18,344		—		—		—		—		—		—		18,344		—		1.00%	Fixed 1.00%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	Banco Interamericano de Desarrollo A		—		8,765		8,579		—		—		—		—		8,765		8,579		2.20%	Libor 6M +2.05%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	Finnish Export Credit		—		49,269		24,065		—		—		—		—		49,269		24,065		3.20%	0.00%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	DnB Nor		—		238		102		—		—		—		—		238		102		1.47%	0.00%
—	Eufores S.A.		U.S. Dollars	Banco República Oriental del Uruguay		26,546		—		—		—		—		—		—		26,546		—		1.49%	Libor 6M +1.3%
—	Eufores S.A.		U.S. Dollars	Citibank		2,513		—		—		—		—		—		—		2,513		—		1.05%	Libor 6M +0.9%
—	Eufores S.A.		U.S. Dollars	ITAU		12,564		—		—		—		—		—		—		12,564		—		1.05%	Fixed 1.05%
—	Eufores S.A.		U.S. Dollars	Scotiabank		5,024		—		—		—		—		—		—		5,024		—		1.00%	Fixed 1.00%
—	Eufores S.A.		U.S. Dollars	Santander		27,134		—		—		—		—		—		—		27,134		—		1.00%	Fixed 1.00%
—	Stora Enso Uruguay S.A.		U.S. Dollars	Banco República Oriental del Uruguay		554		—		—		—		—		—		—		554		—		1.49%	Libor 6M +1.3%
—	Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Votorantim		—		232		—		—		—		—		—		232		—		5.00%	5.00%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Votorantim		—		206		—		—		—		—		—		206		—		5.00%	5.00%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito A		33		96		—		—		—		—		—		129		—		7.79%	TJLP +2.91%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito B		20		58		—		—		—		—		—		78		—		8.79%	TJLP +3.91%
—	Arauco Forest Brasil S.A.		U.S. Dollars	Banco Bndes Subcrédito C		38		111		12		—		—		—		—		149		12		5.60%	Cesta +2.91%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito D		23		65		—		—		—		—		—		88		—		9.99%	TJLP +5.11%
	Arauco North America, Inc.		U.S. Dollars	Banco Itau Corpbanca		17,620		17,469		34,539		228,999		—		—		—		35,089		263,538		1.81%	Libor 6M +1.65%

				Total		148,043		116,049		143,627		302,508		72,725		71,991		246,204		264,092		837,055


September 30, 2021				Maturity														Total
Tax ID	Name	Currency	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.	U.F.	Barau-F		11,434		11,256		21,982		21,273		20,565		19,856		63,916		22,690		147,592		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-F		4,573		4,503		8,793		8,509		8,226		7,942		25,567		9,076		59,037		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-P		3,670		12,092		23,684		23,017		22,349		21,682		124,672		15,762		215,404		4.00%	4.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-R		3,306		3,306		6,612		6,612		6,612		6,612		244,802		6,612		271,250		3.60%	3.60%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-S		2,210		2,210		4,421		4,421		4,421		4,421		187,506		4,420		205,190		2.40%	2.40%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-W		1,161		1,161		2,323		2,323		2,323		2,323		116,984		2,322		126,276		2.10%	2.10%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-X		2,733		2,733		5,467		5,467		5,467		5,467		299,491		5,466		321,359		2.70%	2.70%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2022		127,666		—		—		—		—		—		—		127,666		—		4.75%	4.75%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2024		—		22,500		22,500		522,500		—		—		—		22,500		545,000		4.50%	4.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2027		9,688		9,688		—		—		—		—		500,000		19,376		500,000		3.88%	3.88%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2047		11,000		11,000		22,000		22,000		22,000		22,000		741,000		22,000		829,000		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2029		10,625		10,625		21,250		21,250		21,250		21,250		563,750		21,250		648,750		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2049		13,750		13,750		27,500		27,500		27,500		27,500		1,132,500		27,500		1,242,500		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2030		—		21,000		21,000		21,000		21,000		21,000		573,500		21,000		657,500		4.20%	4.20%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2050		—		25,750		25,750		25,750		25,750		25,750		1,105,125		25,750		1,208,125		5.15%	5.15%

			Total		201,816		151,574		213,282		711,622		187,463		185,803		5,678,813		353,390		6,976,983

105

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


September 30, 2021				Maturity																Total
Tax ID	Name	Currency	Underlying asset class	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.$
85.805.200-9	Forestal Arauco S.A.	U.F.	Motor vehicles		470		1,073		1,151		581		392		312		31		1,543		2,467
85.805.200-9	Forestal Arauco S.A.	U.S. Dollars	Lands		60		180		240		240		240		240		540		240		1,500
85.805.200-9	Forestal Arauco S.A.	U.F.	Plants and equipments		555		784		193		—		—		—		—		1,339		193
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Plants and equipments		33		100		100		—		—		—		—		133		100
85.805.200-9	Forestal Arauco S.A.	U.F.	Other properties, plant and equipment		1,081		2,789		833		282		189		625		—		3,870		1,929
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Other properties, plant and equipment		95		201		127		127		127		405		—		296		786
—	Arauco Argentina S.A.	U.S. Dollars	Buildings and constructions		118		71		12		—		—		—		—		189		12
—	Arauco Argentina S.A.	U.S. Dollars	IT equipment		13		35		—		—		—		—		—		48		—
—	Arauco Argentina S.A.	U.S. Dollars	Plants and equipments		347		1,040		1,098		919		—		—		—		1,387		2,017
—	Arauco Argentina S.A.	U.S. Dollars	Motor vehicles		699		1,376		1,643		1,125		—		—		—		2,075		2,768
—	Arauco Industria de Paineis S.A.	Brazilian Real	Other properties, plant and equipment		3		8		—		—		—		—		—		11		—
—	Arauco Industria de Paineis S.A.	Brazilian Real	Fixed facilities and accessories		9		27		33		—		—						36		33
—	Arauco Industria de Paineis S.A.	Brazilian Real	IT equipment		13		34		5		—		—		—		—		47		5
—	Arauco Industria de Paineis S.A.	Brazilian Real	Motor vehicles		113		169		—		—		—		—		—		282		—
—	Arauco Forest Brasil S.A.	Brazilian Real	IT equipment		5		14		3		—		—		—		—		19		3
—	Arauco Forest Brasil S.A.	Brazilian Real	Lands		1,219		3,195		4,257		4,257		4,257		4,257		3,901		4,414		20,929
—	Arauco Florestal Arapoti S.A.	Brazilian Real	IT equipment		2		4		1		—		—		—		—		6		1
—	Arauco do Brasil S.A.	Brazilian Real	Buildings and constructions		50		150		201		100		—		—		—		200		301
—	Arauco do Brasil S.A.	Brazilian Real	IT equipment		24		68		52		24		—		—		—		92		76
—	Arauco do Brasil S.A.	Brazilian Real	Motor vehicles		97		292		32		—		—		—		—		389		32
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Buildings and constructions		412		1,160		1,533		1,533		1,533		1,534		3, \|450		1,572		9,583
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Motor vehicles		153		417		368		149		90		37		1		570		645
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Buildings and constructions		16		48		32		—		—		—		—		64		32
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Plants and equipments		484		—		—		—		—		—		—		484		—
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Motor vehicles		4,426		13,279		10,276		284		—		—		—		17,705		10,560
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Motor vehicles		46		30		—		—		—		—		—		76		—
—	Arauco North America, Inc.	U.S. Dollars	Buildings and constructions		263		852		1,174		1,303		1,445		1,600		1,891		1,115		7,413
—	Arauco North America, Inc.	U.S. Dollars	Motor vehicles		39		185		154		136		12		—		—		224		302
—	Arauco Canada Limited	Canadian dollars	Buildings and constructions		26		9		—		—		—		—		—		35		—
—	Arauco Canada Limited	Canadian dollars	Motor vehicles		14		42		90		39		3		—		—		56		132
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Plants and equipments		192		444		592		592		592		592		7,276		636		9,644
—	Eufores S.A.	U.S. Dollars	Lands		943		2,720		6,108		5,800		5,375		4.974		34,457		3,663		56,714
—	Eufores S.A.	U.S. Dollars	Plants and equipments		306		917		1,223		1,223		1,222		1,222		1,528		1,223		6,418
—	Eufores S.A.	U.S. Dollars	Buildings and constructions		111		210		198		78		—		—		—		321		276
96.510.970-6	Maderas Arauco S.A.	Chilean pesos	Motor vehicles		2,907		8,722		6,536		1,008		—		—		—		11,629		7,544
96.510.970-6	Maderas Arauco S.A.	U.F.	Motor vehicles		89		242		157		32		6		4		—		331		199
	Arauco Colombia S.A.	U.S. Dollars	Buildings and constructions		6		17		40		—		—		—		—		23		40
—	Arauco Colombia S.A.	U.S. Dollars	Fixed facilities and accessories		56		—		—		—		—		—		—		56		—
—	Arauco Europe Cooperatief U.A.	Euros	Motor vehicles		5		16		21		12		6		—		—		21		39
—	Arauco Europe Cooperatief U.A.	Euros	Buildings and constructions		19		57		78		80		7		—		—		76		165
—	Araucomex S.A. de C.V.	Mexican pesos	Buildings and constructions		326		992		1,157		533		258		—		—		1,318		1,948
—	Araucomex S.A. de C.V.	U.S. Dollars	Buildings and constructions		27		83		117		10		—		—		—		110		127
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Plants and equipments		—		97		131		—		—		—		—		97		131
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Lands		—		—		4		4		4		—		—		—		12
—	Araucomex Servicios S.A. de C.V.	Mexican pesos	Motor vehicles		—		7		18		17		17		7		—		7		59
	Araucomex Servicios S.A. de C.V.	Mexican pesos	Buildings and constructions		—		30		119		88		90		29		—		30		326
96.637.330-K	Servicios Logisticos Arauco S.A.	U.F.	Motor vehicles		17		49		30		—		—		—		—		66		30
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Motor vehicles		9		26		25		8		—		—		—		35		33

			Total		15,898		42,261		40,162		20,584		15,865		15,838		53,075		58,159		145,524

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.

106

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


December 31, 2020					Maturity														Total
Tax ID	Name	Currency		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. Dollars	Scotiabank		1,379		1,378		2,733		202,733		—		—		—		2,757		205,466		1.35%	Libor 6M+1.1%
93.458.000-1	Celulosa Arauco y Constitución S.A.		Euros	BNP Paribas / ECA		—		31,224		57,365		56,798		56,251		55,658		216,997		31,224		443,069		1.06%	1.06%
—	Zona Franca Punta Pereira S.A.		U.S. Dollars	Banco Interamericano de Desarrollo A		1,117		1,104		2,172		2,123		—		—		—		2,221		4,295		2.33%	Libor 6M +2.05%
—	Zona Franca Punta Pereira S.A.		U.S. Dollars	Banco BBVA		—		18,341		—		—		—		—		—		18,341		—		1.00%	1.00%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	Banco Interamericano de Desarrollo A		4,517		4,466		8,785		8,588		—		—		—		8,983		17,373		2.33%	Libor 6M +2.05%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	Finn Vera/ Finnish Export Credit		25,589		25,200		49,269		24,065		—		—		—		50,789		73,334		3.20%	3.20%
—	Celulosa y Energia Punta Pereira S.A.		U.S. Dollars	DnB Nor		187		155		218		93		—		—		—		342		311		—	-
—	Eufores S.A.		U.S. Dollars	Banco República Oriental del Uruguay		—		26,551		—		—		—		—		—		26,551		—		1.54%	Libor 6M +1.3%
—	Eufores S.A.		U.S. Dollars	Citibank		—		2,514		—		—		—		—		—		2,514		—		1.16%	Libor 6M +0.9%
—	Eufores S.A.		U.S. Dollars	ITAU		—		12,564		—		—		—		—		—		12,564		—		1.05%	1.05%
—	Eufores S.A.		U.S. Dollars	Scotiabank		—		5,025		—		—		—		—		—		5,025		—		1.00%	1.00%
—	Eufores S.A.		U.S. Dollars	Santander		—		27,133		—		—		—		—		—		27,133		—		1.00%	1.00%
—	Stora Enso Uruguay S.A.		U.S. Dollars	Banco República Oriental del Uruguay		—		554		—		—		—		—		—		554		—		1.54%	Libor 6M +1.3%
—	Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Votorantim		—		255		243		—		—		—		—		255		243		5.00%	5.00%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Votorantim		—		226		215		—		—		—		—		226		215		5.00%	5.00%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito A		36		106		100		—		—		—		—		142		100		7.46%	TJLP +2.91%
—	Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito B		22		64		60		—		—		—		—		86		60		8.46%	TJLP +3.91%
—	Arauco Forest Brasil S.A.		U.S. Dollars	Banco Bndes Subcrédito C		40		116		124		—		—		—		—		156		124		5.80%	Cesta +2.91%
—	Arauco Forest Brasil S.A.		U.S. Dollars	Banco Bndes Subcrédito D		25		72		67		—		—		—		—		97		67		9.66%	TJLP +5.11%
—	Arauco North America, Inc.		U.S. Dollars	Banco del Estado de Chile - NY Branch		—		35,657		35,077		34,496		212,036		—		—		35,657		281,609		1.91%	Libor 6M +1.65%

				Total		32,912		192,705		156,428		328,896		268,287		55,658		216,997		225,617		1,026,266

December 31, 2020					Maturity														Total				Effective rate		Nominal rate
					Up to 3 months		3 to 12 months		1 to 2 years		2 to 3 years		3 to 4 years		4 to 5 years		More than 5 years		Current		Non Current
Tax ID	Name		Currency	Bonds	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-F		—		25,426		24,644		23,863		23,081		22,299		81,380		25,426		175,267		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-F		—		10,170		9,858		9,545		9,232		8,920		32,552		10,170		70,107		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-P		—		8,098		26,500		25,764		25,027		24,291		149,427		8,098		251,009		4.00%	4.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-Q		—		10,375		—		—		—		—		—		10,375		—		3.00%	3.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-R		—		7,295		7,295		7,295		7,295		7,295		273,750		7,295		302,930		3.60%	3.60%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-S		—		4,878		4,878		4,878		4,878		4,878		209,325		4,878		228,837		2.40%	2.40%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-W		—		2,563		2,563		2,563		2,563		2,563		130,356		2,563		140,608		2.10%	2.10%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.F.	Barau-X		—		6,032		6,032		6,032		6,032		6,032		333,461		6,032		357,589		2.70%	2.70%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2022		2,996		2,996		129,164		—		—		—		—		5,992		129,164		4.75%	4.75%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2024		11,250		11,250		22,500		22,500		522,500		—		—		22,500		567,500		4.50%	4.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2027		—		19,375		19,375		19,375		19,375		19,375		538,750		19,375		616,250		3.88%	3.88%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2047		—		22,000		22,000		22,000		22,000		22,000		884,000		22,000		972,000		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2029		—		21,250		21,250		21,250		21,250		21,250		574,375		21,250		659,375		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2049		—		27,500		27,500		27,500		27,500		27,500		1,146,250		27,500		1,256,250		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2030		10,500		10,500		21,000		21,000		21,000		21,000		594,500		21,000		678,500		4.20%	4.20%
93.458.000-1	Celulosa Arauco y Constitución S.A.		U.S. Dollars	Yankee 2050		12,875		12,875		25,750		25,750		25,750		25,750		1,130,875		25,750		1,233,875		5.15%	5.15%
—	Prime-Line, Inc.		U.S. Dollars	Bond ADFA 2014		128		384		512		512		512		512		1,493		512		3,541		4.84%	4.84%
—	Prime-Line, Inc.		U.S. Dollars	Bond ADFA 2013		38		113		149		112		—		—		—		151		261		4.00%	4.00%

				Total		37,787		203,080		370,970		239,939		737,995		213,665		6,080,494		240,867		7,643,063

107

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


December 31, 2020				Maturity														Total
Tax ID	Name	Currency	Underlying asset class	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.$
85.805.200-9	Forestal Arauco S.A.	U.F.	Motor vehicles		527		1,563		1,578		1,057		569		431		271		2,090		3,906
85.805.200-9	Forestal Arauco S.A.	U.F.	Plants and equipments		1,511		2,005		1,410		41		—		—		—		3,516		1,451
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Plants and equipments		384		259		153		76		—		—		—		643		229
85.805.200-9	Forestal Arauco S.A.	U.F.	Other properties, plant and equipment		1,518		3,812		4,459		46		—		—		—		5,330		4,505
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Other properties, plant and equipment		72		217		120		—		—		—		—		289		120
—	Arauco Argentina S.A.	U.S. Dollars	Buildings and constructions		116		334		34		—		—		—		—		450		34
—	Arauco Argentina S.A.	U.S. Dollars	IT equipment		13		39		35		—		—		—		—		52		35
—	Arauco Argentina S.A.	U.S. Dollars	Other properties, plant and equipment		—		—		—		—		—		—		—		—		—
—	Arauco Argentina S.A.	U.S. Dollars	Plants and equipments		347		1,040		1,386		1,002		668		—		—		1,387		3,056
—	Arauco Argentina S.A.	U.S. Dollars	Motor vehicles		744		2,316		1,804		1,589		750		—		—		3,060		4,143
—	Novo Oeste Gestao de Ativos Florestais S.A.	Brazilian Real	Lands		—		—		—		—		—		—		—		—		—
—	Arauco Industria de Paineis S.A.	Brazilian Real	Other properties, plant and equipment		3		10		8		—		—		—		—		13		8
—	Arauco Industria de Paineis S.A.	Brazilian Real	IT equipment		14		42		38		1		—		—		—		56		39
—	Arauco Industria de Paineis S.A.	Brazilian Real	Motor vehicles		118		355		177		—		—		—		—		473		177
—	Arauco Forest Brasil S.A.	Brazilian Real	IT equipment		7		17		16		2		—		—		—		24		18
—	Arauco Forest Brasil S.A.	Brazilian Real	Lands		676		2,027		2,476		2,702		2,702		2,702		4,728		2,703		15,310
—	Arauco Florestal Arapoti S.A.	Brazilian Real	IT equipment		5		8		5		—		—		—		—		13		5
—	Arauco do Brasil S.A.	Brazilian Real	Buildings and constructions		75		226		301		301		75		—		—		301		677
—	Arauco do Brasil S.A.	U.S. Dollars	IT equipment		—		—		—		—		—		—		—		—		—
—	Arauco do Brasil S.A.	Brazilian Real	IT equipment		34		64		49		3		—		—		—		98		52
—	Arauco do Brasil S.A.	Brazilian Real	Motor vehicles		84		252		408		—		—		—		—		336		408
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Buildings and constructions		428		1,283		1,597		1,170		—		—		—		1,711		2,767
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Motor vehicles		197		527		603		312		141		88		27		724		1,171
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Buildings and constructions		18		55		74		18		—		—		—		73		92
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Plants and equipments		1,612		—		—		—		—		—		—		1,612		—
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Motor vehicles		5,055		15,165		20,220		7,005		—		—		—		20,220		27,225
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Motor vehicles		45		136		30		—		—		—		—		181		30
—	Arauco North America, Inc.	U.S. Dollars	Lands		—		—		—		—		—		—		—		—		—
—	Arauco North America, Inc.	U.S. Dollars	Buildings and constructions		267		822		1,156		1,285		1,426		1,581		3,275		1,089		8,723
—	Arauco North America, Inc.	U.S. Dollars	Motor vehicles		38		118		247		138		123		—		—		156		508
—	Arauco North America, Inc.	U.S. Dollars	Other properties, plant and equipment		—		—		—		—		—		—		—		—		—
—	Arauco Canada Limited	Canadian dollars	Other properties, plant and equipment		—		—		—		—		—		—		—		—		—
—	Arauco Canada Limited	Canadian dollars	Buildings and constructions		25		78		9		—		—		—		—		103		9
—	Arauco Canada Limited	Canadian dollars	Motor vehicles		13		41		57		91		34		—		—		54		182
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Plants and equipments		139		418		383		384		384		384		7,094		557		8,629
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Buildings and constructions		—		—		—		—		—		—		—		—		—
—	Eufores S.A.	U.S. Dollars	Lands		975		2,980		5,744		5,549		5,245		4,819		32,721		3,955		54,078
—	Eufores S.A.	U.S. Dollars	Other properties, plant and equipment		—		—		—		—		—		—		—		—		—
—	Eufores S.A.	U.S. Dollars	Plants and equipments		306		917		1,222		1,222		1,222		1,222		2,445		1,223		7,333
—	Eufores S.A.	U.S. Dollars	Buildings and constructions		70		210		117		117		49		—		—		280		283
96.510.970-6	Maderas Arauco S.A.	Chilean pesos	Motor vehicles		3,906		10,298		12,736		5,840		—		—		—		14,204		18,576
96.510.970-6	Maderas Arauco S.A.	U.F.	Motor vehicles		125		322		345		105		28		6		2		447		486
96.510.970-6	Maderas Arauco S.A.	U.F.	Lands		—		—		—		—		—		—		—		—		—
—	Arauco Colombia S.A.	U.S. Dollars	Buildings and constructions		10		—		—		—		—		—		—		10		—
—	Arauco Colombia S.A.	U.S. Dollars	Fixed facilities and accesories		137		411		—		—		—		—		—		548		—
—	Arauco Europe Cooperatief U.A.	Euros	Motor vehicles		8		12		11		10		—		—		—		20		21
—	Arauco Europe Cooperatief U.A.	Euros	Buildings and constructions		17		52		77		79		81		7		—		69		244
—	Araucomex S.A. de C.V.	Mexican pesos	Buildings and constructions		26		80		112		98		—		—		—		106		210
—	Araucomex S.A. de C.V.	U.S. Dollars	Buildings and constructions		358		970		2,251		1,859		1,815		—		—		1,328		5,925
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Plants and equipments		261		—		—		—		—		—		—		261		—
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Plants and equipments		94		288		131		—		—		—		—		382		131
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Buildings and constructions		—		—		—		—		—		—		—		—		—
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Lands		—		—		—		—		—		—		—		—		—
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Lands		—		—		—		—		—		—		—		—		—
—	Araucomex Servicios S.A. de C.V.	Mexican pesos	Motor vehicles		20		59		17		—		—		—		—		79		17
96.637.330-K	Servicios Logisticos Arauco S.A.	U.F.	Motor vehicles		24		62		70		16		—		—		—		86		86
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Motor vehicles		21		40		38		21		5		—		—		61		64

			Total		20,443		49,930		61,704		32,139		15,317		11,240		50,563		70,373		170,963

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.

108

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Regarding the Libor rate and its discontinuity, at the end of September 2021 Arauco maintains 5.69% of its total debt at said rate and it is not estimated that the effect of its elimination will be material. Additionally, Arauco maintains interest rate derivatives for 90% of its Libor rate based debt.

Guarantees

As of the date of these interim consolidated financial statements, Arauco has financial assets of approximately MU.S.$ 48 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 September 30, 2021, the total assets pledged as an indirect guarantee were MU.S.$ 393. 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

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

380

Railways

Celulosa Arauco y Constitución S.A.

Guarantee
letter

—

Chilean
Pesos

Regional Road Administration (Bío - Bío region)

Celulosa Arauco y Constitución S.A.

Guarantee
letter

—

Chilean
Pesos

2,489

Ministry of Public Works (MOP)

Celulosa Arauco y Constitución S.A.

Guarantee
letter

—

Chilean
Pesos

250

Illustrious municipality of Arauco

Celulosa Arauco y Constitución S.A.

Guarantee
letter

—

Chilean
Pesos

15,683

Sociedad Concesionaria Autopista Costa Arauco S.A.

Arauco Forest Brasil S.A.

Mortgage
Industrial
Plant of

Jaguariaíva
of Arauco do
Brasil

Property
plant and
equipment

Brazilian
Real

28,185

BNDES

Arauco Forest Brasil S.A.

Endorsement
of Arauco do
Brasil

—

Brazilian
Real

392

Bank Votorantim S.A.

Arauco Florestal Arapoti S.A.

Endorsement
of Arauco do
Brasil

—

Brazilian
Real

442

Bank Votorantim S.A.

Total

48,526

INDIRECT

Subsidiary

Guarantee

Assets
Pledged

Currency

ThU.S.$

Guarantor

Celulosa Arauco y Constitución S.A.

Suretyship
not
supportive
and
cumulative

—

U.S.
Dollar

92,105

Joint Ventures (Uruguay)

Celulosa Arauco y Constitución S.A.

Full
Guarantee

—

U.S.
Dollar

300,000

Arauco North America, Inc.

Celulosa Arauco y Constitución S.A.

Guarantee
letter

—

Brazilian
Real

480

Arauco Forest Brasil

Total

392,585

109

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 +/- 0.8% (equivalent to ThU.S.$ -/+ 6,534), and +/- 0.05% of equity (equivalent to ThU.S.$ -/+ 3,921).

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 +/- 0.26% (equivalent to ThU.S.$-/+$ 2,107) and a change on the equity of +/- 1.18% (equivalent to ThU.S. -/+$ 91,948).

110

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 September 30, 2021, 5.8% 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 +/- 0.005% (equivalent to ThU.S.$-/+ 39) and +/- 0.0003% (equivalent to ThU.S.$-/+ 23) on equity.


	September 2021 ThU.S.$		Total
Fixed rate		5,449,164		94.2	%
Bonds issued		4,587,946
Bank borrowings and others (*)		683,590
Lease liabilities		177,628
Variable rate		337,576		5.8	%
Bonds issued		—
Bank borrowings		337,576
Total		5,786,740		100.0	%


	December 2020 ThU.S.$		Total
Fixed rate		5,631,837		90.9	%
Bonds issued		4,707,944
Bank borrowings and others (*)		712,138
Lease liabilities		211,755
Variable rate		562,122		9.1	%
Bonds issued		—
Bank borrowings		562,122
Total		6,193,959		100.0	%

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

111

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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 September 30, 2021, revenue due to pulp sales accounted for 44.4% 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 +/- 16.9% (equivalent to ThU.S.$-/+ 137,784) on the income for the year after tax and +/- 1.06% (equivalent to ThU.S.$ -/+ 82,671) on equity.

112

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 24. REPORTABLE SEGMENTS

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

Pulp segment

The main products sold by this reportable segment are long fiber bleached pulp (BSKP), short fiber bleached pulp (BHKP), long fiber raw pulp (UKP), pulp fluff and dissolving pulp (DP). Additionally, it manages a forest plantations in order to supply its production plants and, at the same time, to sell to the wood products segment or to third parties what it does not use (pruning, sawing, poles and chips). Finally, depending on the needs, it buys logs and chips from third parties which are consumed or sold to the wood products segment.

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. Fluff pulp is mainly used in the production of diapers and female hygiene products. On the other hand, dissolving pulp is used as raw material for the manufacture of different fabrics.

Arauco has seven plants, five in Chile, one in Argentina and one in Uruguay (50% property of Arauco) and they have a total production capacity of approximately 4 million tons per year. Pulp is sold in more than 41 countries, mainly in Asia and Europe.

113

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

Wood products segment

The main products sold by this segment correspond to plywood, MDF (Medium Density Fiberboard), PB (chipboard), sawn wood of different dimensions and remanufactured products such as moldings, pre-cut pieces, finger joints, among others.

The Panels area produces a wide range of panel products and several kinds of moldings aimed at the furniture, decoration and construction industries. It consists of 20 industrial plants: 4 in Chile, 2 in Argentina, 4 in Brazil, 2 in Mexico, and 8 plants around USA and Canada. The Company has a total annual production capacity of 7.6 million cubic meters of PBO, MDF, plywood and moldings.

Through the joint venture Sonae Arauco (see note 16), 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 total, Sonae Arauco’s production capacity is approximately 1.5 million m3 of MDF, 2.4 million m3 of PB, 460,000 m3 of OSB and 70,000 m3 of sawn timber.

Including Sonae Arauco at 50%, Arauco totalize a capacity of 4.3 million m3 of MDF, 4.5 million m3 of PB and 230,000 m3 of OSB in its plants.

The Sawn Timber area 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.

With 8 sawmills in operation (7 in Chile and 1 in Argentina), the Company has a production capacity of 3.0 million m3 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.

Arauco has no customers representing 10% or more of its revenues.

According to Note 2 Accounting Policies, changes in Accounting Estimates, since January 1, 2021, the pulp and forestry segments were merged. Given this merger and complying with the requirements of IFRS 8, the information for the period to December 31, 2020 and the 6 months period to September 30, 2021 has been restated.

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:

114

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Period ended September 30, 2021	Pulp ThU.S.$		Wood products ThU.S.$		Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from sales of goods		1,976,132		2,559,185		—			—			4,535,317						4,535,317
Revenues from rendering of services		71,826		18		190			—			72,034						72,034

Revenues from external customers		2,047,958		2,599,203		190			—			4,607,351						4,607,351
Revenues from transactions with other operating segments		372,187		23,669		28,275			—			424,131			(424,131	)		—

Finance income		—		—		—			22,612			22,612						22,612
Finance costs		—		—		—			(170,443	)		(170,443	)					(170,443	)
Net finance costs		—		—		—			(147,831	)		(147,831	)					(147,831	)

Depreciation and amortizations		220,445		137,401		1,218			8,354			367,418						367,418
Other income		369,630		14,411		265			21,262			405,568						405,568
Other expenses		91,673		19,597		189			12,014			123,473						123,473

Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		1,611		—		—			(1,222	)		389						389
Joint ventures		—		33,487		—			(2,390	)		31,097						31,097

Income tax expense		—		—		—			(335,106	)		(335,106	)					(335,106	)


Profit (loss) of each reportable segment		756,012		636,517		(6,289	)		(570,926	)		815,314						815,314

Geographical information on revenues
Revenue – Chilean entities		1,407,682		670,237		190			—			2,078,109						2,078,109
Revenue – Foreign entities		640,276		1,888,966		—			—			2,529,242						2,529,242
Total Ordinary Income		2,047,958		2,559,2039		190			—			4,607,351						4,607,351


Period ended September 30, 2021	Pulp ThU.S.$		Wood products ThU.S.$		Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets

Acquisition of property, plant and equipment and biological assets		1,042,075		54,684		97			4,538			1,101,394			—			1,101,394
Acquisition and contribution of investments in associates and joint venture		—		—		—			4,833			4,833			—			4,833


Period ended September 30, 2021	Pulp ThU.S.$		Wood products ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Subtotal ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		12,379,645		2,965,707		25,535		1,690,074		17,060,961		(83,844	)		16,977,117
Segment assets (excluding deferred tax assets)		12,379,645		2,965,707		25,535		1,684,827		17,055,714		(83,844	)		16,971,870
Deferred tax assets								5,247		5,247					5,247
Investments accounted through equity method
Associates		28,188		—		—		55,272		83,460					83,460
Joint Ventures		—		207,067		—		42,724		249,791					249,791
Segment liabilities		995,712		469,004		10,461		7,698,060		9,173,237					9,173,237
Segment liabilities (excluding deferred tax liabilities)		995,712		469,004		10,461		6,133,601		7,608,778					7,608,778
Deferred tax liabilities								1,564,459		1,564,459					1,564,459

Geographical information on non-current assets
Chile		7,882,909		540,184		24,809		316,160		8,764,062		(6,095	)		8,757,967
Foreign countries		2,665,592		1,211,707		—		56,103		3,933,402					3,933,402
Non-current assets, Total		10,548,501		1,751,891		24,809		372,263		12,697,464		(6,095	)		12,691,369

115

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Period ended September 30, 2020	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from goods sale		1,458,685		1,865,989									3,324,674						3,324,674
Revenues from rendering of services		55,195		2			82						55,279						55,279

Revenues from external customers		1,513,880		1,865,991			82						3,379,953						3,379,953
Revenues from transactions with other operating segments		814,256		16,551			24,433						855,240			(855,240	)		—

Finance income		—								23,683			23,683						23,683
Finance costs		—								(202,099	)		(202,099	)					(202,099	)
Net finance costs		—								(178,416	)		(178,416	)					(178,416	)

Depreciation and amortizations		226,093		143,986			1,161			7,398			378,638						378,638
Other income		143,468		29,783			89			2,283			175,623						175,623
Other expenses		86,941		44,006			3			10,476			141,426						141,426

Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		963								3,569			4,532						4,532
Joint ventures				(4,683	)					969			(3,714	)					(3,714	)

Income tax expense										7,726			7,726						7,726


Profit (loss) of each reportable segment		109,493		110,326			(1,624	)		(267,789	)		(49,594	)					(49,594	)

Geographical information on revenues
Revenue – Chilean entities		1,051,154		780,556			82						1,831,792						1,831,792
Revenue – Foreign entities		462,726		1,085,435									1,548,161						1,548,161
Total Ordinary Income		1,513,880		1,865,991			82						3,379,953						3,379,953


Period ended September 30, 2020	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets

Acquisition of property, plant and equipment and biological assets		1,180,619		78,428			386			6,032			1,265,465			—			1,265,465
Acquisition and contribution of investments in associates and joint venture		—		—			—			15,252			15,252			—			15,252


Period ended December 31, 2020	Pulp ThU.S.$		Wood products ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Subtotal ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		11,543,571		2,886,177		24,941		1,623,700		16,078,389		(50,070	)		16,028,319
Segment assets (excluding deferred tax assets)		11,543,571		2,886,177		24,941		1,617,659		16,072,348		(50,070	)		16,022,278
Deferred tax assets		—		—		—		6,041		6,041					6,041
Investments accounted through equity method
Associates		29,205		—		—		56,509		85,714					85,714
Joint Ventures		—		187,388		—		43,837		231,225					231,225
Segment liabilities		494,065		471,024		8,574		7,639,021		8,612,684					8,612,684
Segment liabilities (excluding deferred tax liabilities)		494,065		471,024		8,574		6,175,135		7,148,798					7,148,798
Deferred tax liabilities		—		—		—		1,463,886		1,463,886					1,463,886

Geographical information on non-current assets
Chile		7,487,475		588,973		24,305		314,330		8,415,083		(6,380	)		8,408,703
Foreign countries		2,731,405		1,277,666		—		66,220		4,075,291		—			4,075,291
Non-current assets, Total		10,218,880		1,866,639		24,305		380,550		12,490,374		(6,380	)		12,483,994


Quarter July – September 2021	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from goods sale		735,199		944,232			—						1,679,431						1,679,431
Revenues from rendering of services		25,631		(8	)		16						25,639						25,639

Revenues from external customers		760,830		944,224			16						1,705,070						1,705,070
Revenues from transactions with other operating segments		320,594		9,240			10,961						340,795			(340,795	)		—

Finance income		—								8,178			8,178						8,178
Finance costs		—								(52,263	)		(52,263	)					(52,263	)
Net finance costs		—								(44,085	)		(44,085	)					(44,085	)

Depreciation and amortizations		69,139		45,952			416			2,809			118,316						118,316
Other income		278,154		6,235			265			538			285,192						285,192
Other expenses		42,913		7,062			56			2,986			53,017						53,017

Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		763		—			—			(513	)		250						250
Joint ventures		—		20,922			—			(902	)		20,020						20,020

Income tax expense										(169,100	)		(169,100	)					(169,100	)


Profit (loss) of each reportable segment		457,793		289,099			(1,722	)		(233,643	)		511,527						511,527

Geographical information on revenues
Revenue – Chilean entities		520,435		247,080			16						767,531						767,531
Revenue – Foreign entities		240,395		697,144									937,539						937,539
Total Ordinary Income		760,830		944,224			16						1,705,070						1,705,070


Quarter July – September 2021	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets

Acquisition of property, plant and equipment and biological assets		342,578		19,701			45			2,137			364,461			—			364,461
Acquisition and contribution of investments in associates and joint venture		—		—			—			28			28			—			28

116

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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


Quarter July – September 2020	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from goods sale		486,856		699,267			—						1,186,123						1,186,123
Revenues from rendering of services		16,789		1			—						16,790						16,790

Revenues from external customers		503,645		699,268			—						1,202,913						1,202,913
Revenues from transactions with other operating segments		272,165		4,908			9,032						286,105			(286,105	)		—

Finance income		—								4,164			4,164						4,164
Finance costs		—								(64,395	)		(64,395	)					(64,395	)
Net finance costs		—								(60,231	)		(60,231	)					(60,231	)

Depreciation and amortizations		74,974		48,143			387			3,060			126,564						126,564
Other income		47,252		3,510			89			1,928			52,779						52,779
Other expenses		28,149		1,878			1			3,104			33,132						33,132

Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		366		—			—			536			902						902
Joint ventures		—		(108	)		—			512			404						404

Income tax expense										(21,385	)		(21,385	)					(21,385	)


Profit (loss) of each reportable segment		35,487		93,846			(1,160	)		(92,124	)		36,049						36,049

Geographical information on revenues
Revenue – Chilean entities		349,882		301,916			—						651,798						651,798
Revenue – Foreign entities		153,763		397,352									551,115						551,115
Total Ordinary Income		503,645		699,268			—						1,202,913						1,202,913


Quarter July – September 2020	Pulp ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property, plant and equipment and biological assets		431,951		16,444			61			2,543			450,999			—			450,999
Acquisition and contribution of investments in associates and joint venture		—		—			—			40			40			—			40

117

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

The following table shows information related to cash flows by segments which is presented as a complementary information as required by our regulatory entities:


Period ended September 30, 2021	Pulp ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		875,402			579,830			2,840			(60,426	)		1,397,646			—		1,397,646
Cash flows (used in) investing activities		(950,697	)		(58,840	)		(468	)		(4,414	)		(1,014,419	)		—		(1,014,419	)
Cash flows from (used in) Financing Activities		(68,750	)		(30,080	)		(1,901	)		(2,719	)		(103,450	)		—		(103,450	)
Net increase (decrease) in Cash and Cash Equivalents		(144,045	)		490,910			471			(67,559	)		279,777			—		279,777


Period ended September 30, 2020	Pulp ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		655,544			295,503			1,012			(147,375	)		804,684			—		804,684
Cash flows (used in) investing activities		(1,171,582	)		(86,144	)		(386	)		(8,501	)		(1,266,613	)		—		(1,266,613	)
Cash flows from (used in) Financing Activities		103,397			(5,550	)		(57	)		(2,975	)		94,815			—		94,815
Net increase (decrease) in Cash and Cash Equivalents		(412,641	)		203,809			569			(158,851	)		(367,114	)		—		(367,114	)


Quarter September 2021	Pulp ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		407,508			197,467			3,331			(65,498	)		542,808			—		542,808
Cash flows (used in) investing activities		(315,502	)		(14,699	)		(197	)		(2,431	)		(332,829	)		—		(332,829	)
Cash flows from (used in) Financing Activities		7,743			(5,364	)		(1,016	)		(1,222	)		141			—		141
Net increase (decrease) in Cash and Cash Equivalents		99,749			177,404			2,118			(69,151	)		210,120			—		210,120


Quarter September 2020	Pulp ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		396,772			198,671			1,029			(41,026	)		555,446			—		555,446
Cash flows (used in) investing activities		(429,339	)		(14,853	)		(61	)		(5,625	)		(449,878	)		—		(449,878	)
Cash flows from (used in) Financing Activities		(156,994	)		(3,760	)		(20	)		(11,119	)		(171,893	)		—		(171,893	)
Net increase (decrease) in Cash and Cash Equivalents		(189,561	)		180,058			948			(57,770	)		(66,325	)		—		(66,325	)

Information required by geographic area:


	Geographical area
2021	Local country		Foreign country
	Chile		Argentina		Brazil		USA/ Canada		Uruguay		Mexico			Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$			ThU.S.$
Revenues from goods sale		2,032,362		377,080		462,160		1,183,844		339,560		140,311			4,535,317
Revenues from rendering of services		45,747		—		—		—		26,270		17			72,034

Revenues as of September 30, 2021		2,078,109		377,080		462,160		1,183,844		365,830		140,328			4,607,351

Revenues from goods sale		750,297		150,367		176,940		434,521		116,082		51,224			1,679,431
Revenues from rendering of services		17,234		—		—		—		8,413		(8	)		25,639

Revenues between July – September of 2021		767,531		150,367		176,940		434,521		124,495		51,216			1,705,070

Non-current Assets at 09-30-2021 other than deferred tax		8,753,394		706,616		649,177		740,623		1,708,924		127,388			12,686,122


	Geographical area
2020	Local country		Foreign country
	Chile		Argentina		Brazil		USA/ Canada		Uruguay		Mexico		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues from goods sale		1,801,324		279,935		296,007		630,633		225,405		91,370		3,324,674
Revenues from rendering of services		30,468		—		—		—		24,809		2		55,279

Revenues as of September 30, 2020		1,831,792		279,935		296,007		630,633		250,214		91,372		3,379,953

Revenues from goods sale		643,178		103,763		119,996		211,233		73,682		34,271		1,186,123

Revenues from rendering of services		8,620		—		—		—		8,169		1		16,790

Revenues between July – September of 2020		651,798		103,763		119,996		211,233		81,851		34,272		1,202,913

118

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 25. OTHER NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES


	09-30-2021		12-31-2020
Current non-financial assets	ThU.S.$		ThU.S.$
Roads to amortize current		47,246		55,000
Prepayment to amortize (insurance and others)		47,854		16,671
Recoverable taxes (GST and others)		74,219		91,337
Other current non-financial assets		5,546		5,589
Total		174,865		168,597


	09-30-2021		12-31-2020
Non-current non-financial assets	ThU.S.$		ThU.S.$
Roads to amortize, non-current		87,247		91,441
Guarantee values		2,828		3,605
Recoverable taxes		5,009		14,437
Other non-current non-financial assets		4,324		3,731
Total		99,408		113,214


	09-30-2021		12-31-2020
Current non-financial liabilities	ThU.S.$		ThU.S.$
Provision of minimum dividend (1)		475,676		698
ICMS, PIS-COFINS and other tax payables - Brazil		25,262		24,997
Other tax payable		14,704		17,851
Other Current non-financial liabilities		3,730		1,184
Total		519,372		44,730

(1)

In 2021, Arauco update the dividend policy of the Company, establishing that in respect of fiscal year 2021, it will be distributed among the shareholders an amount equivalent to the 40% of the cash income for such year capable of being distributed as dividends. As of September 30, 2021 Arauco in the Financial Statements has recognize provision of minimum dividend for ThU.S.$ 275,058, this amount include a provision for a total of ThU.S.$ 200,000. It was paid sas of October 25, 2021.



	09-30-2021		12-31-2020
Non-current non-financial liabilities	ThU.S.$		ThU.S.$
ICMS tax payable - Brazil		77,670		82,033
Other non-current non-financial liabilities		1,971		1,270
Total		79,641		83,303

119

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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:

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.

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.

As of September 30, 2021 Arauco in the Financial Statements has recognize provision of minimum dividend for ThU.S.$ 275,058. Since November 5, 2021 Arauco paid ThU.S.$ 271.000 as a provisional dividend an account of the minimum dividend provision.

In consideration of the positive results obtained by the Company during this year, it was agreed to summon to an Extraordinary Shareholders’ Meeting to be held on Tuesday, October 12, 2021, in order that such Shareholders’ Meeting decide on the distribution of a definitive dividend (eventual dividend) with charge on the fund of retain profits. Generating September 30, 2021, a provision for a total of ThU.S.$ 200,000. It was paid sas of October 25, 2021.

The following table details the adjustments made for the determination of distributable net profit as of September 30, 2021 and 2020:


	Distributable Net Profit
	09-30-2021 ThU.S.$			09-30-2020 ThU.S.$
Net profit attributable to parent company		634,793			(49,320	)
Adjustments:
Biological assets
Unrealized gains/losses		(122,609	)		(130,740	)
Realized gains/losses		191,799			159,642
Deferred income taxes		(16,338	)		(6,616	)

Total adjustments		52,852			22,286

Distributable Net Profit		687,645			(27,034	)

120

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

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 - September					July - September
	2021 ThU.S.$		2020 ThU.S.$			2021 ThU.S.$		2020 ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		813,993		(49,320	)		511,081		36,157
Weighted average of number of shares		118,336,953		113,278,304			120,188,355		113,159,655
Basic and diluted earnings per share (in U.S.$ per share)		6.8786037		(0.4353879	)		4.2523338		(0.3195220	)

121

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 27. COVID-19

In late December 2019 a notice of pneumonia originating from Wuhan, Hubei province (COVID-19, caused by a novel coronavirus) was reported to the World Health Organization, with cases soon confirmed in multiple provinces in China, as well as in other countries. As of the date of this report, the virus has affected most nations, including Chile, Argentina, Brazil, Uruguay, Mexico, and the United States.

Several measures have been undertaken by governments around the globe, including the use of quarantine, screening at airports and other transport hubs, travel restrictions, suspension of visas, nation-wide lockdowns, closing of public and private institutions, suspension of sport events, restrictions to museums and tourist attractions and extension of holidays, among many others.

In this complex scenario, it is important to highlight that, in March 2020, our industrial activities were declared as essential business by the authorities in most of the countries where we have operations. This has allowed us, as of the date of this report, to maintain the operational continuity in most of our industrial operations, helping to mitigate negative effects on the demand of some of our clients and products. We have implemented health and safety protocols for our workers both in industrial operations and in commercial offices. The measures adopted -such as social distancing, sanitation of the facilities, preventive testing, personnel transportation, home office, among others- are being continuously monitored so that workers have all the necessary protection for the performance of their functions.

Arauco’s commitment is not only with its workers, but also with the communities where we operate. In this regard, we have developed programs aimed at strengthening the capacities of the health system, through massive sanitation and fumigation programs of common spaces in the suburbs where we are present in Chile and delivery of sanitary supplies and essential reagents for 8 thousand diagnostic tests in the Ñuble region. In addition, support has been provided in temperature taking points and sanitary barriers in coordination with authorities; contributuion of hospital equipment and mechanical fans in Curanilahue, Biobío region; support in the implementation of rest areas for hospital personnel and improvements in spaces within hospitals in Chile; and collaborated in research for the development of mechanical fans.

On the other hand, our employees have participated as volunteers to deliver food boxes, as part of the campaign promoted by the CPC to reach the most vulnerable families in the country. This initiative entailed deliverying 5,226 food boxes in 28 communes of Chile, and putting together a network of Arauco Chile seamstresses for the development of reusable masks. Support was also provided, through the Fundación AcercaRedes, to the economy of small producers in Chile and for thereopening of agricultura fairs, applying various sanitation actions and delivering health kits. A network of volunteers was also assembled to support families living in rural areas.

No significant economic impacts have been generated in the operations reflected in Arauco’s financial statements.

122

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2021

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

NOTE 28. SUBSEQUENT EVENTS

The authorization for the issuance and publication of these consolidated financial statements for the period between January 01, 2021 and September 30, 2021 was approved by the Board of Directors of Arauco at the Extraordinary Meeting No. 659 held on November 12, 2021.

Subsequent to September 30, 2021 and as of the date of issuance of these interim consolidated financial statements, there have been no events that could materially affect the presentation of these financial statements.

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arauco Press Release 3Q 2021

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3Q 2021 RESULTS Highlights For more details on ARAUCO´s financial statements please visit www.cmfchile.cl or www.arauco.com 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. REVENUES US$1,705.1 million ARAUCO’s revenues reached US$1,705.1 million during the third quarter of 2021, a 9.6% increase compared to the US$1,555.6 million obtained during the second quarter of 2021 and a 41.7% increase compared to the third quarter of 2020. NET INCOME US$511.5 million ARAUCO’s net income was US$511.5 million, equivalent to a US$377.6 million or 154.0% increase when compared to the US$201.4 million obtained during the second quarter of 2021, and a US$475.5 million increase compared to the third quarter of 2020. ADJUSTED EBITDA US$922.9 million Adjusted EBITDA reached US$922.9 million, a 69.2% or US$377.6 million increase compared to the US$545.4 million obtained during the second quarter of 2021, and US$632.2 million increase compared to the third quarter of 2020. NET DEBT TO EBITDA 2.00x Net Financial Debt decreased by US$297.0 million or 6.2% compared to the last quarter. Net Financial Debt / LTM Adjusted EBITDA ratio reached 2.00x in this quarter, a decrease compared to 2.97x in the second quarter of 2021 and the 5.43x reached during the third quarter of 2020. CAPEX US$364.5 million CAPEX reached US$364.5 million during this quarter, a US$37.3 decrease when compared to the US$401.8 million from the second quarter of 2021.

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3Q 2021 RESULTS Overview ARAUCO´s net income for the third quarter of 2021 was US$511.5 million, an increase of US$310.1 million compared to the second quarter of 2021. This is mainly explained by the closing of the forestry asset sale we announced a few months ago, and also due to a better operational result due to higher average realized prices in our wood products segment, and higher volumes in our pulp segment. This was partially offset by a 14.5% increase in distribution costs. Our Adjusted EBITDA was 69.2% higher than that of the second quarter, reaching US$922.9 million. The Adjusted EBITDA margin increased from 35.1% to 54.1% on a quarterly basis. Net Financial Debt decreased by US$297.0 million or 6.2% compared to the last quarter. Our Net Debt/LTM EBITDA ended up in 2.00x, a decrease when compared to the 2.97x reached during the second quarter of 2021. In US$ Million Q3 2021 Q2 2021 Q3 2020 QoQ YoY YTD 2021 YTD 2020 YoY Acum Revenue 1,705.1 1,555.6 1,202.9 9.6% 41.7% 4,607.4 3,380.0 36.3% Net income 511.5 201.4 36.0 154.0% 1319.0% 815.3 -49.6 1744.0% Adjusted EBITDA 922.9 545.4 290.7 69.2% 217.5% 1,853.0 691.0 168.1% Adjusted EBITDA Margin 54.1% 35.1% 24.2% 54.4% 124.0% 40.2% 20.4% 96.7% LTM Adj. EBITDA 2,233.8 1,601.6 902.1 39.5% 147.6% 2,233.8 902.1 147.6% CAPEX 364.5 401.8 453.9 -9.3% -19.7% 1,058.2 1,283.6 -17.6% Net Financial Debt 4,463.3 4,760.3 4,901.7 -6.2% -8.9% 4,463.3 4,901.7 -8.9% Net Financial Debt / LTM Adj. EBITDA 2.00x 2.97x 5.43x -32.8% -63.2% 2.00x 5.43x -63.2% Adjusted EBITDA and EBITDA Margin (in US$ Million) 17.2% 17.6% 17.3% 19.6% 24.2% 28.1% 28.6% 35.1% 54.1% 922.9 238.2 211.0 194.6 205.8 290.7 380.8 384.7 545.4 693.5 229.4 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 FY 2019 FY 2020 YTD 2021 1,147.4 1,071.8 1,853.0 Note: For Q3 2021, highlighted in blue the one-time US$229.4 million effect on Adj. EBITDA of the recently closed forestry asset sale.

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3Q 2021 RESULTS Income Statement In US$ Million Q3 2021 Q2 2021 QoQ Revenues 1,705.1 1,555.6 9.6% Cost of sales (923.4) (887.2) 4.1% Distribution costs (182.4) (159.3) 14.5% Administrative expenses (137.8) (150.7) -8.5% Other income 285.2 45.4 528.5% Other expenses (53.0) (33.0) 60.8% Financial income 8.2 7.6 7.6% Financial costs (52.3) (57.2) -8.6% Share of profit (loss) of associates and joint ventures accounted for using equity method 20.3 8.7 132.5% Exchange rate differences 10.8 (5.2) 307.7% Income before income tax 680.6 324.8 109.6% Income tax (169.1) (123.4) 37.1% Net income 511.5 201.4 154.0%

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3Q 2021 RESULTS Revenues ARAUCO’s revenues reached US$1,705.1 million in the third quarter of 2021, an increase of 9.6% when compared to the previous quarter. This variation is mostly explained by higher revenues in our wood products division, due to an 8.8% increase in average prices. Additionally, revenues for our pulp division increased by 6.9% or US$49.0 million. The following table shows a breakdown of our revenues by business segment: In US$ Million Q3 2021 Q2 2021 QoQ Pulp 760.8 711.9 6.9% Wood Products 944.2 843.6 11.9% Total 1,705.1 1,555.6 9.6% 3Q 2021 Revenue’s breakdown Pulp 44.6% Wood Products 55.4%

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3Q 2021 RESULTS Cost of sales Increased by 4.1% or US$36.2 million compared to the second quarter of 2021. This is mostly explained by increases in forestry labor and chemical costs primarily due to the increase in sales volume both in our Pulp and Wood Products segments, partially offset by a decrease in timber costs. In US$ Million Q3 2021 Q2 2021 QoQ Timber 159.8 181.0 -11.7% Forestry labor costs 155.9 136.5 14.2% Depreciation and amortization 96.1 100.3 -4.2% Depreciation for right of use 10.2 10.2 0.0% Maintenance costs 68.1 63.2 7.7% Chemical costs 144.1 130.5 10.4% Sawmill services 26.0 28.1 -7.4% Other raw materials and indirect costs 107.7 86.6 24.3% Energy and fuel 56.8 42.8 32.7% Cost of electricity 8.2 12.5 -34.2% Wage, salaries and severance indemnities 90.5 95.3 -5.1% Cost of Sales 923.4 887.2 4.1% Administrative expenses Decreased by 8.5% or US$12.8 million, when compared to the previous quarter, mostly due to a decrease in, (i) wages, salaries and severance indemnities and (ii) computer services and (iii) other administration expenses. In US$ Million Q3 2021 Q2 2021 QoQ Wages, salaries and severance indemnities 59.2 62.7 -5.6% Marketing, advertising, promotion and publications 3.2 3.3 -2.9% expenses Insurance 6.1 6.0 1.9% Depreciation and amortization 9.7 9.4 2.4% Depreciation for the right of use 1.6 1.7 -1.6% Computer services 6.3 9.6 -34.4% Lease rentals (offices, warehouses and machinery) 1.4 1.6 -14.5% Donations, contributions, scholarships 1.6 1.2 32.3% Fees (legal and technical advisories) 10.4 9.3 11.9% Property taxes, patents and municipality rights 6.3 8.2 -23.2% Other administration expenses 32.0 37.6 -14.9% Administrative Expenses 137.8 150.7 -8.5%

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3Q 2021 RESULTS Distribution costs Distribution costs increased by 14.5%, or US$23.1 million due to an increase in freight costs caused by pandemic-related logistic issues, and to increases in sales volume. In US$ Million Q3 2021 Q2 2021 QoQ Commissions Insurance 3.4 3.6 -4.6% 0.9 0.9 10.2% Other selling costs Port services 5.7 4.5 28.1% 13.9 11.8 17.8% Freight Depreciation for the 146.7 128.2 14.4% 0.6 0.6 -5.8% right of use Other shipping and freight costs 11.0 9.6 14.1% Distribution Costs 159.3 144.8 10.0% Other income Increased by US$239.8 million, mainly as a result of gains on sales of assets owing to the closing of the forestry asset sales announced few months ago. In US$ Million Q3 2021 Q2 2021 QoQ Gain from changes in fair 41.5 41.8 -1% value of biological assets Net income from insurance 0.2 0.60 -60% compensation Leases received 0.5 0.19 137% Gains on sales of assets 233.6 1.68 13,846% Tax recovery - 0.0 -100% Severance, payments - 0.0 -100% Profit on sales of - - N/A permanent investments Other operating results 9.5 1.14 730% Government Subsidies - - N/A Other Income 285.2 45.4 528.5%

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3Q 2021 RESULTS Other expenses Increased by 60.8% or US$20.0 million when compared to the second quarter of 2021. This is mostly explained by an increase in impairment provision of property, plant and equipment and others mostly as a result of adjustments related to spare parts obsolescence. In US$ Million Q3 2021 Q2 2021 QoQ Legal payments 0.9 4.7 -80.0% Impairment provision 31.0 7.9 293.3% property, plant and equipment and others Operating expenses related 1.3 2.1 -36.5% to plant stoppages Project expenses 4.8 6.1 -21.7% Loss (gain) from asset sales 4.4 1.2 279.6% Loss and repair of assets 0.2 0.2 16% Loss of forests 4.2 0.6 588.6% Other taxes 3.7 6.8 -45.9% Research and development 0.8 1.7 -50.7% expenses Other expenses (donations, 1.7 1.8 -3.0% repayments insurance) Other expenses 53.0 33.0 60.8% Foreign exchange differences Showed a net gain of US$10.8 million, a US$16.0 million increase when compared to the first quarter that ended with a US$5.2 million loss. The main significant effects are given by the variation of local currencies in the countries where we have industrial operations, such as the Chilean Peso and the Brazilian Real. Income tax For the third quarter, income tax expenses reached US$169.1 million, US$45.7 million higher than the US$123.4 million of the previous quarter, explained by a better pre-tax result.

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3Q 2021 RESULTS Adjusted EBITDA Adjusted EBITDA for the third quarter of 2021 was US$922.9 million, a 69.2% or US$377.6 million increase when compared to the previous quarter. This is mainly explained by the effect on results of the closing of the forestry asset sale announced a few months ago. This effect is contained in our pulp business segment and was of approximately US$229 million. We also saw an increase in our wood products segment Adjusted EBITDA, increasing 33% or US$83.9 million, due mostly to higher average realized prices. In US$ Million Q3 2021 Q2 2021 Q3 2020 QoQ YoY Net Income 511.5 201.4 36.0 154.0% 1319.0% Financial costs 52.3 57.2 64.4 -8.6% -18.8% Financial income (8.2) (7.6) (4.2) 7.6% 96.4% Income tax 169.1 123.4 21.4 37.1% 690.7% EBIT 724.7 374.4 117.7 93.6% 515.9% Depreciation & amortization 118.3 122.4 127.8 -3.3% -7.4% EBITDA 843.0 496.7 245.5 69.7% 243.4% Fair value cost of timber harvested 97.3 77.2 85.8 26.0% 13.4% Gain from changes in fair value of (41.5) (41.8) (41.9) -0.8% -1.0% biological assets Exchange rate differences (10.8) 5.2 (13.9) 307.7% -22.0% Others (*) 34.9 8.0 15.2 338.7% 129.6% Adjusted EBITDA 922.9 545.4 290.7 69.2% 217.5% (*)Includes provision from forestry fires and provisions from property, plants and equipment, and others. Adjusted EBITDA variation by business segment (in US$ million) 545.4 284 83.9 9.2 922.9 Q2 2021 Pulp Wood Products Consolidation Adj. & Others Q3 2021

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3Q 2021 RESULTS Pulp Business During the third quarter, pulp demand remained stable, with some minor price declines in some markets towards the end of the quarter, due to the low season in the northern hemisphere. Customers in every market, but mainly in Asia, have been affected by the rise in logistics costs, which made them reduce their exports and concentrate in the domestic market. World inventories for both fibers increased between June and August 2021, short fiber increased by 8 days and long fiber by 6 days. Global BCP Shipments China -9.2% Europe 1.2% Other Asia -9.1% USA -2.3% Rest of the World 3.2% Total -4.7% Last 9 months, Jan-Sep 2020 and 2021 BCP stands for Bleached Chemical Pulp. Source: Hawkins Wright. In China, pulp demand started to decline towards the end of the third quarter because mills in all type of industries had to reduce their operating rate or stop their production lines due to the government limiting energy consumption in several provinces in the country. The tissue industry started to improve, with some producers achieving some price increases to their final products. The P&W industry remained relatively stable during the quarter, with some producers trying to implement price increases. Long fiber prices remained steady through the quarter, however, short fiber prices decreased. The spread between the long and short fiber, after decreasing for several quarters, began to increase considerably, reaching US$205 at the end of September 2021. In Europe, pulp demand continued positively throughout the quarter, price remained unchanged at a high level, which caused the price spread with China to increase towards the end of the quarter. The tissue industry started the quarter weak, however, during the quarter it began to improve in both the At-Home and Away-from-Home segments. The P&W industry remained strong, with very good demand for their products, and producers were able to implement price increases for their final products. By the end of the quarter, some producers in the paper industry started to be affected by high energy prices, and to a lesser extent, high chemical prices. The dissolving pulp market remained steady, with prices slightly declining due to lower demand. The viscose market, after remaining stable during the first months of the quarter, began to deteriorate due to increases in some of their costs. Production during the third quarter was higher than Q2, but slightly lower compared to the same period of 2020. During the quarter we had the programmed maintenance stoppage of the Licancel mill, in Chile. Production and Sales Volume (In thousand tonnes) 980 888 876 823 958 868 Q3 2020 Q2 2021 Q3 2021 Production Sales

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3Q 2021 RESULTS The Adjusted EBITDA for our pulp business segment reached US$614.3 million during this quarter, which translates to an 86.2% or US$284.4 million increase compared to the second quarter of 2021. Pulp EBITDA Mg reached 80.7%, 34.4% higher than the previous quarter. 17.2% 17.6% 17.3% 19.6% 24.2% 28.1% 28.6% 35.1% 54.1% 614.3 229.4 203.2 140.0 151.5 168.2 171.7 214.8 210.3 329.9 384.9 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q12021 Q2 2021 Q3 2021 Note: For Q3 2021, highlighted in blue you will see the one-time US$229.4 million effect on Adj. EBITDA of the recently closed forestry asset sale. Days of Stoppages Mill 2021 2022 1Q 2Q 3Q 4Q 1Q 2Q Arauco - Line 1 11 Arauco - Line 2 22 Constitución 16 Licancel 22 Nueva Aldea 19 13 Valdivia 13 15 Esperanza 31 Montes del Plata 15 Maintenance Stoppages: Finished Planned

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3Q 2021 RESULTS Wood Products Business Includes PB, MDF, OSB, HB, Composite Panels and Retail Panels. Includes sawn timber, kilned sawn timber, remanufactured wood products, pallets. Note: Sales include trading Panels Revenues increased when compared to the second quarter, mainly as a result of a 10.8% increase in average prices. Sales volume increased 2.3%. During the third quarter, demand continued at high levels. The foregoing is explained by an strong demand for products of home improvement and remodeling. We observed this for most of our products, such as MDF, PB and mouldings. Production and Sales Volume: Panels (1) (In thousand m3) 1,466 1,560 1,615 1,547 1,578 1,582 Q3 2020 Q2 2021 Q3 2021 Production Sales Sawn timber During the third quarter sales volume decreased by 2.0% while average prices increased by 14.9%. During the beginning of the third quarter, we observed strong demand and prices especially for remanufactured wood products. Sawn Timber demand decreased somewhat by mid-quarter, especially in China. Production and Sales Volume: Sawn Timber (2) (In thousand m3) 608 598 688 595 702 572 Q3 2020 Q2 2021 Q3 2021 Production Sales Plywood Sales volume increased by 6.5% during the third quarter, coupled with an increase in average prices of 9.5%. Higher demand in markets such as Chile, Europe, Oceania and the US, despite some effects arising from logistical issues leading to some shipping delays. Production and Sales Volume: Plywood (In thousand m3) 151 132 140 127 150 135 Q3 2020 Q2 2021 Q3 2021 Produciton Sales

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3Q 2021 RESULTS Adjusted EBITDA for our wood products business was US$338.4 million during the third quarter of 2021, which translates to a 33.0% or US$83.9 million increase, compared to the previous quarter. Wood products EBITDA Mg was 35.8%, higher than the 30.2% reached during the second quarter. 62 73 65 67 141 197 187 254 338 8.4% 11.3% 10.1% 12.9% 20.2% 26.1% 24.3% 30.2% 35.8% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Adjusted EBITDA EBITDA Mg

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3Q 2021 RESULTS Capital Expenditures During this quarter, capital expenditures(*) reached US$364.5 million, US$37.3 million lower than the previous quarter. The biggest single item in CAPEX-related expenditures during this quarter were those related to the MAPA project, reaching approximately US$236.1 million. US$ Million Q3 2021 Q2 2021 Q3 2020 YTD 2021 YTD 2020 Cash flow used to obtain control of (48.0) subsidiaries or other businesses - - - - Cash flow used to purchase in 4.8 associates - 2.5 0.0 15.2 Purchase and sale of property, plant 937.0 and equipment 333.9 346.2 417.6 1,100.4 Purchase and sale of intangible 3.4 assets 0.9 (0.4) 3.1 14.6 Purchase of other long-term assets 161.0 29.7 53.4 33.2 153.2 Total CAPEX (*) 1,058.2 364.5 401.8 453.9 1,283.6 (*) On a cash basis.

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3Q 2021 RESULTS Free Cash Flow During the third quarter, free cash flow decreased by US$81.8 million reaching inflows of US$171.3 million. Cash from Operations increased US$92.7 million, mostly due to the increase in EBITDA. Cash used in investment activities decreased US$66.4 million due to a decrease in Capex. This was all offset by a US$200.7 million decrease in Cash from Financing Activities, due to last quarter’s capital injection. US$ Million Q3 2021 Q2 2021 Q3 2020 Adjusted EBITDA 922.9 545.4 290.7 Working Capital Variation (423.6) (164.4) 76.7 Interest paid and received (33.9) (73.4) (44.9) Income tax received (paid/refunded) (26.1) 81.0 8.7 Other cash inflows (outflows) 103.5 61.5 221.4 Cash from Operations 542.8 450.1 552.6 Capex (*) (364.5) (401.8) (453.9) Proceeds from investment activities 32.9 2.5 2.4 Other inflows of cash, net (1.2) 0.2 1.6 Cash from (used in) Investment Activities (332.8) (399.2) (449.9) Dividends paid - (0.2) (0.3) Other inflows of cash, net (18.3) (17.5) 234.4 Proceeds from issue of shares 0.0 200 0 Cash from (used in) Financing Activities - Net of Proceeds and Repayments (18.3) 182.3 234.1 Effect of exchange rate changes on cash and cash equivalents (20.4) 19.9 (1.0) Free Cash Flow 171.3 253.1 335.8 (*) On a cash basis. Net Debt Variation Q3 2021 – Q2 2021 (in US$ million) 4,760.3 (171.3) (127.1) 19.0 (17.6) 4,463.3 Net Debt Q2 21 Free Cash Flow ECA Direct Payments Exchange rate/inflation variation Accrued interest variation Leasing Variation Net Debt Q3 21

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3Q 2021 RESULTS Cash Our cash position was US$1,323.5 million at the end of the third quarter, which translates to a 16.7% increase equivalent to US$189.7 million when compared to the end of the second quarter of 2021. Cash provided by operational activities increased by US$92.7 million mainly due to an increase in receipts of sales of goods, partially offset by income tax paid. Cash used in investment activities decreased US$66.4 million mainly due to a decrease in capital expenditures. Cash provided by financing activities decreased by US$138.7 mainly due to the capital injection of US$200.0 million received during the past quarter. In terms of liquidity, and additionally to our cash position, the Company has a committed revolving credit facility for a total amount of US$375 million, which as of the date of this report hasn’t been withdrawn. This facility is due in February 2025. Cash by Currency Brazilian Real 13% Chilean Peso 11% Argentinean Peso 6% Mexican Peso 4% Euro 1% Other Currencies 0% U.S. Dollar 65% Cash by Instrument Time Deposits 41% Money Market Funds 10% Overnight Accounts 49%

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3Q 2021 RESULTS Financial Debt ARAUCO’s total financial debt as of September 30, 2021 reached US$5,786.7 million, a decrease of 1.8% or US$107.3 million when compared to June 30, 2021. Our consolidated net financial debt decreased 6.2% or US$297.0 million when compared with June 2021. Our leverage, measured as Net Financial Debt/LTM Adjusted EBITDA was 2.00x, which compares to the 2.97x in the last quarter. In US$ Million Sep 2021 Jun 2021 Sep 2020 Short term financial 527.8 487.7 335.5 debt Long term financial debt 5,258.9 5,406.4 5,728.8 TOTAL FINANCIAL DEBT 5,786.7 5,894.0 6,064.4 Cash and cash equivalents 1,323.5 1,133.7 1,162.7 NET FINANCIAL DEBT 4,463.3 4,760.3 4,901.7 LTM Adjusted EBITDA 2,233.8 1,601.6 902.1 Net Financial Debt and Leverage (In US$ Million) 2.30x 3.91x 4.88x 5.94x 5.43x 4.79x 3.98x 2.97x 2.00x 4,017.8 4,489.8 4,817.2 5,050.0 4,901.7 5,129.2 5,025.5 4,760.3 4,463.3 Q2 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

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3Q 2021 RESULTS Debt Profile and Structure Financial Debt Profile For 2021 short term bank and bond obligations (which includes accrued interest) sum up US$227.5 million. Bank obligations include the following maturities: US$163.1 million in bank loans including US$17.5 million in leasing. Bond obligations for the remainder of the year sum up US$64.5 million. These obligations include amortizations of local bonds, and interest payments of our USD-denominated bonds. Debt Amortization Profile as of September 30, 2021 (In US$ Million)* 228 378 199 826 117 298 602 710 107 514 1,787 64 179 40 536 40 220 531 640 40 511 163.1 200 158 290 78 78 71 70 68 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 & thereafter Bank Loans Bonds *Approximately US$126 million of our debt payments scheduled for 2022, as of September 30, 2021, (related to our 2022 USD-bond), were redeemed at par during October 2021. See more information on the section “Subsequent Events”. Debt by Currency UF (*) swapped to U.S. Dollar 19% Other Currencies 11% U.S.Dollar 70% Debt by Instrument Bonds 79% Leasing 3% Banks 18% (*) UF is a Chilean monetary unit indexed to inflation.

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3Q 2021 RESULTS Third Quarter Subsequent Events and News Agreement for Selling Forestry Assets update As we informed on August, 17, 2021, with a “Material Fact” published via cmfchile.cl, the conditions precedent for the closing of the operation described on that ocassion were met and, consequently, on August 17, 2021, the parties proceeded to execute the sale of 430 properties committed in the master agreement for a price of US $ 343,668,296, plus the corresponding Value Added Tax. Additionally, on the same date, the parties entered into a supply contract and a preferential call option to purchase pulp volume of radiata pine, a fire fighting service contract and a temporary forest property management and operational task management service contract, among others. Finally, it is noted that the parties expect to carry out the sale of the 31 remaining properties to the extent that, for each of them, certain particular conditions are met within the following months, as established in the Master Agreement. The effects on our Income Statement and Adjusted EBITDA of the execution of the sale of such 430 properties are contained in the 3Q results. Studies Towards Evaluating New MDF Line in Mexico On October 29, 2021, we announced that we are beginning an Environmental Impact Assessment in México (“Estudio de Manifestación de Impacto Ambiental or “MIA” as it is known in México) as part of the assessment related to the possibility of building a new production line of MDF in Zitácuaro, a city located close to Ciudad de México (DF) (about 160 kms) where we already operate a 160kt PB mill. The project, which is subject to the approval of the competent authorities and our Board of Directors, would allow us to double our production capacity of MDF in México, thus answering to the increasing demand in the furniture and construction industries. This new MDF line -which contemplates an estimated total investment of US$200 million- would incorporate state-of-the-art operational and environmental technology. Additionally, its supply aims to foster a circular economy model, supporting small forestry producers and safekeeping the ecosystemic values of that environment. If all the necessary precedent conditions are met and we obtain the necessary permits and approvals, we believe we will start construction of the new line, and subsequently start producing during 2024. Redemption of USD Notes due 2022 On October 11, 2021, we redeemed in full the outstanding amount of our 4.75% USD-denominated notes due 2022. This prepayment was done at par value, according to provisions of the Indenture and the terms and conditions of the securities representing such notes which allowed us to redeem at par three months before the final maturity date. This implied paying the outstanding 126,168,000 USD plus the corresponding accrued interest. The rationale for this redemption is related to our strong commitment of managing our debt in accordance with our Investment Grade, and also to the positive market conditions which have allowed us to increase our liquidity.

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3Q 2021 RESULTS Third Quarter Subsequent Events and News MAPA Project update MAPA Project overall progress as of the end of October 2021 was 90.0% . Construction work continues, as well as the commissioning and startup of some facilities and equipment. During the quarter, we have enacted campaigns related to a safe commissioning of the equipment within companies currently at work in the Project. We have also increased the scope of action of our “Equipo Previene” (Prevention Team) which is tasked with monitoring and supervising compliance with sanitary protocols and measures for workers of the project, both in public spaces and in local lodging facilities. We recently communicated to clients and the market that we now estimate that the startup of the MAPA Project will take place during March of 2022. This is mainly due to delays in construction. At that point the existing eucalyptus line (Line 1) will be permanently shut down in accordance with the environmental permit. ARAUCO at the COP26 – UN Climate Change Conference in Glasgow In the COP26, we announced our Climate Action Plan (“Plan de Acción Climática”) aimed at reducing our greenhouse gas emissions by 1 million tonnes by 2030. This strategy is based on three main pillars: (i) mitigation based on science, aimed at replacing fossil fuels in our productive processes, (ii) conservation and restoration of ecosystems and (iii) circular economy. This adds to our continuous efforts in these matters, such as our declaration as the first forestry company to be certified as carbon neutral, to our adherence to the “Science Based Targets” (SBTs) and also to the “Race to Zero”. Dividend Policy and Payments With respect to the Material Fact published via cmfchile.cl on September 28th, 2021, we hereby inform that both dividend payments announced on such date were paid by us to our shareholders. On October 25th, 2021, we paid our shareholders a total of US$200 million with respect to the aforementioned extraordinary dividend. After that, on November 5th, 2021, we paid our shareholders a total of US$271 million as an interim dividend with respect to the financial results of the year 2021.

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3Q 2021 RESULTS UPCOMING EVENTS 3Q 2021 RESULTS CONFERENCE CALL Thursday, November 18, 2021 10:00 Santiago Time 08:00 Eastern Time (New York) Dial in: +1 (844) 450 3845 from the US +56 (44) 208 1274 from Chile +55 (11) 3181 8565 from Brazil +1 (412) 317 6368 from other countries Conference ID: Arauco For further information, please contact: Marcelo Bennett Treasurer marcelo.bennett@arauco.com Phone: +56 2 2461 7309 Marcelo Reyes Intveen Investor Relations marcelo.reyes@arauco.com Phone: +56 2 2461 7434 investor_relations@arauco.cl

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3Q 2021 RESULTS Financial Statements Income Statement In US$ Million Q3 2021 Q2 2021 Q3 2020 YTD 2021 YTD 2020 Revenues 1,705.1 1,555.6 1,202.9 4,607.4 3,380.0 Cost of sales (923.4) (887.2) (867.9) (2,708.4) (2,511.5) Gross profit 781.6 668.4 335.1 1,899.0 868.5 Other income 285.2 45.4 52.8 405.6 175.6 Distribution costs (182.4) (159.3) (129.6) (486.5) (389.8) Administrative expenses (137.8) (150.7) (122.7) (425.0) (376.4) Other expenses (53.0) (33.0) (33.1) (123.5) (141.4) Financial income 8.2 7.6 4.2 22.6 23.7 Financial costs (52.3) (57.2) (64.4) (170.4) (202.1) Share of profit (loss) of associates and joint ventures accounted for using equity 20.3 8.7 1.3 31.5 0.8 method Other income (loss) 0.0 0.0 0.0 0.0 0.0 Exchange rate differences 10.8 (5.2) 13.9 (2.9) (16.2) Income before income tax 680.6 324.8 57.4 1,150.4 (57.3) Income tax (169.1) (123.4) (21.4) (335.1) 7.7 Net income 511.5 201.4 36.0 815.3 (49.6) Profit attributable to parent company 511.1 201.0 36.2 814.0 (49.3) Profit attributable to non-parent company 0.4 0.4 (0.1) 1.3 (0.3)

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3Q 2021 RESULTS Balance Sheet In US$ Million 30-09-2021 30-06-2020 30-09-2020 Cash and cash equivalents 1,323.5 1,133.7 1,162.7 Other financial current assets 16.5 3.3 12.7 Other current non-financial assets 174.9 208.0 153.2 Trade and other receivables-net 1,248.2 878.6 629.8 Related party receivables 7.3 5.8 8.1 Inventories 1,081.2 1,019.8 998.7 Biological assets, current 315.0 297.9 270.3 Tax assets 104.8 111.8 149.2 Non-Current Assets classified as held for sale 14.5 132.0 3.9 Total Current Assets 4,285.7 3,790.9 3,388.6 Other non-current financial assets 9.4 16.7 1.0 Other non-current and non-financial assets 99.4 117.9 122.3 Non-current receivables 14.9 15.7 6.7 Investments accounted through equity method 333.3 324.4 298.4 Intangible assets 94.2 97.1 97.9 Goodwill 58.1 59.6 58.1 Property, plant and equipment 8,942.1 8,806.7 8,314.7 Biological assets, non-current 3,134.7 3,189.7 3,300.2 Deferred tax assets 5.2 5.7 7.0 Total Non-Current Assets 12,691.4 12,633.4 12,206.2 TOTAL ASSETS 16,977.1 16,424.4 15,594.8 Other financial liabilities, current 527.8 487.7 338.0 Trade and other payables 705.3 700.2 596.4 Related party payables 7.6 3.9 3.2 Other provisions, current 0.4 0.4 0.3 Tax liabilities 94.3 56.0 23.5 Current provision for employee benefits 5.9 6.4 5.9 Other non-financial liabilities, current 519.4 50.0 39.3 Total Current Liabilities 1,860.7 1,304.5 1,006.6 Other non-current financial liabilities 5,571.8 5,517.5 5,914.2 Trade and Other payables non-current 0.0 0.0 0.0 Other provisions, non-current 28.8 29.3 30.1 Deferred tax liabilities 1,564.5 1,509.3 1,270.9 Non-current provision for employee benefits 67.9 73.9 68.5 Other non-financial liabilities, non-current 79.6 86.0 76.3 Total Non-Current Liabilities 7,312.5 7,216.1 7,359.9 Non-parent participation 25.7 26.9 29.6 Net equity attributable to parent company 7,778.1 7,876.9 7,198.7 TOTAL LIABILITIES AND EQUITY 16,977.1 16,424.4 15,594.8

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3Q 2021 RESULTS Cash Flow Statement US$ Million Q3 2021 Q2 2021 Q3 2020 YTD 2021 YTD 2020 Receipts from sales of goods and rendering of services 1,659.4 1,473.4 1,263.7 4,491.8 3,549.8 Other cash receipts (payments) 57.2 95.5 131.4 256.7 327.2 Payments of suppliers and personnel (less) (1,115.9) (1,125.2) (807.1) (3,308.6) (2,942.8) Interest paid and received (33.9) (73.4) (44.9) (146.0) (167.2) Income tax paid (26.1) 81.0 8.7 103.9 36.3 Other (outflows) inflows of cash, net 2.1 (1.3) 3.5 (0.2) 1.4 Net Cash Provided by (Used in) Operating Activities 542.8 450.1 555.4 1,397.6 804.7 Capital Expenditures (364.5) (401.8) (451.0) (1,058.2) (1,280.7) Other investment cash flows 31.7 2.6 1.2 43.8 14.1 Net Cash Provided by (Used in) Investing Activities (332.8) (399.2) (449.9) (1,014.4) (1,266.6) Proceeds from borrowings 51.2 0.0 11.0 56.2 389.8 Repayments of borrowings (32.7) (43.5) (414.1) (305.4) (479.9) Dividends paid 0.0 (0.2) (0.3) (0.2) (0.4) Other inflows of cash, net (18.3) (17.5) 231.5 (54.1) 185.3 Proceeds from Issue of Shares 0.0 200.0 0.0 200.0 0.0 Net Cash Provided by (Used in) Financing 0.1 138.9 (171.9) (103.5) 94.8 Activities Total Cash Inflow (Outflow) of the Period 210.1 189.8 (66.3) 279.8 (367.1) Effect of exchange rate changes on cash and cash equivalents (20.4) 19.9 (1.0) (21.0) (30.2) Cash and Cash equivalents at beginning of the period 1,133.7 924.1 1,230.0 1,064.7 1,560.0 Cash and Cash Equivalents at end of the Period 1,323.5 1,133.7 1,162.7 1,323.5 1,162.7

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: November 24, 2021	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer