As filed with the Securities and Exchange Commission on April 5, 2024

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 2023

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________.

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

Date of event requiring this shell company report __________________.

Commission File Number: 33-99720

CELULOSA ARAUCO Y CONSTITUCIÓN S.A.

(Exact name of Registrant as specified in its charter)

Arauco and Constitution Pulp Inc.

(Translation of Registrant’s name into English)

Republic of Chile

(Jurisdiction of incorporation or organization)

Avenida El Golf 150

14th Floor

7550107 Las Condes, Santiago

Chile

(Address of principal executive offices)

Gianfranco Truffello

Tel.: 56-2-2461-7200

E-mail: gianfranco.truffello@arauco.com

Avenida El Golf 150

14th Floor

7550107 Las Condes, Santiago

Chile

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
None	N/A	N/A

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Title of each class:

4.500% Notes due 2024

3.875% Notes due 2027

4.250% Notes due 2029

4.200% Notes due 2030

5.500% Notes due 2047

5.500% Notes due 2049

5.150% Notes due 2050

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: Shares of Common Stock, without par value: 120,474,350.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yesx No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yesx No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non‑Accelerated Filer	x	Emerging Growth Company	¨

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statement included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards as issued
by the International Accounting Standards Board x Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

(Applicable only to issuers involved in bankruptcy proceedings during the past five years)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

TABLE OF CONTENTS

Item 1. Identity of Directors, Senior Management and Advisers	4
Item 2. Offer Statistics and Expected Timetable	4
Item 3. Key Information	4
Item 4. Information on our Company	23
Item 5. Operating and Financial Review and Prospects	58
Item 6. Directors, Senior Management and Employees	76
Item 7. Major Shareholders and Related Party Transactions	82
Item 8. Financial Information	84
Item 9. The Offer and Listing	89
Item 10. Additional Information	89
Item 11. Quantitative and Qualitative Disclosures About Market Risk	97
Item 12. Description of Securities Other than Equity Securities	98
Item 13. Defaults, Dividend Arrearages and Delinquencies	99
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	99
Item 15. Controls and Procedures	99
Item 16A. Audit Committee Financial Expert	100
Item 16B. Code of Ethics	100
Item 16C. Principal Accountant Fees and Services	100
Item 16D. Exemptions from the Listing Standards for Audit Committees	101
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	101
Item 16F. Change in Registrant’s Certifying Accountant	101
Item 16G. Corporate Governance	101
Item 16H. Mine Safety Disclosures	101
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	101
Item 16J. Insider Trading Policies	101
Item 16K. Cybersecurity	101
Item 17. Financial Statements	103
Item 18. Financial Statements	103
Item 19. Exhibits	103

2

CERTAIN TERMS AND CONVENTIONS

Celulosa Arauco y Constitución S.A. is a sociedad anónima (corporation) organized under the laws of the Republic of Chile, and subject to certain rules applicable to sociedades anónimas abiertas (Chilean public corporations). Except where otherwise specified or the context otherwise requires, when we refer to the “Company,” “Arauco,” “we,” “our” or “us” in this annual report, we mean Celulosa Arauco y Constitución S.A. and its consolidated subsidiaries. When we refer to “Chile,” we mean the Republic of Chile; when we refer to “Argentina,” we mean the Argentine Republic; when we refer to “Brazil,” we mean the Federative Republic of Brazil; when we refer to “the U.S.,” “U.S.A.,” or “the United States,” we mean the United States of America; when we refer to “Uruguay,” we mean the Oriental Republic of Uruguay; and when we refer to “Mexico,” we mean the United Mexican States.

All references to “tonnes” or “tons” are to metric tons (1,000 kilograms), which equals 2,204.7 pounds. One “hectare” equals 10,000 square meters or 2.471 acres. Discrepancies in any table between totals and the sums of the amounts listed may be due to rounding.

Unless otherwise specified, all references to “$,” “U.S.$,” “U.S. dollars” or “dollars” are to United States dollars; references to “Chilean pesos” or “Ch$” are to Chilean pesos; references to “Argentine pesos” or “AR$” are to Argentine pesos; references to “UYU” are to Uruguayan pesos; references to “Brazilian reais,” “Brazilian reals” or “R$” are to Brazilian reais; references to “Mexican pesos” or “MXN$” are to Mexican pesos; references to “€,” “EUR” or “euro” are to the euro, the single European currency established pursuant to the European Economic and Monetary Union; and references to “UF” are to Unidades de Fomento. The UF is a unit of account that is linked to, and adjusted daily to reflect changes in the Chilean consumer price index Reported by the Instituto Nacional de Estadísticas (Chilean National Institute of Statistics). As of December 31, 2023, one UF equaled U.S.$41.94 and Ch$36,789.36.

Regarding our pulp business, references to “hardwood” kraft pulp are to pulp made from eucalyptus or short fiber, and references to “softwood” kraft pulp are to pulp made from pine or long fiber.

Presentation of Financial and Other Data

This report includes the audited consolidated statement of financial position of Arauco and our subsidiaries as of December 31, 2023 and 2022 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years for the period ended December 31, 2023 (collectively, the “audited consolidated financial statements” or “financial statements”). In addition, this report includes selected financial information as of and for the periods ended December 31, 2019, 2020, 2021, 2022 and 2023.

We make statements in this report about the pulp market partly on the basis of information from third-party sources. This information is principally sourced from reports published by Hawkins Wright Ltd. and Resource Information Systems Inc. (“Fastmarkets RISI”), which are specialized consultants in the pulp market, and other data providers.

For your convenience, this annual report contains certain translations of Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, the U.S. dollar equivalent for information in Chilean pesos is based on the observed exchange rate reported by Banco Central de Chile, which we refer to as the “Central Bank of Chile” or the “Central Bank.” The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. On December 31, 2023, the observed exchange rate for Chilean pesos, as published in the website of the Diario Oficial de la República de Chile (the “Official Gazette”) on January 1, 2024, was Ch$877.12 to U.S.$1.00, and on April 1, 2024, the observed exchange rate was Ch$952.59 to U.S.$1.00, as published in the website of the Official Gazette on April 2, 2024. You should not construe these translations as representations that the Chilean peso amounts actually represent such dollar amounts or could be converted into U.S. dollars at the rates indicated or at any other rate. Unless otherwise specified, references to the devaluation or the appreciation of the Chilean peso against the U.S. dollar are in nominal terms (without adjusting for inflation) based on the observed exchange rates published by the Central Bank of Chile for the relevant period.

Forward-Looking Statements

This annual report on Form 20-F contains words such as “believe,” “expect,” “anticipate” and similar expressions that identify forward-looking statements, which reflect our views about future events and financial performance. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Such statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the United States Private Securities Litigation Reform Act of 1995, as amended.

Forward-looking statements involve inherent risks and uncertainties. These forward-looking statements are based on current plans, estimates and projections; therefore, readers should not place undue reliance on them. Actual results could differ materially from those projected in such forward-looking statements because of various factors that may be beyond our control, including but not limited to our ability to service our debt, fund our working capital requirements, comply with financial covenants in certain of our debt instruments, fund and implement our capital expenditure programs and maintain our relationships with customers, as well as the effects on us from competition, future worldwide demand for forestry and wood products we produce in the different countries in which we have industrial operations, international prices for forestry and sawn timber products, the condition of our forests, possible shortages of energy, including electricity, the state of the economies in the main countries we operate and the world economy generally, the effects of a pandemic or epidemic and any subsequent mandatory regulatory restrictions or containment measures, the relative value of the local currencies in the countries we run manufacturing operations compared to other currencies, inflation, increases in interest rates, the effects of earthquakes, floods, tsunamis, forest fires or other catastrophic events, geopolitical risks and changes in our regulatory environment, including our ability to comply with new or stricter environmental regulations and to resolve environmental liabilities. Forward-looking statements in this annual report speak only as of their dates, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

3

PART I

Item 1.  Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3.  Key Information

4

Selected Consolidated Financial Data

The selected consolidated financial information as of December 31, 2019, 2020, 2021, 2022 and 2023 and for each of the five years then ended is derived from, should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements which have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) (“IFRS Accounting Standards”).

	As of and for the year ended December 31,
	2023			2022			2021			2020			2019
	(in thousands of U.S. dollars, except ratios and share data)
INCOME STATEMENT DATA
Revenue		6,011,819			7,102,070			6,349,761			4,732,869			5,329,214
Cost of sales		(4,744,095	)		(4,274,496	)		(3,681,603	)		(3,445,284	)		(3,910,378	)
Gross profit		1,267,724			2,827,574			2,668,158			1,287,585			1,418,836
Other income		573,017			100,129			378,977			283,816			232,393
Distribution costs		(693,039	)		(922,226	)		(682,996	)		(535,704	)		(586,873	)
Administrative expenses		(624,326	)		(613,608	)		(577,147	)		(510,137	)		(554,038	)
Other expenses		(480,336	)		(373,889	)		(192,101	)		(182,883	)		(203,698	)
Other gains (losses)		0			0			0			0			21,674
Finance income		131,666			72,116			33,499			29,449			32,582
Finance costs		(373,496	)		(200,366	)		(219,982	)		(268,179	)		(273,639	)
Share of profit (loss) of associates and joint ventures accounted for using equity method		7,709			33,684			31,386			2,317			7,775
Exchange rate differences		(194,739	)		(77,067	)		(5,281	)		(39,111	)		(32,507	)
Income (loss) before income tax		(385,820	)		846,347			1,434,513			67,153			62,505
Income tax		27,293			(142,121	)		(402,914	)		(41,848	)		(535	)
Net income (loss)		(358,527	)		704,226			1,031,599			25,305			61,970
BALANCE SHEET DATA
Current assets		4,175,578			3,774,921			3,919,325			3,544,325			3,931,381
Property, plant and equipment		10,207,477			9,848,822			9,133,490			8,544,438			7,932,562
Biological assets (1)		3,022,579			3,195,370			3,008,897			3,598,827			3,669,426
Total assets		17,910,364			17,180,108			16,661,310			16,028,319			15,860,030
Total current liabilities		2,071,742			1,526,284			1,429,642			1,097,593			1,261,522
Total non-current liabilities		7,829,593			7,393,840			7,413,164			7,515,091			7,229,093
Issued capital		803,618			803,618			803,618			603,618			353,618
Total equity		8,009,029			8,259,984			7,818,504			7,415,635			7,369,415
CASH FLOW DATA
Cash flow from (used in) operating activities		740,427			1,700,492			1,939,878			1,142,144			675,250
Cash flow from (used in) investing activities		(1,333,124	)		(1,469,976	)		(1,136,778	)		(1,678,855	)		(1,317,741	)
Cash flow from (used in) financing activities		645,667			(527,219	)		(822,241	)		56,204			1,145,020
Net (decrease) increase in cash and equivalents before effect of exchange rate changes		52,970			(296,703	)		(19,141	)		(480,507	)		502,529
OTHER FINANCIAL DATA
Capital expenditures (2)		1,263,725			1,431,420			1,362,268			1,740,634			1,198,906
Depreciation and amortization		661,068			507,029			492,704			516,012			519,380
Fair value cost of timber harvested		487,778			431,845			342,701			302,490			323,271
EBIT (3)		(143,990	)		974,597			1,620,996			305,883			303,562
Adjusted EBITDA (3)		1,025,977			2,166,820			2,493,370			1,071,834			1,147,368
Adjusted EBITDA (3)/finance costs		2.75			10.81			11.33			4.00			4.19
Adjusted EBITDA (3)/revenue		17,1	%		30.5	%		39.3	%		22.6	%		21.5	%
Average debt (4)/Adjusted EBITDA (3)		6.23			2.61			2.36			5.71			4.60
Total debt (5)		7,055,471			5,718,360			5,581,293			6,193,959­­­			6,049,790
Total debt (5)/capitalization (6)		46.8	%		40.9	%		41.7	%		45.5	%		45.1	%
Total debt (5)/equity attributable to parent company		88.2	%		69.3	%		71.5	%		83.9	%		82.5	%
Working capital (7)		2,103,836			2,248,637			2,489,683			2,446,732			2,669,859
Number of shares		120,474,350			120,474,350			120,474,350			117,223,375			113,159,655
Net income (loss) per share (U.S.$ per share)		(3.0	)		5.8			8.6			0.2			0.5
Dividends paid (8)		279,622			376,103			471,000			-			182,040
Dividends per share (U.S.$ per share)		2.32			3.12			3.91			-			1.61

(1) Biological assets refer to our forests (current and non-current).

(2) Includes capital expenditures in respect of property, plant and equipment and biological assets accrued for the period. Excludes acquisitions of companies.

(3) We calculate EBIT as “net income” before “finance costs,” “finance income” and “income tax”. We calculate EBITDA as EBIT, plus “depreciation and amortization”.

(4) Average debt is calculated as the average of total debt between the beginning and the end of the applicable year.

(5) Total debt is calculated as the sum of other current financial liabilities and other non-current financial liabilities, minus hedging instruments.

(6) Capitalization is calculated as total debt, including accrued interest, plus total equity.

(7) Working capital is calculated by subtracting current liabilities from current assets.

(8) Dividends paid corresponds to dividends paid to our shareholders.

5

Adjusted EBITDA is calculated by adding “fair value cost of timber harvested,” “exchange rate differences” and other expenses, and deducting “gain from changes in fair value of biological assets” to EBITDA. “Fair value cost of timber harvested” is a non-cash expense included in our cost of sales (as a component of raw materials) that represents the fair value of the wood harvested and sold from our own plantations, which is commonly excluded from the non-generally accepted accounting principles (non-GAAP) measures used by analysts to compare participants in our industry as it is a non-cash item (purchases of wood from third parties are cash expenses that are not included in “fair value cost of timber harvested”). “Gain from changes in fair value of biological assets” is a gain that does not represent cash flow. We believe that Adjusted EBITDA provides investors with a useful supplemental indicator of the performance of our core business because (i) it cancels out the effects of fair value that are independent of the cost efficiency of our operating facilities and (ii) it excludes the effect of exchange rate differences, which are mainly derived from our debt instruments.

In evaluating the performance of Arauco, we believe that each of these non-GAAP financial measures should be considered together with and should not be considered in isolation, or as a substitute for, the analysis of our results as reported under IFRS Accounting Standards. Some of the limitations of our non-GAAP financial measures are that EBIT, EBITDA and Adjusted EBITDA do not reflect: (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, working capital needs; or (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our outstanding debt.­­­

Because not all companies calculate EBIT, EBITDA or Adjusted EBITDA in the same manner, such measures calculated by us may differ from such measures calculated by other companies. We compensate for these limitations by using EBIT, EBITDA and Adjusted EBITDA as supplemental measures to monitor our performance and by relying primarily on our financial statements that have been prepared in accordance with IFRS Accounting Standards.

The following table presents, for the periods indicated, a reconciliation of EBIT, EBITDA and Adjusted EBITDA to net income.

	As of and for the year ended December 31,
	2023			2022			2021			2020			2019
	(in thousands of U.S. dollars, except ratios and share data)
Net income (loss)		(358,527	)		704,226			1,031,599			25,305			61,970
(+) Finance costs		373,496			200,366			219,982			268,179			273,639
(-) Finance income		(131,666	)		(72,116	)		(33,499	)		(29,449	)		(32,582	)
(+) Income tax		(27,293	)		142,121			402,914			41,848			535
EBIT		(143,990	)		974,597			1,620,996			305,883			303,562
(+) Depreciation and amortization (*)		661,068			507,029			492,704			516,012			519,380
EBITDA		517,078			1,481,626			2,113,700			821,895			822,942
(+) Fair value cost of timber harvested		487,778			431,845			342,701			302,490			323,271
(-) Gain from changes in fair value of biological assets		(264,477	)		(12,932	)		(81,986	)		(182,950	)		(154,705	)
(+) Exchange rate differences		194,739			77,067			5,281			39,111			32,507
(+) Others (**)		90,858			189,214			113,674			91,288			123,353
Adjusted EBITDA		1,025,976			2,166,820			2,493,370			1,071,834			1,147,368

(*) See Note 7 and Note 19 of our audited consolidated financial statements for more detail on depreciation and amortization.

(**) Reflects other non-cash expenses for loss of forest due to fires, theft and impairment provisions of industrial property, plant and equipment.

A.            Reserved

B.            Capitalization and indebtedness

Not applicable.

C.            Reasons for the Offer and Use of Proceeds

Not applicable.

D.            Risk Factors

6

Summary of Risk Factors

We are subject to a number of risks related to our business that are described under “Risk Factors” and elsewhere in this annual report. These risks could materially and adversely impact our business, results of operations, financial condition and future prospects. Among these important risks are the following:

Risks Relating to the Company

· Fluctuations in market price for our products could adversely affect our financial condition, results of operations and cash flows.

· Worldwide competition in the markets for our products may adversely affect our business, financial condition, results of operations and cash flows.

· Global economic and other developments, and particularly economic developments in the Asian, European and U.S. economies, could have an adverse effect on the demand for our products, our financial condition, results of operations and cash flows.

· We depend on free international trade as well as economic and other conditions in our principal markets.

· In Chile and in Mexico, we are located in a seismic area that exposes our properties to the risk of earthquakes and tsunamis.

· The costs of complying with, and addressing liabilities arising under, environmental laws and regulations have in the past and may in the future adversely affect our business, financial condition, results of operations and cash flows.

· Environmental concerns led to the temporary suspension of our operations at the Valdivia mill in 2005, which adversely affected, and in the future may continue to adversely affect, our business, financial condition, results of operations and cash flows.

· We have been and currently are subject to legal proceedings related to some of our mills which could adversely affect our business, financial condition, results of operations and cash flows.

· Our ability to access local and international credit or capital markets may be restricted at a time when we need financing, which could have a material adverse effect on our flexibility to react to changing economic and business conditions.

· Material disruptions affecting our manufacturing mills, remanufacturing facilities, forestry assets or commercial operations could negatively impact our financial results and forestry operations.

· Currency fluctuations may have a negative effect on our financial results.

· Disease or fires could affect our forests and manufacturing processes and, in turn, adversely affect our business, financial condition, results of operations and cash flows.

· Climate change may negatively affect our business, financial condition, results of operations and cash flows.

· We may undertake mergers, acquisitions and investments to expand or complement our operations that could result in operating difficulties or otherwise adversely affect our business, financial conditions and results of operations.

· Labor action, contractual and other disputes could adversely affect our operations.

· Cybersecurity events, such as a cyberattack, could adversely affect our business, financial condition and results of operations.

Risks Relating to Chile

· Adverse changes in Chile’s political, legal, tax, social and economic conditions could directly impact our business and the market price of our securities.

· Chile has different corporate disclosure standards from those with which you may be familiar in the United States, and Chile’s securities laws may not afford you the same protections as U.S. securities laws.

7

Risks Relating to the United States and Canada

· Economic conditions in the United States and Canada may have a direct impact on our business, financial condition, results of operations and cash flows.

Risks Relating to Brazil

· Economic conditions and government policies in Brazil may have a direct impact on our business, financial condition, results of operations and cash flows.

· The Brazilian government has exercised significant influence over the Brazilian economy. Brazilian political and economic conditions have a direct impact on our business.

Risks Relating to Argentina

· Economic conditions and government policies in Argentina may have a direct impact on our business, financial condition, results of operations and cash flows.

· The Argentine government has exercised significant influence over the Argentine economy. Argentine political and economic conditions have a direct impact on our business.

Risks Relating to Mexico

· Economic conditions and government policies in Mexico may have a direct impact on our business, financial condition, results of operations and cash flows.

· The Mexican government has exercised significant influence over the Mexican economy. Mexican political and economic conditions have a direct impact on our business.

Risks Relating to Uruguay

· Economic conditions in Uruguay, or the failure of Montes del Plata and its affiliates to service their debt, may have a direct impact on our financial condition, results of operations and cash flows.

Risks Relating to Other Markets

· Our business, earnings and prospects may be adversely affected by developments in other countries that are beyond our control.

· Developments in other emerging and developed markets may adversely affect the market price of our securities and our ability to raise additional financing.

Risks Relating to Our Securities

· The non-payment of funds by our subsidiaries could have a material adverse effect on our business, financial condition, results of operations and ability to service our debt, including our securities.

· Changes in Chilean tax laws could lead us to redeem our securities.

· Credit rating downgrades below investment grade could have a material and adverse effect on our business, financial condition, results of operations and ability to service our debt, including our securities.

· As a result of these risks and other risks described under “Risk Factors” there is no guarantee that we will experience growth or profitability in the future.

8

Detailed Risk Factors

We are subject to various changing economic, political, social and competitive conditions, particularly in our principal markets. Any of the following risks, if they actually occur, could materially and adversely affect our business, financial condition, results of operations and cash flows.

Risks Relating to the Company

Fluctuations in market price for our products could adversely affect our financial condition, results of operations and cash flows.

Prices for many of the products we sell can fluctuate significantly. The prices of our products are highly correlated with international prices. Consequently, prices of our products are highly dependent on prevailing international and regional prices.

The following table sets forth historic price fluctuations for bleached hardwood kraft pulp sold in China (pulp made from eucalyptus or birch which is sold in China or “BHKP – China”) which is the benchmark for bleached hardwood pulp sold in China, for bleached hardwood kraft pulp sold in Europe (pulp made from eucalyptus or birch which is sold in Europe or “BHKP – Europe”) which is the benchmark for bleached hardwood pulp sold in Europe, for Norscan bleached softwood kraft market pulp sold in China (pulp produced in North American, Nordic and Central European countries and sold to manufacturers of paper products delivered in China, or “NBSK – China”) which is the benchmark for bleached softwood pulp sold in China and for Norscan bleached softwood kraft market pulp sold in Europe (pulp produced in North American, Nordic and Central European countries and sold to manufacturers of paper products delivered in Northern Europe, or “NBSK – Europe”) which is the benchmark for bleached softwood pulp sold in Europe, for each of the years indicated.

	Year ended December 31,
BHKP	2019		2020		2021		2022		2023
China
Minimum Price		456.69		441.26		500.46		588.18		474.65
Maximum Price		699.95		499.08		780.09		866.17		810.07
Year-end Price		456.92		499.08		576.42		827.59		653.35
Europe
Minimum Price		680.00		680.00		680.00		1,140.00		800.00
Maximum Price		1,024.16		681.80		1,140.00		1,380.00		1,379.97
Year-end Price		680.01		680.00		1,140.00		1,380.00		1,007.96
NBSK
China
Minimum Price		557.57		554.41		672.88		762.12		650.10
Maximum Price		714.43		670.56		985.23		989.69		910.07
Year-end Price		557.57		670.56		755.05		884.99		749.25
Europe
Minimum Price		819.84		819.96		879.79		1,260.00		1,145.88
Maximum Price		1,188.70		879.36		1,340.00		1,498.06		1,429.58
Year-end Price		819.95		879.36		1,260.67		1,429.03		1,242.99

* Source: Fastmarkets RISI, Prices in U.S. dollars.

Hardwood Pulp. During the first months of 2019, prices for NBHK – China and NBHK – Europe remained relatively stable, due to the Chinese New Year that took place in February 2019 and lower pulp demand, respectively. After the first quarter, prices started to decrease and this trend continued through the end of the year, mainly due to (i) growing trade tensions between China and the United States, (ii) higher inventories of some pulp producers and (iii) lower economic activity in Europe. Throughout 2020, hardwood pulp prices remained low and stable mainly due to the impact of the COVID-19 pandemic and high inventories of some pulp and paper producers. During the last weeks of 2020 and the first quarter of 2021, prices of both BHKP – Europe and BHKP – China started steadily increasing, mostly due to normalization of demand and logistic issues which constrained supply chains to a certain extent. During the second quarter of 2021, prices remained stable for BHKP – China, albeit at high levels, and continued to increase for BHKP – Europe. Prices for BHKP – Europe remained largely stable during the second half of 2021, and prices for BHKP – China decreased somewhat mostly due to a lower operating rate of paper producers and electrical outages. During the first quarter of 2022, prices increased in comparison with the last week of the fourth quarter of 2021, in both BHKP – Europe and BHKP – China, mostly due to logistical issues, strikes or work stoppage that occurred to a relevant competitor, meanwhile in Europe due to high economic activity and low levels of imports from Asia. Moreover, shortage of birch in Northern Europe caused significant pressure on short fiber which make producers switch to long fiber. During the second quarter of 2022, prices increased again due to inflation affecting the markets in both BHKP – Europe and BHKP – China. During the second half of 2022, prices of both BHKP – Europe and BHKP – China remained relatively stable due to a normalization of logistical issues and a relatively stabilization of inventories.  2023 began with price declines for both BHKP-Europe and BHKP-China, with an increase in supply due to the injection of new pulp capacity in the market towards the end of March. BHKP-China prices reached their minimum of the year yet started to stabilize by the end of the second quarter of 2023, while BHKP-Europe continued declining due to reduced demand. During the third quarter of 2023, BHKP-China prices increased due to higher demand, while BHKP-Europe began to stabilize. By the end of 2023, prices for both BHKP-China and BHKP-Europe increased, fueled by improved European demand resulting from reduced pulp inventories and narrowed price differentials with China.

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Softwood Pulp. During the first quarter of 2019, softwood pulp prices followed a similar trend to hardwood pulp prices. After the first quarter and through the third quarter of 2019, prices in China and Europe began to markedly deteriorate mainly due to growing trade tensions between China and the United States and duties imposed by both countries that impacted pulp demand. During the fourth quarter of 2019, prices stabilized to a certain extent. Throughout the first three quarters of 2020 softwood pulp prices remained low and stable mainly due to the impact of the COVID-19 pandemic and high (yet decreasing) inventories of some pulp and paper producers. During the fourth quarter of 2020, inventories somewhat stabilized which led to an increase in prices of NBSK mainly during the final weeks of the year. The first quarter of 2021 continued with the trend observed during the last weeks of 2020, with prices of both NBSK – Europe and NBSK – China steadily increasing, mostly due to normalization of demand, and logistic issues which constrained supply chains to a certain extent. During the second quarter of 2021, prices remained stable for NBSK – China, albeit at high levels, and continued to increase for NBSK – Europe. Prices for NBSK – Europe remained largely stable during the second half of 2021, and prices for NBSK – China decreased somewhat mostly due to a lower operating rate of paper producers and electrical outages. During the first quarter of 2022, prices increased in comparison with the last week of the fourth quarter of 2021, in both NBSK – Europe and NBSK – China, mostly due to logistical issues and also in Europe, due to high economic activity and low levels of imports from Asia. During the second quarter of 2022, prices increased again due to inflation affecting the markets in both NBSK – Europe and NBSK – China. During the third quarter of 2022, prices of both NBSK – Europe and NBSK – China remained relatively stable; and at the end of the year of 2022, prices decreased due to a normalization of logistic issues and a relatively stabilization of inventories. Prices decreased considerably during the first quarter of 2023 for NBSK-Europe and NBSK-China due to high inventories and low paper production. During the second quarter of 2023, prices remained low for NBSK-China while prices for NBSK-Europe continued to decline. In the third quarter of 2023, prices for both NBSK-Europe and NBSK-China increased towards the end of the quarter until year-end, due to higher demand rates.

Wood Products. Throughout 2019, the panels market remained healthy with strong sales particularly in the United States and Canada. The sawn timber and plywood markets both evidenced oversupply and prices were thereby affected. Additionally, trade tensions between China and the United States added further pressure on prices, especially with respect to sawn timber products. Wood products markets remained stable during 2019 in terms of prices and sales volume compared to 2018. During the first half of 2020, we confronted significant challenges due to adverse effects that the COVID-19 pandemic had on the wood products markets, especially during the second quarter of the year. During the second half of 2020, prices continuously improved due to an increase in demand, especially in the construction and remodeling sectors, among other reasons. During 2021, the wood products markets remained generally stable and at high levels both in terms of prices and sales volume. Prices for some wood products continued to increase throughout the year, and we observed some supply shortages in some of the markets we participate in. During 2022, the wood products markets’ demand remained relatively stable in panel consumptions in North America. In addition, our sawn timber segment’s demand was relatively stable during the first half of 2022 and a relatively restricted supply due to logistic issues. During 2023, average prices of all wood products decreased throughout the year, with panels being affected by higher interest rates, oversupply, high inventories, and political uncertainty. Sawn timber was mainly affected by slower markets throughout the year.

Global economic conditions may exert downward pressure on commodity prices, including the international prices of the products we sell, which could result in material and adverse declines in our revenues, results of operations and financial condition. We have no control over the factors that cause prices to change which include, among others:

· worldwide demand (which may be affected by a number of factors, including economic or political conditions in Asia, Latin America, North America and Europe);

· prevailing world prices, which historically have been subject to significant fluctuations over relatively short periods of time, depending on worldwide demand;

· world production capacity; and

· the availability of substitutes.

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In addition, the prices of many of the products we sell are correlated to some extent, and historical fluctuations in the price of one product have usually been accompanied by similar fluctuations in the prices of other products. If the price of one or more of the products that we sell were to decline significantly from current levels, it could have a material adverse effect on our revenues, results of operations and financial condition.

Worldwide competition in the markets for our products may adversely affect our business, financial condition, results of operations and cash flows.

We experience substantial worldwide competition in each of our geographical markets and in each of our product lines. Some of our competitors are larger than we are or may have greater financial and other resources, which, among other things, may enhance their ability to support strategic expenditures directed to increase their market share. Our market share and competitive position may be adversely affected if we are unable to successfully continue to expand our productivity at the same pace as our competitors.

Both the pulp and wood products industries are sensitive to changes in industry capacity and producer inventories, as well as to cyclical changes in the world’s economies, all of which may significantly affect selling prices and, thereby, our profitability. One or more of these factors could materially and adversely affect our business, financial condition, results of operations and cash flows.

Global economic and other developments, and particularly economic developments in the Asian, European and U.S. economies, could have an adverse effect on the demand for our products, our financial condition, results of operations and cash flows.

The global economy, and in particular global industrial production, is the primary driver of demand for pulp, paper and wood products. For example, our wood products segment, which is highly dependent on the strength of the home-building industry, has experienced decreases in its prices and demand for its products from time to time.

A decrease in the level of activity in either the domestic or the international markets within which we operate could adversely affect the demand and the price of our products and thus our cash flows and operational and financial results.

Our business, financial condition, results of operations and cash flows could be materially and adversely affected if the economic and other conditions in Asia, Europe, the United States and elsewhere deteriorate, and if we are unable to address competitive challenges resulting from currency fluctuations or reallocate our wood products and other products to other markets on equally beneficial terms, which could require us to recognize additional impairment charges.

Furthermore, in February 2022, Russian troops invaded Ukraine. Although the severity and duration of the ongoing military action are highly unpredictable, Russia’s prior annexation of Crimea, recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions being levied by the United States, the European Union, and other countries against Russia, with additional potential sanctions threatened and/or proposed. Russia’s military incursion and the market volatility could adversely affect the global economy and financial markets and thus could affect our business, financial condition, or results of operations. In addition, the conflict has resulted in significant volatility in certain commodity prices, as well as in supply chain complications and increases in oil and natural gas prices which has resulted in higher fuel prices and – consequently – in a sharper rise in inflation around the world. If prolonged, these fluctuations could materially affect our business, financial condition or results of operations. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by this conflict or resulting sanctions may magnify the impact of other risks described in this annual report.

More recently, on October 19, 2023 the Houthi movement, which controls parts of Yemen, launched a number of attacks on marine vessels in the Red Sea. The Red Sea is an important maritime route for international trade. As a result of such disruptions, we have experienced, and may continue to experience, extended lead times, delays in supplier deliveries, increased transportation and component costs, and increased costs for expedited shipments. Finally, the ongoing military conflict in the Middle East between Israel and Hamas is also a source of uncertainty. The conflict could bring about disruption, instability and volatility in global markets and supply chains, which could in turn adversely affect our business operations and financial performance.

The duration and material impact of these conflicts remain highly unpredictable but could be substantial.

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We depend on free international trade as well as economic and other conditions in our principal markets.

We are a global company with industrial operations in eleven countries, from which we sell our products in the domestic market and through exports. In 2023, 34.2% of our sales were to customers in Asia, 31.7% to customers in North America, 25.6% to customers in Central and South America, 6.7% to customers in Europe, and 1.8% to customers in other regions. Consequently, our results of operations and cash flows depend, to a significant degree, on economic, political and regulatory conditions in our principal markets. Our ability to compete effectively in our markets could be materially and adversely affected by a number of factors beyond our control, including deterioration in macroeconomic conditions, exchange rate volatility, government subsidies and the imposition of increased tariffs or other trade barriers. If our ability to sell our products competitively in one or more of our principal markets were impaired by any of these developments, it might be difficult to reallocate our products to other markets on equally favorable terms and our business, financial condition, results of operations and cash flows might be adversely affected.

In Chile and in Mexico, we are located in a seismic area that exposes our properties to the risk of earthquakes and tsunamis.

Our properties in Chile and in Mexico are located in seismic areas that expose our facilities, plants, equipment and inventories to the risk of earthquakes and even subsequent tsunamis in some areas. A significant earthquake or other catastrophic event could severely affect our ability to meet our production targets or satisfy customer demand and could require us to make unplanned capital expenditures, resulting in lower sales and having a material adverse effect on our financial results. For example, on February 27, 2010, an earthquake with an 8.8 magnitude on the Richter scale occurred in the South-Central Region of Chile, followed by a tsunami that affected the coast. This event led to the suspension of our operations in the region. It resulted in significant asset impairment charges due to earthquake-related damage to property and inventories, as well as a significant decrease in our sales volumes due to plant closures, which had an adverse effect on our results of operations and cash flows.

We cannot assure that we will not experience suspensions or interruptions or unexpected damage to our property as a result of earthquakes, aftershocks, tsunamis, any related repair and maintenance or other consequences associated with such events, or that our insurance coverage will be sufficient, any of which could have a material adverse effect on our revenue, results of operations and financial condition.

The costs of complying with, and addressing liabilities arising under, environmental laws and regulations have in the past and may in the future adversely affect our business, financial condition, results of operations and cash flows.

We have significant operations in Argentina, Brazil, Canada, Chile, Mexico and the United States. We also have operations in Uruguay through our 50% share in the Montes del Plata joint operation and in Spain, Portugal, Germany and South Africa through our 50% share in the Sonae Arauco joint venture. In each of those countries we are subject to a wide range of national and local environmental laws and regulations concerning, among other matters, the preparation of environmental impact assessments for our projects, the protection of the environment and human health, the generation, storage, handling and disposal of waste, the discharge of pollutants and the remediation of contamination. As a forest products manufacturer, we generate air and water emissions and solid and hazardous wastes. These emissions and our waste disposal are subject to limits and controls prescribed by law or by our operating permits, and we may be required to install or upgrade our pollution control equipment in order to meet these legal requirements. We have made, and expect to continue to make, expenditures to maintain compliance with environmental laws. Notwithstanding our policy to strictly comply with all requirements established by applicable environmental laws, any failure to comply with such environmental laws may result in civil, administrative or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental authorizations or the temporary or permanent closure of facilities.

Environmental regulations in countries in which we operate have become increasingly stringent in recent years (for example, in connection with the approval and development of new projects). Future changes in environmental laws, or in the application, interpretation or enforcement of those laws, including new or stricter requirements related to harvesting activities, air and water emissions and/or climate change regulations, could result in substantially increased capital, operating or compliance costs, impose conditions that restrict or limit our operations or otherwise adversely affect our business, financial condition, results of operations and cash flows. These changes could also limit the availability of our funds for other purposes, which could adversely affect our business, financial condition, results of operations and cash flows.

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In respect to such regulations, in November 2015, the Cruces river, where the Valdivia mill disposes its effluents, became subject to the Secondary Water Quality Standard for the Valdivia River Basin (hereinafter, the “Norm” or “SWQSVR”). The Valdivia mill discharges its treated effluents into the Cruces River, which is part of the Valdivia River Basin.

We and other local entities challenged the validity of the Norm before the Third Environmental Court in January 2016, expressing concerns, among others, regarding various aspects of the Norm’s General Environmental and Social Impact Assessment (AGIES, for its acronym in Spanish). These objections included the lack of identification and consideration for the economic and social costs resulting from the adoption of the Norm. Other objections included that the Norm’s parameters and limits exceeded the reviewed water quality criteria enforced by reference countries in both quantity and stringency; and that many of the parameters and limits were not technically or environmentally reasonable. The Third Environmental Court ruled in our favor on September 29, 2016, declaring the invalidity of the Norm, and the decision was upheld by the Supreme Court in July 2017.

In December 2017, the government restarted the rulemaking process and published a new draft SWQSVR for public comments. The draft proposes to impose regulations with practically the same parameters and limits included in the previous Norm declared void by the Supreme Court. In our opinion, the draft presents flaws similar to those detected in the previous rulemaking process, among others, the lack of identification and consideration of its actual economic and social costs and that most of its parameters and limits are not technically or environmentally reasonable. The public comment process finished in March 2018 and several comments from the public and different stakeholders were submitted, including various technical, economic and legal reports from third parties. In September 2023, the government submitted a final report for the consideration of the Sustainability and Climate Change Ministers’ Committee (Consejo de Ministros para la Sustentabilidad y el Cambio Climático) and the President of the Republic. If the new norm enters into force, we cannot exclude the possibility that the regulatory authority may declare that the Valdivia River Basin is “contaminated” and thus initiate an administrative proceeding to impose a decontamination plan, which may include new limits on discharges of wastewater applicable to our Valdivia mill.

Environmental concerns led to the temporary suspension of our operations at the Valdivia mill in 2005, which adversely affected, and in the future may continue to adversely affect, our business, financial condition, results of operations and cash flows.

Our operations at the Valdivia mill have been subject to environmental scrutiny by Chilean environmental regulators and the Chilean public since the mill began its operations in 2004. A variety of concerns and claims have been raised regarding the mill’s potential environmental impacts in the area. Primarily, it has been alleged that the mill’s operations impacted the habitat of the nearby Carlos Anwandter Nature Sanctuary and contributed to the migration and death of black-neck swans living in the area. In connection with an environmental administrative proceeding, environmental regulators required us to suspend operations at the Valdivia mill for approximately one month in January 2005.

In February 2009, as previously required by the environmental authorities, we submitted an environmental impact study for the construction of a pipeline to discharge the Valdivia mill’s wastewater in the Pacific Ocean near Punta Maiquillahue, complying with the requirement that such wastewater be discharged in a body of water other than the Cruces River, the Carlos Anwandter Nature Sanctuary or their respective sources. In February 2010 and October 2012, the environmental authorities approved this environmental impact study subject to some conditions. On April 30, 2013, the Committee of Ministers passed Exempt Resolution No. 391, which modified certain paragraphs of the above-mentioned approval (establishing effluent discharge limits for 13 parameters).

The construction and operation of the pipeline requested by the environmental authority in order to discharge the Valdivia mill’s wastewater in a body of water other than the Cruces River, the Carlos Anwandter Nature Sanctuary or their respective sources, remains subject to environmental, regulatory, engineering and political uncertainties. As of the date of this annual report, it has not been possible to obtain relevant permits and authorizations for the project. As a result, we cannot provide any assurances that the project will be completed and that any deadline extensions would be granted, even if we comply with all the requirements that may be set forth by those authorities. If the installation of the pipeline is delayed for reasons attributable to us, we may face sanctions that include warnings, fines or the revocation of the Valdivia mill’s environmental permit for operation.

The suspension of operations at the Valdivia mill in 2005 adversely affected our business, financial condition, results of operations and cash flows. Any future suspension of operations at the Valdivia Mill or at any other of our significant operating mills can be expected to have similar adverse effects. We offer no assurance that the Valdivia Mill, or our other mills, will be able to operate without further interruption.

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We have been and currently are subject to legal proceedings related to some of our mills which could adversely affect our business, financial condition, results of operations and cash flows.

In connection with the death of fish in the Cruces River in January 2014 close to the Valdivia mill’s effluent discharge, in January 2019, the National Defense Council instituted a civil lawsuit seeking reparations from us for environmental harm allegedly caused by our Valdivia mill in connection with the death of fish in the Cruces River in January 2014. The National Defense Council did not determine the damages in this lawsuit, which could be sought by the National Defense Council in a separate proceeding before a civil court. The Company filed its defense in February 2019. The lawsuit remains under review by the court as of the date of this annual report. A decision by the Third Environmental Court is expected to be rendered during 2024, which could eventually be appealed before the Supreme Court. We cannot predict the outcome or impact of this lawsuit or when it may be resolved. If the result of such lawsuit is unfavorable to us, we may be required to conduct studies on ecosystems and biodiversity as well as to implement programs to both repopulate and monitor species under conservation. We may be required to incur in significant costs to repair any environmental harm a court determines we have caused.

The commencement of similar criminal and civil proceedings against us at any time in the future could adversely affect some of our mills. We can neither predict the likelihood that we will face such similar proceedings in the future, nor the likely outcome or impact of any such proceedings.

We are also subject to certain administrative proceedings. In 2016 the Superintendence of the Environment initiated administrative proceedings against the Valdivia mill. The first part of the proceeding against the Valdivia mill concluded in 2017. On December 15, 2017, the Superintendence of the Environment decided that the Valdivia mill was liable for ten out of eleven charges and imposed a fine of 7,777 UTA (approximately U.S.$6.5 million as of December 2018). We appealed this decision on April 5, 2018 before the Third Environmental Court. A decision by the Third Environmental Court was issued in February 2020. This decision partially accepted the claim, only in connection with the inadequate classification of one of the charges, ordering the Superintendence to make a new classification. The decision also mentioned that the Superintendence had not proved that the death of fish in the Cruces River in January 2014 was caused by the operations of the Valdivia mill. This ruling was appealed by both the Superintendence and us before the Supreme Court. In December 2022, the Supreme Court upheld the Third Environmental Court decision, confirming most of the fines but stating that the death of fish in the Cruces River in January 2014 was not caused by the operations of the Valdivia mill. The Superintendence will make a new classification in connection therewith (as of the date of this annual report, the Superintendence has not yet made this new classification). In January 2023, we paid the corresponding fines of approximately 5,360.2 UTA (approximately U.S.$4.9 million as of January 2023).

In 2019, our Moncure mill received an initial notice of violation from the North Carolina Department of Energy, Mineral, and Land Resources for exceedings of stormwater benchmarks. The administrative proceeding will remain open until the Moncure mill can demonstrate long-term compliance with such benchmarks. There was no civil penalty assessed for the initial notice of violation.

Any such proceedings or claims, or any subsequent interruption in our operations as a result of such proceedings as well as any unexpected costs to resolve such proceedings, may have an adverse effect on our business, financial condition, results of operations and cash flows. See “Item 3. Key Information—Risk Factors—Risks Relating to the Company—Environmental concerns led to the temporary suspension of our operations at the Valdivia mill in 2005, which adversely affected, and in the future may continue to adversely affect, our business, financial condition, results of operations and cash flows.”

Our ability to access local and international credit or capital markets may be restricted at a time when we need financing, which could have a material adverse effect on our flexibility to react to changing economic and business conditions.

As of December 31, 2023, we had approximately U.S.$ 7.1 billion of outstanding indebtedness. The economic environment prevailing at any point in time may prevent us from accessing, or restrict our access to, credit and capital markets to satisfy our financing needs, or we may not be able to refinance our existing indebtedness on terms that are favorable to us or at all. If we are unable to refinance our indebtedness as it becomes due, or if we refinance such indebtedness on terms that are not favorable to us, our business, results of operations and financial condition could be materially and adversely affected. For further information, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk”.

Material disruptions affecting our manufacturing mills, remanufacturing facilities, forestry assets or commercial operations could negatively impact our financial results and forestry operations.

A material disruption at any of our manufacturing, processing or remanufacturing facilities, or commercial operations could prevent us from satisfying customer demand for our products, meeting our production targets and/or require us to make unplanned capital expenditures, resulting in lower sales, which could have a negative effect on our financial results. Our Chilean and Mexican facilities are located in regions known for seismic activity that exposes our facilities to the risk of earthquakes and, in some areas, to subsequent tsunamis.

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A long-lasting conflict in part of the South of Chile has extended in territory and escalated in violence in recent years towards areas where we have operations, especially in the Biobío, Araucanía and Los Ríos regions. This conflict has included assaults, occupation of lands, arson of machinery and other assets, road blockades and confrontations with police. We have also faced other additional difficulties in such regions, including theft of logs. Further escalation of violence may result in material disruptions to our forestry or industrial operations in such regions.

Our commercial operations could also be affected by disruptions or other difficulties regarding supply chains, the availability of containers or ships, among other factors.

In addition, our facilities (or any of our machines within an otherwise operational facility) could cease operations unexpectedly due to a number of events, including:

· unscheduled maintenance outages;

· prolonged power failures;

· an equipment failure;

· fires, floods, hurricanes or other adverse weather;

· disruptions in the transportation infrastructure, including roads, bridges, railroad tracks, tunnels and ports;

· a chemical spill or release;

· explosion of equipment;

· the effect of a drought or reduced rainfall on its water supply;

· labor difficulties;

· terrorism or threats of terrorism;

· coronavirus or other global epidemic;

· domestic and international laws and regulations applicable to our Company and our business partners, including joint operation partners, around the world; and

· other operating problems.

In connection with losses to our production plants, facilities, equipment and forestry assets caused by material disruptions, our insurance coverage may be insufficient. The incurrence of losses or other liabilities that are not covered by insurance could result in significant and unexpected additional costs. Moreover, the terms and conditions for the renewal of our insurance policies may change in the future depending upon market circumstances and the type and amount of risks insured. See “Item 4. Information on our Company—Description of Business—Insurance”.

Currency fluctuations could have a negative effect on our financial results.

Domestic currencies of the countries in which we have industrial operations have been subject to depreciations and appreciations in the past and may be subject to significant fluctuations in the future. Even though most of our business is denominated in U.S. dollars, a portion of our revenues, costs, incomes and other expenses are denominated in domestic currencies other than the U.S. dollar, such as the Chilean peso, the Euro, the Argentine peso, the Uruguayan peso, the Brazilian real, the Mexican peso and the Canadian dollar, among others. As a result, fluctuations in the exchange rates of such foreign currencies relative to the U.S. dollar may have a material adverse effect on our business, results of operations, financial conditions and cash flows.

Disease or fires could affect our forests and manufacturing processes and, in turn, adversely affect our business, financial condition, results of operations and cash flows.

Our operations are subject to various risks affecting our forests and manufacturing facilities, including disease and fire. Pests and diseases afflicting radiata or taeda pine plantations in other parts of the world may migrate and may significantly affect the forestry industries in Chile, Argentina, Brazil or Uruguay in the future.

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Similarly, forest fires are always a risk, particularly during the forestry fires season in Chile that typically extends through the southern hemisphere summer, from the last quarter of each calendar year through the first quarter of the following year.

In January and February 2017, wildfires, exacerbated by high temperatures, the action of the winds, low atmospheric humidity and the complexity of combatting multiple focal points that appeared simultaneously in different places, broke out in the central and southern regions of Chile, and in respect of us, in the Maule, Ñuble and BioBío regions. As a consequence of such fires, we suffered the burning of approximately 72,500 hectares of forest plantations, which had a fair value of approximately U.S.$210 million, according to IFRS Accounting Standards . The affected forest plantations represented approximately 5.6% of the fair value of the total of our forest plantations, and approximately 1.5% of our total assets.

During the 2021-2022 forest fire season, approximately 7,566 hectares of our forest plantations were adversely affected by fires.

During the 2022-2023 forest fire season, approximately 47,000 hectares of our productive forest plantations in Chile were adversely affected by fires that occurred in early 2023 in the regions of Maule, Ñuble, Araucanía, Biobío and Los Ríos due to a combination of multiple irresponsible and/or intentional actions by third parties and extreme unfavorable weather conditions such as high temperatures, low humidity and high winds. As of December 31, 2023, we recognized a forest fire loss of U.S.$17 million net of insurance compensation for the fires in Chile, representing approximately 3.2% of the fair value of our total forest plantations.

As of the date of this annual report, during the 2023-2024 forest fire season, approximately 800  hectares of our forest plantations had been adversely affected by fires.

In connection with losses to our production plants, facilities, equipment and forestry assets caused by fires, our insurance coverage may be insufficient. We do not maintain insurance coverage against pests, diseases and, in certain areas, fires that could affect our planted forests. The incurrence of losses or other liabilities could result in significant and unexpected additional costs. Moreover, the terms and conditions for the renewal of our insurance policies may change in the future depending upon market circumstances and the type and amount of risks insured. See “Item 4. Information on our Company—Description of Business—Insurance.”

Climate change could negatively affect our business, financial condition, results of operations and cash flows. 

A significant number of scientists, environmentalists, international organizations, regulators and other commentators maintain that global climate change has contributed, and will continue to contribute, to the increasing unpredictability, frequency and severity of natural disasters (including, but not limited to, hurricanes, droughts, tornadoes, freezes, other storms and fires) in certain parts of the world. As a result, a number of legal and regulatory measures as well as social initiatives have been introduced in numerous countries in an effort to reduce carbon dioxide and other greenhouse gas emissions and combat global climate change. Such reductions in greenhouse gas emissions could result in increased energy, transportation and raw material costs and may require us to make additional investments in facilities and equipment. In addition, our plantations are located in regions which have favorable climatic conditions for a short growing cycle. Any climate changes that negatively affect such favorable climate conditions in central or southern Chile or in any region in which we benefit from favorable climate conditions could adversely affect the growth rate and quality of our plantations, or our production costs.

Regarding water scarcity, Chile has experienced a drought during the last years; consequently, the Licancel mill had to cease its activities for approximately three months at the end of 2019. Rainfall in the Maule region slightly increased during the 2020 and 2021 summer seasons compared to 2019. Thus, we were able to ensure the continuity of our operations, except in February 2022 and February 2023 when the Valdivia pulp mill had to cease its activities for five days and one day, respectively, due to the low flow of the Cruces River.  Following such events, different alternatives to mitigate the effect of the drought are being evaluated.

On the contrary, the year 2023 had a very rainy season in central and southern Chile, which caused some regions to overcome the water deficit they had carried over from previous years, reaching their normal records and in some cases surpassing them.

In June and August 2023, heavy rainfall in the Maule region caused the Mataquito River to overflow, flooding Licantén city and the Licancel pulp mill. In September 2023, Licancel's indefinite suspension of operations was publicly announced due to, among other reasons, high climate variability.

In the 2023 summer season, great damages were caused in Chile both to nature and individuals due to high temperatures combined with strong gusts of wind and very dry land caused by lack of rainfall in previous years. This scenario caused the spread of forest fires that devastated part of Arauco's forestry assets. For more information regarding certain risks to our forests presented by disease and fire, see “Item 3. Key Information—Risk Factors—Risks Relating to the Company—Disease or fires could affect our forests and manufacturing processes and, in turn, adversely affect our business, financial condition, results of operation and cash flows.”

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Although we cannot predict the impact of changing global climate conditions, if any, or potential legal, regulatory and social responses to concerns about global climate change, any such occurrences may negatively affect our business, financial condition, results of operations and cash flows.

We may undertake mergers, acquisitions and investments to expand or complement our operations that could result in operating difficulties or otherwise adversely affect our business, financial conditions and results of operations.

From time to time, we carry out mergers, acquisitions and investments to expand or complement our operations. In connection with such transactions, we may be exposed to various risks, including those arising from: (i) not having accurately assessed the value, future growth potential, strengths, weaknesses and potential profitability of potential acquisition targets; (ii) difficulties in successfully integrating, operating, maintaining or managing newly-acquired operations, including personnel; (iii) unexpected costs of such transactions; or (iv) unexpected contingent or other liabilities or claims that may arise from such transactions. If any of these risks were to materialize, it could adversely affect our business, financial condition and results of operations.

Labor action, contractual and other disputes could adversely affect our operations.

We have had certain strikes, work slowdowns, stoppages and other labor-related disruptions that have adversely affected our operations.

Under Chilean, Brazilian, Mexican, Argentine and Uruguayan labor legislation, we are secondarily liable for the payment of labor and social security obligations owed to our contractors’ employees. In Chile, if we do not supervise our contractors in their fulfillment of their labor and social security obligations pursuant to labor laws, then our responsibility will be elevated from secondary to joint and several, thus enabling an employee of a contractor to bring a claim against both the contractor and us (as the party hiring such contractor), even though the contractor will remain primarily liable for its obligations.  We also have some responsibilities for the health and safety conditions of the contractors’ employees and are obliged to ensure that the contractors comply with all obligations related to such conditions, while such employees are performing activities within the scope of our business operations.

In Argentina, joint liability rules that are substantially similar to those we are subject to in other countries where we have industrial operations, apply to a principal and its contractors. In addition, the national rural labor law, Law No. 26,727, promulgated on December 28, 2011 and fully in effect since March 2013, permits contractor employees under forestry contracts to bring actions directly against the principal to whom the employees’ services are being provided, instead of requiring them to bring actions against the contractor. For works or services related to the ordinary production process of a principal, the law provides that an employment relationship is deemed to exist between the principal and the employee of the contractor.

In Uruguay, under Laws 18.099 and 18.251, the liability for our Montes del Plata joint operation with Stora Enso arises only in case of subcontractors, intermediaries or suppliers of labour manpower (as defined in Article 1 of Law 18.251). The liability will be joint and several unless Montes del Plata duly exercises its right to be informed that contractors fulfill their labor and social security obligations pursuant to labor laws.

We may be affected by future strikes, work slowdowns, stoppages or other labor-related developments in the various countries in which we operate, including such developments attributable to employees of contractors performing outsourced services, and such strikes, slowdowns, stoppages or other developments could have a material adverse effect on our business, financial condition, results of operations or prospects.

Cybersecurity events, such as a cyberattack, could adversely affect our business, financial condition and results of operations.

Our business depends on information technology systems to effectively manage our production processes. Therefore, interruptions in these systems caused by employee error or attacks, external cyber-attacks, obsolescence or technical failures can deeply harm our business operations. Cybersecurity risks have generally increased in recent years as a result of the proliferation of new technologies and the increased sophistication and activities of cyberattacks. Any failure of our systems related to sensitive information could disrupt our business and result in production errors, processing inefficiencies and the loss of sales and customers, which in turn could result in decreased revenue, increased costs and excess or out-of-stock inventory levels.

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Additionally, cyberattacks or internal actions, including negligence or misconduct of our employees and suppliers, may have a negative impact on our reputation, our relationship with external entities (government, regulators, partners, among others) and our strategic positioning with relation to our competitors. Any significant security breaches or disruptions in the performance of our information technology systems could have a material adverse effect on our results of operations and financial condition. For more information regarding our cybersecurity policy, see “Item 4. Information on our Company—Description of Business—Cybersecurity”.

Risks Relating to Chile

Adverse changes in Chile’s political, legal, tax, social and economic conditions could directly impact our business and the market price of our securities.

For the year ended on and as of December 31, 2023, 70.9% of our property, plant and equipment and forest assets were directly owned by Arauco and our Chilean subsidiaries, and 51.2% of our revenues were attributable to our Chilean operations. Accordingly, our business, financial condition, results of operations and cash flows depend, to a considerable extent, upon political and economic conditions in Chile. Future changes in Chile’s political, regulation and economic conditions - affecting interest rates, inflation, tax rates or charges on imports and/or exports, among others - could adversely affect our business, financial condition, results of operations and cash flows and may impair our ability to proceed with our strategic plan of business. In addition, such changes may impact the market price of our securities.

On October 25, 2020, Chile held a referendum whereby nearly 80% of voters opted to replace the National Constitution and to have a new National Constitution drafted by a special constitutional convention (the “Constitutional Convention”). The Constitutional Convention was composed of 155 members, and elections to select the members were held on May 15 and 16, 2021. The Constitutional Convention began working on a proposed constitution in July 2021 and finalized the proposed constitution on July 4, 2022. On September 4, 2022, Chile held a national plebiscite in which the proposed constitution was rejected by 61.86% of the voters.

After the rejection of the constitution proposed by the Constitutional Convention, the Chilean lawmakers agreed to enter into a new constitutional process and submit a new proposal to public referendum. On March 6, 2023, an expert’s commission was installed to draft a new constitutional proposal to be afterwards reviewed and eventually revised by a constitutional council (the “Constitutional Council”) composed by 50 members elected in public elections held on May 7, 2023.

On December 17, 2023, the new constitution proposed by the Constitutional Council was submitted to a national plebiscite in which it was rejected by 55.76% of the votes cast.

We cannot assure that the political and social situation or future developments in Chile, will not have an adverse effect on our business, financial condition or result of operations. Further, we cannot assure that any new government policies, or any new law enacted by Congress will not adversely affect the Chilean economy or, directly or indirectly, our business, operations, and revenues.

Chile has different corporate disclosure standards from those with which you may be familiar in the United States, and Chile’s securities laws may not afford you the same protections as U.S. securities laws.

The securities disclosure requirements applicable to certain foreign private issuers differ from those applicable to issuers domiciled in the United States in some important respects. Accordingly, the information about us available to you will not be the same as the information disclosed by a U.S. company required to file reports with the U.S. Securities and Exchange Commission (the “SEC”).

In addition, although Chilean law imposes restrictions on insider trading and price manipulation, applicable Chilean securities laws and regulations are different from those in the United States, and some investor protections available in the United States may not be available in the same form, or at all, in Chile.

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Risks Relating to the United States and Canada

Economic conditions in the United States and Canada may have a direct impact on our business, financial condition, results of operations and cash flows.

For the year ended on and as of December 31, 2023, 4.6% of our property, plant and equipment were owned by our U.S. subsidiaries, and 14.1% of our revenues were attributable to our U.S. operations. See “Item 4. Information on our Company—Description of Business.”

For the year ended on and as of December 31, 2023, 0.3% of our property, plant and equipment were owned by our Canadian subsidiaries, and 3.5% of our revenues were attributable to our Canadian operations. See “Item 4. Information on our Company—Description of Business.”

As a result of the foregoing, to a certain extent, our business, financial condition, results of operations and cash flows will be dependent on economic conditions in the United States and Canada.

Risks Relating to Brazil

Economic conditions and government policies in Brazil may have a direct impact on our business, financial condition, results of operations and cash flows.

For the year ended on and as of December 31, 2023, 5.0% of our property, plant and equipment and forest assets were owned by our Brazilian subsidiaries and 10.2% of our revenues were attributable to our Brazilian operations. See “Item 4. Information on our Company—Description of Business.” As a result of the foregoing, to a certain extent, our business, financial condition, results of operations and cash flows will be dependent on economic conditions in Brazil.

The Brazilian government has exercised significant influence over the Brazilian economy. Brazilian political and economic conditions have a direct impact on our business.

The Brazilian government has exercised a substantial influence over many aspects of the Brazilian economy. The Brazilian government’s actions to control inflation and other policies and regulations have involved in the past, among other measures, wage and price controls, currency devaluations, capital controls and limits on imports. The business, financial condition, results of operations and cash flows of our Brazilian subsidiaries may be adversely affected by such matters, changes in policy or regulation involving tariffs and exchange controls, as well as by other factors.

The Brazilian government’s actions have had and may continue to have a material effect on private sector entities, including our operations in Brazil. We have no control over and cannot predict how government intervention and policies will affect the Brazilian economy or, directly and indirectly, our operations and revenues.

Future economic, social and political developments in Brazil may adversely affect the business, financial condition, results of operations and cash flows of our Brazilian subsidiaries.

Risks Relating to Argentina

 Economic conditions and government policies in Argentina may have a direct impact on our business, financial condition, results of operations and cash flows.

For the year ended on and as of December 31, 2023, 4.9% of our property, plant and equipment and forest assets were owned by our Argentine subsidiaries, and 9.5% of our revenues were attributable to our Argentine operations. As a result of the foregoing, our business, financial condition, results of operations and cash flows will be dependent, to a certain extent, on economic conditions in Argentina. See “Item 4. Information on our Company—Description of Business—History.”

There are various aspects of the Argentine economy that could adversely affect our operations, including, among others, inflation, interest rates, taxes and foreign exchange controls implemented in Argentina, which include the obligation to repatriate foreign currency obtained abroad and strong restrictions on the transfer of funds abroad, with certain exceptions for authorized transactions.

In 2017, we signed an intercompany loan with Arauco Argentina S.A. (“Arauco Argentina”), for U.S.$250 million, which proceeds were used to repay in full certain Arauco Argentina’s debt that we guaranteed. During 2018, Arauco Argentina prepaid U.S.$90 million. The balance due after such prepayment was U.S.$160 million.

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On May 28, 2020, the Central Bank of the Argentine Republic (“BCRA”) issued Communication “A” 7030 (as amended from time to time, “Communication 7030”), which established additional requirements on outflows made through the local foreign exchange market (“MULC”). Among other things, Communication 7030 provides that the BCRA’s prior approval is required to access the foreign exchange market to make financial debts principal payments abroad if the creditor is an affiliate of the debtor. This requirement is applicable until December 31, 2024. This provision continues in force and the BCRA has not yet authorized Arauco Argentina to make the principal payments that were due on June 1, 2020, December 1, 2020, June 1, 2021, December 1, 2021, and June 1, 2022, which is the loan expiration date. However, under Communication "A" 7301 of the BCRA, which allows access to the MULC without the prior approval of the BCRA for the cancellation of this type of loans between related parties, to those who have a Certification of increase in Exports of Goods for the year 2021, Arauco Argentina made a partial cancellation of U.S.$ 6 million of the overdue debt on July 14, 2022. The balance due after such payment of principal is U.S.$154 million.

On April 21, 2023, the BCRA issued Communication “A” 7746 which provides that the BCRA’s prior approval is required to access the foreign exchange market to make payments abroad of interests of financial debts if the creditor is an affiliate of the debtor. This requirement is applicable until December 31, 2024. This provision continues in force and the BCRA has not yet authorized Arauco Argentina to make the interest payments that were due on June 1, 2023, and December 1, 2023. As of December 31, 2023 the amount of interest due is approximately U.S.$ 26.9 million.

During 2023, the former administration of the Argentine government approved different rules that complexified or directly prohibited access to the MULC for payments to foreign suppliers. For this reason, Arauco Argentina has received a series of loans from its shareholder Arauco Wood Ltd. in order to be able to make certain payments on overdue debts. The balance due as of December 31, 2023 is U.S.$23.5 million.

We cannot predict how current foreign exchange restrictions may change after the date hereof and whether they may limit or impede our ability to fulfill our commitments, which in turn may have a negative impact on our financial condition, results of operations and cash flows.

We have no control over and cannot predict how any future changes in economic policy or other changes in the Argentine economy may affect our operations and revenues in Argentina.

The Argentine government has exercised significant influence over the Argentine economy. Argentine political and economic conditions have a direct impact on our business.

The Argentine government has exercised a substantial influence over many aspects of the Argentine economy. In furtherance of its economic objectives, the Argentine government has adopted a wide variety of measures, such as wage and price controls, currency devaluations, exchange and capital controls and limits on imports, among others. The business, financial condition, results of operations and cash flows of our Argentine subsidiaries may be adversely affected by any such measures or regulatory changes, including with respect to tariffs and exchange controls.

On December 10, 2023, Mr. Javier Milei took office as new President of Argentina. During the first weeks in office, the new government announced several economic measures, including a devaluation of the Argentine currency.

Despite the proposals of the new administration, the regulations currently in force may continue to have a material effect on the private sector, including our operations in Argentina. We have no control over and cannot predict how government intervention and policies will affect the Argentine economy or, directly and indirectly, our operations and financial condition.

Future economic, social and political developments in Argentina may adversely affect the business, financial condition, results of operations and cash flows of our Argentine subsidiaries.

Risks Relating to Mexico

Economic conditions and government policies in Mexico may have a direct impact on our business, financial condition, results of operations and cash flows.

For the year ended on and as of December 31, 2023, 1.3% of our property, plant and equipment were owned by our Mexican subsidiaries, and 3.4% of our revenues were attributable to our Mexican operations. See “Item 4. Information on our Company—Description of Business.”

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In the past, Mexico has experienced several periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation, government intervention in the economy and other economic disruptions. Future economic, social and political developments in Mexico may adversely affect the business, financial condition, results of operations and cash flows of our Mexican subsidiaries.

The Mexican government has exercised significant influence over the Mexican economy. Mexican political and economic conditions have a direct impact on our business.

The Mexican government has exercised a substantial influence over many aspects of the Mexican economy. The Mexican government’s actions to control inflation and other policies and regulations have involved in the past, among other measures, wage and price controls, currency devaluations, capital controls and limits on imports. The business, financial condition, results of operations and cash flows of our Mexican subsidiaries may be adversely affected by such matters, changes in policy or regulation involving tariffs and exchange controls, as well as by other factors.

The Mexican government’s actions have had and may continue to have a material effect on private sector entities, including our operations in Mexico. We have no control over and cannot predict how government intervention and policies will affect the Mexican economy or, directly and indirectly, our operations and revenues.

Future economic, social and political developments in Mexico may adversely affect the business, financial condition, results of operations and cash flows of our Mexican subsidiaries.

Risks Relating to Uruguay

Economic conditions in Uruguay, or the failure of Montes del Plata and its affiliates to service their debt, may have a direct impact on our financial condition, results of operations and cash flows.

For the year ended on and as of December 31, 2023, 13.0% of our property, plant and equipment and forest assets were located in Uruguay, and 8.1% of our revenues were attributable to the Uruguayan joint operation of Montes del Plata. See “Item 4. Information on our Company—Description of Business.”

We have made significant investments, and we may make additional ones in the future. As a result, our financial condition and results of operations may consequently depend, to a certain extent, on political and economic conditions. Certain future actions by the Uruguayan government, including, among others, actions with respect to forestation, inflation, interest rates, foreign exchange controls and taxes, could have a material adverse effect on our operations.

Risks Relating to Other Markets

Our business, earnings and prospects may be adversely affected by developments in other countries that are beyond our control.

Our business, financial condition, results of operations and cash flows depend on the level of economic activity, government and foreign exchange policies and political and economic developments in our principal markets. Our business, earnings and prospects, as well as our financial condition, results of operations, cash flows and the market price of our securities, may be materially and adversely affected by developments in our principal markets relating to inflation, interest rates, currency fluctuations, protectionism, government subsidies, price and wage controls, exchange control regulations, taxation, expropriation, social instability or other political, economic or diplomatic developments. For example, certain target countries to which we export may impose buying restrictions in our industry, which may adversely affect our sales. We have no control over these conditions and developments which could adversely affect us and our business, financial condition, results of operations and cash flows or the price or market of our securities.

Developments in other emerging and developed markets may adversely affect the market price of our securities and our ability to raise additional financing.

Our financial condition and the market price of our securities may be adversely affected by declines in the international financial markets and world economic conditions. Investors’ reactions to developments in one country can affect the securities markets and the securities of issuers in other countries. Negative developments in the international financial markets in the future could adversely affect the market price of our securities and impair our ability to raise additional capital.

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Risks Relating to Our Securities

The non-payment of funds by our subsidiaries could have a material adverse effect on our business, financial condition, results of operations and ability to service our debt, including our securities.

Our cash flow and ability to service debt is dependent, in part, on the cash flow and earnings of our subsidiaries and the payment of funds by those subsidiaries to us, in the form of loans, interest, dividends or otherwise. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the terms of our securities or to make any funds available for such purpose.

Furthermore, claims of creditors of our subsidiaries, including trade creditors, will have priority over our creditors, including holders of our securities, with respect to the assets and cash flow of our subsidiaries. Our right to receive assets of any of our subsidiaries upon their liquidation or reorganization (and the consequent right of the holders of our securities to participate in those assets) will be effectively subordinated to the claims of our subsidiaries’ creditors.

Changes in Chilean tax laws could lead us to redeem our securities.

Under current Chilean law and regulations, payments of interest made from Chile to holders of debt securities who are neither residents nor domiciled or organized in Chile for purposes of Chilean taxation will, generally, be subject to Chilean withholding tax at a rate of 4.0%. Subject to certain exceptions, we will pay additional amounts (as described in “Item 10. Additional Information-Taxation”) so that the net amounts received by the holder of our notes (including additional amounts) after such Chilean withholding tax will equal the amounts that would have been received in respect of the notes in the absence of such Chilean withholding tax. In the event of certain changes in Chilean tax laws requiring that we pay additional amounts that are in excess of the additional amounts that we would owe if payments of interest on our securities were subject only to a 4.0% withholding tax, we will have the right to redeem our securities.

Credit rating downgrades below investment grade could have a material and adverse effect on our business, financial condition, results of operations and ability to service our debt, including our securities.

Credit rating agencies could downgrade our ratings either due to factors specific to us, a prolonged cyclical downturn in the forestry industry or macroeconomic trends (such as global or regional recessions) and trends in credit and capital markets more generally. Any decline in our credit rating would increase our cost of borrowing and may significantly harm our financial condition, results of operations and profitability, including our ability to refinance our existing indebtedness.

On September 27, 2019, Fitch Ratings changed our ratings outlook from stable to negative, mentioning a projected increase in net debt as a result of weaker pulp prices which has also decreased the operating cash flow available.

On October 15, 2019, Standard & Poor’s changed our ratings outlook from stable to negative, citing higher leverage expectations for the next two years amid lower-than-expected pulp prices coupled with a high investment cycle.

On April 20, 2021, Standard & Poor’s changed our ratings outlook from negative to stable, citing a recovery in pulp prices and the expectation of an acceleration in deleveraging.

On July 28, 2021, Fitch Ratings changed our outlook from negative to stable, and our local rating from AA- to AA mentioning the strengthening of our credit profile and strong operating cash flow generation due to a substantial recovery in pulp prices and increased demand in the wood products division.

 On November 24, 2023, Moody’s changed our ratings outlook from stable to negative, mentioning subpar financial results during the first nine months of 2023 due to unique circumstances, such as the ramp up process of Line 3 of the Arauco pulp mill (“Arauco 3”) contemplated by the “MAPA” project, a steep fall in prices, the severe forest fire in early 2023 and mill stoppages.

We cannot assure that we will not be subject to further credit rating downgrades. Credit rating downgrades below investment grade could have a material and adverse effect on our ability to service our debt, including our securities, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

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Item 4.  Information on our Company

Description of BusinesS

Overview

We believe we are one of Latin America’s largest forest plantation owners and one of the world’s largest producers of market pulp, bleached and unbleached softwood kraft pulp, bleached hardwood kraft pulp, dissolving and fluff pulp, and panels (fiberboard and particleboard) in terms of production capacity. We have industrial operations in Chile, Argentina, Brazil, Mexico, the United States and Canada. We also have industrial operations in Uruguay, through our 50% share in the Montes del Plata joint operation, and in Spain, Portugal, Germany and South Africa, through our 50% share in the Sonae Arauco joint venture. As of December 31, 2023, we owned more than 822 thousand hectares of forest plantations in Chile, Argentina, Brazil and Uruguay combined.

During 2023, (i) we sold 3.8 million metric tons of pulp, in the form of hardwood bleached pulp, softwood bleached pulp, softwood unbleached pulp, fluff pulp, and dissolving pulp; (ii) we sold 7.3 million cubic meters of wood products, including sawn timber (green and kiln-dried lumber), remanufactured wood products, plywood and panels (medium-density fiberboard (“MDF”), particleboard (“PBO”), and high-density fiberboard (“HDF”)); and (iii) we harvested 19.5 million cubic meters of sawlogs and pulplogs. Our revenues consist of export sales and domestic sales in the countries where we have industrial operations. During 2023, sales in Asia, North America and South and Central America accounted for 34.2%, 31.7% and 25.6%, respectively, of our total revenue for such year.

As of December 31, 2023, our planted forests consisted of approximately 55.8% radiata, taeda and elliottii pine and approximately 42.0% eucalyptus. We seek to manage our forestry resources sustainably and in a way that ensures that the annual growth of our forests is equal to or greater than the volume of resources we harvest each year. In 2023, we planted a total of 100,615 hectares and harvested a total of 57,782 hectares in Chile, Argentina, Brazil and Uruguay.

We operate our business through two main segments: pulp and wood products, each as described below.

Pulp

Our pulp segment consists of our manufacturing of market pulp, bleached and unbleached softwood kraft pulp, bleached hardwood kraft pulp, dissolving pulp and fluff pulp. Our pulp segment also includes our sales of forestry products (i.e., sawlogs, pulplogs, chips and others) and energy.

We own five pulp mills in Chile, one in Argentina and jointly own one in Uruguay through our Montes del Plata joint operation with Stora Enso. Our aggregate installed annual pulp production capacity (including our 50% share of the Montes del Plata mill’s 1.4 million metric ton capacity) is approximately 5.3 million metric tons. During 2023, our pulp mills produced 3.5 million tonnes of bleached pulp and 0.3 million tonnes of unbleached pulp.

During 2023, our sales volume (in tonnes) in Asia and Oceania, Europe, North and South America and others represented approximately 76.8%, 15.8%, 7.3%, and 0.1%, respectively, of our total pulp sales volume for such year. During 2023, our pulp and forestry segment revenues were U.S.$2,686.8 million, representing 44.7% of our total revenues for such year.

Wood Products

Our wood products segment consists of our manufacturing of fiberboard panels, sawn timber, plywood and remanufactured wood products.

During 2023, our wood products sales volume (in cubic meters) in North America, Central and South America, Asia and Oceania, and other countries represented approximately 49.0%, 36.4%, 11.3% and 3.3%, respectively, of our total wood products sales volume for such year. During 2023, our wood products segment revenues were U.S.$3,131.1 million, representing 52.1% of our total revenues for such year, and were comprised of (i) U.S.$2,148.3 million in sales of fiberboard panels and (ii) U.S.$982.9 million in sales of sawn timber, plywood and remanufactured wood products.

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Fiberboard Panels

We own and operate fiberboard panels mills in Chile, Argentina, Brazil, the United States, Canada and Mexico. Fiberboard includes MDF, PBO and HDF. As of December 31, 2023 our aggregate installed annual fiberboard panels production capacity was approximately 6.6 million cubic meters, and our production during 2023 was approximately 5.1 million cubic meters.

During 2023, our sales volume (in cubic meters) of particleboard panels and medium-density fiberboard panels represented approximately 48.9% and 51.1% of our total fiberboard panels sales volume, respectively. For the same year, our fiberboard panels sales volume (in cubic meters) in the United States and Canada, Brazil, Mexico, Argentina, Chile and other countries represented approximately 42.8%, 27.8%, 11.6%, 9.8%, 4.6% and 3.4%, respectively, of our total fiberboard panel sales volume for such year.

Sawn Timber, Plywood & Remanufactured Wood Products 

We own and operate sawmills in Chile and in Argentina with an aggregate installed annual production capacity of approximately 2.7 million cubic meters of sawn timber. We also own plywood mills with an aggregate installed annual production capacity of approximately 0.7 million cubic meters. Additionally, we own remanufacturing facilities in Chile and in Argentina that reprocess sawn timber into remanufactured wood products such as mouldings and frames. In 2023, we produced 2.9 million cubic meters of sawn timber, plywood and remanufactured wood products.

During 2023, our sawn timber, plywood and remanufactured wood products sales volume (in cubic meters) in the United States, Chile, China, Mexico, South Korea, Vietnam, Japan, Saudi Arabia and others represented approximately 24.9%, 13.6%, 11.3%, 8.2%, 7.7%, 5.2%, 4.4%, 4.3% and 20.2%, respectively, of our total sawn timber and remanufactured wood products sales volume for such year.

HISTORY AND DEVELOPMENT OF THE COMPANY

Celulosa Arauco y Constitución S.A. is a sociedad anónima (corporation) organized under the laws of Chile and subject to certain rules applicable to sociedades anónimas abiertas (Chilean public corporations). We were formed on September 14, 1979 in a merger between Industrias de Celulosa Arauco S.A., or Industrias Arauco, and Celulosa Constitución S.A., or Celulosa Constitución. Our two predecessor companies were created in the late 1960s and early 1970s by Corporación de Fomento de la Producción, or Corfo, a Chilean government development corporation, to develop forest resources, improve soil quality in former farming areas and promote employment. As part of the Chilean government’s privatization program, Corfo sold Industrias Arauco to Compañía de Petróleos de Chile S.A., or Copec, in 1977 and Celulosa Constitución to Copec in 1979. In October 2003, Copec transferred all of its gasoline- and fuel-related business assets to a new subsidiary, Compañía de Petróleos de Chile COPEC S.A. In 2003, Copec changed its legal name to Empresas Copec S.A., or Empresas Copec, while in 2021 Compañía de Petróleos de Chile COPEC S.A. changed its legal name to COPEC S.A. (“COPEC”). See “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

In 1996, we acquired Alto Paraná S.A., an Argentine company that subsequently changed its name to Arauco Argentina S.A., which, at the time of the acquisition, owned plantations and other land in Argentina and manufactured and sold bleached softwood kraft pulp. With this initial acquisition, we began our expansion outside of Chile.

Between 2005 and 2016, we expanded our presence in Chile, Argentina, Brazil, the United States, Canada and Uruguay through a series of acquisitions described below that increased our land holdings and the production capacity of various sectors of our business.

In 2009, together with a subsidiary of Stora Enso, we acquired the Uruguayan subsidiaries of Grupo Empresarial ENCE, S.A. The main assets of these Uruguayan companies included 130,000 hectares of land, of which 73,000 had forestry plantations, 6,000 hectares under agreements with third parties, an industrial site, the necessary environmental permits for the construction of a pulp mill, a river terminal, a chip producing mill and a nursery.

On September 27, 2009, we entered into a series of joint operation agreements with Stora Enso, which resulted in Stora Enso and us agreeing joint control over a group of companies operating in Uruguay, which comprise the Montes del Plata joint operation (“Montes del Plata”).

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In 2011, the Montes del Plata joint operation built a state-of-the-art pulp mill with an annual production capacity of 1.3 million tonnes, a port and a power producing unit based on renewable sources, all located in Punta Pereira in the department of Colonia, Uruguay. The Montes del Plata pulp mill entered the production phase in June 2014 and reached full production capacity in October 2015.

In September 2012, we acquired 100% of the shares of Flakeboard Company Limited, (“Flakeboard”), a North American producer of wood paneling for furniture with seven panel mills in Canada and the U.S., with an aggregate annual production capacity of 1.2 million cubic meters of MDF panels, an annual production capacity of 1.2 million cubic meters of PBO, and an annual production capacity of 634,000 cubic meters of melamine.

In May 2015, we acquired 50% of the shares of a Spanish subsidiary of Sonae Industria, named Tableros de Fibras S.A., and changed its name to “Sonae Arauco”. We and Sonae Industria jointly control Sonae Arauco. Sonae Arauco and its subsidiaries produce market wood panels of the oriented strand board (“OSB"), MDF and PBO type, and sawn timber through the operation of: (i) two panel mills and one sawmill in Spain; (ii) two panel mills and one resin plant in Portugal; (iii) three panel mills and one impregnation papers plant in Germany, (iv) and two panel mills in South Africa (one of which is currently shut down). The aggregate annual production capacity of Sonae Arauco is approximately 460,000 cubic meters of OSB, 1,450,000 cubic meters of MDF, 2,270,000 cubic meters of particleboards and 100,000 cubic meters of sawn timber.

On October 25, 2016, our Board of Directors approved the “MDP Grayling” project by our U.S. subsidiary Flakeboard America Limited, located in the State of Michigan, United States of America. The project consisted of the construction and operation of a mill dedicated to the manufacture of medium-density particle board. The current production capacity of the mill is 800,000 cubic meters of PBO per year, of which approximately 320,000 cubic meters are coated with melamine paper. The project began operations by April 2019 and required an investment of approximately U.S.$450 million, which was financed with our own resources and bank loans.

On September 13, 2017, our Board of Directors approved a “Dissolving Pulp” project at the Valdivia mill, aiming to diversify the type of pulp produced by enabling dissolving pulp production. This project required an investment of approximately U.S.$200 million. This project was built in the current facilities of the Valdivia mill, implementing certain adjustments and new equipment. The project installed two new additional digesters to optimize the production level of dissolving pulp, a new discharging tank of pulp (storing process) and certain modifications to the treatment areas, among other changes. In addition, the project increased the mill’s capacity to inject energy to the Chilean power grid (Sistema Eléctrico Nacional, or SEN) from the current units of the mill. Construction of this project was completed at the end of 2019, and the mill started to produce dissolving pulp in June 2020.

On December 6, 2017, through our Brazilian subsidiary Arauco do Brasil S.A., we acquired from Masisa S.A., or “Masisa”, 100% of Masisa do Brasil Ltda., currently named Arauco Indústria de Painéis Ltda. The main assets acquired as a result of the transaction consist of two industrial complexes located in Ponta Grossa (Paraná) and in Montenegro (Rio Grande do Sul). They have a line of MDF boards with an annual installed capacity of 300,000 m3, a line of PBO with a current annual installed capacity of 500,000 m3, and four lines of melamine coating, with a total annual installed capacity of 660,000 m3.

In January 2019, through our subsidiaries Arauco Internacional and AraucoMex, S.A. de C.V., we acquired all the shares of certain of Masisa’s Mexican subsidiaries. The main assets acquired were two industrial complexes located in Durango and Zitácuaro, that consist of three PBO lines with an annual installed capacity of 339,000 m3; an MDF line with an annual installed capacity of 220,000 m3; thermally fused laminates (“TFL”) lines with an annual installed capacity of 309,000 m3; a chemical plant with an installed capacity of 60,000 tonnes of resins and 60,600 tonnes of formaldehyde; and impregnation lines with an aggregate annual installed capacity of 28.9 million of m2.

On July 24, 2018, our Board of Directors approved the modernization and expansion of the Arauco mill located in the Province of Arauco, Bio Bío Region, Chile (Proyecto Modernizacion Ampliacion de la Planta Arauco, MAPA). The MAPA project included the construction and start-up of a new production line of 1,560,000 annual tonnes of bleached hardwood kraft pulp (Arauco 3), with an estimated investment of approximately U.S.$2.85 billion. The MAPA project is expected to increase the net production of the Arauco mill by approximately 1,270,000 tonnes of pulp, reaching Arauco mill a total production capacity of approximately 2,100,000 annual tonnes. The modernization and expansion began in February 2019. Line 1 of the Arauco mill ceased its operations on January 3, 2022, and on January 20, 2023, the production of the first bale of pulp manufactured entirely in Arauco 3 was completed.

On September 1, 2019, our subsidiary Arauco North America, Inc, acquired the shares of Prime-Line, Inc. for a price of approximately U.S.$19.8 million. The main asset acquired consisted of a facility with three fully automated MDF moulding lines with an installed annual capacity of 135,000 m3.

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In 2020, Arauco Forest Brasil and Empreendimentos Florestais Santa Cruz sold 33,749 hectares of real estate properties, including 12,544 hectares of planted forest assets.

On May 13, 2021, our subsidiary Forestal Arauco S.A. (“Forestal Arauco”) executed a master agreement, by means of which it agreed to sell to Vista Hermosa Inversiones Forestales SpA, a company controlled by BTG Inversiones Forestales Fondo de Inversión, managed by BTG Pactual Chile S.A. Administradora General de Fondos, 461 forest properties that included a total of 80,489 hectares, for a total price of U.S.$385,500,000 net of value added tax. On August 17, 2021, the conditions precedent for the closing of the aforementioned transaction were fulfilled, and we proceeded to transfer 430 properties pursuant to the master agreement, for a total price of U.S.$343,668,299 net of value added tax.

In December 2021 Arauco Forest Brasil S.A. acquired the remaining 20% participation that Stora Enso Amsterdam B.V. had in Arauco Florestal Arapoti S.A. for a price of approximately R$294.5 million (U.S.$52.5 million).

On June 22, 2022, we signed a collaboration agreement with the Government of Mato Grosso do Sul, in Brazil. The foregoing is an important preparatory step that allows us to continue our evaluation of building a new pulp mill. If conditions permit, which would include obtaining all necessary permits and the approval of our Board of Directors, this new mill (Sucuriú Project) would have an estimated production capacity of 2.5 million tons of short fiber pulp and would require an estimated investment of approximately U.S.$3 billion.

On September 27, 2022, our Board of Directors approved the decision adopted by our subsidiary Arauco Industria de México, S.A. de C.V., to carry out the construction of a new production line of MDF with an estimated investment of approximately U.S.$235 million, to be located in our industrial complex in Zitácuaro, Michoacán, Mexico. Upon completion, this project is expected to add approximately 300,000 cubic meters of annual MDF production capacity, of which 150,000 cubic meters would be melamine laminated.

On December 20, 2023, we entered into a share purchase and sale agreement by virtue of which we agreed, together with our subsidiary Inversiones Arauco Internacional Limitada, to sell all of our shares and equity rights held directly in Arauco Florestal Arapoti S.A. and Arauco Forest Brasil S.A., and indirectly in Empreendimentos Florestais Santa Cruz Ltda. and Florestal Vale do Corisco S.A., which hold assets mainly in the state of Paraná, Brazil, to a company specially incorporated for such purpose and appointed by the Brazilian company Klabin S.A. We hold the totality of the shares and rights in such Brazilian forestry companies except for Florestal Vale do Corisco S.A., where we indirectly own only 49% of the shares and rights of such company.

The eucalyptus and pine forest plantations subject to the aforementioned sale occupy approximately 85,000 hectares. Moreover, it should be considered that the sale of shares and social rights does not extend to the industrial assets related to the panel plants in Brazil, nor to other forestry assets located mainly in the state of Mato Grosso do Sul, Brazil, and which relate to an industrial project to build a pulp mill in the future, called the "Sucuriú Project". The total price of the agreed purchase and sale (which is subject to adjustments customary for this type of transactions) is US$1,160,000,000, payable at the transaction closing date. The closing of the transaction is subject to the fulfilment of certain conditions precedent, including the authorization of the Brazilian competition authorities (Administrative Council for Economic Defense or "CADE").

On March 12, 2024, Eufores S.A. and Forestal Cono Sur S.A. (affiliates of Montes del Plata) acquired all the shares and social rights of four companies owned by Global Timber Spain SLU and Global Timer International LLC in Uruguay. The companies acquired are: Taurion S.A., Taurion Asociación Agraria de Responsabilidad Limitada, Monte Fresnos S.A. and Monte Fresnos Asociación Agraria de Responsabilidad Limitada. These companies jointly own approximately 32,000 hectares in Uruguay, of which approximately 19,000 hectares are planted with eucalyptus.

Our principal executive offices are located at Avenida El Golf 150, 14th Floor, Las Condes, Santiago, Chile, and our telephone number is +56-2-2461-7200. Our website is www.arauco.cl or www.arauco.com. The contents of our website and other websites referred to herein or therein are not part of this annual report. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov). 

ORGANIZATIONAL STRUCTURE

We are substantially wholly-owned by Empresas Copec S.A., a public company listed on the Santiago Stock Exchange and the Chilean Electronic Stock Exchange. Empresas Copec is a holding company, the principal interests of which are in Arauco, gasoline and gas distribution, electricity, fishing and mining. See “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

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The following table sets forth our ownership interests in our subsidiaries as of December 31, 2023.

	Country of incorporation		Total stock held (%)
Agrícola Ranquillón SpA		Chile		98.6411
Agrícola San Carlos SpA		Chile		99.9484
Agrícola Santa Emilia SpA		Chile		98.9484
Agrícola Santa Isabel SpA		Chile		99.9484
Agrícola Siberia SpA		Chile		98.6411
Agrícola Trupán SpA		Chile		98.6411
Arauco Argentina S.A.		Argentina		99.9801
Arauco Australia Pty Ltd.		Australia		99.9990
Arauco Bioenergía SpA		Chile		99.9990
Arauco Canada Ltd.		Canada		99.9991
Arauco Celulose do Brasil S.A.		Brazil		99.9991
Arauco Colombia S.A.		Colombia		99.9983
Arauco do Brasil S.A.		Brazil		99.9991
Arauco Europe Cooperatief U.A.		The Netherlands		99.9990
Arauco Florestal Arapoti S.A.		Brazil		99.9990
Arauco Forest Brasil S.A.		Brazil		99.9991
Arauco Industria de México S.A. de C.V.		Mexico		99.9991
Arauco Indústria de Painéis S.A.		Brazil		99.9991
Arauco Middle East DMCC		Dubai		99.9990
Arauco MS Participações S.A.		Brazil		99.9990
Arauco North America, Inc.		U.S.A.		99.9991
Arauco Participações Florestais Ltda		Brazil		99.9991
Arauco Perú S.A.		Peru		99.9990
Arauco Pulp Limited		United Kingdom		99.9990
Arauco Ventures Limited		United Kingdom		99.9990
Arauco Wood (China) Company Limited		China		99.9990
Arauco Wood Limited		United Kingdom		99.9991
Araucomex S.A. de C.V.		Mexico		99.9991
Araucomex Servicios S.A. de C.V.		Mexico		99.9991
Consorcio Protección Fitosanitaria Forestal S.A.		Chile		56.8311
E2E SpA		Chile		99.9986
Empreendimentos Florestais Santa Cruz Ltda.		Brazil		99.9991
Forestal Arauco S.A.		Chile		99.9484
Forestal Cholguán S.A.		Chile		98.6411
Inversiones Arauco Internacional Limitada		Chile		99.9990
Investigaciones Forestales Bioforest SpA		Chile		99.9489
Leasing Forestal S.A. (1)		Argentina		99.9801
Lemu Earth SpA		Chile		87.6539
Lemu Global Limited		United Kingdom		94.3783
Lemu Inc.		U.S.A.		94.3783
Maderas Arauco Costa Rica S.A.		Costa Rica		99.9990
Maderas Arauco S.A.		Chile		99.9986
Mahal Empreendimentos e Participações S.A.		Brazil		99.9991
Novo Oeste Gestão de Ativos Florestais S.A.		Brazil		99.9991
Servicios Aéreos Forestales Ltda.		Chile		99.9991
Servicios Logísticos Arauco SpA		Chile		99.9992
Tecverde Engenharia S.A.		Brazil		89.3906
Woodaffix LLC.		U.S.A.		99.9991

(1) Company under ongoing liquidation.

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BUSINESS OVERVIEW

Business Strategy

Our strategy consists of focusing on maximizing value and pursuing growth opportunities with respect to our forestland and industrial assets, managing our operations sustainably and developing products that contribute to an economy based on renewable resources that we believe improves the quality of life of millions of people around the world. We seek to implement our strategy through the following principles and initiatives:

· Striving to combine science, technology and innovation to unlock the full potential of our plantations and develop renewable products in our business segments.

· Seeking to manage our operations in an environmentally and socially responsible manner by adopting the best environmental practices and promoting the safety and development of our employees and contractors.

· Creating high quality products and materials for the paper, packaging, furniture, construction and energy industries and providing high quality service to our customers.

· Consolidating and expanding our presence internationally in regions we believe offer comparative advantages in the industry sectors in which we operate.

Domestic and Export Sales

The following table sets forth our revenues derived from exports and domestic sales for the years indicated.

	Year ended December 31,
	2023		2022		2021
	(in millions of U.S. dollars)
Export Sales (1)
Bleached pulp	$	1,885	$	1,920	$	1,819
Unbleached pulp		208		418		320
Dissolving pulp		280		244		305
Sawn timber		355		501		485
Remanufactured wood products		261		405		301
Plywood		254		333		287
Fiberboard panels		369		574		412
Other		5		6		5
Total export revenue	$	3,617	$	4,401