CMPC INVESTOR DAY GUAÍBA MILL - BRAZIL JUNE 23RD, 2015 LUIS LLANOS – CFO CMPC Luis Llanos was born in 1962 Holds a civil engineering degree from the Universidad de Chile and an MBA from MIT Began working at CMPC in 1986 Has served in several positions at CMPC linked to business development, planning and strategy In 2004 he became CFO of Empresas CMPC 2 ​WELCOME / PULP PRODUCTION PROCESS LUIS LLANOS CFO EMPRESAS CMPC INVESTOR DAY AGENDA 9:00 AM – Welcome & Opening remarks 9:15 AM – Pulp production process – Luis Llanos (CFO CMPC) 9:30 AM – Guaíba Site Visit 12:00 PM – Lunch “Churrasco Gaúcho” 1:00 PM – Company presentations: – Maximizing the value of our biological assets – Francisco Ruiz-Tagle (CEO CMPC Forestry) – ​Rio Grande do Sul footprint & the “on-time and on-budget” goal – Walter Lidio Nunez (CEO CMPC Celulose Riograndense) – ​2015: a commercial challenge for CMPC Pulp – Washington Williamson (CEO CMPC Pulp) – Beyond Guaíba: CMPC's next steps – Hernán Rodríguez (CEO CMPC) 3:00 PM – Q&A 3:45 PM – Closing remarks 5:00 PM - Arrival to Porto Alegre / Porto Alegre Airport 4 OUR PULP MILLS Market Pulp Capacity Top 20 Producers (end 2014) BHKP BSKP Others Fibria 5.3 April 3.9 Suzano 3.4 Arauco 0.8 1.9 0.5 CMPC 2.4 0.7 UPM 1.4 1.0 Pacífico - Chile Laja - Chile GP 0.1 2.2 (Pine) (Pine) PE 0.2 1.6 0.4 500 Th. tons/y 340 Th. tons/y Metsa 0.2 1.6 0.3 Ilim 0.3 1.4 0.2 Stora Enso 0.8 1.1 WY 1.8 Eldorado 1.7 Mercer 1.6 Domtar 0.1 1.4 IP 0.3 1.1 0.1 Sodra 0.2 1.2 RFP 0.2 1.1 Canfor 0.9 0.4 Guaíba - Brazil Santa Fe - Chile WF 0.6 0.6 (Eucalyptus) (Eucalyptus) 1,750 Th. tons/y 1,500 Th. tons/y Source: CMPC and Hawkins Wright as of April 2015 (million tons) 5 PULP PRODUCTION PROCESS 1 3 2 DIGESTER DEBARKER WOOD YARD 7 5 6 CHIP WOOD SIEVE PRE-HEATER 4 CHIPPER 2 WHITE LIQUOR 1 RECOVERY BOILER THERMOELECTRICAL 10 9 PLANT 12 14 13 11 8 PRESS FORMING CUT SHEET TABLE PRE-WASH AND CLASSIFICATION WASHING BLEACHING DRYER FORMING PRESS SHEET TABLE CUT INPUT 12 DRAWER DRYER 9 11 10 6 CMPC INVESTOR DAY GUAÍBA MILL - BRAZIL JUNE 23RD, 2015 FRANCISCO RUIZ TAGLE – CEO CMPC FORESTRY Francisco Ruiz-Tagle was born in 1963 Holds a commercial engineering degree from the Universidad de Chile and an MBA from UCLA Began working at CMPC in 1991 Has served as General Manager of Celulosa del Pacífico, Deputy CFO of CMPC, General Manager of Papelera del Plata and CEO of the former CMPC Paper Products division, now merged with CMPC Papers In 2011 he became CEO of CMPC Forestry 8 MAXIMIZING THE VALUE OF OUR BIOLOGICAL ASSETS FRANCISCO RUIZ-TAGLE CEO CMPC FORESTRY CMPC FORESTRY: WHO WE ARE? CMPC Forestry, who manages the Company’s forests and manufactures wood products, is organized in the following subsidiaries: FORESTAL MININCO BOSQUES DEL BOSQUES BRASIL CMPC MADERAS Forestry operations in PLATA Forestry operations in Sawmills, Chile (Pine and Forestry operations in Brazil (Eucalyptus) Remanufactured Wood Eucalyptus) Argentina (Pine) & Plywood (Pine) 10 CMPC FORESTRY: WHO WE ARE? CMPC FORESTRY Chile Brazil PORTO ALEGRE CHILE • 733 Th. has. • 500 Th. has. planted • 40 Th. has. to be planted PELOTAS BRAZIL* • 220 Th. has. Concepción • 120 Th. has. planted • 6 Th. Has. to be planted ARGENTINA • 94 Th. has. • 56 Th. has. planted TEMUCO • 11 Th. has to be planted CMPC’s Forestry base Argentina Posadas is 177 times the size MISIONES of Manhattan Island *There is an agreement to acquire from Fibria aprox. 100 Th. hectares of which 39 Th. are planted. CMPC is waiting the approval 11 of Brazilian authorities to consolidate this land Source: CMPC. 11 CMPC FORESTRY: WHO WE ARE? Some facts about our operations In 2015 we will plant We harvest about Annually we build and 37,400 hectares 114 hectares a day maintain about equivalent to 1,300 km. of 130,000 trees per roads day equivalent to 36% of New York’s Central Park We have more than Annually we pay direct US$350 million 2,600 Only supplying Guaíba workers and more than for harvesting and requires 48 hectares transport services in 250 contractors a day Chile, Brazil and (almost 12,000 Argentina indirect workers) The volume produced of solid wood products is 1.7 M m3 12 CMPC FORESTRY MISSION Produce a forestry base in order to: 1. Secure the supply to CMPC’s industrial mills, 2. maximizing the return per hectare, 3. in a socially and environmentally sustainable way 13 1. SECURE THE SUPPLY TO INDUSTRIAL ASSETS IN THE SHORT, MEDIUM AND LONG TERM CMPC Forestry owns and manage planning systems designed to deliver the required log output (volume and quality) that satisfies projected future demand Long Term Planning (25 years) Secure the supply to Medium Term Planning (5 years) current and futures Short Term Planning (1Y) mills through a linear 5 years planning for programing model that harvesting, maximizes profits transportation and road Secure the annual construction through a budgeted supply to mills linear programing monthly model 14 CMPC FORESTRY MISSION Produce a forestry base in order to: 1. Secure the supply to CMPC’s industrial mills, 2. maximizing the return per hectare, 3. in a socially and environmentally sustainable way 15 2. MAXIMIZE BIOLOGICAL ASSET VALUE WAYS TO IMPROVE FOREST PRODUCTIVITY Establishment + Weather -Plant production + Base land -Soil preparation seeds -Weed Control -Fertilization Genetic Improvement Intensive Silviculture (Provides potential) (Realizes potential) Maximize Productivity and Quality Maximize return per hectare 16 2. MAXIMIZE BIOLOGICAL ASSET VALUE INCREASING LOG VALUE: PLANTATION MANAGEMENT – RADIATA PINE OBJECTIVE Maximize the return of the forest by producing high volume of quality logs at minimum cost to satisfy industrial needs 17 2. MAXIMIZE BIOLOGICAL ASSET VALUE PRUNING: ADDED VALUE TO PLANTATIONS 18 2. MAXIMIZING BIOLOGICAL ASSET VALUE: PRUNNED LOG VALUE Sweep and branch size 5 Prunning age (DOS) Small end diameter 4 PLI = 3 PLI = 5 Clear wood 3 2 Knotty 1 Core (m) (cm) 30 0 30 19 2. MAXIMIZE BIOLOGICAL ASSET VALUE INCREASING PRODUCTIVITY THROUGH ACTIVE SILVICULTURE Weed Control Soil Preparation and habilitation Type and quality of plants Genetics Fertilization Type of silvicultural management and harvesting age This factors explains gains between 15% and 40% . 20 2. MAXIMIZE BIOLOGICAL ASSET VALUE IMPORTANCE OF WEED CONTROL Line without weed control 21 2. MAXIMIZE BIOLOGICAL ASSET VALUE SOIL PREPARATION 22 2. MAXIMIZE BIOLOGICAL ASSET VALUE SOIL PREPARATION Soil with trench prepared with Digger Soil with trench prepared without Digger 23 23 2. MAXIMIZE BIOLOGICAL ASSET VALUE FAST GROWING PLANTATIONS A forestry base with fast growth cycles optimizes capital invested in land, reduces average distance to mills and increases gains due to genetic and silvicultural practices Radiata Pine Eucalyptus Improvement in Forestry Yields ** Average softwood growth rate Average hardwood growth rate 32% (m3ssc*/ha/year) (m3ssc*/ha/year) 43 43 23% 14% 23 19 20 9% 11 11 3% 5 0% 2 4 1975 1980 1990 2000 2010 2020P USA Chile Chile Acacia Russia Brazil Iberian Canada Mangium Eucalyptus E. Globulus E. Globulus Scandinavia Source: CMPC. E. Nitens Chile * m3ssc: solid m3 without bark 24 ** Evolution of the weighted increase of volume per hectare excepted for eucalyptus and pine plantations established in Chile in the respective year 2. MAXIMIZE BIOLOGICAL ASSET VALUE MINIMIZE COSTS AND EXPENSES Mechanization/automation of operations adapted to different topographies present in our forests Competitive operational costs obtained by a competitive tender process Scale Economies: 1,000,000 hectares of land managed Introduction of new technologies (forest chipping) Increasing the fiber recovering from forest Quality controls along the productive process New business developments: biomass Safety Projects Developing local contractors Training employees Our mills are close to the forest Logistic cost can represent up to Less logistical costs 50% of logs cash cost 25 2. MAXIMIZE BIOLOGICAL ASSET VALUE CMPC MADERAS Maximize Asset Value through the optimization of an integrated logistic process with the forest, developing together products and markets for solid wood and plywood products generating a high margin and scalable mix. Ways to maximize return: Client Segmentation in order to give them a personalized value proposal Simplification and automation of the operations seeks to improve productivity per worker Development of value added products (e.g: beaded plywood) Production agreement with third parties to optimize the mix without capital expenditure 26 2. MAXIMIZE BIOLOGICAL ASSET VALUE CMPC MADERAS: SAWN WOOD TYPE AND USES CENTRAL LUMBER SIDE BOARDS • Packaging - Japan /Corea • Furniture – China Vietnam • Structural - Chile • Remanufactured – USA (Chile) PREMIUM SAWNWOOD • Solid Mouldings - USA 27 2. MAXIMIZE BIOLOGICAL ASSET VALUE CMPC MADERAS: PLYWOOD USES FURNITURE Clear/Decorative DECORATIVE CONSTRUCTION Knotty 28 2. MAXIMIZE BIOLOGICAL ASSET VALUE CMPC MADERAS: MOULDING AND BOARD USES Ceiling Door Frame 29 CMPC FORESTRY MISSION Produce a forestry base in order to: 1. Secure the supply to CMPC’s industrial mills, 2. maximizing the return per hectare, 3. in a socially and environmentally sustainable way 30 3. BE SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE CMPC Forestal is a world class leader in social and environmental sustainability Since 2012 has FSC Forest Management Certification in the majority of it forests (FSC- C006246) • In May 2015 was honoree with the Sustainable Setter award by Rainforest Alliance in New York CMPC Forestal and UPM co-chair 26 forestry companies in the World Business Council for Sustainable Development (WBCSD) in the Forestry Solutions area CMPC is part of WWF’s New Generation Plantation initiative FAO has recognized forested areas belonging to CMPC Forestry as an exemplary case of sustainable development 31 3.