Empresas CMPC to Close Papeles Río Vergara Newsprint Mill in Chile

"This was a sad and difficult decision for CMPC. We did not want to close the mill, and have searched for options to keep Papeles Río Vergara in operation.
– Hernán Rodriguez, CEO of Empresas CMPC.

Sept. 10, 2013 (Press Release) - Empresas CMPC's General Secretary announced that its Board of Directors has taken the decision to close the Papeles Río Vergara newsprint mill located in Nacimiento, Chile, on November 30, 2013.

This difficult decision was taken due to increased electricity prices, which led to higher production costs. In the last 10 years the Company has had an electricity supply contract at the Mill with prices compatible with newsprint production. However, this contract is due to expire soon. Despite numerous attempts and great efforts on the part of the Company, Empresas CMPC has been unable to obtain a new supply contract with prices that would allow the mill to continue operations.

For the reasons given above, production was substantially reduced in the past. As CMPC has previously announced, 2012 production was 130,000 tons, compared with an average of 200,000 tons from 2000-2011.

Production capacity in 2013 has been 60,000 tons.

"This was a sad and difficult decision for CMPC. We did not want to close the mill, and have searched for options to keep Papeles Río Vergara in operation. Unfortunately, the economic reality of higher electricity prices made this impossible," said Hernán Rodriguez, CEO of Empresas CMPC.

"The Company will make every effort to accommodate the mill's workforce; the 202 workers will be offered a retirement plan with corresponding indemnification program, as well as initiatives to reallocate workers into other subsidiaries of CMPC, and a special bonus for workers who remain with the Company until November 30, 2013," Rodriguez added.

The Papeles Río Vergara mill has been producing newsprint since 1957, continuing production even in challenging circumstances such as the 2010 earthquake.

All other CMPC businesses, which are substantially less power-intensive, will continue to operate normally.

The Company is moving forward with investments in cogeneration in electric and thermal energy, which will produce approximately 82% of the energy required for CMPC's Chilean operations in 2013.

CMPC is one of the leading Latin american companies in the production and marketing of forest products, pulp, paper, tissue and paper products. For further information visit: www.cmpc.cl.

SOURCE: Empresas CMPC