Santander: Chile's constitutional reform potentially disruptive to pulp/paper producers due to proposed land nationalization, monoculture forestry prohibition; roughly 15% pulp capacity projected to reach global market by 2025 will come from Chile

LOS ANGELES , May 12, 2022 (Industry Intelligence Inc.) –

One major potential headwind for the Pulp and Paper market is the constitutional reform process currently taking place in Chile, which involves the proposal of potentially disruptive ideas to the industry and increasing the risk of the availability of water to producers to carry out forest cultivation and paper production activities (Santander, Apr. 10). The country accounts for nearly 7% and 6% of hardwood and softwood pulp supplies globally, which is equivalent to 2.6mtpy and 1.8mtpy, respectively (Santander, Apr. 10). Roughly 15%, or 1.2mtpy of hardwood pulp capacity projected to reach the global market until 2025 will come from Chile (Santander, Apr. 10). The Economic Model Commission’s proposal introduces the greatest potential disruption, with propositions such as the expropriation of land without compensation, prohibition of monoculture cultivation, preservation of large portions of land, and the nationalization of land claimed by indigenous communities (Santander, Apr. 10).  

Primary Sources:

• LatAm Pulp & Paper: Thematic Report – The Constitutional Reform in Chile: Implications for Pulp Markets & CMPC. Santander, April 10, 2022 

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