Chilean forestry and pulp producer CMPC is assessing whether to advance its proposed US$4.6 billion Natureza project in Brazil, a decision that would materially expand its hardwood pulp capacity but could put further pressure on its balance sheet and investment-grade credit profile.

According to Bloomberg, CMPC is weighing whether to proceed with one of the largest proposed pulp investments in South America or delay the development and risk losing ground in a Brazilian market that continues to attract large-scale eucalyptus pulp capacity.

Natureza is planned for Barra do Ribeiro in Rio Grande do Sul and would comprise a bleached hardwood kraft pulp (BHKP) mill with capacity of up to 2.5 million tonnes per year, together with associated forestry, road and port infrastructure.

CMPC has estimated the overall investment at approximately US$4.57 billion.

The project would substantially expand CMPC’s pulp-production base and deepen its presence in Brazil, where the company already operates the Guaíba pulp mill.

The planned facility would be located about 35 km from Guaíba, creating potential operating and logistics synergies. CMPC has estimated that the proximity could generate more than US$50 million per year in efficiencies between the two operations.

Financing and leverage challenge

The scale of Natureza has placed CMPC’s financing capacity under close scrutiny. Bloomberg reported that proceeding with the project could put additional pressure on the company’s investment-grade credit profile, while delaying it could weaken CMPC’s competitive position as other producers expand in Brazil.

CMPC’s balance sheet is already a key consideration. Its net debt-to-EBITDA ratio stood at 4.17x in the second quarter of 2026, above the company’s stated target range of 2.5x to 3.5x. CMPC has said it is pursuing asset monetization, tighter cash management and lower capital expenditure to reduce leverage.

S&P Global Ratings has said Natureza is not incorporated into its base-case forecast. The agency has indicated that a clearly defined financing plan and measures to protect CMPC’s capital structure would be important if the company proceeds with the project. Its analysis has also highlighted the possibility of leverage rising above 5x during the investment period under certain scenarios.

Moody’s changed CMPC’s outlook to negative in June 2026, citing the risk that credit metrics could remain below levels consistent with its rating through 2026 and 2027, alongside uncertainty over the financial implications of Natureza.

CMPC has been examining several funding options, including traditional and hybrid bond issuance, export-credit-agency financing, green debt and the monetization of non-core assets.

The company has also discussed potential asset sales of around US$1.5 billion as part of efforts to reduce debt and preserve its investment-grade rating.

Competitive pressure from Brazil

The financial dilemma comes as major pulp producers continue to expand in Brazil, reinforcing the country's position as a key source of new low-cost eucalyptus pulp capacity.

Arauco’s Sucuriú project in Mato Grosso do Sul is already more than 70% complete and is expected to start operations toward the end of 2027. The project is designed to produce up to 3.5 million tonnes of pulp per year.

For CMPC, delaying Natureza could therefore mean giving competitors an opportunity to strengthen their position in a market where Brazil's fast-growing eucalyptus plantations, competitive fiber costs and export infrastructure support globally competitive pulp production.

Natureza would also benefit from CMPC’s existing forestry platform in Rio Grande do Sul. The company has said it has secured the wood required for the first five years of operation, equivalent to around 116,000 hectares, out of an estimated 205,000-hectare forest base. The remaining supply would be developed through additional planting.

Licensing process advances

The project has progressed through the environmental licensing process, although construction cannot begin until the required approvals are secured and CMPC’s board makes a final investment decision.

In June, the company’s associated Rio Grande port terminal received its preliminary environmental license. The terminal is planned to handle pulp and other cargo and forms part of the logistics infrastructure supporting Natureza.

For the mill itself, CMPC said in September that it expected to receive the preliminary environmental license within weeks. The company still needs the subsequent approvals required for construction before the project can move forward.

CMPC had previously indicated that Natureza could begin operations toward the end of 2029, subject to permitting, the final investment decision and construction.

The project therefore leaves CMPC balancing two competing considerations: the financial pressure associated with committing US$4.6 billion to new capacity and the strategic risk of delaying investment while competitors add further large-scale pulp capacity in Brazil.

The timing and financing of Natureza remain key issues as CMPC moves toward its final investment decision.

This article draws on Bloomberg reporting, CMPC disclosures and publicly available rating-agency information.