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Home › Dodgy Deals ›
Dodgy Deal
AraucoChile

Company – On record

This profile is no longer actively maintained, with the information now possibly out of date
Contact:

nature@banktrack.org

Last update: 2024-03-01 00:00:00
Arauco's co-owned eucalyptus pulp mill at Punta Pereira, Uruguay. Photo: EPN

Company – On record

This profile is no longer actively maintained, with the information now possibly out of date
Contact:

nature@banktrack.org

Last update: 2024-03-01 00:00:00
Why this profile?

Why this profile?

Arauco has a 50+ year history of land grabbing and conversion of large tracts of land, with severe social and environmental impacts on wider areas. Financial institutions associated with Arauco and its longstanding land disputes, and the resulting social and environmental impacts, risk reputational risks. The social conflicts are of such an extent that they may result in stranded assets, due to conflict escalation. Financial institutions should utilise their leverage to demand Arauco address the ongoing impacts and, if this should fail, they should divest or suspend any financial agreements. 

About
Sectors Biomass Electric Power Generation, Pulp, Paper and Paperboard Mills
Headquarters
Ownership

Arauco is controlled by the Angelini family and is part of the Empresas Copec holding.

Subsidiaries
Website https://www.arauco.com/

Celulosa Arauco y Constituición S.A. (Arauco) is Chile’s second largest pulp producer with a total capacity of 3.9 million tonnes of pulp. It has one million hectares of fibre plantations in South America and it owns seven pulp mills, nine saw mills, 30 panel mills and 13 energy plants. It has operations in Chile, Argentina, Uruguay, Brazil, the United States of America, Canada, Spain, Portugal, Germany and South Africa.

Impacts

Impact on human rights and communities

Land conflicts Arauco has a long history of involvement in land conflicts in Chile, dating back to the 1970s. At the time, the military dictatorship distributed hundreds of thousands of hectares to plantation companies, without consulting or compensating the traditional owners of these lands, many of which were Indigenous Mapuche people. The regions that were converted to pine plantations are now among the poorest of the country, whereas the pulp company owners are among the richest people of South America.

After Chile returned to democracy, the Mapuche have started to revendicate the return of their lands, with little success. Many Mapuche live surrounded by eucalyptus plantations. They have lost their livelihoods and suffer from lack of water. This has led to strong tensions between the Mapuche and plantation companies including Arauco. There have been numerous cases of company trucks and cars being set on fire, which have been claimed by the Mapuche. On the other hand, the Mapuche suffer from criminalization and the militarization of their territories.

Militarization The reaction from the government to the Mapuche conflict has been the militarization of the region and the application of anti-terrorist law, which has been used to systematically criminalize the Mapuche people and to put several of them in jail. In September 2018, the government announced its plan for “peace and development of the Araucania”, which has been denounced by indigenous leaders as a plan for the big companies.

In November 2018, the Mapuche warrior Camilo Catrillanca was killed by the police, while he was driving his tractor, in the community of Temucuicui. This community is among the most active in the battle to recover land, and Catrillanca was a leading figure in this battle. A few days later, a protest in Santiago calling for justice for the Mapuche people, was violently repressed by the police with teargas and water canons.

Lack of FPIC for the MAPA project There are 35,000 indigenous people living in the village of Arauco, yet Arauco’s EIA for the MAPA project states that no indigenous communities will be affected by the expansion project. Mapuche communities that live nearby the Horcones complex took the government to court for providing Arauco with an Environmental License based on a flawed EIA.

Impact on tourism The aerial emissions of a pulp mill have a strong smell, which makes places downwind from pulp mills unattractive as a tourist destination. On top of that, the effluents of pulp mills pollute the nearby waters, making them unfit for swimming.

Arauco’s Validivia mill has had a strong negative impact on local tourism, as it is located close to a nature sanctuary. When it opened in 2004, the mill's effluents caused major pollution of the wetlands, leading to the death of thousands of birds and fish.

Air and noise pollution A group of around 30 elderly Mapuche from the community Carrizales de Bajo, in Ranquil, which lies at less than one kilometer from the Nueva Aldea mill, sued Arauco in October 2015 over pollution charges. They say that the mill regularly emits clouds of nauseating fumes which have put several people in hospital. The mill also makes a lot of noise and it has not covered a waste dump of lime, which is used at the mill and has a high dust content. The wind blows this dust into their houses causing health problems. The communities have been complaining since 2013 about bad smell and noise pollution.

Impact on fisheries sector The effluents discharged by Arauco’s mills impact on the fisheries sector. At the Horcones mill, there are strong concerns from local fishermen communities regarding the impact of the company’s expansion plans on the quantity and the quality of fish available. Questions during the consultation process of the EIA showed that Arauco has done very limited monitoring of the impacts.

In Valdivia there have been strong protests ever since Arauco announced its plans to build a 32 kilometer pipeline to discharge wastewater from its Valdivia pulp mill directly into the sea. Especially the Lafkenche communities fear the impacts on the fish and therefore their small-scale fisheries sector. With boats they have made blockades which made it impossible for Arauco to complete the EIA for the pipeline.

 

Labour issues In February 2016 workers from the Forest Transportation Federation - Fertraforma, started a strike. They felt they were being treated as cannon fodder by the plantation companies that make them work in conflict areas, on territories that are claimed by the Mapuche indigenous people.


Impact on nature and environment

Fires Large areas of monocultures of pinus or eucalyptus trees are very susceptible to fires. These are quite common in Chile, where almost every year there are large wildfires in and around plantations. In January 2017 the fires were exceptionally large. Arauco reported it has lost 72,564 hectares of plantations in the fires, equivalent to USD 210 million.

Lack of EIA for plantations for MAPA project The EIA for the MAPA project (the Arauco III line) only evaluated the impacts of the construction of the pulp line and the electricity line. Though it will increase the mills capacity by 1.56 million tonnes, the EIA did not look at impact of the plantations that will be required to feed the mill. This will probably include the conversion of pinus plantations to eucalyptus plantations, which are likely to further increase the problems of lack of water, as well as the risk of big fires.

Pollution of the Rio Cruces Sanctuary In 2004 Arauco opened a mill in Valdivia. The license for the mill was provided on the condition that Arauco would build a pipeline to discharge the wastewater into the sea. However, due to protests of fishermen this pipeline was not build and Arauco fell back to its initial plan, which was to discharge the wastewater in the Rio Cruces Sanctuary, an internationally protected Ramsar site, impacting also the national reserve Carlos Anwandter. Just months after the opening of the Valdivia plant, thousands of black-necked swans died. Rio Cruces was one of South America’s most important nesting sites for black-necked swans and an important source of income from tourism for the local population.

In January 2014, Arauco again discharged a green liquid into a nearby river, which led to a mass death of fish in the Cruces River.

Impacts on water availability A 2015 report on water availability in Arauco, written by the NGO Ingenieros Forestales por el Bosque Nativo and the Iniciativa ‘Agua que has de beber’, links plantations to water scarcity.


Other impacts

Dependency on subsidies The Chilean pulp industry, which includes Arauco but also its competitors, is heavily dependent on governmental support in the form of favourable legislation and subsidies. A large part of this support was provided by the 1974 Decree 701, which promoted the expansion of plantations through generous land distribution and large subsidies. The subsidies covered 75% of the production costs of plantations and it exempted the sector from taxes. This Decree was extended several times untill 2015.

Lobby against Environmental Legislation Arauco is trying to stop new legislation on water quality, as changes to the present regulations would make it impossible for it to operate its Valdivia mill.

Financiers

Several private sector banks have financied Arauco via corporate loans and underwriting services. A detailed overview is listed below.

Institution type
Finance type
Year
Projects
There are no active project profiles for Arauco now.

MAPA project

Chile
Project
On record
Pulp, Paper and Paperboard Mills

MAPA project

Chile
Governance
Norms & standards

Applicable norms and standards

AFLEG Declaration and Action Plan
FSC Principles and Criteria
ILO Guidelines for labour inspection in forestry
ILO Safety and health in forestry work
Land Use, Land-Use Change, and Forestry (LULUCF) Guidance for GHG Project Accounting
WWF Guidelines for Investment in Operations that Impact Forests
News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Conflict and controversy swirl around Vanguard investments in Chilean pulp giant Arauco

2024-07-23 | Chile | iofuelwatch, the Environmental Paper Network (EPN), Global Justice Ecology Project, the Global Forest Coalition (GFC), Resumen.
BankTrack news BankTrack blog Partner news Partner blog

Residents neighbouring Celulosa Nueva Aldea in Quillón denounce bad practices by Arauco

Vecinos de Celulosa Nueva Aldea en Quillón denuncian malas prácticas de Forestal Arauco y afectación por incendios forestales
2024-03-22 | Chile | El Resumen
Blog
BankTrack news BankTrack blog Partner news Partner blog

New benchmark from BankTrack shows Latin American banks falling short on human rights

All 17 Latin American banks assessed are meeting fewer than half of their responsibilities under the UN Guiding Principles
2024-03-12 | Nijmegen | BankTrack
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Arauco is the ninth largest landowner in Argentina

2024-02-20 | Interferencia.cl
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International Rights of Nature Tribunal rules impacts caused by current forestry model as ecocide

2024-02-06 | International Rights of Nature Tribunal
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Forestal Arauco pretende construir un "Monstruo de Celulosa" en el sur de Brasil

2023-12-05 | Resumen
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Chile on fire. Civil society had warned about the risks and demanded to change the forestry model

2023-02-09 | Chile | EPN
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Pulp & paper industry expansion in Cerrado risks fires, water shortage and climate damage, says new EPN report

2022-12-14 | Environmental Paper Network
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Arauco to complete MAPA pulp mill expansion in October 2021

2021-05-10 | EUWID
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A la memoria de don Julio Faúndez, campesino fallecido resistiendo a Forestal Arauco

2020-06-09 | Resumen.cl
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Workers of Mapa de Arauco protest, demanding a suspension due to Coronavirus

2020-03-18 | Elmostrador.cl
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Pobladores/as se toman terrenos de Forestal Arauco en Laraquete

2020-03-12 | Resumen.cl
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Rebajan en cerca de $1.400 millones la multa a Celulosa Arauco por derrame en Río Cruces

2020-02-11 | Uruguay | El Desconcierto
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INDH: Comunidades mapuche de Mariquina enfrentan escasez de agua y contaminación provocada por industria forestal

INDH: Mapuche communities from Mariquina face water scarcity and pollution caused by the foretry industry
2019-09-10 | Chile | Rio en Linea
BankTrack news BankTrack blog Partner news Partner blog

Chilean pulp mill’s major expansion could fuel conflicts

2019-06-13 | Environmental Paper Network
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'We are hostages': indigenous Mapuche accuse Chile and Argentina of genocide

2019-04-12 | The Guardian
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Encuentran muerto a dirigente social y opositor de Celulosa Arauco en extrañas condiciones

Social leader and opponent of Celulos Arauco is found dead under strange circumstances
2019-02-03 | Chile | El Desconcierto
BankTrack news BankTrack blog Partner news Partner blog

Encuentran muerto a dirigente sindical de empresa Paneles Arauco en Teno

Union leader of Paneles Arauco is found dead in Teno
2018-12-10 | Chile | El Desconcierto
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Violencia estatal contra el pueblo mapuche en Chile

2018-12-02 | Olca
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Contundente rechazo a Plan Araucanía y un llamado a la unión para que los propios Mapuche decidan la vida y el futuro del Wallmapu

2018-11-26 | Chile | Olca
BankTrack news BankTrack blog Partner news Partner blog

Valmet to supply key pulp mill technology for ARAUCO pulp mill project in Chile

2018-10-03 | Chile | Valmet
BankTrack news BankTrack blog Partner news Partner blog

ANDRITZ to supply major equipment for ARAUCO’s MAPA project

2018-10-02 | Chile | Andritz
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Justicia ordena al Grupo Angelini a devolver terrenos a comunidad Mapuche

2018-10-01 | Chile | Olca
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El despojo de la dictadura: Cómo Pinochet garantizó el negocio redondo de las forestales con el territorio mapuche

2018-09-09 | Chile | Olca
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La fiebre del oro verde en medio del conflicto mapuche

2018-07-25 | Chile | Olca
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Mega incendios forestales, crímenes empresariales e impunidad

2018-07-11 | Chile | Olca
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Rechazan absolver a Celulosa Arauco por derrame que mató 2 mil peces en el Río Cruces

2018-04-01 | Olca
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Nuevo derrame afectó al ducto de celulosa Nueva Aldea en Ñipas

2017-12-25 | Chile | Olca
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Comunidades del Valle de Mariquina: Las razones para impugnar el acuerdo con Arauco

2017-07-30 | Chile | Olca
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Em nota, MST pede por mais Reforma Agrária e pelo fim da criminalização do Movimento

O MST denuncia a “escalada da repressão contra a luta pela terra, onde predominam os interesses do agronegócio associado a violência do Estado de Exceção” após ação da Polícia Civil do PR nesta sexta.
2016-11-04 | Movimento dos Trabalhadores Rurais Sem Terra
BankTrack news BankTrack blog Partner news Partner blog

Plantas Valdivia y Nueva Aldea de Celco arriesgan clausura por graves faltas ambientales

2016-02-26 | Chile | Olca
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Trabajadores Forestales inician movilización y exigen dejar de ser “carne de cañón” del empresariado forestal

2016-02-03 | Chile | Elciudadano.com
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Chile regulator to fine Arauco for 'green liquid' waste spillage

2016-01-11 | Reuters
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Comunidades mapuche acudirán a Tribunal Ambiental por proyecto MAPA de forestal Arauco

2015-12-21 | Chile | Biobiochile.cl
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Emanaciones de malos olores vuelven a afectar a vecinos de planta Nueva Aldea en Ránquil

2015-10-25 | Chile | Olca
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ARAUCO is planting the seeds of success in China

2015-10-02 | The South China Morning Post
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Chile's Arauco to build USD 325 million wood panel mill in Michigan

2015-09-14 | Reuters
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Arbitration case in Montes del Plata settled

2015-04-29 | www.pulpapernews.com
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Montes del Plata alcanzará este mes su nivel de plena producción

2015-03-13 | El Observador
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Impresionante video muestra la gran cantidad de agua que consumen los eucaliptus

2015-01-06 | Chile | Radio del Mar
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VERGONZOSO: Gobierno corre a apoyar a forestal Arauco y valida fraudulenta Consulta Indígena de proyecto MAPA

2014-11-19 | Chile | Radiodelmar.cl
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Arauco plans to build 1.5 million tpy pulp plant

2014-02-07 | Pulpapernews.com
Resources
Documents
Videos
Links
2022-12-14 00:00:00

Pulp & paper industry expansion in Cerrado risks fires, water shortage and climate damage, says new EPN report

NGO document
2022-12-14 00:00:00 | Environmental Paper Network
2022-12-14 00:00:00

Scorching The Earth

Pulp and paper expansion in Três Lagoas, Brazil
NGO document
2022-12-14 00:00:00 | Environmental Paper Network
2022-06-23 00:00:00

Conflict Plantations

Chapter 3: Stolen lands and fading forests in Chile
NGO document
2022-06-23 00:00:00 | Environmental Paper Network (EPN)
2019-05-30 00:00:00

The Impacts of Native Forests and Forest Plantations on Water Supply in Chile

Other document
2019-05-30 00:00:00 | Camila Alvarez-Garreton et al, Universidad Austral de Chile
2019-03-31 00:00:00

Annual report 2018

Annual report
2019-03-31 00:00:00 | Arauco
2018-03-01 00:00:00

Sustainability report 2017

Annual report
2018-03-01 00:00:00 | Arauco
2016-01-08 00:00:00

Superintendencia del Medio Ambiente Gobierno de Chile – Formula Cargos que indica a Celulose Arauco y Constitucion SA, Planta Valdivia

Other document
2016-01-08 00:00:00 | Gobierno de Chile
2016-03-01 00:00:00

Arauco corporate presentation 2015

Company document
2016-03-01 00:00:00 | Arauco
2015-12-31 00:00:00

Pulp & Paper Sourcing Country Profile: Chile

NGO document
2015-12-31 00:00:00 | Tft-transparancy.org
2015-03-01 00:00:00

Arauco corporate presentation 2014

Company document
2015-03-01 00:00:00 | Arauco
2015-03-01 00:00:00

Arauco sustainability report 2014

Annual report
2015-03-01 00:00:00 | Arauco
2013-10-07 00:00:00

BTG Pactual Equity research on Chile forest products

Company document
2013-10-07 00:00:00 | BTG Pactual

Incendios Forestales en Chile - ¿Lección aprendida?

2020-03-12 08:35:39

No al Ducto

OLCA

Arauco's corporate social responsibility webpage

Agrupación de Ingenieros Forestales por el Bosque Nativo (AIFBN)

Group of Forest Engineers for the Native Forest

SPOTT - ESG policy transparency assessments

Business & Human Rights Resource Centre

FSC Watch

Updates

2024

2024-02-06 00:00:00 | Chile's largest forestry companies Arauco and CMPC responsible for devastating forest fires

The International Rights of Nature Tribunal held its 11th Local Tribunal in the Biobío region in Chile on January 12 2024 focusing on the violations of the Rights of Nature arising from the forestry model and the devastating forest fires of 2023. The judges listened to the testimonies and evidence from experts, affected communities, and activists, reflecting the catastrophic impact of the forestry model on communities and the ecosystem. The judges concluded that forestry companies such as Arauco and CMPC were responsible for environmental destruction and compromising the fundamental rights of local communities. Read the full report from the proceedings.

2022

2022-06-23 00:00:00 | Stolen land and fading forests in Chile: A new report from the Environmental Paper Network

A new report by the Environmental Paper Network (EPN) together with Colectivo Viento Sur and Global Forest Coalition highlights the ongoing impacts of the pulp & paper industry in Southern-central Chile. Since 1974, when forestry companies, supported by the military dictatorship, too land from the Mapuche indigenous people to develop plantations. Since then, there has been an ongoing conflict between the Mapuche people and these forestry companies - Celulosa Arauco y Constitución and Compañía Manufacturera de Papeles y Cartones (CMPC). In the same time period, vast expanses of natural forests have been converted into plantations with timber plantations now occupying almost half (43%) of the Southern-central Chilean landscape. The report is Chapter 3 in a global investigative report series by EPN entitled "Conflict Plantations". Read the full report here. 

2018

2018-07-24 00:00:00 | ARAUCO approves the construction of MAPA, the largest investment in the company's history

Today, ARAUCO’s Board of Directors approved the modernization and extension of Arauco Mill, an initiative that involves a US$2,350 million investment, the largest investment in the company’s history.

2014

2014-06-07 00:00:00 | Montes del Plata pulp mill starts operations

Stora Enso's and Arauco's joint operation Montes del Plata Pulp Mill at Punta Pereira in Uruguay has received all necessary permits from the Uruguayan authorities and is now starting up its operations. The pulp mill has an annual production capacity of 1.3 million tonnes of bleached chemical eucalyptus pulp (pulpapernews.com).

2014-02-06 00:00:00 | Chile's Arauco plans to increase pulp production by 40% with USD 2.1 billion investment

According to a Reuters report, Chile's Arauco y Constitucion seeks to expand its wood pulp production by over 40 percent with a recently approved USD 2,1 billion expansion project. With the new project, the company's overall wood pulp production will reach 2,1 million tonnes. On Wednesday, the Chilean authorities gave Arauco the environmental permit. ''The project, called the Proyecto Modernización y Ampliación Planta Arauco (MAPA), involves the suspension of Arauco mill's 280,000 tonne eucalyptus production line, a modernization of the 506,000 tonne pine line, and the construction of a third 1.56 million tonne line,''says Reuters.

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