Empresas Copec (COPEC) Investor Update summary

Project overview and strategic rationale

• Sucuriú project, the largest in company history, will build a 3.5 million ton BHKP pulp mill in Inocência, Mato Grosso do Sul, Brazil, with operations expected to start in Q4 2027.

• Total investment is $4.6 billion (BRL 25.3 billion), with 14,000 jobs at peak construction and 6,000 permanent jobs in forestry, mill, and logistics.

• The project leverages over a decade of land acquisition and plantation development, including 400,000 hectares of eucalyptus plantations.

• Sucuriú will increase pulp capacity from 5.1 to 8.6 million tons, boosting production in Brazil and enhancing geographic diversification.

• The project aligns with long-term growth, sustainability, and ESG strategies, supporting global expansion and responsible value creation.

Technical and operational details

• Mill will use 100% proven technology, including two fiber lines, three drying machines, and the world's largest single recovery boiler.

• Features oil-free lime kilns, advanced automation, and no solid waste sent to landfill, exceeding local environmental standards.

• Will generate 400 MW of clean energy, selling a 220 MW surplus to the Brazilian grid.

• Main production equipment supplied by Valmet under an EPC contract, ensuring integration, cost efficiency, and performance guarantees.

• Designed for operational reliability, energy self-sufficiency, and access to green financing markets.

Financial structure and policy

• Project CapEx intensity is below $1,300/ton, with total capex distributed over 2024–2028, peaking in 2026.

• Financing includes $1.2 billion equity from the parent, $900 million free cash flow, $2.5–$3 billion in new debt, and refinancing of $1.7 billion in existing obligations.

• Parent company will use existing cash, dividends from affiliates, and a temporary reduction in its own dividend payout to fund equity.

• Dividend payout will be reduced to 30% of net income for 2024–2026, returning to 40% thereafter.

• Financial policy targets net debt/EBITDA of 2–3x, net debt/equity below 1x, and maintains investment grade ratings.