Empresas Copec (COPEC) Investor Update summary

Project overview and strategic rationale

• Approval of the Sucuriú Project, a $4.6 billion greenfield pulp mill in Inocência, Mato Grosso do Sul, Brazil, with a 3.5 million ton annual capacity, marking the largest investment in company history.

• Operations are expected to start in Q4 2027, creating 14,000 jobs at peak construction and 6,000 operational jobs.

• The mill will generate 400 MW of clean energy, selling a 220 MW surplus to Brazil's grid, and will leverage 400,000 hectares of eucalyptus plantations.

• The project enhances geographic and product diversification, with Brazil becoming a key production hub and product mix including BSKP, EKP, UKP, DP, and Fluff.

• Strategic fit with Empresas Copec's long-term growth, sustainability, and global expansion plans.

Technology and sustainability

• Utilizes 100% proven technology: two fiber lines, three drying machines, the world's largest recovery boiler, and three turbogenerators.

• Lime kilns use gasification based on chips, minimizing oil and gas use.

• No solid waste will be sent to landfill, and the plant is designed for best-in-class automation and energy efficiency.

• Environmental standards and automation enable access to green financing and minimize emissions.

• Sucuriú supports the company’s sustainability model, contributing to CO2 absorption and social value creation.

Financial structure and risk management

• Total investment of $4.6 billion will be financed through $1.2 billion equity from Empresas Copec, $900 million free cash flow, and $2.5–$3 billion in new debt.

• Parent company equity funded by existing cash, dividends, and a temporary reduction in payout ratio to 30% for 2024–2026.

• Financial policy targets net debt/EBITDA of 2–3x, net debt/equity below 1.0x, and strategic debt maturity alignment to maintain investment grade.

• Debt profile allows future financing flexibility, with no additional measures anticipated beyond those outlined.

• Investment grade status reaffirmed by Fitch and S&P in 2Q24.