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Empresas CMPC to Shutter Papeles Rio Vergara Newsprint Mill in Chile

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Empresas CMPC, Chile, reports that it will close the Papeles Rio Vergara newsprint mill in Nacimiento, Chile, on November 30. This decision to close the mill was due to increased electricity prices, which led to higher production costs, the company noted.

During the past 10 years, the company has had an electricity supply contract at the mill with prices compatible with newsprint production. However, this contract is due to expire soon. Despite numerous attempts and considerable efforts on the part of the company, Empresas CMPC says it has been unable to obtain a new supply contract with prices that would allow the mill to continue operations.

For these reasons, production was substantially reduced in the past. As CMPC has previously announced, 2012 production was 130,000 tons, compared with an average of 200,000 tons from 2000-2011. Production capacity in 2013 has been 60,000 tons.

"This was a sad and difficult decision for CMPC. We did not want to close the mill, and have searched for options to keep Papeles Rio Vergara in operation. Unfortunately, the economic reality of higher electricity prices made this impossible. The company will make every effort to accommodate the mill's workforce; the 202 workers will be offered a retirement plan with corresponding indemnification program, as well as initiatives to reallocate workers into other subsidiaries of CMPC, and a special bonus for workers who remain with the company until November 30," said Hernan Rodriguez, CEO of Empresas CMPC.

The Papeles Rio Vergara mill has been producing newsprint since 1957, continuing production even in challenging circumstances such as the 2010 earthquake. All other CMPC businesses, which are substantially less power-intensive, will continue to operate normally. The company is moving forward with investments in cogeneration in electric and thermal energy, which will produce approximately 82% of the energy required for CMPC's Chilean operations in 2013.

 

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