CHILE

Corporación Chilena de la Madera

Current situation of the Chilean economy

The performance of the economy was generally good in 2000, after the mild recession of 1999, a GDP growth of 5.8 percent brought per capita income to US$4 620. The Consumer Price Index (CPI) showed a variation of 4.5 percent for the period, up from 2.3 percent for 1999.

Unemployment decreased slightly to 8.3 percent. The labour force was absorbed: 45 percent by the service and trade sectors; 26 percent by industry and agriculture; and 29 percent by several smaller activities.

Nominal salaries went up by some 5 percent in 2000 and the real cost of labour grew 0.1 percent.

In foreign trade, Chile showed a surplus in 2000 of US$1.5 billion over exports of US$18.2 billion and imports of US$16.7 billion. The forestry sector exported US$2.4 billion in this period. International reserves by the end of 2000 amounted to US$14.7 billion. The foreign debt, as of November 2000, came to a total of US$36 billion, 85 percent of which was of the private sector and the remaining 15 percent of the Chilean Government. Estimates for 2001 are as follows:

^{Source: Central Bank}

Development of the forest industry

The forestry sector is one of the most dynamic areas of the Chilean economy and has become a fundamental pillar of the country's political and economic development. It has shown a sustained growth, thus, from an unknown supplier of limited volumes of raw materials, it has become a relevant player in the world market, with increasing exports that have been incorporating more added value.

Consumption, production and trade of forest products

In 1999, forest harvest reached 34 million m³, of which 23.2 million m³ were destined to industrial use and 10.8 million m³ were used as fuelwood. The following table shows the total roundwood consumption of the forest industry.

Industrial roundwood consumption

Source: INFOR

Forest production by product

Product	1998	1999
	(m3 thousand)
Sawnwood (1)	4 550.7	5 253.7
Chips (2)	5 457.7	5 840.0
Hardboard	54.6	74.7
MDF	301.9	409.2
Particle board	320.9	301.3
Plywood	129.2	166.2
Veneers	104.1	111.9
Total	10 658.2	12 157

Source: INFOR
(1) 90 percent of sawnwood production corresponds to radiata pine (Monterrey pine)
(2) Includes chips produced from residue

Paper and paperboard production by grade

Type of paper	1999	2000
	(tonnes)
Printing and writing paper Newsprint Other printing and writing paper	354 465 225 206 129 259	387 547 244 115 143 432
Corrugated paper	149 320	152 859
Kraft paper	30 754	49 033
Folding cases	124 890	148 059
Other papers and cardboard for packaging and packing	18 000	9 142
Paper for household and sanitary use	107 094	109 000
Other papers and paperboard	11 290	5 206
Total	795 813	860 846

Source: CORMA

Pulp production by grade

Type of pulp	1999	2000
	(tonnes)
1. Mechanical pulp	135 714	104 188
2. Thermo mechanical pulp (TMP)	234 344	267 797
3. Chemical pulp 3.1 Sulphite 3.2 Sulphate and soda 3.2.1 Softwood Bleached Unbleached 3.2.2 Hardwood Bleached Unbleached	2 064 066 0 2 064 066 1 624 055 1 258 054 366 001 440 011 440 011 0	2 219 874 0 2 219 874 1 716 477 1 303 382 413 095 503 397 503 397 0
Total	2 434 124	2 591 859

Source: CORMA

The Chilean forestry sector is clearly oriented to exports, thus its growth and development is based on the possibilities offered by the international market. The forest industry has evolved on a par with the changes in the overseas markets, with a permanent modernization and expansion of the plants and through heavy investment in new industrial projects. Likewise, its exportable supply of lumber products has grown, showing increasing diversification.

Currently, exported products go from chips, pulpwood and sawlogs, sawn and processed lumber, softwood and hardwood fibre, different wood-based panels, newsprint, to products with a higher elaboration degrees such as furniture and components, doors and windows, toys, tissues and paper and paperboard of various types.

Forest exports by product

Product		1999		2000
	unit	thousand	million US$ FOB	thousand	million US$ FOB
Chemical pulp	tonnes	1 904.5	766.8	1 834.6	1 110.4
Paper and paperboard	tonnes	251.9	212.5	181.1	146.2
Newsprint	tonnes	164.2	85.9	182.5	104.1
Sawnwood 1	m3	1 212.1	173.3	1 308.1	189.2
Processed lumber	m3	404.7	122.2	559.8	144.2
Mouldings	tonnes	137.5	172.4	136.4	137.4
Chips	tonnes	2 410.1	133.0	2 640.5	133.7
Hardboard	tonnes	29.0	7.5	28.2	7.1
MDF	tonnes	142.4	48.2	155.6	54.7
Particle boards	tonnes	16.0	4.2	27.2	5.9
Plywood	tonnes	59.4	36.5	63.6	38.4
Veneer	tonnes	45.7	20.0	39.1	17.4
Sawlogs/pulpwood	m3	915.2	50.1	681.1	35.8
Doors and windows	tonnes	55.0	77.5	77.6	85.2
Furniture components	tonnes	21.3	28.6	23.5	51.9
Others	tonnes		32.0		103.6
Total			1 970.7		2 365.2

Source: INFOR
¹ Approximately 92 percent of the sawnwood exported
corresponds to radiata pine (Monterrey)

The pulp and paper industry is the activity showing the highest economic importance in the Chilean forestry sector, both in terms of production and in terms of foreign currency generation. Pulp remains the main export, accounting for 47 percent of the total 2000 exports.

Paper and paperboard trade by grade

Type of paper	1999		2000
	Import	Export	Import	Export
	(tonnes)
Printing and writing paper Newsprint Other printing and writing paper	127 884 12 172 115 712	179 331 160 836 18 495	150 595 12 010 150 595	201 218 182 549 18 669
Corrugated paper	142 839	10 828	162 616	1 596
Kraft paper	2 657	24 079	4 875	20 650
Folding cases	8 530	51 591	7 351	89 356
Other papers and cardboard for packaging and packing	633	75	381	29
Paper for household and sanitary use.	0	17 584	3 079	3 789
Other papers and paperboard	13 675	626	14 156	1 019
Total	296 218	284 114	343 053	317 657

Source: CORMA

Pulp trade by grade

Type of pulp	1999		2000
	Import	Export	Import (*)	Export
	(tonnes)
1. Mechanical pulp	1	0	0	0
2. Thermo mechanical pulp (TMP)	0	0	0	0
3. Chemical pulp 3.1 Sulphite 3.2 Sulphate and soda 3.2.1 Softwood Bleached Unbleached 3.2.2 Hardwood Bleached Unbleached	13 743 42 13 701 13 699 13 604 95 2 0 2	1 892 453 0 1 892 453 1 575 190 1 215 195 359 995 317 263 317 263 0	15 000 15 000 15 000 15 000	1 834 613 1 497 903 1 192 578 305 325 336 710 336 710
Total	13 744	1 892 453	15 000	1 834 613

Source: CORMA
(*) Estimated

Trade flow

In 2000, the forest exports of US$2 365 million, increased in comparison with 1999, US$1 970 million, due to the recovery of exports to the Asian markets. Asia continues to be the main destination, a total of US$791.7 million. Japan was the main buyer, followed by China, China Taiwan and Republic of Korea. Asia was followed by North America with US$572.2 million, then Europe with US$565.3 million and South America with US$403.9 million. On a country basis, United States of America was the main destiny, buying 19.7 percent of the total, US$467 million.

The forest exports were placed in 95 countries. The main markets of destination are shown in the following chart.

Source: INFOR

Investment in the forestry sector

After the mining sector, the forest sector is one of the most important in terms of investment. For period 1991-1998, domestic and foreign companies have invested heavily in the area. According to CORMA's estimates, investments totalled US$4 135 million, with emphasis on the cellulose and paper sector, and to a lesser degree on the timber production sector and in the development of new forests. Investment is expected to border the US$3 670 million by 2008.

Investments in the forestry sector

	Historical 1991-1999	Estimate 2000-2010
	(US$ million)
Plantations	380	230
Pulp and paper	3 150	3 060
Sawmill and manufacturing industries	300	200
Panels and plywood	185	130
Others	120	50
Total	4 135	3 670

Source: CORMA

Future wood availability

The sustainable annual felling of radiata pine, which in the period 1998-2000 totalled 22.7 million m³ will practically double by 2027 to some 40 million. By the beginning of this century the volume of eucalyptus harvested will reach a sustainable 13 million m³ in the period 2000-2016. According to this wood availability, the investment projects will have the possibility of increasing their installed capacity, pulp by 1.5 million tonnes and sawnwood by 1 million m³, among others, within the next 10 years.

Future availability of radiata pine and eucalyptus wood, 1998-2027

Source: INFOR
Note: At present, approximately 1.9 million m³ of native woods are consumed
for industrial uses and exports, which added to radiata pine and eucalyptus total 23.2 million m³

Sustainable forest management

In 1998, CORMA initiated the development of a national certification scheme. In 1999, an important number of their associated companies initiated a joint work in order to advance towards ISO 14001 certification. At the moment, one of them obtained this certification and the rest are hoping to obtain it in the course of this year. In this way, added to other three companies that had obtained such goal between 1997 and 1998, 60 percent of the forest plantations of the country will be certified - equivalent to 1 215 000 ha.

By the end of 1999, given the worldwide tendency to adopt environmental standards, CORMA began to work in the development of a national standard designed to satisfy international requirements. CORMA considers positive to generate alternatives to the FSC (Forest Stewardship Council), so that the companies have the possibility of choosing between several options of certification. In 2000 a project was started, which will be developed jointly by several national institutions.

This project is supported by the main entities related to the forest sector along with academic and scientific institutions. A council was constituted to represent varied interests. Within a year, the plantations standard will have been finished. However, the native forest standards will be elaborated over a longer period. This norm will facilitate the medium and small producers to obtain the certification, as it is the case of many suppliers of the larger industries.