Empresas Copec SA
SGO:COPEC
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
5 740
7 811
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CLP.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
You don't have any saved screeners yet
Good morning, everyone, and welcome to the Empresas Copec's Second Quarter 2018 Results Conference Call. Today's presentation and the second quarter 2018 earnings release are available on the company's website at www.empresascopec.cl, and also on our Investor Relations website, investor.empresascopec.cl.
Before we begin, I would like to remind you that the presentation may include market outlooks and forward-looking statements, which are based on the beliefs and assumptions of Empresas Copec's management and on information currently available to the company. They involve risks, uncertainties and assumptions, because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Empresas Copec and could cause results to differ materially from those expressed in such forward-looking statements.
This presentation contains certain performance measures that have been adjusted with respect to the IFRS definitions, such as EBITDA.
Please note, today's conference is being recorded. I will now turn the conference over to Mr. Rodrigo Huidobro, Chief Financial Officer at Empresas Copec. Please go ahead, sir.
Okay, thank you very much. Welcome, everyone, and thank you for joining us today. We will be taking a look at the results of Empresas Copec in the second quarter 2018. In order to do that, I am joined today by people from our Investor Relations department, led by Mr. Cristián Palacios; and also people from Arauco, led by Mr. Gianfranco Truffello.
Let us begin by looking at the figures of this quarter placed in a historical context. While doing that in -- on Page 4, you can see that EBITDA has gone up to $804 million, which is probably the largest EBITDA we have recorded. So record levels of EBITDA for the company. This is driven, as you will see further on, basically, by our performance in our main divisions, but mainly in the forestry segment. We'll get into more details going further. So that is 48% up with respect to the second quarter 2017.
In terms of net income, we have reached $335 million, which is up with respect to both the previous quarter and also with respect to second quarter 2017. You can see in the historical figures here as well that this is one of the highest figures ever recorded, second only to that recorded back in 2014, where we had a significant onetime effect, which stemmed from our sale of our stake in the power generation company, Guacolda, so a huge onetime effect back then. No significant onetime effects in this particular quarter, the second quarter 2018.
Moving on to Page 5. You can see, to left-hand side, you can see the main increases in EBITDA. And what we can see there is that the increase in EBITDA is driven basically by our 2 main subsidiary companies, which are Arauco and Copec. To the right-hand side, you can see that the composition of the EBITDA, basically, as usual, more than 90% of EBITDA is concentrated in Arauco, Copec and the rest of our subsidiary companies in the fuels division.
Similar analysis for net income on Page 6. Net income, as we said, amounted to $335 million, which is a 93% increase on the second quarter of 2017. And the main increment here relates to Arauco and stems from -- basically from the better operating performance in the different segments within Arauco. Once again, to the right-hand side, the composition is concentrated basically in fuels and forestry.
On Page 7, what you can see there is the net income statement. Net income increased basically, because of higher operating income and offset to some extent by a more negative nonoperating income. Operating income has to do, as we already said, with a stronger results in Arauco, which basically relates to all business lines, particularly pulp, but also panels and woods. And also relates to better results in Copec, because of higher margins in Chile and Colombia. We saw -- we will give out the details further on, but we saw an increase in volumes both in Terpel and in Mapco.
In terms of the nonoperating income, you will see that the figures on the table here are a little distorted, because of some readjustments and reclassifications we did to the figures of the first quarter 2018. But the main drivers are listed down here. So we have, as main drivers, negative exchange differences, because of local currencies depreciating during the quarter. So that has an effect on -- basically on FX, cash and other assets held in local currencies. We have higher other expenses related to projects in Arauco and also with a rollback of a provision back in 2017. Lower other income was recorded as well and this relates to a onetime effect -- positive effect back in 2017 related to the acquisition and the purchasing price adjustment done at Duragas for the subsidiary company acquired in Ecuador. We also have solid improved results in associates, which mainly relate to Sonae and Corpesca. And finally, a higher tax on the back of improved results and also of the higher tax rate in Chile.
On Page 8, you can see the improvement in our key financial ratios. Operating margin, EBITDA margin and return on capital employed have been rising gradually, basically driven by, once again, our performance in our forestry division. You can see as well that our leverage ratios have been gradually going down, net debt to EBITDA is now at 2.1x, down from 2.4 back at the end of the first quarter this year. This is basically explained by EBITDA -- 12-month trailing EBITDA that already reaches $2.65 billion. And as you can see here as well that our debt levels are quite comfortable on one hand and also we have a comfortable debt schedule for the years to come.
Now digging deeper into forestry. If you can move on to Page 11, you can see that net income increases here, because of essentially higher operating income, offset to some extent, by a more negative nonoperating income. As we said before, higher operating income comes from stronger revenues in all business lines, basically, because of higher prices in pulp and some timber and also higher volumes for pulp and panels. In terms of nonoperating income, as we mentioned before, we have negative exchange differences stemming from the depreciation of local currencies and its effect on assets held in local currencies. Together with that, we have higher other expenses related to projects, particularly to the Grayling Project, and also to some reversals of provisions back in 2017. This is all offset to some extent by higher profits in associates, which basically comes from Sonae Arauco, our joint venture in Europe and South Africa. In addition to all that, we have higher taxes related to better results and also higher tax rate in Chile.
Now moving into the pulp division on Page 12. You can see that our pulp EBITDA has reached $408 million, which is clearly an increment with respect to the $343 million that we reported back in the first quarter 2018 and also to the $205 million that we recorded as an EBITDA for pulp in the second quarter 2017. This stems from increases in both in volumes and in prices. You can see that volumes increased between 8% and 9% with respect to last year and also with respect to the preceding quarter, while prices are 32% up with respect to last year and 2.5% up with respect to the previous quarter. Together with all that, we can see some slight variations in unitary costs that are listed there and that have to do basically with the maintenances that had been carried on in the different mills and with some slight increase in wood and chemicals. We are also presenting there the schedules for maintenance of our mills going forward.
In terms of behavior of markets and outlook for pulp, if you look at Page 13, you can see stability of prices at very good levels. The demand for pulp has remained quite active in the second quarter and also during the third quarter, even in months when we usually see some decrease in demand, because of seasonality. We're seeing Asian markets continue to be quite active, especially China. The prices in China, if you look at the chart down there, you can see they are quite stable, standing at levels, which are close to $890 for softwood and quite stable around $790 for hardwood. Likewise, in Asia, we are facing some good price levels. Paper producers are seeing good demand. They are being able to transfer or to pass through increases in prices to the final customers. However, some of them are also already seeing reduced margins and might be a little more vulnerable in terms of their financial situation. So some caution there so as to how much can prices rise further.
For the third quarter, we are seeing stability and not any driver for significant variations either to one side or the other. As a matter of fact, if you look at the inventories on Page 14, you can see that they are quite stable and very, very much in line with the historical averages, standing at 45 days for hardwood and 30 days for softwood. You can see down there as well that demand for pulp has grown at a very healthy 1.7%, with China leading growth with a 4.1% accumulated throughout the 6 first months of this year.
Moving on to our wood products and panels. You can see that EBITDA is up to $101 million for the second quarter 2018. This means an increase of a little more than 5% on our figures for the second quarter 2017 and a little bit more than 8% for the figures corresponding to the first quarter 2018. This has been driven basically by volumes in the case of panels with prices slightly going down and driven basically by prices in the case of soft timber with volumes in this case slightly going down. Production has been quite stable and smooth for both kinds of products.
In terms of the outlook for main geographical destinations, you can go to Page 16, where we are presenting some comments for North America. North America accounts for 47% of our sales in this division. We're seeing housing starts standing at 1.2, stable during the last couple of months, 1.2 million units per year. This has caused the different types of panels to be quite stable as well, in general, we're seeing stability for MDF and PBO. We are seeing stability for MDF moldings as well, some improvements in remanufactured products, basically related to some problems from Brazilian produces and active demand for plywood.
In terms of our other markets, South and Central America, accounts for 35% of our total production. We have seen good demand in Brazil, in general, with a good level of sales. However, some concerns going around related to the devaluation or depreciation of the Brazilian real and also related to additional capacity coming onstream over the next few months. Somewhat uncertainty also related to the political situation to upcoming elections and to the situation of the exchange rate. Same for Argentina. Some instability in the case of the exchange rate. This clearly affects our margins, which have some strong component of local currency. Therefore, we're looking at opportunities to increase exports from Argentina into other markets. In the case of Chile, very good first semester. We've seen price increases, we've seen improvements in the mix of products, and therefore, very good results, in general, in Chile.
In Asia, good behavior of some relevant markets such as Japan and Korea. Some uncertainty in China, because of exchange rates and potential trade war.
Both in Europe and the Middle East, we are seeing a stable situation. In the case of Middle East, also we have some potential for increase in supply coming from Brazil and from other sources as well.
Let us now move on to fuels. We're showing our fuels or liquid fuels division on Page 19. This is Copec consolidated, so Copec plus Terpel plus Mapco. We have seen an increase in operating income together with a more negative nonoperating income. The increase in operating income and in EBITDA comes from higher commercial margins in Chile and Columbia, mostly explained by a very strong effect related to inventory revaluation. So the first-in, first-out, the FIFO effect in most countries explains a large part of the increase in EBITDA. Together with that, we have seen liquid fuels rising, especially in Colombia, but also in Mapco, with a very good performance in terms of liquid fuels volumes. Finally, an important driver of the increase in EBITDA has been the consolidation of the assets and entities that we acquired from ExxonMobil in Peru and Ecuador. They also already started to consolidate in these 2 countries. Not yet as we will see in Columbia. But Peru and Ecuador has -- had already contributed with some EBITDA that makes part of the increment that we are seeing from one quarter to another.
In terms of the nonoperating effects, once again, these figures here are a little distorted by some reclassification and readjustments we made to the first quarter figures. But the important effects here are those that are listed there. First of all, higher financial expenses in Terpel related to the higher levels of debt that Terpel has after the acquisition of the ExxonMobil assets. We have a lower profit in associated companies coming from Sonamar. This is a division that is devoted to fuels transportations by sea. And what we're doing here, we're writing off the investment held in that division, both through Copec and Abastible, and therefore, a negative effect in the figures for Copec, and also, as we will see further on, for Abastible, and higher taxes, because of the increase in the rate in Chile.
In terms of operational figures, on Page 20, you can see that our market share, and we're showing the figures from February 2018 there. There's a delay now in these figures for making them public. We are up to 56.4% of the market. These movements in market share have been driven basically by drops in the industrial channel. As you can see there, in this particular quarter, we decreased 6.1% in the industrial channel. This has been driven basically by some mining companies that we have lost over time as clients. Together with that, we have seen a lower demand from power generation companies, and we have also lost some aviation volumes. We will have some mining clients coming back though and therefore, that trend should change a little bit as from October this year. In terms of gas stations, a very strong growth, up to 5.5% for volumes sold through gas stations. This has to do basically with GDP with the stock of new cars and also with the price of gasolines. Those are the 3 main drivers of the volumes for liquid fuels through gas stations in Chile.
Going forward, we are seeing stability in margins except for these inventory revaluation effects. We are seeing a very good positioning of our network and of our brand. So we should stay within these levels of market share. And briefly, a comment on Mapco. Mapco has shown a very significant increase in volumes during this quarter. It has -- volumes have gone up by 13.6%, so a very interesting increase in volumes in a market that is growing at low rates, very -- a market, which is actually very flat. So Mapco, we are seeing good volumes and the focus now is in controlling expenses and also bringing some more stability to the unit margins for fuels.
On Page 21, we're giving out some more details about Colombia. We have seen higher commercial margins on one side. The wholesale margin in Colombia, which is regulated, has been readjusted in main -- in May and gone up by 3% approximately. And together with that, we have a positive first-in, first-out effect in this particular quarter. Volumes in Colombia have been very good. In particular, gas stations have gone up by 7% and total volumes from Colombia have gone up by 5.5%. And so strong volume growth in Colombia. And on top of that, as we mentioned before, we are seeing -- for the first time this quarter, we are seeing the consolidation of ExxonMobil's activities in Peru and Ecuador. This has brought about a very significant increase in volumes. If you can see -- if you see in the chart down there, to the bottom-left corner, there's a huge increase in Ecuador and a huge increase in volumes in Peru. Almost all of that is accounted for by the incorporation of these new assets coming from ExxonMobil. Total contribution of EBITDA from these assets during the quarter amounted to COP 21,000 million, which is approximately $7 million, pretty much in line with expectations. Approximately $7 million in EBITDA coming from the incorporation of assets in Peru and Ecuador, ExxonMobil.
Now moving on to Page 22. Some comments about Abastible, our LPG subsidiary company. We have a small decrease in EBITDA and also a decrease in net income due to a nonoperating effect there. In terms of operating income, we are seeing a lower depreciation, because of an adjustment made to the life of some assets there. We are also -- we have also seen a very good performance in Chile and Colombia, offset by a weaker performance in Peru. We are commenting in more detail further on. In terms of nonoperating income, once again, the loss in our fuel transportation division, Sonamar, I mean, investment that was written off during this quarter and that explains most of the fall in nonoperating income for Abastible. Together with that, we had a onetime positive effect last year, which was related to badwill coming from the purchasing price allocation made to Duragas in the second quarter 2017.
On Page 23, you can see that volumes in Chile are growing at a very healthy 5.8%, with industrial or bulk growing at 4.4% and bottled volumes growing by 6.4%. Likewise, in Colombia, a very strong 5.2% increase. In Peru, we have managed to stop volumes from falling down further. The trend in terms of volumes is beginning to change. We are managing to do that by improving distribution and also by improving brand management. Volumes this quarter are up by 4.4% and the challenge going forward is to work on the margins in Peru. In Ecuador, doing very well. Volumes are up by 7.8%. The company has become the first player in the market. So as we can see in the outlook down there, very good outlook for Chile and Colombia. In Chile, volumes have been basically driven by housing growth, a good economic situation and also immigration, also helping there. In Peru, a challenging market, because of [ informality ] as we have commented before. But as I said, already managed to control the dropping volumes and now working on distribution, on brand management and margins. So this is, as we have said before, a challenge in the short term, but an opportunity in the long term. And in the case of Ecuador, Duragas has become the first brand in the market. So very good performance there.
Now on Page 24. Sonacol, stable as always and growing in line with volumes transported. Volumes have gone up by 2% and in line with that, EBITDA is gone -- has gone slightly up.
On Page 26, we are showing some of our other investments. It has been a good year for the fishing divisions, so both Igemar and Corpesca have shown better results this year, related to better -- or increased of availability of catchers and also through a good pricing scenario for their main products. The other 3 that are listed there, Laguna Blanca, Metrogas and AGESA with stable results with respect to last year. So not much to comment for those 3 other companies.
That's it for the main figures for this quarter. And what we have next is some comments related to some important developments that have taken place during these last few months. The first of them is the announcement that we have made of the MAPA project having been approved by the Board of Directors in July. So a couple of weeks ago, the MAPA project was approved by the board, and we have announced that as an essential fact. We are estimating a total CapEx of approximately $2.35 billion. This is a project that consists in the construction of a new line amounting to 1.56 million tons of short fiber. When that is operational, we will be closing down line 1, which amounts to 290,000 tons of short fiber. And therefore, the net increment associated to the project is 1.27 million tons of short fiber capacity. Together with that, we will be building power generation facilities, which will make the project self-sufficient in energy and will also yield a capacity surplus of 132 megas, which will be injected into the central grid. On top of that, we are making a set of environmental improvements for line 2, which will stay operational. We will be providing employment, on average, to 4,500 people, with a maximum of 8,300 people, and we expect the start-up during the second quarter 2021. So that's it from our MAPA project, which was finally approved and announced.
With regard to our other projects, we are showing on Page 29, the amount of progress that we have made in our main -- our other main 2 projects, one of them is Grayling. Grayling is fairly well advanced. We are at 80% completion. This is a project -- just to remind you, this is a project that involves a capacity of 800,000 cubic meters per year and a total CapEx of $400 million per year. And we are expecting the first panel to be produced in the last quarter of this year. So late 2018, we should be beginning operations at Grayling. In relation to the Valdivia dissolving pulp project, the project is up to 31% progress. We continue to estimate the CapEx at $185 million, and we are expecting the start-up of the line for late 2019. So everything according to plan in Valdivia as well.
And finally, a brief update on the process of taking over the ExxonMobil assets. Just as a reminder, this was an operation that was announced back at the end of 2016. We closed the operation more than 1 year after that, after having the permits and the conditions imposed by the Colombian authorities in terms of antitrust. So with that in hand, we proceeded to close the deal back in March this year. The cash outlay was $714 million for the total assets, which included cash for $230 million. In order to cope with the restrictions imposed by the authorities in Colombia, the assets that have to be sold in Colombia were transferred to a blind trust, an autonomous trust, that is mandated with dividing the assets in Colombia and also selling part of the assets in Colombia. The division of the asset has already taken place, so the operation of lubricants has been separated from the operations of fuels. Following that, Terpel in July has repurchased the lubricants business from this autonomous trust. At the same time, Terpel has transferred one of the lubricants plant, the one held in Bucaramanga in Colombia. And the contracts related to the brand, to the Maxter brand, also transferred to this blind trust. This was also a condition imposed by the authorities in Colombia. And following all those operations, we are going to begin consolidating the lubricants operation in Colombia as from the third quarter this year. So lubricants in Colombia is already going to be operated by Terpel, and therefore, the financials related to that operation are going to be reflected in our third quarter figures.
What is still within the autonomous trust is the fuels business acquired from ExxonMobil under lubricants operations transferred to that autonomous trust, which were the operations that were previously in the hands of Terpel. All of that will be sold to a third party, as required by the authorities in Columbia. So bottom line is that lubricants business is going to be reflected in our third quarter figures. And as we said during the presentation as well, we have already begun to reflect the figures from Peru and Ecuador in our second quarter consolidated -- reflected in our second quarter figures. That's it for ExxonMobil. And that's it for what we have prepared for you this afternoon. If you have any questions, please feel free to go ahead with them. Thank you.
[Operator Instructions] Today's first question will be from George Staphos with Bank of America Merrill Lynch.
Two questions and then I'll turn it over. First of all, with MAPA, which has been discussed and under consideration for a long time. If we hold pricing constant, can you discuss, at all, what's the change in the return profile has been for the project? And what cost position you anticipate to ultimately reach with MAPA? And when do you expect to be at a normal cash cost for the project, perhaps mid-2022 or something to that effect? And then switching gears, if we go to Grayling, when we look at Grayling, construction cost per cube comes at around $500, which is a little bit higher than what we've seen with other panel projects in the past. Would you agree with our benchmark work? Either way, what's unique about Grayling? And there are some other panel projects being underway in Grayling, Michigan as well, one is an OSB project. Are you having any challenges at all in terms of finding folks to construct from here on out? I know you're 80% done. Or with hiring or is everything normal?
Thank you, George. I will hand that over to Gianfranco Truffello from Arauco.
Thanks for your questions. Well, regarding MAPA, if I understood correctly, your question was is what triggered the decision to build MAPA right now. And the other question was at what time it's going to be at a normal cash level position -- cash cost position. Well, first of all, I mean, we were waiting a long time for the environmental approval. And once we got that, we were in the middle of M&A operation that didn't go through, which was the Eldorado. So I will say that once we've got off the deal with Eldorado, we started reaching again for MAPA project and updated the numbers on the technology and the capacity. And I think what really triggered the investment decision was that -- these prices went up and the forecast for prices for next year were also good. The finance for the project was easier to be done. I mean, the leverage is going to be more comfortable for the rating position that we had. So it made more feasible the alternative to build the project right now. I mean, our long-term view of price is still the same. It is only that it was easier to approve it because we didn't need equity at the beginning with this new forecast of pricing and debt level was going to be lower. That is basically what pushed the decision sooner. And regarding the cash cost, I think that probably at the end of 2022, I think beginning of 2023, we could reach normal level of cash cost. But normally, the ramp-up curve is about 9 months more or less. So you will see that probably first quarter 2022, we should be producing a normal cash cost position.
If we forget the electricity sales, what do you think the cost might be, if you would share that?
We are not disclosing the cash cost of the project. It's in the first quartile. If you put all the projection you make, all the adjustments to the Brazilian producers, and all that, to make it that comparable, we are in the first quartile of cost.
Understood.
We are not disclosing any numbers. And now regarding Grayling. Yes, I mean there's not a lot of panels being built in the U.S. I think that for the last 20 years, we haven't seen any panel mills -- any particleboard mills being built in the U.S. So we don't have any good comparison in terms of CapEx per cubic meter. And the ones that we have still built in Brazil or Chile are different in terms of cost margins. What I think makes it profitable is that the logistics involved in the project because we are closer to the main customers there, so the margins are better if you take out the logistic cost. So not really a benchmark. And of course, you cannot compare when you buy older mills like what we have done in our acquisition of Flakeboard 1Q and also the acquisition that we made of the assets of Masisa, which are different assets, different country and different margins. So not easy to compare.
Yes. Sometimes when you can look at OSB, I know it's a total different panel, the numbers tend to be around 350 to 400 per cube. But that's what was informing the question. And I assume, even with the warehouser project there, you're not having any challenges in terms of final construction and finding people?
Well, not really. I mean the project is almost completed. But it was more challenging than, of course, building a project in other parts of the world. You know that the scarcity of human resources in the U.S. and especially in that zone is quite difficult sometimes to get electrician or something like that. But we were able to get the people that we wanted and now we are almost complete with construction.
Today's next question will be from Arthur Suelotto with Bradesco.
My first question is on Terpel. Just regarding the Colombian assets there being operated by the autonomous trust, I just wanted to know if you could give us some kind of time line for when you expect this asset sale to be completed? And also you mentioned that the distributions -- the lubricants assets are going to be consolidated in 2018 in the third quarter. I just wanted to know if you -- and so the cash position, which is $130 million cash position is also going to consolidate at this point? Then the second question is regarding the Mina Justa project. I just wanted to know if you could give us some updates regarding what are the next steps that you will have for this project? And what kind of CapEx you expect to disbursed in the coming years for the Mina Justa? And if I may, just a final question on MAPA, regarding the cost base, what kind of investment do you still have to do for integration of the new line? And also kind of forest to mill other divisions are you expecting to have once the new line is operating.
Let me try to answer that. I'll take the 2 first ones and then I will hand it over to Gianfranco. Regarding the autonomous trust in Terpel, as I said before, what we are doing there is we are complying with the restriction posed by the Colombian authorities. So we bought every single asset from ExxonMobil. We transferred that to this blind trust. The blind trust's first task was to separate the lubricants assets from the fuels assets, then to hand over the lubricants assets to our sales, that has already been done. And then to sell the fuels assets to a third party and also to get the lubricants that we owned previously in Colombia from our sales and sell them to a third party. The sale of both assets to a third party is still underway. We expect to have that completed before year-end. And once that is done, the blind trust will basically be transferring all of the cash that it holds back to Terpel. So every material equity effects of this operations will take place whenever the assets are finally sold to third parties and the blind trust is transferring back the final assets that it holds to Terpel. In the meantime, we are already consolidating the figures from Peru and Ecuador as we said. And we're also beginning -- in this third quarter, we are beginning to consolidate the figures from lubricants in Colombia. So all that is pending there is the final sale of the fuels business of ExxonMobil in Colombia and the lubricants business previously owned by Terpel to third parties in the months to come. So that's the first question. Moving on to the second one about Mina Justa. Mina Justa in Peru, we announced that we have entered into this association with the local company, Minsur, the Peruvian company Minsur, in order to tackle this project, Mina Justa. This is going to be 100,000-ton copper project in the southern region of Peru. It involves an initial down payment from ourselves in order to get this 40% of $182 million that is already closed. So we already own the 40%. And following that, it involves an estimated CapEx of $1.6 billion in order to have the project up and running. That is still not going ahead. We are waiting for the final approvals at the board level. What we have finally done is secured financing for the project, and that's probably the most important piece of news in the last few weeks. We have secured financing for the project. It is a project finance structure. $900 million in debt out of the total $1.6 billion. So $900 million is coming in debt from this project finance structure. This is going to have banks and ECAs taking part in the financing. The remainder of $700 million is going to be contributed as equity in proportional terms by the 2 parties. So we are -- on the side of Empresas Copec, we will have to devote approximately $280 million as equity for the Mina Justa project. We are expecting to have the project built and up and running by the beginning of 2021. And as for the MAPA question, I'll hand it over to Gianfranco, again.
Okay. Regarding the forest investment, it is not significant. The project will be around 70% self-sufficient in the supply of fiber, logs as that is the same percentage as all of our mills in Chile. So it will be a normal level. So it will -- we will have to have some catch up at the beginning to get to that 30%, but I don't think it will be significant in terms of the forest investment. We normally invest about $180 million on planting forest and maintaining the forest every year. And I will guess that we will have to spend a little bit more by -- in advance some standing wood and purchasing wood from third parties to catch up. But it is nothing really significant compared to the total investment of the mill.
At this time, this will conclude today's question-and-answer session. At this time, I turn the floor back over to Mr. Rodrigo Huidobro for any closing remarks.
Okay. Thank you very much for joining us today, and we expect to get back to you at some point in November with the results for the third quarter. Thank you very much.
Thank you. This concludes today's presentation. You may disconnect your line at this time, and have a nice day.