Empresas Copec SA
SGO:COPEC
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Good afternoon, everyone, and welcome to Empresas Copec's Third Quarter 2021 Results Conference Call. Today's presentation and the 3Q '21 earnings release are available on the company's website at www.empresascopec.cl and also on our Investor Relation's website investor.empresascopec.cl.
Before we begin, I would like to remind you that this 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 IFRS definitions, such as EBITDA.
Please note, this event is being recorded. I will now turn the call over to Mr. Rodrigo Huidobro, Chief Financial Officer of Empresas Copec. Please go ahead, sir.
Thank you very much. Hello, everyone. Welcome to our conference call for the third quarter of 2021. We will be taking a look at the numbers recently reported by Empresas Copec for the third quarter. I'm joined here today by people from our Investor Relations department, led by Mr. Cristián Palacios and also people from Arauco, led by Mr. Gianfranco Truffello, all of whom will be helping us out in answering any questions you might have at the end of the presentation.
Just to remind you, we are operating through the webcast format, and we are going to be taking your questions through the webcast platform in written form. So please send your questions through that channel and Cristián Palacios will be taking them at the end of the presentation.
Okay. Having said all that, let us please switch into Page 4, where we are presenting the main highlights for the third quarter of 2021. It was a quarter where we reported quite an interesting EBITDA and net profit. Better numbers definitely that in the [indiscernible] quarters last year and the preceding quarter as well. And all that has to do to be with a better performance of the forestry and fuels division. In the forestry, we have increases because of a very good performance in pulp and also in wood products during the last few quarters. We have higher margins in panels and sawn timber with respect to the last quarter and also to comparable quarter last. We have pulp prices that improved year-on-year quite significantly, more than 60% and volumes increasing on the preceding quarter.
In terms of fuels, we have seen a gradual recovery of the volumes sold and this, of course, has to do with a progressive lifting of restrictions related to the pandemic in the geographies in which we operate. So we are already reaching pre-pandemic levels or above pre-pandemic levels, which is very good news. And that is the main driver of the results we are showing during this quarter. Together with that, we are seeing also an interesting result coming from the FIFO effect, some more details going forward.
In terms of LPG, we had lower EBITDA basically on account of reduced margins. In relation to the main projects that we are carrying out and other developments, we have the MAPA project standing at 90% progress as of October, and we have moved start-up for March 2022. So we have recently announced that we will be aiming for starting up in March 2020 rather than during this fourth quarter as we had previously announced.
[indiscernible] continued ramping up its operations, all in a very good pricings area. Arauco has recently announced the start of study in order to potentially go ahead with the new MDF mill in Mexico, some further details on that to come. And finally, in terms of leverage, we have been progressively reducing our leverage. We are already reaching levels of 2.2 net debt to EBITDA.
Moving on to Page 5. We can see the numbers for this quarter in a historical context. You can see there that the EBITDA came up to $975 million, which is quite an interesting figure and is more than 100% up with respect to last year when we were still hurt by effects related to the pandemic and by a pulp market that was showing at that point in time, very weak prices. Also, with respect to last quarter, it came up 10.5%, which is also an interesting increase. In terms of net income, we came up to $734 million, which is a significant increase, of course, with respect to last year and also more than twice what we recorded in the immediately preceding quarter in the second quarter of 2021. That has to do with the operational performance we already commented, but also with nonrecurrent effects that we have recorded in this particular quarter related to the sale of assets basically.
On Page 6, you can see this cascading graph here to the left-hand side, we are showing the main explanations for the increase in EBITDA. To the right-hand side, we can see the composition of EBITDA for the quarter. As you see there, the increases are mainly explained by Arauco and Copec. In the case of Arauco, it has to do with a better performance in pulp and wood products. In the case of Fuels, it has to do with stronger volumes and also an interesting FIFO effect. To the right-hand side, you can see that Around Copec make up the bulk of our EBITDA.
On Page 7, the same analysis for net income. Net income came up to $734 million, as we said, and that compares with $98 million in the third quarter of 2020. The main explanation of this increase is a Arauco, where we have, again, a very good operational performance. But on top of that, we have a nonrecurrent income coming from the sale of forestry assets. Together with that, we can see the strong contribution of Copec with operational factors,Abastible based, to a great extent on the sale of take in Gasmar. And also and for the first time, a very significant contribution by Alxar International, which is the company through which we hold the 40% stake in the Mina Justa project. So that's the first time we are seeing profits recorded from the operation of Mina Justa. To the right-hand side, again, Arauco steel in this case and Copec and also started to make up the bulk of our net profit for the quarter.
Moving on to Page 8. You can see some more detail on our income statement. Net income came up to $734 million, which is $637 million, up on the $98 million we recorded in the third quarter 2020. In terms of operating income, definitely highlight the reports of Arauco, which is explained by better pulp and prices -- prices and pulp and also a very strong performance of wood division.
In the case of Copec, it is related to higher volumes and also inventory revaluation, which was -- as it has been the case during most of this year, it was a quite strong quarter in terms of inventory revaluation. In terms of nonoperating income, you can see other income going -- explained basically by the sale of forest assets at Arauco, also other profit going up because of the sale of Gasmar Abastible and finally, in terms of nonoperating income, a stronger product from associates and JVs. And that has to do essentially with Alxar International. So through its associate Marcobre and -- which is the owner of Mina Justa. And Arauco Sonae, which is a joint venture we offer Europe for the panel segment. And as we said, the panel division, in general, also for this joint venture has been performing very well. All of the above is compensated -- is offset to a certain extent by higher taxes and what, of course, has to do with a higher tax base stemming from the improved operational performance, but also with the sale of assets.
Moving on to Page 9, you can see some financial ratios here, some important financial ratios. All of our operating margins, EBITDA margins and returns have been gradually increasing in line with the improved operational performance and our leverage ratios have been decreasing. And so as you can see in the bar graph, which is shown there to the -- in the bottom right of the page, you can see that we have been quite rapidly going down from the peak we reached by the third quarter last year, a peak of 4.6% net debt to EBITDA. We have been quite rapidly going down to the current 2.2% that we have recorded. Just to remind you, about that point in the third quarter 2020, we're still carrying out several very large scale projects, MAPA and Mina Justa among them. At the same time, we were facing a scenario of reduced EBITDA stemming from a depressed pulp market and also fuels markets that were very badly hurt by the pandemic developing at that time.
In terms of financial maturities, debt maturities quite an interesting and quite a well-balanced schedule going forward for the next few years. Let me get into some more detail regarding forestry, so let us move to Page 12. The income statement for Arauco. Arauco recorded a net income of $511 million to $36 million in third quarter 2020. That has to do with a stronger in income, which in turn comes from increased sales in pulp because of better prices and also has to do with the performance of panels and wood products, which are facing and have been facing for most of this year, a very distinct business environment.
In terms of nonoperating income, the most important fact here is higher other income due to the sale of forest lands, partly offset by other expenses. Also, as I mentioned before, a stronger profit coming from associates, which in this particularly comes from Sonae, our joint venture operating panel division in Europe and South Africa. Together with all that, decreased financial expenses and all of that offset to a certain extent by increased taxes, of course.
On Page 13, we have some more detail on the both markets. You can see that EBITDA came to $614 million million, which is a figure that is presented according to Arauco Convention, which is basically built from the bottom up. So it's EBITDA starting out from the deep and netting out the interest and [ net ] depreciation and amortization. So this basically includes the nonrecurrent income coming from the sale of assets. If we net that out, the EBITDA would be around [ $380 million, $390 million ]. So still a very interesting to both the second quarter and the third quarter last year.
This has to do in terms of the interannual comparison basically has to do with high prices, which are up more than 60%, offset with slightly lower volumes, which are down by 2.3%. In the case of the quarter-on-quarter comparison, we have higher volumes this time, offset by slightly lower prices or prices which are down 2% on average. You can also see some detail on the movements of costs for the year-on-year -- quarter-on-quarter comparison there and also the schedule of maintenance stoppages for the orders to come. You can see that in the fourth quarter, we are not having any maintenance stoppages.
Some further detail on pulp on Page 14. We saw a quarter where demand was, in general, stable but with some declines in prices and in particular in certain types of fibers and having to do especially with seasonality effects. An element that hit the market as well was logistical restrictions and increases, therefore, in logistical costs. In China, we had these plans of energy consumption restrictions and production limitations for several geographical areas within China. However, tissue improved, printing and writing continues to be stable. In general, softwood remain quite stable, while hardwood declined during the quarter.
Europe has decoupled from China in general. Prices continue to be very strong and a bit so during this third quarter as well. By the end of the quarter, however, some producers begin to be affected by rising costs in general, having to do with energy and chemicals. Dissolving pulp, which is a rather new product for ourselves, has also shown good levels of prices quite stable, but also with some decreases toward the end of the quarter. You can see there that inventories are -- have been quite stable in the last few months, pretty in line, probably a little bit above historical levels.
On Page 15, some further elements to have in mind regarding pulp. In terms of the outlook, there is definitely in China, some uncertainty created by the restrictions placed by the government in terms of energy consumption and production in general. This could affect pulp prices and pulp volumes for the coming years. Therefore, we're expecting an adjustment for softwood prices and especially taking into account that the gap between pulp fiber continues to be quite large. We could face further adjustments for hardwood pulp as well, stemming from these curtailments in production that China has been implemented.
In Europe, as we said, the market has decoupled from the rest of the world and from China, particularly. We continue to see strong prices and it has to do to a great extent with logistic restrictions. So it is harder than before to bring volumes from 1 market to another because of the logistic restrictions.
Regarding solving pulp, we have seen a decline, as we said previously during the third quarter, and we could see some further decline into the fourth quarter of 2021. We have seen some producers facing increased costs in general. All in all, what we are seeing today in terms of prices, you can see in the graph below there, we are seeing dissolving pulp, which is around $950 per ton. And then softwood and hardwood, which are showing levels of around $710 for softwood and $560, $574 hardwood.
Some elements we have in mind regarding wood products and panels in the case of our division. The EBITDA that we recorded was basically 3x the usual EBITDA that we recorded in this division, so $338 million very interesting EBITDA shown by the wood panels. And this has to do with prices that have gone out -- gone up significantly, as you can see here. In the year-on-year comparison, prices have gone up by more than 30% and regarding the last quarter, more than 10%. That's a very interesting evolution of prices, joined by an increase as well in volumes.
In the case of solid wood, we can see a similar behavior for prices, 47% up with respect to the third quarter last year. and 14%, 15% up with respect to the last quarter. In this case, volumes are slightly down. But all in all, a very good performance by the Wood division.
Moving on to Page 17. We are seeing here some more elements in terms of the outlook for panels. In North America, which has become our main market, we are seeing a very good performance in general for MDF and we see that it might continue to perform well. The many side, no significant projects coming into the market. In the case of PB, there is some slowdown, especially in the East Coast in the U.S. But all in all, very good market, you can see everything is linked to the housing starts, which are shown down there and the trend is definitely very positive and steady and consistent.
In the case of remanufactured products, the prices have reached a very high levels. We still see potential for these increases. Demand has been very robust during the year, given the developments in home improvement and also construction of houses. And this is all coupled to supply, which is limited because of logistic restrictions and also because of tariffs.
In the case of plywood, we can see that demand has been recovering. And this could generate favorable demand, favorable conditions in general, and we could see the very good business environment to persist.
On Page 18, some reflections about South Central America. Brazil has shown a very strong performance. It is a very active market, PB and MDF, which are main products there. And we see full time being no of these very good levels going for the year,same thing in Chile, very strong demand and therefore, prices trending upward. -- some supply shortages as well in some products. In Argentina also increased demands and prices have been able to keep up and compensate inflation and depreciation. And finally, in Asia, which also is also an interesting market for ourselves. We are seeing some logistical problems, some slowdown in demand, particularly in China because of the production restrictions and prices, therefore, slightly going down. But anyway, remaining at very strong levels. In the case of Australia and Oceania in general, market continues to be very strong.
Let us move to Fuels. We are showing Copec on Page 20. In the case of Copec, we had a very good performance, especially compared with the third quarter of 2020 when we are still facing in the geographies we were facing the very severe restrictions at that point in time related to mobility stemming from the pandemic. EBITDA came up to CLP 181 billion, which compares to CLP 78 bill that we recorded in the third quarter last year. So this has to do with slick recovered volumes, which in turn give way to higher margins. Another important factor is a very positive effect on inventory revaluation, the FIFO effect. And the volumes are up almost 40% and across all geographies, mainly in Chile, in Terpel, in Colombia, which are our main geographies, we are seeing volumes going up by 40% approximately.
Some nonoperational variations as well. Nothing very important there. And of course, a very -- a much larger tax during this quarter related to the higher tax base.
Some operational figures on Page 21 related to Chile. You can see there that we are at 58.9% accumulated market share as of August 2021, which is the latest thing we have. This is pretty much in line with our historical level. In terms of fuel volumes, as we said, it's have been going up by 38%, almost 40% both in the industrial and the gas station channel. Very significantly, the gas station channels are already approximately 6% up with respect to a normal year to a pre-pandemic level to accumulate approximately 6% up. Whereas the industrial volumes are slightly down with respect to a pre-pandemic year to, let's say, 5% -- 4% to 5% down. So the recovery has been quite interesting.
In general, we're showing, as always, in this division, very stable margins where we measure them by in Chilean pesos, in real Chilean pesos adjusted by inflation. But of course, we have some elements of volatility in the EBITDA, which are basically related to the effects of FIFO inventories plus the eventual vary interest we may have in industrial margins.
In terms of Terpel, shown on Page 22. Also a very interesting EBITDA. We are showing an EBITDA of COP 84 billion for the quarter compared with COP 24 billion in the third quarter last year. This has to do with improved margins, which in turn have to do with volumes going up and also with inventory effects. This case as well, pretty much like in Chile, we saw volumes going up by 40% approximately, explained by increases basically across all geographies and Panama is going by 43% -- sorry, Columbia like 43%, Panama 34%, Ecuador 14%, Dominican Republic, interestingly enough, which is the aviation operation of airport is up by 109%. And Peru, which has a strong component of aviation as well, also doubling with respect to the third quarter of last year.
Together with all that, a very strong performance in Terpel of the lubricant segment. Just to remind you, a few months before pandemic, we have started to operate the new assets acquired from ExxonMobil. Those new assets have performed very well during this quarter. And during this year in general we are very, I would say, on our way to reach the EBITDA, the incremental EBITDA that we projected back when we acquired these assets that we projected as a long-term EBITDA for the assets related to ExxonMobil, which is around $50 million to $60 million per year. So we are on our way to achieve that.
All of that is compensated by higher taxes and [indiscernible] with 2 effects. One is the higher tax base related to operational performance, but we also have an effect on tax on deferred tax liabilities coming from the increase in the tax rate for Colombia.
On Page 23, you can see a discussion on Mapco , which is our subsidiary company in fuels in the U.S. EBITDA is down with respect to last year, $16.9 million compared to $20.5 million. This has to do with the special situation that we had last year, where margins -- unit margins were historically high. They were volatile in general, but very high during most of last year. Those margins have gradually gone back to more normal levels. Together with that, we are seeing increased costs essentially labor cost, which is something that, in general, the U.S. and in particular, these geographies where we operate in the U.S. have been facing most of these years. So volumes up by 1.3%. EBIT margins are going down and increased labor costs. That's basically explanation for ,Mapco's operational performance.
On Page 24, some discussion on Abastible. We are seeing basically a decreased EBITDA from CLP 42 billion we have gone down to CLP 35 billion. This has to do basically with lower margins and that in turn has to do with higher costs. In general, our volumes have been improving across all geographies, but unit margins have gradually gone down, and this has to do essentially with the high prices of propane, which is a raw material or main input that we've seen international basically, internationally.
Together with that, in nonoperational terms, we have seen other profit, which is very strong this quarter and which records the onetime effect related to the from the sale of Gasmar. All of that is offset with -- by higher taxes, which relates to essentially the sale of Gasmar together with the operational expense and also the effect of the increased exchange rate on the accounting of our international investments that Abastible has.
Operationally speaking, as shown on Page 25. In general, as I said, we've seen volumes go up across all geographies, but unit margins go down. Particularly in Chile, we've seen an increase in the bottled segment, which is driven by the strong economic performance in general that the country has had during this year, linked in part to the liquidity enhancements that the government has pushed through. In the case of the bulk segment, it has shown also very interesting and strong performance, once again explained by the economic recovery, but also with explained by the new strategy, the new commercial strategy that Abastible has been putting in place. All in all, we've been increasing our market shares in both segments.
In Colombia, we are seeing centrally a contraction in the bottled segment demand because of the high -- of the very high propane prices that we have been passing through to final customers. So the consumption of other substitutes have been very active.
Similar thing in Peru. In Peru, in general, we've seen a recovery of volumes, which has to do with the gradual opening up of the country and lifting of restrictions -- of sanitary restrictions. Together with that, we have seen some interesting wholesale volumes through which sold gas has contributed to overcome some LPG shortages that the country has faced. Increase of bulk segment, we've reached quite good levels -- have to do essentially with also some -- with some new commercial strategies that we're carrying forward in the bulk segments, as you know, other geographies, we've seen reduced margins because of the high prices of propane.
In the case of Ecuador, volumes have been increasing, and we, in general, have a widespread recovery from the restrictions that we faced during the pandemic. So all in all Abastible in general, volumes go up because of the lifting of restrictions and margins going down because of the very high propane prices.
In the case of Sonacol, which is shown on 26, Page 26. We have seen an increase in EBITDA. EBITDA has gone up to CLP 12 billion compared with CLP 8 billion last quarter through last year. And this has to do essentially with the recovery of volumes pipeline through the Sonacol infrastructure.
On Page 28, some briefly -- some more of our other investments.Igemar is slightly up with respect to last year. This is our filing division. Metrogas and Agesa slightly down with respect to last year.. And I would particularly like to highlight here the performance of Alxar International, which is the company through which we hold the 40% investment with Mina Justa. So for the first time, we are recording a profit for this investment of $55 million in the case of Alxar for the quarter.
Let us move to the main developments of the quarter. We want to highlight here. Let's just remind you to please start posting your questions through the webcast platform. As the first development that we would like to highlight is the Mapa project progress. We are up to 90% overall progress by the end of October 2021. We have recently communicated that the start-up will finally take place during -- we're expecting it to take place during March 2022, at a point in time when we will be closing down line 1 in accordance with the environmental permit that we have. Brief comments on we have done recently basically continuing to communicate companies related to safety and enhancement of tenant conditions. We have been strengthening the prevention team, which is tasked with monitoring and supervising compliance of these conditions. And in terms of infrastructure, we had the first steam blow test at the power boiler successfully being run.
Moving on to Page 31. Some brief comments about Mina Justa. We have continued to ramp up this mine, this copper mine. We started up its production stage in March, and we had the first shipments of copper concentrate and cathodes in July. All of this has been taking place, as you well know, in a very good pricing scenario. We are still ramping up the facilities in the mine and the equipment. At the same time, we're working estimating our production plan. The best estimation we have at this point in time for this year for 2021 is to come up to a production of 80,000 to 85,000 tons for the year.
During the quarter, as we commented before, we had Cumbres Andinas is the direct parent company of the project, in which we have a 40% stake. We had Cumbres Andinas recording a profit of $138 million million and an EBITDA of $263 million, $264 million. So very interesting figures. There might be a marginal distortion to those figures because we are still capitalizing some costs. But all in all, we will have EBITDA levels if this pricing scenario continues to be present, we will have very interesting EBITDA and net income levels.
The sales reached 3,500 tons for cathodes and 29,000 tons for concentrates. This is resulting of a total amount of ore, which is 2.4 million tons. This proportion is, of course, not in line with the expected proportion that we expect to have during the life of the mine, which is a little less for cathodes during the whole of the mine. But of course, it's to do the different speeds of ramping up that we've seen for the different production lines.
Moving on to Page 32. This is, we believe, very good news in the -- especially in the -- even the performance -- the very good performance of the wood and panel division that we've seen over the last few quarters. Arauco is going on with some tariff to evaluate a potential new mill in Mexico. It will be an MDF mill that would start up in 2024, and that would mean doubling current MDA capacity of Arauco in Mexico. The total investment for this panel mill would be around $200 million. This will be situated in Zitacuaro,and. is a place in Mexico where we already operate a PB mill. This, of course, is subject to the outcomes of these initial studies and the approval of local authorities.
On Page 33, a brief comment on new developments in electro mobility. As you've seen before and as we have communicated, we have been making a progressive advances in this mobility business, therefore, trying to lead this process of transition towards electro mobility as a way prepare ourselves to this new scenario that will stem from the expected massive adoption of electro mobility around the world.
So the last -- the last milestone that we have recorded in this area is the fact that we were awarded a tender to build 10 of 13 electrical terminals for buses in Chile's metropolitan region. This is a very important step in in making our leadership position more robust, this electro mobility area. This is -- This is a project that we will build in conjunction with Siemens on where the total investment amounts to approximately $30 million. We will be building 194 fast chargers. And with that, we will be transformed to 1 of the largest providers of -- the largest in Chile, the largest electrical supplier for buses in Chile and 1 of -- actually, 1 of the largest projects for electrical buses in Latin America.
We will be starting up this project in the second quarter 2022. In line with that, on Page 34, we are highlighting some announcements that we made from Copec and from Arauco in relation to climate change. Companies have issued statements on climate change. In the case of Copec, it had -- this has committed to attain carbon neutrality by 2030, considering Scopes 1 and 2. It has also committed to commercialize a higher proportion of renewable energy versus fuel -- fossil fuel by 2050. And together with all that, it has committed us well to contribute strongly to biodiversity and to reduce waste and become zero-waste by 2029.
Along those same lines, Arauco has made a statement during the COP 26 [indiscernible] in Scotland (sic) [ Glasgow ]. Arauco has announced its climate action plan, which basically is aimed at remissions by 1 million tons by 2030. And this will be carried forward basis on 4 of 3 pillars, which have to do with mitigation based on science by replacing fossil fuels essentially; second, by the conservation of ecosystems and thirdly, by initiatives related to server economy. So our 2 most important service facilities, making -- taking interesting steps there towards very strong contributions to the mitigation of climate change.
On Page 35, two distinctions, which we have previously received and we're receiving them once again during this year. In the case of the award called La Voz del Mercado, which is an award for corporate governance. We're receiving it for the third year in a row. We were ranked among the 3 best companies in the country in terms of corporate governance. This is a survey where more than 500 board members, investors, analysts and other opinion leaders are pulled and companies were ranked according to 5 pillars, which both the strategy to sustainability management. And we came up as 1 of the 3 most distinguished companies for the third year in a row. Very happy about that.
And together with that, we have been confirmed as member of the Dow Jones Index for Chile and for Mila, which basically groups Chile, Peru, Colombia and Mexico. So once again, very good news in terms of sustainability.
On Page 36, some detail about the dividends we paid during last October. As you well know, we have seen a very positive scenario compared to last year. So we have -- the company has seen a significant improvement in results, as we have commented during this conference call. We've also been gradually completing our large investment projects, and some of them are already getting to yield results. Together with that, we have gone ahead with some sale of assets. And all of this has finally enabled the company to achieve very significant improvement in terms of the robustness of its balance sheet and in terms of its credit indicated.
So considering all that, the company's Board of Directors agreed to modify the dividend policy and therefore, come back to the 40% that the company had historically shown for several years before it was brought down to 30% last year. And together with that, the Board of Directors decided to approve the distribution of interim dividends for $0.21 per share and another one of $0.33 per share, all of which added up to a total dividend distribution of more than $700 million during October and November.
And that's basically with which the end of the presentation. So let me invite you once again to post your questions through the webcast platform. And having said all that, I will turn it over to Cristián, who is consolidating the different questions and who will be letting us know what the questions are. Cristián, please go ahead.
We have our first question come from Isabella Vasconcelos at Bradesco. Now that we're closer to MAPA start-up, Mina Justa is ramping up, what should [indiscernible] from capital allocation in terms of growth auctions, M&A and [indiscernible]
Well, yes, that's a good question. As I said before, we've seen our balance sheet improving quite strongly. And as a result of that, we've already decided -- the company has already decided to give away more dividends than before with these exceptional dividends that were distributed during October and November. And also with the return to our historical policy of 40% of net income. So that's definitely something that we have already done. And we might consider, of course, going forward again. We still have -- I mean the philosophy going forward should be to continue investment according to our traditional principles. So it basically means long-term investments in areas where the company has competitive advantages, focused in energy and natural resources. This long-term definition means, of course, considering and having a strong component of sustainability. In forestry, the philosophy has been traditionally looking for -- has been looking for geographic that have good conditions for growing forests as we have done in the past, all across Latin America. And from there, building facilities in order to produce pulp and wood products and all of products related to the yield coming from the forest.
In the case of energy, it means looking for geographies where we're -- we can replicate what we have done in Chile in the past and what we have done in other geographies as well. And plan to add as much value as possible to our existing networks. And also, at this point in time, as we have communicated before, looking for assets that might complement our existing assets and help us in the transition to a low carbon economy as we have been doing through it through our innovation and better capital initiatives.
So I would say that first of all, we've just finished a very strong expansion phase. So it's time for us to to give us some time to digest and start operating these new assets that we have. The projects we will have going forward, we will be gradually announcing them. Just like Arauco has just announced a potential new Panama in Mexico. And together with that, we will continue to grow according to our traditional philosophy. And in our segments, we have competitive advantages.
Thank you, Rodrigo. The next 1 comes from [indiscernible]. If you can provide some figures of the FIFO effect, both for Copec, Chile and Terpel in this quarter.
Yes. Yes, the exact figures, I mean, the variation, the increase on the third quarter last year, I mean, related to -- relating to FIFO effects, both for Chile and Colombia is approximately [ 25 ] million. So that's the most important figure to have in mind. We have -- we had an increase in EBITDA, coming from FIFO effects of around $25 million, and that group's effects coming from Chile and Colombia. So quite a strong component, actually, of the total increase we saw in our beta for fuels.
The next one we have here is from Alfonso Salazar at Scotiabank. This in forestry, considering the strong market for panels in the past. What is the outlook for 2022? And if you expect deceleration going forward, Gianfranco, please.
Okay. Thank you for the question. Well, yes, we have been having very good quarters in the panels division, especially MDF. During the whole year, and we always expecting this to end at some point, but the momentum is strong, and we think that, that should continue apart from next year. Of course, we cannot anticipate if that thing is going to could be the whole year. But we think that at least the first or the second quarter, we should have good numbers. Of course, we cannot expect a full year like 2021, probably for 2022. But we'll keep monitoring the conditions of the market. To this point, the only -- rather weak market that we have is China for timber, which is a small part of our revenues. And most of our markets are in North America and Latin America, and those markets are doing great, especially in North America. And in holdings, we have record prices and also very good prices in plywood and MDF. So I think that as liquidity is strong in the market in terms of all the efforts of the government to recover the economy, all the people removing their homes, working from their offices. I think that should help the momentum of the panel division. So we're still enjoying the results for the next probably 2 quarters, and we'll see how things develop. But for the time being, I don't -- I'm not counting on having a full year like 2021 or 2022, especially because some of the input prices are going up resigns, logistic costs are up also, and that could hurt the margins for next year.
Thank you, Gianfranco. We have another question, Alfonso Salazar. Considering all the new pulp capacity ramping up and weak demand in China, when do you anticipate market conditions to improve? And what in your view should help the market to be balanced again?
Well, as we have discussed, the prices have gone down, especially in China. Hardwood prices are back to the $560 something prices from $800. So prices have gone down very, very fast. The market in Europe is still very good. So we had a difference in prices that is very significant between markets that haven't been able to balance because of logistic restrictions to move pulp from the Asian markets to Europe. On the other part, we have some capacity starting producing in Brazil. There's a mill in Brazil, which is already producing with some, I think, logistic costs, logistic problem to ship their products yet. But at some point, we'll come to the market. And then we have MAPA, which we'll start producing in March next year at some point, the volume will go into China. It's very hard to assess what will be the balance. It's going to depend on how the market grows in China, the exports of paper from China. As we have seen, the demand from market has gone down in terms of volume. -- especially in China almost 10% if we compare 1 year to the other. So we should expect that the consumption and the deliveries will increase as prices are more close to a low level of price. And so we should see the Chinese start buying again with the expectation that if prices goes up, they could save some money buying now. So I think that demand will pick up in volume, and we will see how the balance between the new capacity coming into the market from MAPA and Brazil will balance the increase in demand from the Chinese market. So as usual, very hard to predict, but we don't expect decreases -- very big decreases in price for hardwood because it's is already down to a more normal level right now
And Gianfranco, we have Rodrigo [indiscernible] back to asking if you can provide guidance in terms of production or sales for MAPA in 2020?
Yes. Well, MAPA as we said, is going to -- we expect that we'll start producing in March. Of course, all these mills have a ramp-up curve. It's not that you go immediately to 100%. It's very -- it's more easy to get to like 80%, but the last 20% is subject to minor adjustments and debottlenecking and testing the equipment to run full capacity. So it takes about 6 months to reach 100% capacity. And so with all that, we expect that probably we will be producing and selling between 800,000 to 900,000 tons, something like that from a total capacity of 1.5 million tons. Of course, we'll be updating that in coming quarters. But right now, if we start in March, you should expect that kind of amount of pulp going into the market.
Thank you, Gianfranco. Next one, we have Cesar Perez at BTG. Rodrigo, if you can provide the status of the asset divestments and a potential completion timeline? And the second question is regarding growth, which I think it was already answered, but if you can comment again regarding that.
Yes. I think we already touched on the growth strategy going forward in relation to asset sales. Well, we -- as we said in the conference, we completed 2 asset sales, the Gasmar stake that we had through Abastible and also the forestry assets sold by Arauco. Regarding the other processes, there's nothing new to be formed at this point in time. We'll be forming the market as soon as we have any significant milestones. All of these asset sales basically respond to our philosophy of focusing our sales in what we know how to do best. We think there might be value in that in these kind of assets where with all the same profile, they are long term, very stable cash flows and therefore, might work more in the hands of specialized investors. We are also making our balance sheet more efficient through the divestments and also more robust, which was especially critical last year when we were facing a tough environment in terms of credit metrics. We do not have that urgency in all, but how we believe that these asset sales will contribute to generating value. So we'll proceed with them in spite of not having the urgency anymore. But the philosophy at this point in time, I wouldn't say there's something relevant to to inform regarding milestones of the processes.
Thank you, Rodrigo. Then we have 2 questions from Leonardo Neratika at Bank of America. The first one, is again asking regarding the FIFO effect in Q3. And if you can provide some expectations for Q4 '21? And the second one, any update on Mina Justa's cash cost, you can comment on what was the figure or the range of cash cost for 3Q? And if we should be able to reach the $1 level with the ramp-up?
Okay. Regarding the FIFO effect, I already commented about that. It's approximately $25 million of [ excess for effect ] when comparing with the third quarter last year, which is the comparison that we are showing in this conference call.
Regarding the effect for the fourth quarter, I would say it's too soon to say -- too soon to tell, it, of course, depends on the evolution of fuel prices and oil prices for the rest of the quarter. So far, I would say it's flattish, not relevant even in [indiscernible] or the other, but it will depend a lot on how fuel -- oil prices evolved during the rest of the quarter. And regarding Mina Justa cash costs, we recorded a cash cost of $0.9 per pound for the third quarter. This might be marginally influenced by the fact that we are capitalizing some costs still because of the ramp-up stage. But given that figure, we believe that we are on track to attain the $1 or $1.1 per pound cash cost that we have projected for the first few years. That we have talked about $1.3 cash cost for the stage of the mine, and this will -- should be even lower than that for the first 2 years when we have access to the best parts of the mine. So given the way that the processes and the ramping up has been evolving, we think that we are on track to achieve that -- those levels of figures.
Thank you, Rodrigo. The next one comes from [indiscernible] at Santander. And also Jens Spiess at Morgan Stanley. Both asking about CapEx guidance for 2022.
Well, we are working on that at this very precise moment. So I would say that we will make those figures public probably in the next conference call. But anyhow, just as a general principle, we should be facing our maintenance, recurring CapEx, which should add up to somewhere between $800 million to $900 million per year. And on top of that, we should include any projects that we decide to go ahead with. And it's probably too soon to be very explicit about that, but we will be updating the figure very shortly.
And then a follow-up question from [ Abigail Farooqi ]. Gianfranco, if you can comment on if there are adjustments to cash -- to the cost of construction for MAPA, considering these days?
Well, the MAPA project, we still -- we are still going to face some disbursement into next year as the project start in March, we will still be paying for construction companies and things like that in during the first quarter and also some payments of performance bonds from the equipment. So we expect that for MAPA, we still have to pay in 2020 about $200 million, $250 million probably. Depending on exchange rates and things that because most of the payments or all of the payments to construction companies are done in Chilean pesos. So at the end of the day, it could be a little bit lower in terms of U.S. dollars, depending on the currency. -- So, of course, makes the project a little bit more expensive than we thought, still some -- it's very common for these type of big projects to be a little bit over the budget, and we think that is a percentage that is reasonable for the size of the project and for the conditions and the circumstances of construction under COVID during most of the construction of the project. So it's not going to be very big, considering the type and size of the project. But still, we're going to be facing cash outflows during 2022, which amounts for probably $200 million, $250 million at this point.
And Gianfranco, another 1 from Jens Spiess at Morgan Stanley. How are pulp price negotiations progressing for December? And if you can repeat volume guidance for MAPA in 2022?
Well, we don't have information for negotiation for December, so I don't have anything to give you at this point. Regarding the volume, I think it will be about 800,000 tons. If the mill starts in March and if the curve is as we are expecting it to be, could be more or less a production of 800,000 tons. That is below the -- so a little bit more than 50% of total capacity, which is [ $1.5 million. ]
Thank you, Gianfranco. And Rodrigo, another one from Jens, asking about the dividends that mean Mina Justa should be distributing to shareholders if you can comment on that? And what are the expectations, the amount that Copec might receive in 2022?
Yes, also working on that and waiting to see how the ramping up project develops going forward. So not a lot to say at this point in time. But you can see there that the company is recording a very interesting net income on a quarterly basis. You have to consider that there are some restrictions coming from the project financing that has in place. So if we are going ahead with distributions, we have paid debt at the same time. So that's a restriction that we have. The spirit in which both shareholders seem to be is to go ahead with the payment of dividends if that is possible. But it's still probably too soon to tell. We will be also working on that figure and updating you as soon as possible. One other thing to consider is that this project has very little maintenance investment, maintenance CapEx required. So most of the cash generator should be available to distribute as dividends and to pay down debt. So with all that in mind, you can probably come up with an estimation yourself, but we will be updating the figure as soon as possible.
Okay. Thank you, Rodrigo and Gianfranco. We don't have any further questions at this moment. So I'll turn it back to Rodrigo.
Okay. Thank you, Cristián, and thank you, everyone, for joining us today. We expect to get back to you with the results of the fourth quarter 2021 at the beginning of March. In the meantime, please feel free to contact us if you have any questions. Thank you very much.
Bye-bye.
Thank you. This concludes today's presentation. You may disconnect now, and have a nice day.