CMPC weighs $4.6B Brazil project amid leverage strain

Empresas CMPC S.A. is facing a capital allocation dilemma regarding its planned $4.6 billion Proyecto Natureza in Rio Grande do Sul, Brazil, as reported by Bloomberg on October 6, 2026. The investment plan includes $4.0 billion for an industrial pulp mill designed to produce 2.5 million metric tons of bleached hardwood kraft pulp per year, $420 million for road infrastructure, and 3.0 billion Brazilian reais for a private export terminal at Porto de Rio Grande. The port facility is projected to handle 4.6 million metric tons per year by 2030.

The company's balance sheet has experienced sustained pressure. CMPC reported net debt of $5.0 billion and a net debt-to-EBITDA ratio of 4.17 times in the second quarter of 2026. This level exceeds the company's internal target leverage band of 2.5 to 3.5 times. In 2025, the ratio had reached an operating trough peak of 4.5 times amid cyclical downturns in the sector, where benchmark short-fiber hardwood pulp stands at $560 per metric ton.

Credit rating thresholds add further scrutiny to the spending decision. S&P sets a downgrade threshold at a net debt-to-EBITDA ratio of 3.5 times and a funds from operations to debt ratio below 20%. Itaú BBA forecasts that CMPC's leverage ratio will reach 4.8 times in 2026 before factoring in capital expenditures for Proyecto Natureza.

To alleviate debt burdens, CMPC has targeted $1.5 billion in divestments of forestry land and surplus real estate assets. Meanwhile, shares of Empresas CMPC have declined 30% year-to-date in 2026.