Good morning, everyone, and welcome to Empresas Copec third quarter 2023 results conference call. Today's presentation and the 3Q 2023 earnings release are available on the company's website at investors.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 management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depends 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.
In this opportunity, questions will be received in written form. If you have a question, please write it down on the Q&A section. Please be aware that your company name should be visible for a question to be taken. I will now turn the conference over to Mr. Rodrigo Huidobro, Chief Financial Officer of Empresas Copec. Please go ahead, sir.
Okay. Welcome, everyone. Thank you for attending today's conference call. We will be taking a look at the results for Empresas Copec third quarter 2023. So thanks for attending. We will be joined today by Mr. Cristián Palacios, who's heading the Investor Relations Department at Empresas Copec, and also by Mr. Gianfranco Truffello, CFO of Arauco. They will both be helping us out in the last section of the presentation, where we'll be taking the Q&A. Let's take a look at the numbers on the presentation. The main highlights of the quarter are shown on screen. We recorded an EBITDA of $609 million, which is up with respect to the last quarter, up with respect to the second quarter, 2023.
And the net income, a negative net income because of some non-recurrent effects on assets that we will explain going forward. In general terms, we had higher pulp volumes Q-on-Q, and lower selling costs in some of the fibers. So the forestry sector showed an increased operational income and EBITDA Q-on-Q. Year -on -year, we continue to have a lower operating income, and that is due to a drop in pulp and the wood segment as well, together with higher costs on pulp. In terms of net income, probably the most important effect is that we had a non-recurrent effect that we had to record due to impairments of fixed assets.
Regarding energy, we once again we improved Q-on-Q, so we have a higher operating income, which is essentially associated to an inventory revaluation, most of it coming from the pulp. And so a higher inventory revaluation to pulp causes us to have a higher EBITDA and net-- and operational income Q-on-Q. However, year-on-year, we continue to show a decreased EBITDA and a decreased income, and this is associated to lower volumes, inventory revaluation going in the other sense, and also a decreased industrial margin at Copec. We will look at some developments as well. We will explain a little bit more the Mina Justa expansion that was announced a couple of weeks ago. That's an interesting project that we have just announced.
MAPA has reached 500,000 tons, and we'll be giving out some more detail on that. We finally completed the sale of Mapco for a total, enterprise value after adjustments of CLP 745 billion. We also got some dividends from Mapco before closing the transaction. Finally, we will be commenting the fact that Arauco announced the indefinite suspension of operations at the Licancel. As always, we will also have some news in terms of ESG, where we will be commenting the fact that Arauco will be allocating one-third of its plantations for forest preservation in South America, and also the fact that Copec has installed the first gas station or the first hydrogen station for fueling up hydrogen buses. So also another milestone in this energy transition that we're going through. Let's look further into the numbers.
We've got EBITDA of $609 million, as I said, which is up 38% Q-on-Q and down 35% year-on-year. Once again, as we have said before, we are coming from two exceptional years. We faced very good prices of pulp for many months, and also very good margins in the panel segment, for many months in a row, which is highly unusual. And we also got very good performance at the fuels division. So 2022 and 2021 were two very good years, and now we are facing a very different scenario, especially in pulp. However, we have rebounded from the lowest point that we reached in the second quarter of 2023, and this $609 million represents a good increase on that previous EBITDA that we had reported.
Net income, as we commented, is a loss of $31 million, a loss of $31 million, and that is essentially associated to some non-recurrent events having to do with asset impairments. Here we have the comparison with the figure of three, the third quarter 2022. The bulk of the decrease comes from the forestry sector, where we are facing lower prices of pulp once again. The previous, in the last year, the scenario was very good in terms of pulp prices, and also we are facing lower margins in wood segment, which was also exceptional last year. Together with that, we have lower volumes in wood segment and also higher costs of production related to a large extent to the MAPA ramp up. In terms of energy, we also have a lower EBITDA, $20 million lower than last year.
However, it's still a very good level of EBITDA generation in fuels. And the drop, once again, was related to a drop in industrial margin in Chile, and also an inventory revaluation effect that was less favorable than last year. As always, if you look to the right-hand side of the graph, you can see that most of our EBITDA is contributed by Arauco and by the energy sector. In terms of net income, we've already commented this, but once again, the bulk of the decrease comes from Arauco, and it has to do with the operational factors that we already commented, plus the fact that we have some non-recurrent effects in non-operating income, having to do with impairments of fixed assets.
Together with that, we have some non-operating effects as well in both in Arauco and in the other companies related to increased financial costs, and also some less favorable exchange, foreign exchange effects. Another minor effect that we have highlighted here comes from the fishing sector, where in the third quarter, 2022, we had the important non-recurrent income coming from the sale of a related company. And that's not there anymore, of course, so we have a drop in net income. But looking further into the details of the numbers, what we see here is that the change in operating incomes comes essentially from decreased results at Arauco, and that has to do with lower prices in pulp, panels, and some timber, together with lower volumes, essentially in wood.
Also, we have these increased costs coming from the ramp up of MAPA. In terms of Copec, we have some increased costs in distribution and administrative expenses, together with lower volumes and what we already commented in terms of revaluation effect, inventory revaluation effect, and also industrial margins. In non-operating income, that's where the bulk of the decrease comes in terms of net income, and it has to do with higher other expenses because of fixed asset impairment coming from the indefinite suspension of the Licancel mill in Arauco. Together with that, we have net financial expenses that go up. That has to do with the fact that inflation and rates have gone up, and also with the fact that during last year we were still capitalizing costs, financial costs related to the MAPA construction, and that's not there anymore.
So all of that gives way to a decreased net income and to a final, loss for this quarter of $31 million. Our financial ratios, of course, are also lower because of this, decreased, performance in all operations and also because of this, non-operational effects. In terms of return on capital employed, we are going down because our margins have gone down in all our divisions, so we record a 6.2 return on capital employed. In terms of net debt to EBITDA, we have been increasing our number there, because of the fact, essentially, that we have decreased our last twelve months EBITDA. However, we're already facing a recovery, as we saw, so we already rebounded from the levels that we reached in the second quarter, 2023.
So going forward, we could, we should expect a gradual recovery in terms of, of this metric, a slight and gradual recovery as we begin to record, to rebound in terms of our quarterly EBITDA. It's important always to have in mind that given that we participate in a cyclical industry, commodity, which is pulp, it is very usual for us, and you can see in the history of our metric there, that our net debt to EBITDA metrics goes up and down, essentially related to the behavior of pulp markets. And therefore, what we have defined in our financial policy is that we should stick to certain metrics measured over a long-term horizon, over five years.
And therefore, we can filter out or account for the effects of the ups and downs in commodity cycles, and feel comfortable with the level of debt that we have in our balance sheet. Now, that's the way we look at our financial policy, long term, five years. If we move further into forestry division, for some more detail on the numbers and also on the main drivers of the markets, we can see there that EBITDA for forestry was $282-, $282 million, compared to $619-, $619 million for the third quarter last year. But again, we see an important rebound from the figure that we recorded in the second quarter this year. So in comparison to last year, we saw, as we commented already, a drop in prices all across the board.
We saw lower volumes for wood segment in general, offset in part by an increase in volumes in pulp. And also, we saw increased cash costs coming, still coming from the ramp-up of MAPA. However, we saw that those cash costs are beginning to show a more reasonable level in, with respect to the second quarter as we move forward in the ramping up of MAPA. And we expect that to continue happening. In terms of non-operating income, we already commented to this. We have an asset impairment coming from the suspension of operations at the Licancel mill. This implied a $75 million loss. Together with that, we have another saw mill at Horcones, where we also suspended operation, and they both add up to $81 million in asset impairments.
That is the main drivers for the non-operating income. We also had increased financial expenses, as we explained, because of higher rates, and also because of interest rates, interest expenses that are not capitalized anymore, given that we finished the construction of MAPA, and we already have started operations there. Lower exchange differences, essentially because of the appreciation of the dollar, and in relation to some assets that we have in local currencies in some countries, especially in Argentina. Moving on to the pulp division and some more detail on the pulp division. We can see that pulp EBITDA for the third quarter 2023 is $144 million, as reported by Arauco. This represents a drop, of course, from $308 million that we recorded last year, but a rebound from the second quarter 2023.
A very interesting rebound on that figure of 2023. This rebound is driven, in case of the Q-on-Q, by higher volumes offset with lower prices. So we're still seeing lower prices in the third Q 2023, compared with the second Q 2023. The drop, however, is much lower than what we were seeing over time. It's only a 7% drop, and this slide is more than offset by an increased sales volume of 43%. Q- In terms of year-on-year, of course, we are seeing prices that are much lower than the very interesting levels that we saw last year. We also are showing the maintenance stoppages there, with the stoppages that have taken place this year and those that are scheduled to take place in the quarters to come.
In terms of the pulp market behavior during the quarter, probably one thing to highlight here is the graph that we have shown, where we are exhibiting the fact that our production has gone consistently up from 781 in the first quarter, 2023, to more than 1 million tons produced in pulp, in the third quarter, 2023. And that has to do essentially with the increase at MAPA. Arauco Line 3 has come to produce 277,000 tons in the third quarter of 2023, and we expect that to continue improving and going up as we move towards full capacity. In terms of the market behavior, we saw a weak beginning of the quarter.
However, throughout the quarter, we saw improvement in demand, particularly in China, and that has helped to bring up prices gradually and to bring down inventories very dramatically. As you see there in the graph, the inventories for hardwood had gone up very significantly at the beginning of the year, and they are now trending and moving towards figures that are much more in line with historic levels. In Europe, we still see a weak market, but however, prices are beginning to be aligned or moving together with those that we see in China. The dissolving market, pulp market was also showing signals of improvement. It was stronger, and we saw mills gradually increasing their operating rate as conditions in the market gradually improved.
The outlook for pulp, you can see here that over the last few weeks and months, we have quite consistently announced, and the industry has quite consistently announced, increases in prices. You can see in the graph down here that we have moved from a low of 475 in May to a current level of more than 600, which is very interesting. We can see that the softwood as well has moved in line with the hardwood and reached levels of more than $750 per ton. So, we have seen some improving conditions in the market, prices going up quite consistently over the last few weeks and months, and we could see some potential further increases, but in general, signs of stability going forward.
China could continue to be the main driver of the pulp market, and what we are beginning to see as well is that the rest of the markets are following the trends in China, especially in Europe. Flipping over to the wood products, we can see that the EBITDA coming from the wood products has dropped year-on-year from the very high levels that even reached above $300 million at some point in time. But in the third quarter of 2022, we still recorded a very interesting level of $282 million, $283 million, and that has gone down to levels that we have seen in the second quarter and the third quarter, which are much more in line with the historical behavior of these markets.
So 150, 140, 130, that's the levels at which we expect to see these markets in the long term, and that's where they have, they have gradually stabilized. We are still seeing some gradual falls in prices, Q-on-Q, in panels. However, some interesting rebalancing prices, Q-on-Q, in terms of sawn timber. And in terms of sales volumes, Q-on-Q, we have seen a lot of stability in both panels and sawn timber. So in general, markets that have given signals of stability going forward, but of course, at levels that are much lower than those recorded over the last year. Zooming in, in our most important market, which is North America, which represents almost 50% of our sales, we can see a different behavior for the different products.
As a matter of fact, in MDF, we are seeing some increased production and supply coming from other markets, so some pressure there on prices and volumes. In particle boards, however, we are not seeing that increased supply coming from abroad and from our competitors, so that market is much more stable. In remanufactured products, also higher supply, so some potential drops there, but however, in general, quite stable market as well. Same thing for plywood, in general, we have seen stability and a balanced market. For Latin America, in general, we continue to see the conditions that we had commented previously in other calls. Brazil continues to be our main concern because of some more MDF capacity coming online and also slow demand. In Chile, we have seen some drops in some particular segments.
Specifically, the construction segment has lowered its demand a little bit, and therefore, has affected demand for the country as a whole. In Argentina, however, we could see, which is also a very important market for wood products, we continue to see demand improving and a very interesting market with good levels. Finally, Asia, Oceania, Europe, and the Middle East, which represents a lower portion of our sales. In general, some uncertainty in terms of behavior of demand, and also some supply that is relocated from markets to another, and therefore, could affect some of the markets. Moving on to energy. We have recorded an EBITDA of CLP 205 billion. This is a business that we record and monitor in local currency. It has stable margins in local currency in general.
The EBITDA is CLP 205 billion, which compares unfavorably with the very interesting levels that we are still recording in 2022, CLP 238 billion. However, once again, it represents a rebound with respect to the figure recorded last quarter. Those trends are explained basically by, in comparison with the third quarter of 2022, we see a drop in volumes in general, related to some specific factors and some specific segments that are dropping both in Chile and in Colombia. Some increase in costs, administration, and distribution in general. A very unfavorable inventory valuation in Chile, partly offset by a favorable one at Terpel. A lower industrial margin in Chile, that was exceptionally high because of very high volumes from industrial sector in Chile last year. That is not happening anymore.
We have gradually gone down to more stable levels in terms of industrial customers. A good behavior of the lubricants segment in terms of margins, some decreased volumes, but very good margins because of the drop of the main raw materials for lubricants. In non-operating income, once again, we see the effect of increasing rates in our financial expenses and also of inflation in those debts that are linked to Chile's or Colombia's CPI. Operational factors or operational drivers in the fuels segment, we continue to see stability in general in market share, so 58.3 accumulated as December 2023. That is very much in line with our historical market share.
Volumes, as I said, have dropped somewhat, and that has to do essentially with the industrial channel, where volumes have dropped 8.5% year-on-year and 3.1% Q-on-Q, and that has to do a bit with some segments that tend to be more volatile, such as power generation. Gas stations have decreased also somewhat 1.7% year-on-year and 0.3% Q-on-Q, and that has to do with decreased activity in general in the local economy in Chile. Going forward, in general, we see margin stability in terms of commercial margins, but of course, they are usually affected by factors that give some volatility to these margins, which are mainly inventory relations and industrial margins.
We see a robust position in terms of competitive positioning, a good network efficiency, a good brand performance and brand positioning. Volumes, of course, are very much related to the economic activity and could eventually continue to present a decreasing performance or a stable performance, depending on the economic change. Terpel had a good quarter, COP 513 billion , which is up with respect to both the third quarter 2022 and the previous quarter 2023. And that has to do essentially with a favorable inventory revaluation in most of the countries in which it operates. Volumes went down in comparison with the second quarter 2022, but that is explained essentially with the aviation segment.
The aviation segment had some airlines leaving the market, and therefore we, momentarily at least, decreased our market share there, and that cost a fall in volumes. Some increase in distribution costs, and some increased financial costs because of increasing rates and inflation. It's good to highlight once, once again, the lubricant segment that has behaved very well in terms of margins, because of the decrease in the base costs, and so margins have gradually trended towards more historical levels. The LPG, the liquid gas market, is showing an interesting performance. We've recorded an EBITDA of CLP 48 billion. Once again, this is, this is another segment that we monitor in Chilean pesos, and that compares well with 44 recorded in the third quarter, 2022, and also compares well with the previous quarter.
So we are seeing better conditions in general, in terms of margins, across the board in all countries, and that has to do with the fall in propane prices that has allowed, in general, the liquid gas companies to gradually move margins back to historical levels from the very decreased levels that they were showing last year. At that point in time, we were hit by very high propane prices. Volumes are doing well in general, with the exception of Chile, where we recorded a drop in Chile, but in all other countries we saw an increase in volumes. Some other non-operational and tax effects, those tax effects are related basically to exchange rate movements.
In terms of operational drivers, we have seen in general, in Chile, the bottle segment decreasing, and also a lower economic activity in the bulk segment, that has caused also volumes to decrease a bit from also very high levels that we had recorded last year. In Colombia, we have seen a good behavior of the bulk segment, essentially because of increasing the client base. Client base has increased, particularly on the basis of a very successful commercial strategy. Bottle segment contracted a bit. However, all in all, we increased market share in Colombia. In Peru, this is a company that has had a very interesting behavior this year, and also last year, and in particular with the performances that we had recorded during several years, where we had some difficulty generating EBITDA.
The scenario for our division at Peru has changed quite a bit, and we are seeing much better numbers in Peru, which comes from a successful commercial strategy and also a very good supply positioning. So Peru is doing well in general. In Ecuador, we see quite a lot of stability, as usual. Some couple of things to highlight from our other investments. Mina Justa has once again recorded a very interesting quarter, $166 million, the EBITDA for the company as a whole. Remember that we have 40% of this company, so we do not consolidate it. We rather record it as income coming from related companies, equity investments. So $166 million for the company as whole, and $69 million for the net income of the company.
That compares very well with the $137 million and $53 million, respectively, that we recorded one year ago, so the third quarter, 2022. This comes from increased volumes of sale. Total physical sales increased by 12%, approximately, and cash costs decreased from a figure that we recorded last year of $1.6, which was basically stemming from some non-recurring operational factors that took place at that point to the more stable, more stable levels of $1.4 that we have seen over the last few quarters, so lower cash cost. Among the other related companies, I would just like to highlight Igemar, our fishing division, where we had in the third quarter, 2022, we had a non-recurring net income coming from the sale of a related company in Brazil.
So as a result of that income that is not there anymore, we are recording a decrease in net income this year. And also, Metrogas, where last year we had a provision stemming from some judicial processes that we are facing in Argentina, and that forced a provision, quite important provision, $250 million at the company level. Once again, we have 40% of that. But in terms of net income from Metrogas, we had that provision last year, and we don't have that provision anymore. So that is the explanation for the increase in net income coming from Metrogas this year. Moving on to the highlights of the quarter, let us begin by commenting once again, the improvement in production at MAPA. MAPA is doing well in its ramp-up process.
We have seen a growth in volumes over the last few months, with production increasing as expected and already reaching more than 500,000 tons. As we saw previously, the increase from third quarter to the previous quarter was approximately 50%, and we have already reached 500,000 tons. And we continue to make progress towards a full capacity performance that should come over the coming months. This is an interesting announcement that we made, still very preliminarily. This is an expansion, an underground expansion that we have preliminarily announced in Mina Justa. Still waiting for some feasibility studies, still waiting for the permits to be in place. But preliminarily, we can say that this should be a project that should entail a CapEx of around $400 million.
Since this is very preliminary, and we have to look at the details of the project in order to come up with more definitive figures. But roughly, we should go ahead with the $400 million CapEx, and this should allow us to increase reserves by 30%, and that should mean also increasing total production of the mine by 500,000 tons. That would imply increasing the lifespan of the year by five years. So an interesting project, once again, the Mina Justa underground project, and we will be issuing more details as we move forward in the process of studying and receiving the permits for this project. So a very interesting development.
We have commented this before, to an essential fact, actually, where we, and Arauco in particular, highlighted the fact that it was suspending operations, indefinitely at the Licancel mill. This is a mill that is located, near a river that caused the flooding of the mill two times this year. So, as a result of that and some other conditions, the economic feasibility of reopening the plant for the time being are not there, and that forced Arauco to, announce the indefinite suspension of operations there. This is a mill, this, this is, of course, a very, hard decision to make. But, Arauco is going through a period of controlling costs in order to be competitive in these markets that have changed quite a bit from the scenario that we had seen last year.
This is a mill that represents around 3% of Arauco's total capacity and 1.7% of Arauco's total revenue. So for the time being, the mill is going to remain closed, and this has implied a non-operational effect of $75 million before taxes in the net income for this quarter. We completed the sale of Mapco. We had commented this before. We had, I would say, a good performance at Mapco during the years that we operated the company. The reasons for going there were, first of all, in 2016, when we decided to go ahead with this acquisition, we saw that the company was performing well below the company and the industry average in terms of its most important metrics. We saw a space there for operational improvement.
And as a matter of fact, we were able to increase performance and increase in EBITDA for approximately $40 million or $45 million that we saw when we acquired the company, to more than $80 million that we recorded by the end of our period. So the operational driver was accomplished. We were able to accomplish a very good performance there. And the next step to make in this very competitive market was essentially increasing scale. These are companies that are facing a scenario of increasing costs and also energy transition, and in order to face both drivers there, it was very important to be large scale. So our alternatives—one of our alternatives was to sell the company to a larger player, and that's effectively what happened.
One of the acquirers here was the largest player in the U.S. market, which is 20 times larger than Mapco. So it made sense in terms of economies of scale for them to acquire the company and for us to sell the company. This is a company that is worth more in the hands of third parties, and we have acknowledged that fact and proceeding with the sale of the company. Final enterprise value, after adjustments and after dividends received, was $775 million. The net income that will be recorded in the fourth quarter, coming from Copec Inc, which is the parent company of Mapco, is going to be approximately $128 million before taxes. So Mapco, we have completed the sale of Mapco.
Moving forward to ESG, as we always do, we like to highlight our developments in ESG. ESG is essential to our business. ESG, our business is strictly and very closely linked to ESG objectives. As a matter of fact, we absorb carbon, we absorb CO2 in our forestry segment. We replace some, we substitute some products that are less environmentally friendly. We drive the energy transition in the countries in which we take part. Therefore, ESG is essential to our business, and we like to highlight the progress that we make in this, in this matter. Arauco has announced that it will be allocated one third of its land in South America to native forest protection. This means almost 500,000 hectares that will be allocated for care and conservation of native forests.
This is totally aligned with the Global Biodiversity Framework, which aims to protect 30% of the planet's land and marine areas by 2030, ensuring an adequate biodiversity management. Our initiative is totally in line with those global goals, and this is also in line, and in addition to some other initiatives that Arauco has announced, such as restoration of 25,000 hectares of native forests, and also preservation of 148 endangered species in the areas where we have operations. So once again, ESG totally linked to our business operations. Also, in line with that, we have gradually been replacing our energy sources so as to make them carbon neutral in the different countries in which we operate.
In particular, during this quarter, we have a highlight and we have a milestone in Brazil, where the plant located at Jaguariaíva has implemented or is beginning to implement a project of panel generation, which will mean that its sourcing will be progressively carbon neutral. And as a matter of fact, Arauco Brazil is already getting its supply of energy, two-thirds from its own biomass and almost one-third from energy from renewable energy sources. So very good progress there in terms of becoming carbon neutral in Brazil. And Copec continues to drive its transition towards other fuels, towards other sources of energy and other business models. The milestone that we have for this quarter is the fact that we have installed the first hydrogen filling station for buses in Chile.
Hydrogen, of course, is one of the fuels that may have a very, interesting future, not only in Chile, but also in the world. The estimates that we have looked at say that, as of 2050, hydrogen could cover up to 24% of Chile's energy demand, and therefore it will show a progressive improvement and a progressive growth. We want to be there. We want to have a solid positioning in the different fuels and energy sources that will be driving the energy transition in Chile and in the countries in which we have operations. That is essentially what we have prepared for you. Therefore, let me open it up for the Q&A section, where Cristián Palacios will be taking the questions which are going to come in written form from the audience.
Myself and Gianfranco will manage to answer those questions. Cristián, please go ahead.
Thank you. We'll now start the Q&A. If you have a question, please write it down in the Q&A section. Please remember that your company's name should be visible for a question to be taken. Wait while we pull for questions. Okay, thank you, Rodrigo, and welcome everyone to this earnings call. I'm gonna start the Q&A. We have a first question coming from Leonardo Neratika at Bank of America. This is in pulp. So he's asking about the price negotiations for December going so far. Trade media report is from attempts to raise prices by $20 per ton. Do you believe the market could absorb it?
Yeah, sorry, I don't know if you guys can see me because I've seen some problems with my video, but I hope you can hear me. Well, we haven't started the negotiation for December. I think we are a little optimistic because what happened in November, I think the market situation is good, but we haven't started that, and we haven't closed any negotiations yet. So I cannot tell you if we're obtaining price increases or not. I hope, but it's gonna depend on what volume that we can get and that sort of things. So I think the next couple of weeks, that will be decided, and hopefully we can increase a little bit the prices. But the situation is ongoing.
Okay, and, I have another question in forestry. Omar Avellaneda at Prima AFP. In MAPA, when do you expect to have the ramp up complete?
Well, the normal schedule is that we will have a capacity production in the first quarter. So I think that we can say that the ramp up is complete the first two months of next year. I mean, the thing is going according to schedule. I mean, we have had the normal progress that you get during a ramp up. Nothing serious up to this point, but I think that probably the first two months or you know of 2024.
Thank you, Gianfranco. Next one, also from Leonardo Neratika, about Mina Justa. What can we expect in terms of annual production and cash costs for this life, lifespan, expansion? And when should Alxar start to deploy CapEx for this expansion?
Yes. Thank you, Cristián. Well, as I said before, this is all still very preliminary. Very preliminary. We're expecting a total CapEx of around $400 million for the expansion. The good thing about the expansion is precisely that we will be able to maintain production at a stable level during more years. So rather than showing a decrease in production, which is what we had initially expected for the initial design of Mina Justa, we should see production stable for many years at a rate which is going to be close to 150,000 tons, which is the max that we're producing in its original design. So that production is gonna be stable for more years, and the decline is going to happen afterwards with respect to the original design.
That will also cause the total lifespan of the mine to increase. So as we said before, we should increase the total lifespan by five more years, and increase the total production over that lifespan by approximately 500,000 tons. So it's a very interesting project. We still have to look at the details of it. We have to look at the permits, we have to obtain the permits, and go into further studies. We're still at pre-feasibility, but initially it looks very attractive, and we should be able to go ahead with it. Initially, doing the bulk of the CapEx in years 2025 and 2026. That's the initial design, but as I said, still very preliminary.
Okay, and then following on Mina Justa, if you can comment on the dividends received by Empresas Copec during the year, and what you expect to receive in 4Q?
Yes. So Mina Justa has been giving out dividends at a very stable rate. Basically, paying out almost its full net income to its shareholder, to its shareholders. So, during 2022, we received approximately $130 million in dividends coming from Mina Justa, and during 2023, we expect a very similar amount to come from Mina Justa. And of those, we should be receiving between around $50 million more during 4Q. But all in all, we will be getting to the same $130 million, approximately, that we received last year.
Okay, one. Okay, the next one comes from Rosario Achondo at Compass. If you can comment, Rodrigo, on the expected maintenance CapEx for 2024.
Yes, we have given out those figures before. We should expect the total maintenance CapEx of around $900 million-$1 billion for our consolidated figure. That's the initial figure that we had given out. We are still looking at some potential reframings of Arauco, essentially, and maybe Gianfranco would like to comment on that. But some operations have been internalized into Arauco, which could entail some more investments around in Arauco. Of course, obtaining some interesting cost savings for the future. But overall, we're still holding to our initial and previously estimated figures of $900 million-$1 billion. We will be giving out more detail as we look at the figures further on.
The next one, Jens Spiess at Morgan Stanley. Gianfranco, you mentioned that you produced 477,000 tons from MAPA in 3Q. How much shipments did you have from MAPA that quarter?
Yeah, I'm not completely sure that that was set total for Q3. We announced that as of September, we have produced 504,000, I think, tons accumulated. Of course, mostly concentrated in 2Q and 3 Q, because the first quarter was very low production. So, but we were expecting about 800,000 tons for production for the whole year. And in terms of sales, about-
... 700,000, because there's a build-up of inventory and things like that. So that's more or less the figures that we're still thinking of for the total year 2023. Sorry, yes, 700,000 of sales, 800,000 of production, more or less, for the whole year for MAPA.
Thank you, Gianfranco. I have another question here about CapEx. It was already answered. Keeping on pulp, regarding the oversupply of pulp expected for next year with the entry of Cerrado and UPM, and with China showing no signs of recovery, seeing that prices have already recovered significantly, what price levels do you expect for the next quarter, and for the next year? If you can give your thoughts about that.
Yeah. It's always very difficult to predict pulp prices. We all know that. And of course, there's a new capacity coming, but the... In the case of Cerrado, which is the most important one in terms of the capacity, the mill is supposed to be starting at the middle of 2024. So they will have also a ramp-up process, and they have to accumulate inventory before reaching the market. So I think that probably that volume will reach the market in the last quarter of 2024. The prices have recovered, but still, I mean, they are on the $600 range, let's say, of short fiber. And that could be an average, historically, something like that. So it's not so high.
And even if China doesn't recover, I mean, the growth of the market, the natural growth of the market could be at 2%, something like that. And that is around a million, or more, a little bit more than a million of increased consumption for the whole market. So I think that we're gonna be okay for the first half, at least. The second half will depend on the conditions at that point, and of course, the volume coming from Cerrado. I think that the volumes from MAPA and the volumes from UPM has been absorbed quite well by the market. So I think that we should have a probably a good first semester, and for sure, I think a good first quarter in the next year.
Thank you, Gianfranco. That was a question from Clemente Swett at AFP Cuprum. I'm going with the next one, Edward Palma at Bice Inversiones. If you can comment, Gianfranco, regarding the maintenance CapEx, if you can break down if you have, including in your comment, investments in forests or not, and if you can give some range of that amount.
Yes, of course. I mean, the number I gave in the case of if it's regarding what I told in the Arauco press conference, it's including forestry investment. And in that sense, one part is the plantations of the things that we are harvesting, let's say, and that could be probably $200 million-$220 million, more or less. And the other part of the forestry investments are the planting that we're doing in Brazil, which is—which means the growing of new forests for a potential new project, and that could be, let's say, another $120 million-$150 million a year. And then on top of that, we have the equipment that we are buying for the internalization of labor of harvesting.
That is another probably $100 million. That, of course, that internalization is replacing tariffs that were paying to subcontractors. So that is reducing, let's say, cost at some point. But, that number that I gave of about 850 is including all of that. So if you want to compare with other periods, you have to deduct the Brazilian investment in forestry and the internalization of harvesting to compare with the previous years.
Omar Avellaneda, from Prima AFP, at current pulp prices, do you expect any operations to close temporarily?
No, no. I mean, we were producing all we can, even at the lowest price in May. So our variable cost, our total cost, total cash costs are lower than the price that we saw on the worst part of the cycle. So at this point, it's even more impossible, let's say, to think about a market downtime. I mean, we had problems with operation, but there's nothing regarding the market. So we will continue to produce at capacity.
We have Vicente Navarro from Consorcio. If you can, Gianfranco, give an update on the status of Sucuriú project.
Well, the project is advancing. I mean, it hasn't been approved by the board. We are gonna probably analyze that at the board at the end of next year, 2024. We are advancing on the environmental impact study, on feasibility study, logisticals. We are doing basic engineering. So still some way to go, but we're on a good track. And we will have more news probably at the end of next year, once the board gets all the information to make a decision. And one of the part, most important part, is the CapEx. Until we have a more definite basic engineering, we can start getting quotes of equipment, probably in the last quarter of next year, to have a decision probably at the end of the year.
That's our schedule, and we are working according to that.
Okay, and that is the last question. So, thank you, everyone. I'm gonna turn it over to the operator and Rodrigo for a couple of final words. Thank you.
Thank you. This does conclude the question-and-answer section. At this time, I would like to turn the floor back to Mr. Rodrigo Huidobro for any closing remarks. Please go ahead, sir.
Thank you, Odile, and thank you everyone for attending today. We expect to see you again at the beginning of March next year to take a look at the results for the fourth quarter 2023. Have a great day, and thank you very much.
Thank you. This does conclude today's presentation. You may now disconnect and have a nice day.