Green With Envy.

AntarChile buys out a partner and rakes in cash from Chile's forests.

STANDING ON THE DECK OF A tourist ferry in southern Chile's fjords, it's easy to spot the commercial forests. Instead of wild, liana-strewn jungles, you see perfectly symmetrical rows of Pinus radiata, a fast-growing pine, all the same deep shade of green, all the same height. And all headed for the same destiny: to be ground into chips for newsprint, tissues or paper, or pressed into particle board for construction, kitchen cabinets and cheap office furniture in the United States, Europe and Asia.

You also see what makes AntarChile tick. Sales for the holding company were strong in 2000 as the United States and other world economies boomed. Mostly. however, revenues zoomed upwards on the purchase of 30%--and control--of its main subsidiary, conglomerate Copec, from New Zealand pulp and paper producer Carter Holt Harvey. AntarChile revenues in 2000 hit US$3.61 billion, up from $2.9 million in 1999.

Headed by Chile's third-richest man, 86-year-old Italian immigrant Anacleto Angelini, AntarChile is a typical Latin American industrial portfolio group, a family-owned (and run) grab bag of investments, some of which lose money and some of which can't make it fast enough. Angelini's nephew, Roberto, is second in command, and Angelinis dot the major shareholders list.

Angelini bought into Copec in 1986, building it from a 67-year-old petroleum distributor into a sprawling group. Copec--about 96% of the investment value of AntarChile, by company estimates--is the group's most public face, known for eponymous gas stations that dot Chile's highways. The company also dabbles in natural gas distribution, fishing, retail and even insurance.

AntarChile's golden-egg-laying goose is a subsidiary of Copec, wood pulp producer Celulosa Arauco y Constitucion, now known simply as Arauco. Southern Chile's wet Patagonian forests are treemaking machines: Canadian forests need 150 years to bring a tree to the mill, while Scandinavian producers average 100 years. Chilean trees mature in 26 years, a blip on the biological clock for timber.

Chips will continue to drive profits, especially as new pulp projects come online, says Ricardo Morales, equity research analyst for the Larrain Vial stock brokerage in Santiago. AntarChile already claims to be the No. 1 land-holding paper company in Latin America. Now it's racing to add production capacity that will turn those resources into fast cash.

Prince of pulp. A new plant near Valdivia is expected to up production from the current 1.45 million-ton-per-year capacity to nearly 2 million. Within 10 years, if the Chilean government's environmental board approves a second plant, production could hit close to 2.5 million tons, says Morales.

Particle board is a growth area, too, says Morales, with new investments in Chile and Argentina that will put the company into a better competitive stance with board makers like Chile's Masisa. Once hell-bent on exporting solely raw materials in volume, Chile's family firms seem to have got religion on value-added goods. (AntarChile executives declined interview requests.)

A big part of the reason AntarChile has picked up the pace, of course, is a settlement in early 2000 to dump partner Carter Holt Harvey. Controlled by International Paper. the New Zealand tissue and paper firm fought for years to extend its influence over Copec, often butting heads in court with the Angelinis. Carter Holt Harvey finally sold off its portion of the firm to AntarChile on Jan. 3,2000 for $1.23 billion.

AntarChile says it will use a capital increase and domestic bonds to pay down its debt and stay competitive. And pulp prices, recently depressed by selling by cash-hungry Asian producers, should "correct" by the end of 2002, says Jennifer Corrou, a paper industry analyst with Salomon Smith Barney in New York. She estimates they will hit $720 per ton, up from around $600.

The bottom line for AntarChile: more pulp, more money and, with International Paper in its rearview mirror at last, more freedom to chart its own course. If pulp prices hold up, it's also probably headed to a permanent seat on the Top 100 Companies list.