Jun 10, 2005. /Lesprom Network/. Fitch Ratings has affirmed the 'BBB+' foreign and local currency credit ratings of Celulosa Arauco y Constitucion S.A. (Arauco) and has revised its rating outlook to stable from positive. This rating action is a result of the announcement by the company that it has voluntarily closed its Valdivia pulp mill and that it has accepted the resignation of the CEO of the company. This announcement follows months of disputes between Arauco and some Regional Environmental Commissions within Chile, primarily about the operations of the Valdivia pulp mill and its environmental impact. Fitch's decision to revise the Rating Outlook of Arauco to stable from positive reflects the loss of cash flow that will result from the temporary closure of the Valdivia pulp mill. This mill, which originally was authorized to produce 550,000 tons of market pulp per year, represents about 25% of the company's pulp capacity. Fitch estimates that Valdivia accounts for about 10% to 15% of the company's net income. The lower proportion of profitability reflects Arauco's significant diversification in wood products as well as pulp. The cash flow that was expected to be generated by the Valdivia mill during 2005 was considered by Fitch to be an important part of the funding process for Arauco's Itata pulp mill, which is currently under construction. The revision in the companies' rating outlooks also reflects an increased probability that resolution of the outstanding environmental disputes could be prolonged with Presidential and Congressional elections slated for December of this year; debate over the environmental impact of Arauco's Valdivia pulp mill holds the potential to be highly political in an election year.