The global need for food, fibre and fuel is there enough land to satisfy the demands?

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2 The global need for food, fibre and fuel is there enough land to satisfy the demands? Global demand for wood and fibre in the next 20 years KSLA, Stockholm 27 September 2011

3 Agenda Introduction Industrial wood demand and supply perspectives Conclusions 3

4 Introduction

5 Pöyry Leading consulting and engineering globally Pöyry Group globally operating consulting and engineering company Ca 7000 experts in 50 countries Net sales in 2010 of EUR 682 million Started Listed at NASDAQ OMX Helsinki since 1997 Dedicated to engineering balanced sustainability TM 5

6 Industrial wood demand and supply perspectives

7 Global forest industry demand for wood and fibre is sizeable Global harvest and wood use by end-use category, 2009 NATURAL FOREST, PLANTATIONS, PARKS TOTAL ROUNDWOOD HARVEST million m 3 SAWLOGS/ PLYLOGS 775 million m 3 PULPWOOD OTH IND WOOD FUELWOOD 496 million m 3 FOREST CHIPS 143 million m million m 3 OTHER ENERGY WOOD PROCESSING SAWNWOOD WOOD PANELS WOOD PULP 364 million m million m million t Other products million m 3 43% of total harvest PLANING PAPER & PAPERBOARD PROCESSING SOLID WOOD RESIDUES 111 million m 3 BLACK LIQUOR PELLETS, BRIQUETTES 12 million t BIODIESEL / ETHANOL RECOVERED WOOD RECOVERED PAPER 199 million t Source: FAO HEAT AND POWER TRANSPORT Energy Forest industry 7

8 Continued growth in sawnwood demand, mainly softwood Softwood sawnwood demand by region, and scenario 2030 million m 3 million m 3 Hardwood sawnwood demand by region, and scenario 2030 CAGR 1,0 % CAGR 1,0 % Source: FAO, various industry sources and Pöyry, scenario by Pöyry 8

9 Rapid growth in wood-based panels demand SW substitute million m 3 Wood-based panels demand by region, , scenario 2030 CAGR 2,5 % CAGR 3,4 % Source: FAO, various industry sources and Pöyry, scenario by Pöyry 9

10 Continued consumption growth in paper and paperboard Global demand for paper and paperboard , outlook to Million tons 387 million. ton 1.7%/a 540 million ton million ton Other Latin America Rest of Asia China Emerging markets CAGR 3.2%/a Source: Pöyry Eastern Europe Japan Western Europe North America Mature markets CAGR -0.6%/a 10

11 Future fibre supply mainly from urban forests Global demand for pulp and recovered fibre by type, Million tons - World Pulp Demand Recovered paper Non-wood Sulphite Unbleached kraft 100 Bleached hardwood kraft Bleached softwood kraft Mechanical & semi-chemical Note: Including integrated and market wood pulps. Source: Pöyry 11

12 China a strong driver and force for future use and trade in wood Import of wood and wood products to China e, RWE Million m 3 in RWE Recovered paper Pulp Wood products Roundwood Future 2030: 2% CAGR = 253 million m 3 5% CAGR = 466 million m 3 7% CAGR = 692 million m million m 3 RWE between 2000 and E2010 Source: Comtrade 12

13 Industrial wood demand increase to 2030 is sizeable Product Area Pulp & Paper B Sawnwood C Wood-based panels TOTAL (gross) TOTAL (net) D RWE Increase A 150 million m 3 sub 250 million m 3 sub 400 million m 3 sub 800 million m 3 sub 700 million m 3 sub A) Increase according to Pöyry scenario in KSLA presentation B) Virgin pulp based demand increase C) Softwood & hardwood sawnwood including demand recovery 2020 D) Including utilization of sawnwood residues in pulp and panels 13

14 Industrial wood mainly from natural forests and plantations Divison of world forests by region and forest type Nordic countries Western Europe Eastern Europe Russia USA Canada Latin America Japan China Rest of Asia Oceania Africa Primary forest Modified natural forest Seminatural forest Productive plantation Protective plantation Source: FAO Million ha 14

15 Can fuelwood be put to better use and industrialised? Global roundwood production by region 2009 (million m 3 ) Russian Federation 43 North America Europe excl. Russia China Rest of Asia 23 Industrial wood Fuelwood India 72 South America Africa Oceania Source: FAO 15

16 Growing challenges to future wood supply As global demand for wood-based products increases, pressure on natural forest resources is growing and industrial plantations are becoming ever more important for securing future wood supplies in a sustainable and ethical manner. Mountain pine beetle Harvesting restrictions Softwood plantations established, competition for land Fast-growing plantations established but increasing competition for land 16 Softwood plantations established, limited growth Significant potential Some potential Minor potential Restricted potential Large forest resource but practical supply restrictions Good biological and land potential, increasing commercial interest Largest deficit areas and high competition for land Fast-growing plantations established, further growth Fast-growing plantations established, restricted expansion

17 Fast growing plantations hold great production potential Current area of industrial fast growing plantations*, Some 30 million ha Productive forest land in Sweden, 22, 5 million ha Buenos Aires Montevideo Area of industrial fast growing plantations required to meet current global consumption of industrial roundwood, some 68 million ha (=3* Sweden PFL) Growth assumptions, MAI: - Softwood 20 m 3 /ha/a - Hardwood 30 m 3 /ha/a In Sweden (avg) < 5 m 3 /ha/a Source: Pöyry 17 * Plantations cover more than 156 million hectares. Some 120 million hectares are classified as productive plantations, while the balance consists of protective plantations (protection of soil, water). Industrial fast-growing plantations have been separated from other productive plantations based on the following criteria: Established totally or partly for production of wood for industry mainly as sawlogs, veneer logs or pulpwood Mean annual increment (MAI) exceeding 12 m 3 /ha/a

18 Significant improvements in plantation production and yield 70 s 80 s 90 s 00 s Yield unit m 3 (wood)/ha/a m 3 (wood)/ton(pulp) ton(pulp)/ha/a Illustrative development of Brazilian forest plantations Pulpwood 7 years rotation 14 ton(pulp)/ha/a Short-rotation energy wood 2 years rotation 75 MWh/ha/a 70 s 80 s 90 s 00 s Source: Pöyry 18

19 Conclusion

20 Forest products demand growth impacts future land use Positive long term outlook for global forest products demand and continued growth in demand for roundwood /wood fibre. Growth in wood products demand mainly from Asia (China!) and developing world where land is or is becoming a scarce resource increasing pressure. Industrial fast growing plantations hold significant and growing supply potential strong development. Combined land utilization (e.g. agro-forestry) increasingly valuable to meet different and growing demands for land and (fuel) wood use. Forest products part of providing sustainable solutions for a complex world.

21 Thank you for your attention! Pöyry Sweden AB Jan Wintzell Banérgatan Stockholm Sweden Tel: Mobil: