Metsä Group s bioproduct mill -The largest bioeconomy investment in Europe

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Simon Hudson
6 years ago
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1 Metsä Group s bioproduct mill -The largest bioeconomy investment in Europe 2017 Bioeconomy Investment Summit Kari Jordan President and CEO, Metsä Group

METSÄ GROUP Sales EUR 5 billion Personnel 9,300

by 104,000 Finnish forest owners METSÄ FOREST METSÄ

and forest services Pulp and sawn timber Wood

EUR 1.5 billion Personnel: 850 Sales: EUR 1.

5 billion Personnel: 1,500 Sales: EUR 1.

2 METSÄ GROUP Sales EUR 5 billion Personnel 9,300 METSÄLIITTO COOPERATIVE Group s parent company Owned by 104,000 Finnish forest owners METSÄ FOREST METSÄ FIBRE METSÄ WOOD METSÄ BOARD METSÄ TISSUE Wood supply and forest services Pulp and sawn timber Wood products Paperboard Tissue and cooking papers Sales: EUR 1.5 billion Personnel: 850 Sales: EUR 1.6 billion Personnel: 1,200 Sales: EUR 0.5 billion Personnel: 1,500 Sales: EUR 1.7 billion Personnel: 2,500 Sales: EUR 1.0 billion Personnel: 2, /12/2017 Kari Jordan/ Metsä Group

Metsä Group has been successfully restructured during the past decade and is now on growth track Exit from printing and writing papers Closures or divestments of other non-core businesses Investments

3 Metsä Group has been successfully restructured during the past decade and is now on growth track Exit from printing and writing papers Closures or divestments of other non-core businesses Investments to expand and further develop core businesses Benefit from good long term growth prospects Increase production capacity Improve efficiency and productivity Further improve environmental performance Main projects: Äänekoski bioproduct mill Increase of paperboard production at Husum mill in Sweden Wood products investment programme 3 18/12/2017 Kari Jordan/ Metsä Group

4 Metsä Group s bioproduct mill in Äänekoski

We are building a completely new mill in order to achieve a clear performance

5 Basic assumptions Based on market studies long fibre pulp demand growth continues steadily, especially in Asia We are not expanding the old mill. We are building a completely new mill in order to achieve a clear performance improvement incl. energy and environmental efficiency Wood availability in Finland is adequate 5 18/12/2017 Kari Jordan/ Metsä Group

the Board of Directors and public announcement in Spring 2014 Environmental permit process

6 A new high tech unit called the bioproduct mill Not a traditional pulp mill. Share of bioenergy and other bioproducts clearly larger than before Preliminary approval from the Board of Directors and public announcement in Spring 2014 Environmental permit process started immediately Final approval in April Immediate start of construction 6 18/12/2017 Kari Jordan/ Metsä Group

The world s first next-generation bioproduct mill Annual pulp production 1.3 million tonnes Use of wood 6.5 million m³ annually The mill will not use fossil fuels 150 employees.

7 The world s first next-generation bioproduct mill Annual pulp production 1.3 million tonnes Use of wood 6.5 million m³ annually The mill will not use fossil fuels 150 employees. 2,500 jobs in the whole value chain in Finland, incl. 1,500 new jobs Main markets for pulp: Europe and Asia Sales will increase especially in China Top-level efficiency and cost competitiveness Constructed in line with original timetables and budgets Started up in August Nominal capacity will be reached by summer /12/2017

Demand outlook for forest industry products is good Demand is growing globally

developed current products the mainstream also in the future New products

8 Demand outlook for forest industry products is good Demand is growing globally Population growth Increasing living standards Sustainability Printing paper demand (digitalization!) is declining, but growth continues in all other main categories Further developed current products the mainstream also in the future New products complement the current offering Bioenergy and biochemicals Wood fibre replacing fossil fuel based materials 8 18/12/2017 Kari Jordan/ Metsä Group

Bioproduct concept: all side streams 100% utilised * Traditional bioproducts Accomplished * * New biofuels from bark, wood dust and energy wood Product gas from bark and sludge for the mill s own use

9 Bioproduct concept: all side streams 100% utilised * Traditional bioproducts Accomplished * * New biofuels from bark, wood dust and energy wood Product gas from bark and sludge for the mill s own use Sulphuric acid from odorous gases for the mill s own use New bioproducts from lignin Biogas from sludge for traffic fuel or the mill s own use Fertiliser and earth work material from dregs and ashes New textile fibres from pulp * Biocomposites from pulp 9 18/12/2017 Kari Jordan/ Metsä Group

10 Bioproduct mill has significant contribution to the Finnish economy Domestic content of the investment over 70 % Increases Finnish annual exports by EUR 0.5 billion Construction phase (nearly 3 years)*: Revenue increase of companies operating in Finland of around EUR 2.4 billion value added increase of nearly EUR 1 billion Annual employment impact man-years Production phase (30 years)* Increases revenue in Finland by over EUR 30 billion and value added by EUR 12 billion Employment impact in total over man-years Diversifies the Finnish forestry sector and broadens the current product portfolio Supports Finland in reaching its goal for renewable energy The mill increases the share of renewable energy in Finland by approx. 2 percentage points 10 18/12/2017 Kari Jordan/ Metsä Group *Source: ETLA, 5/2016

11 Bioproduct mill impacts wood supply in the whole country 5.0 million m 3 fibre wood and wood chips will be transported by trucks from a radius of 150 kilometers 1.5 million m 3 of wood will come through railways Metsä Fibre mills Kemi Äänekoski Rauma Joutseno Kemi Kemi Äänekoski Äänekoski Rauma Joutseno Rauma Joutseno 11 18/12/2017 Kari Jordan/ Metsä Group

Finnish forests are managed sustainably Finnish forests are natural commercial forests that do not compete with agricultural land In most parts of the world forest compete with agricultural land

12 Finnish forests are managed sustainably Finnish forests are natural commercial forests that do not compete with agricultural land In most parts of the world forest compete with agricultural land Finnish forests are managed sustainably and most of them are family owned Origin of Finnish wood can be traced 85% of Finnish forests are certified Globally only about 10% of forests are certified 12 18/12/2017 Kari Jordan/ Metsä Group

13 Good cooperation with key politicians and civil servants First contacts in late 2013 Target to find new ways to implement a major investment as fluently as possible A pilot initiative (prime minister Jyrki Katainen s proposal) was started to show that large projects can be implemented in Finland rapidly and competitively E.g. environmental permit was received in half the usual time Processes to be run in parallel, not only sequentially 13 18/12/2017 Kari Jordan/ Metsä Group

14 Massive logistical operation related to wood and end products Old railways and roads do not enable such a large investment Investment was subject to governmental funding for public logistics network improvement Vuosaari was chosen as the main harbour 14 18/12/2017 Kari Jordan/ Metsä Group

15 Conclusions Forest industry has a bright future Metsä Group a key player We need investments to enhance bioeconomy. Major investment requires: Competitive raw material base Customer demand and financial resources Good payback time Comprehensive planning and stakeholder analysis Open dialogue with numerous members of the society Determination 15 18/12/2017 Kari Jordan/ Metsä Group

The next-generation bioproduct mill in Äänekoski. Matti Toivonen Development Manager of bioproduct mill Metsä Group

The next-generation bioproduct mill in Äänekoski Matti Toivonen Development Manager of bioproduct mill Metsä Group Metsä Group and Metsä Fibre Key figures 2017 METSÄ GROUP Sales EUR 5.0 billion Personnel