Contents 1.3. million tonnes. million tonnes

Transcription

1 Metsä fibre Annual review 2014

2 1.3 million tonnes Metsä Fibre is planning to build a bioproduct mill in Äänekoski, Finland. Its annual pulp production capacity would be 1.3 million tonnes. 2 million tonnes The world consumption of softwood pulp is growing steadily by 2 million tonnes by Growth is fastest in Asia. Contents 2 Key figures 4 CEO s review 6 Strategy in brief 10 Bioproduct mill 12 Botnia products and services 14 Sustainability 16 Materiality analysis 18 Management of environmental impacts 20 Environmental balance 21 Environmental performance of northern pulp mills PUBLISHER Metsä Fibre Oy Communications feedback.metsafibre@metsagroup.com The annual review is published in English, Finnish and Chinese. It is available in PDF format at The pattern on the cover follows the structure of lignin, an integral part of the wood cell walls. The use of lignin to produce new bioproducts is currently being examined. Metsä Group Annual Review 2014 Sustainability Report 2014

3 Metsä Fibre is a world-leading producer of softwood pulp and its main brand is Botnia. Our products sustainably and cost-efficiently produced softwood and birch pulp are developed for the production of high-quality tissue and printing papers, specialty products and board. Our sales in 2014 amounted to approximately EUR 1.3 billion, and we employ a total of about 850 people. Metsä Fibre is part of Metsä Group. It is owned by Metsäliitto Cooperative (50.2%), Metsä Board (24.9%) and Itochu Corporation (24.9%). 1

4 key figures Metsä Fibre is a pulp industry company operating in the international market. Our four production units in Finland are at the top of the industry, and their efficiency and environmental performance are continuously being developed. Europe and Asia are our main markets. Sales by market area % Pulp end use % Finland 53 Rest of Europe 21 asia 24 Rest of World 2 Board 32 Printing papers 32 Tissue papers 21 Specialty products 15 PRODUCTION Capacity ISO 9001 ISO ISO OHSAS ISO PEFC COC FSC COC/CW Pulp mills, 1,000 tonnes Joutseno x x x x x x x Kemi x x x x x x x Rauma x x x x x x x Äänekoski x x x x x x x Total 2,257 2,297 2,237 2,205 2,173 2,460 Capacity utilisation, % Metsä Svir Sawn goods, 1,000 m x x 1) x x x 1) Metsä Svir ISO certificate includes the Energy Efficiency system (EES). KEY FIGURES Sales, EUR million 1,296 1,314 1,274 1,301 1,365 Operating result, EUR million Operating result, excl. non-recurring items, EUR million Return on capital employed, % Equity ratio, % Net gearing ratio, % Investments, EUR million Personnel, 31 December Wood consumption, million m Share of certified wood, % Electricity self-sufficiency rate, % Lost-time accident frequency, per million worked hours, incl. all accidents at work leading to absenteeism KEY FIGURES

5 Personnel 850 production 2.3 million tonnes Approx. 25% of our pulp is sold to Asia Production Sales Sales 3.1million tonnes incl. our principals pulp Main markets Metsä Group sales 5.0 eur billion PERSONNEL 10,500 Metsäliitto COOPERATIVE GROUP S PARENT COMPANY OWNED BY 122,000 FINNISH FOREST OWNERS Metsä Tissue Metsä Board Metsä Fibre Metsä Wood metsä forest TISSUE AND COOKING PAPERS PAPERBOARD PULP WOOD PRODUCTS WOOD SUPPLY AND FOREST SERVICES SALES EUR 1.0 BILLION SALES EUR 2.0 BILLION SALES EUR 1.3 BILLION SALES EUR 0.9 BILLION SALES EUR 1.6 BILLION PERSONNEL 2,800 PERSONNEL 3,100 PERSONNEL 850 PERSONNEL 2,300 PERSONNEL 900 OWNERSHIP OF METSÄLIITTO COOPERATIVE 91% OWNERSHIP OF METSÄLIITTO COOPERATIVE 42.53% (HOLDING OF VOTES 62.15%) OWNERSHIP OF METSÄLIITTO COOPERATIVE 50.2%, Metsä Board 24.9%, Itochu Corporation 24.9% OWNERSHIP OF METSÄLIITTO COOPERATIVE 100% OWNERSHIP OF METSÄLIITTO COOPERATIVE 100% KEY FIGURES 3

6 PREFERRED SUPPLIER FOR HIGH-QUALITY BIOPRODUCTS AND SERVICES The pulp market experienced steady growth in Despite the weak economic development in Europe and the slowdown in economic growth in China, global demand for pulp continued to grow as predicted. Considerable volumes of new eucalyptus pulp capacity entered the market, which addressed the demand for short-fibre pulp, in particular. As no new capacity entered the market of Metsä Fibre s main product, northern softwood pulp, the balance between demand and supply remained tight. Ilkka Hämälä CEO, Metsä Fibre Oy 4 CEO s review

7 The difference in the prices of softwood and hardwood pulp reached a record level in 2014; at best, it was more than USD 200 in the European market in the autumn. Towards the end of the year, the price of short-fibre pulp increased, resulting in a slightly smaller difference, although it still remained at nearly USD 200. In the second half of the year, the euro weakened by more than 10 per cent against the U.S. dollar. This contributed to improved price competitiveness and the profitability of pulp producers operating in the euro area. The price development of softwood pulp in Europe and the favourable development of exchange rates contributed to Metsä Fibre s reasonably good development in Efficient and customer-oriented Metsä Fibre s vision is to be the most efficient and the preferred supplier for high-quality bioproducts and services creating added value to its cus tomers businesses. A key factor in efficiency is the continuous improvement of our mills performance in terms of production volumes and quality as well as environment and energy. In 2014, the focus of our development investments was on the Joutseno mill. The renewal of recovery boiler constructions improved the energy efficiency and reduced combustion gas emissions of the mill. We also modernised the chip silo of the digester and its odorous gas treatment system. The investment improved the product quality and runnability of the mill, and also considerably reduced the odorous gas emissions of the mill. We continuously develop our services and customer knowledge. In 2014, we improved the efficiency of our logistics chain through RFID when developed sustainably, Finnish forest industry has the prerequisites to remain competitive in our main markets. technology as well as the innovation and development work with our customers. We also opened a new online pulp sales service. The next-generation bioproduct mill In April 2014, we announced our plan to build a new bioproduct mill in Äänekoski. The planned next-generation mill will be in a class of its own in terms of energy-efficiency and environmental performance. A unique network of companies producing different bioproducts would gradually be built around pulp production. The project supports Metsä Fibre s objectives to be a leading company in the softwood pulp market and to provide the raw material needed by our customers on a long-term basis. Once completed, the mill would be unique among mills producing market softwood pulp in terms of efficiency. The upgrading level of the mill s side streams would also increase, which would support the competitiveness of the entire operation and increase supply in the growing market for wood-based bioproducts. If the prerequisites for the investment are met, the decision regarding the construction of the bioproduct mill will be made in spring competitive forest industry The development of Metsä Fibre s business is based on the global increase in the demand for sustainably produced pulp fibre as well as other wood-based bioproducts and bioenergy. We have reason to believe that Finnish forest industry, when developed sustainably, has the prerequisites to remain competitive in our main markets. Finnish family-owned forestry is the strong foundation of our operations. It applies the principles of sustainable development to produce wood raw material to be upgraded into high-quality products for our customers, today and in the future. CEO s review 5

8 Megatrends: technology globalisation population growth and consumption environment and climate Focus areas of the strategic targets: owner customer internal efficiency and competence strategy Our vision is to be our customers preferred supplier for highquality bioproducts and services that create added value to their business. Our operations are guided by strong values reliability, cooperation, renewal and responsible profitability. metsä fibre Values: reliability Renewal Cooperation responsible profitability customer Vision: Our customers value metsä fibre as their preferred supplier for high-quality bioproducts and services that create added value to their business Mission: to be the most professional and efficient company in the pulp industry Promise to our customers: fibres of success 6 Strategy

9 the elements of strategy Recent measures Upcoming measures OWNER We create added value to our owners We announced our plan to build a bioproduct mill in Äänekoski. We released working capital by means of financing arrangements of sales receivables and accounts payable. We increased synergies within Metsä Group by improving our shared operations. If the prerequisites for the investment are met, the investment decision regarding the bio product mill will be made in spring We will improve our mills environmental performance and cost-effectiveness through investments. CUSTOMER We are the most reliable partner We strengthened our position as a leading supplier of market softwood pulp in the world. Tall oil and turpentine were added to the Botnia product family. We stand out from our competitors with our diverse technical services. Our newest service, the Botnia Startup Kit, provides support for the commissioning of board and paper machines. Our delivery volumes of pulp will increase in Europe as well as in China where demand for softwood pulp is growing steadily. We will improve our customers profitability by introducing new services, such as Innovation Days and Botnia IdeaBooster. Our pulp grades and mills will be developed in accordance with the needs of our customer segments. INTERNAL EFFICIENCY We make profit responsibly also in the future The cost-efficiency and environmental performance of our mills improved. Our accident frequency was the lowest in our history: 4.9 per million worked hours. We will implement the innovative Waste water FOX application, which provides realtime information on waste water load. In 2015, our goal is to increase the pulp production volume by 100,000 tonnes. Our goal is zero accidents. COMPETENCE We continuously challenge ourselves Personnel competence was developed by means of specialist and supervisor coaching in We utilised our long-term research on new bioproducts in the preparation of the bioproduct mill. The innovation process became our established operating model. In the Mills of the Future project, we will create a completely new management model for production, which will support the self-directedness and customer-oriented approach of teams. We will ensure sufficient resources for the planning and construction of the bioproduct mill. We will recruit new production professionals through apprenticeship schemes. Strategy 7

10 Sales EUR million 1,296 Operating result excl. non-recurring items EUR million 208 Personnel Sales by market area % -1.4% 2013: 1, % 2013: % 2013: 884 Finland 53 Rest of Europe 21 asia 24 Rest of World 2 Bioproducts for growing markets Metsä Fibre is a world-leading producer of softwood pulp. The demand for our highquality Botnia pulps is growing as a result of urbanisation and improving living standards. In the future, we will produce increasingly more bioproducts and bioenergy from renewable wood raw material. EVERYONE IS INNOVATING at Metsä Fibre 13,700 ideas are created every year = 20 ideas/person IN BRIEF

11 Events in 2014 Metsä Fibre announced the plans to build a bioproduct mill in Äänekoski. The investments in the recovery boiler and wood chip silo at the Joutseno mill considerably reduced emissions to the air and odorous gases. Metsä Fibre developed a system for real-time monitoring of the waste water load from the process at the Rauma mill. Thanks to the system, the load on watercourses can be reduced more effectively. Demand for pulp grew steadily in Metsä Fibre s reasonably good financial performance resulted from the favourable development of exchange rates and the price of softwood pulp. Metsä Fibre s sales totalled EUR 1,296 million, and the operating result excluding non-recurring items was EUR 208 million. Demand for pulp is expected to remain stable as no signs of rapid changes in the market are in sight. Strong Botnia Our excellent Botnia products and services make us a leading supplier of softwood pulp in the world. Product development projects with our customers, technical applications and our fibre expertise improve our customers products, production, and ultimately their competitiveness. Metsä Fibre is renewing its Botnia product range with both pulp developed for customer needs and new bioproducts. We are developing Joutseno mill s Botnia Nordic+ polysulphide pulps for tissue paper manufacturers needs, while the Rauma mill is focusing on the production of Botnia Nordic Strong, suitable for printing paper. In 2014, we complemented the Botnia product range with biochemicals. We thereby support the business of our tall oil and turpentine customers, with the aim of growing with them. better all the time Not only is our efficiency world-class, our Botnia products enable our customers to reduce the environmental footprint of their own products. Our mills are in excellent condition due to timely investments and continuous improvement of operations. For example, the amount of waste water from our mills has decreased by approximately 30 per cent in a decade, and carbon dioxide emissions from pulp production have decreased by over 20 per cent in the last five years. Our most significant investment in 2014, the replacement of the wood chip silo and recovery boiler at the Joutseno mill, reduced emissions into the air and odorous gases considerably. Future investments will focus on improving the environmental performance of our mills and on the Äänekoski bioproduct mill. Once realised, the world s most modern bioproduct mill would produce 1.3 million tonnes of pulp per year. 13,700 ideas Metsä Fibre s growth is based on intensive collaboration supported by the innovation process and tools. In 2014, we recorded 13,700 ideas and improvement suggestions. We develop products and production processes that support our existing business operations or that can be applied to current production to improve the production process, resource efficiency or our customers profitability. Years of determined research work has also laid a solid foundation for the Äänekoski bioproduct mill. The mill has good prerequisites to develop the industrial ecosystem around it, which in turn would further increase resource efficiency. Metsä Fibre s Supervisor of the Year selected for the first time Skilled personnel are the prerequisite for our competitiveness. Therefore, we encourage everyone to develop their competence and working environment. Effective management ensures that everyone understands their objectives and receives feedback on their work. High-quality supervisory work is promoted by means of supervisor and specialist coaching. In order to highlight the importance of good supervisory work, we introduced the Metsä Fibre Supervisor of the Year award in The first employee to receive the title is Teemu Leppänen, Operation Manager at the Rauma mill. The Supervisor of the Year will be selected annually from now on. The cornerstones of Metsä Fibre s success are high personnel competence and high-quality supervisory work. As we want to develop these strenghts further, competence has been chosen the 2015 theme at Metsä Fibre, says Ilkka Hämälä, CEO IN BRIEF 9

12 bioproduct mill A major investment in the forest industry Metsä Fibre is preparing to build a bioproduct mill in the existing mill area in Äänekoski, Finland. Should it materialise, the mill would be the largest investment ever made in the forest industry in Finland. Read more Metsä Fibre s development paths The new mill is called a bioproduct mill since it will increase the product portfolio with new bioproducts, generate excess bioenergy, and will not use any fossil-based fuels. Metsä Fibre is currently researching new bioproducts and processes as presented in the figure below. Producer gas from bark and sludge for the mill s own use Bark* Wood dust* Turpentine* and tall oil* New biofuels from bark, wood dust and energy wood odorous gases Sulphuric acid and methanol from odorous gases for the mill s own use Lignin New bioproducts from lignin pulpwood Sludge Biogas from sludge for traffic fuel or the mill s own use Pulp* Clean water Dregs and ashes Fertiliser and earth work material from dregs and ashes *Current bioproducts Pulp upgrading glauber salt Bioenergy* Power Prosess steam District heat New textile fibres from pulp Biocomposites from pulp May October January 2014 Pre-planning of the mill, the Environmental Impact Assessment (EIA) and environmental permit processes start Demolition of Letter of Intent to the old mill starts develop Vuosaari as the export harbour ELY Centre issues its statement on the EIA report EIA process end 2015 Pre-planning of the mill and the environmental permit process end 10 Bioproduct mill

13 Investment: Pulp production: EUR 1.1 billion 1.3 million tonnes of softwood and hardwood pulp per year Wood consumption: 6.5 million m 3 per year Employment impact: Impact on the economy: more than 2,500 jobs throughout the value chain an annual impact of more than EUR 0.5 billion on the Finnish economy Should it materialise, the bioproduct mill in Äänekoski with an annual pulp production capacity of 1.3 million tonnes would be the largest ever investment in the forest industry in Finland. It would replace the current Äänekoski pulp mill. If the investment prerequisites are met, the investment decision of the bioproduct mill will be made in spring 2015, and the mill could be operational in In addition to pulp, the mill would produce bioenergy and various bioproducts. The wood raw material and side streams would be utilised 100 per cent as bioproducts and bioenergy, and would increase the share of renewable energy in Finland by over two percentage points. Although the production capacity of the new mill would be considerably higher than that of the current mill, its emissions would be lower than allowed by the current mill s environmental permit. we explore new bioproducts In addition to pulp, the mill would produce a versatile range of bioproducts, such as tall oil, turpentine, and bioenergy. The planning and construction stage of the mill also focuses on the production of new bioproducts. Potential new bioproducts include producer gas, sulphuric acid, textile fibres, biocomposites, fertilisers and biogas. Metsä Fibre is exploring several different product paths, which would be implemented gradually, some perhaps as early as 2017 in the mill s schedule. Metsä Fibre and Itochu are examining producing textile fibres from pulp by means of a new, efficient and environmentally sound production method. Metsä Fibre s participation in the research began with Fibic Ltd s research programme in Metsä Fibre is also examining the production of biogas from sludge from the waste water treatment plant by means of a decomposition method. Biogas could be used in the lime kiln of the mill or as a biofuel for vehicles. The bioproduct mill will be a basis for new industrial symbioses, which would expand the economically significant network of companies operating around the mill. The business model is based on an efficient partner network, in which new bioproducts are upgraded in cooperation with various players. A masterpiece of project competence the bioproduct mill project has progressed smoothly on a tight schedule as planned. By the early spring, we will have negotiated agreements with our principal machine suppliers and earthworks contractors, and so construction can begin immediately after a favourable decision is made, says Timo Merikallio, Project Director. Building a new mill on such a tight schedule requires solid project competence. Project competence seems to be embedded in our DNA, says Merikallio. We have a can-do culture and plenty of seasoned project professionals we can call on. The environmental impact assessment procedure (EIA) was completed in October 2014, and the mill received its environmental permit in January The progress of the project has been accelerated by the pilot project launched by the Ministry of the Environment, which streamlined the environmental permit procedure. Cooperation with the authorities has been open and interactive and has had a considerable positive impact on our progress, explains Merikallio. Spring Spring Spring Autumn Summer Investment decision Civil engineering Contracts on the main equipment deliveries 2016 Main equipment installations 2017 Testing starts Start-up of the mill 2018 Nominal production begins Bioproduct mill 11

14 PULP DELIVERIES 1,000 TONNES Softwood pulp Hardwood pulp 3,000 2,500 2,000 1,500 Pulp end use % Board 32 printing papers 32 tissue papers 21 Specialty products 15 1, Botnia products and services Metsä Fibre s pulp grades are an excellent raw material for board and paper. Our Botnia product family also includes services that enable customers to get the greatest benefit from our fibres. In 2014, Metsä Fibre supplied a total of 3.1 million tonnes of pulp from our own mills and from the pulp producers we represent. We sell approximately 70 per cent of our pulp to customers in Europe and Asia, and the rest to our owners. Global demand for softwood pulp is increasing steadily. An integral part of the growth comes from Asia, where increasing wealth contributes to the demand for tissue papers, board and bio-based specialty products considerably. We deliver approximately 25 per cent of our pulp to Asia. We respond to changes In 2014, we renewed our product range to better meet the changing customer needs. For example, softwood pulp at the Joutseno mill was developed for the needs of tissue paper manufacturers, while the Rauma mill is focusing on the production of high-quality pulp suitable for printing paper. The northern fibres of the Kemi mill are particularly suitable for board as well as tissue paper and specialty products. The Äänekoski mill produces the best birch pulp in the world. In addition to renewing its product range, Metsä Fibre upgraded its management model to better manage the quality of pulp and exceptional situations. We also have the innovative Botnia FOX quality index at our disposal for real-time quality monitoring. The RFID wireless remote monitoring of pulp units makes unit-specific quality data available for our customers, enabling them to reduce their pulp consumption and improve the quality of their products. The Botnia product family includes biochemicals manufactured from the side streams of pulp production, tall oil and turpentine, as well as bioenergy, which together make up 10 per cent of Metsä Fibre s sales. Since 2014, tall oil and turpentine have been sold under the Botnia brand. Fibre expertise at our customers command Metsä Fibre s strength is its excellent fibre raw material and a strong service concept. Customers have access to the fibre expertise we have accumulated over the years through our technical customer service and the product development projects we have carried out together with our customers. In addition, we develop new technical and logistics services, which improve our customers competitiveness. Botnia IdeaBooster is a perfect example of a service in which joint innovation generates new opportunities for both us and our customers. 12 Botnia products and services

15 Fibres of Success: our customer promise Our high-quality pulp grades meet the needs of even the most demanding customers. We make effective use of raw materials, keep emissions low and work safely. We work in close cooperation with our customers, which offers us a more profound understanding of their business operations and needs. Our technical services help customers gain the best benefits from fibres. Our supply chain ensures that the products we supply are in the right place at the right time. These elements form our customer promise, Fibres of Success, a commitment of our 850 professionals. The Botnia product family Pulp grades 90% * Softwood pulp: Botnia Nordic Pine Polysulphide pulp: Botnia Nordic Pine+ Reinforcement pulp: Botnia Nordic Strong Birch pulp: Botnia Nordic Birch High yield pulp: Botnia High Yield End products: Tissue papers, boards, printing papers, specialty products Botnia PARTNERSHIPS FOR SUCCESSFUL BUSINESS Biochemicals 4% * Tall oil: Botnia Nordic CTO Turpentine: Botnia Nordic CST PULP-MAKING KNOWHOW & EXPERTISE TECHNICAL SERVICES WITH INSIGHT Added value for customers End products: Specialty products in the chemical industry and biofuels SUSTAINABILITY SERVICES LEAN LOGISTICS Fibres of Success delivered through knowhow and dedication Customer Bioenergy 6% * Electricity Heat Bark Wood dust metsä fibre metsä board *) Per cent of sales Botnia IdeaBooster opens up intriguing opportunities Metsä Fibre accelerates brainstorming and innovation with its new web service Botnia IdeaBooster, a platform for joint ideas. Although Metsä Fibre has been organising joint Innovation Days with its customers for a long time, IdeaBooster takes the concept to the next level. We can proceed right to the further development stage during the Innovation Day when large number of ideas are recorded in the IdeaBooster already before the actual Innovation Day, says Mikael Lagerblom, VP, General Manager of Metsä Fibre GmbH. The ideas with the greatest potential will be processed further into development programmes aimed at adding value to the customer s operations. The ideas generated in IdeaBooster are largely related to improving the properties of a customer s products or reducing material costs. Potential new pulp products and process improvements as a whole are also areas of interest. The new service increases both the quantity and quality of ideas. Botnia IdeaBooster will be introduced to customers more extensively during Botnia products and services 13

16 success through sustainability Sustainability is an integral part of Metsä Fibre s daily operations. We use the best available technology and take care of the safety and well-being of our personnel. Metsä Fibre s pulps and other bioproducts are safe and sustainable. The raw material of our products is renewable northern wood. we offer sustainable choices we bring the forest to you we work for a better climate and nature we create well-being 14 SUSTAINABILITY

17 READ MORE FROM Metsä Group s Sustainability Report Metsä group s Sustainability themes Metsä Fibre s targets metsä fibre s Performance We offer sustainable choices Turning renewable wood into sustainable, safe and recyclable products Providing customer-focused services and solutions We supply high-quality and safe pulp, biochemicals and bioenergy to our customers All our mills have certified product safety systems We have implemented an operating model for product quality management Approximately 10% of our net sales comes from biochemicals and bioenergy 10% of OUR net sales comes from biochemicals and bioenergy Seeking and adopting innovations for continuous improvement and renewal We bring the forest to you Promoting sustainable forest management, certification and the diversity of forest nature Enhancing sustainability in the value chain Over 80% of the wood we use is certified Metsä Group knows the origin of the wood it procures and assures the sustainability and legality of the entire supply chain 87% of the wood raw material is certified We can trace the origin of the wood we use 100% Certified wood 87% 100% from traceable souces Ensuring the traceability of raw materials We work for a better climate and nature Making efficient use of raw materials, energy and water Increasing the value of side streams Maximizing the share of bioenergy Minimizing emissions to water and air 30% less fossil CO 2 emissions per product tonne* 10% improvement in our energy-efficiency* 10% reduction in process water use per product tonne** Chemical oxygen demand (COD) less than 11 kg per product tonne Over 20% decrease in fossil CO 2 emissions since 2010 Over 1% improvement in total energy-efficiency in 2014 compared to % decrease in the use of process water during the last 10 years Chemical oxygen demand is 11.6 kg per product tonne THE process water USE decreased 30% BY PRODUCT TONNE IN 10 YEARS * from the 2009 level by 2020 ** from the 2010 level by 2020 We create well-being Ensuring ethical business practices Improving safety at work Assuring responsible management Code of Conduct training for all personnel Zero accidents Sickness absenteeism rate below 3% 92% of personnel have taken the Code of Conduct training Accident frequency rate 4.9 Sickness absenteeism rate 3.9% accident frequency RATE (lta1) 4.9 Contributing to local livelihoods and society SUSTAINABILITY 15

18 MATERIALITY ANALYSIS In 2014, Metsä Group updated its sustainability themes and priorities by conducting a materiality analysis based on the feedback from its own business operations and key stakeholders. Highly important OUr sustainability themes We offer sustainable choices We work for a better climate and nature We bring the forest to you We create well-being Important Safety at work Sustainable forest management Product safely Importance to our stakeholders 12 Fairly important Product and process innovation Material and energy effiency Bioenergy Sustainable supply chain Emission to air and water Circular economy New bioproducts Supporting local livelihoods and society Water use IMPACT ON business IMPORTANCE TO OUR STAKEHOLDERS IMPACT OF THE + SUSTAINABILITY TOPICS ON OUR BUSINESS = OUR SUSTAINABILITY PRIORITIES In the materiality analysis we examined the importance of the sustainability topics to our customers and other stakeholders, and evaluated their effects on our operations. The most relevant sustainability focus areas of Metsä Fibre are safety at work, bioenergy, sustainable forest management, material and energy efficiency, environmental efficiency and product safety. Personnel well-being and safety at work are a priority for us. By monitoring absences and accident frequency throughout the Group, we are able to pro actively address factors that might endanger working ability and occupational safety at an early stage. Forest certification is a way for us to prove that the purchasing decisions of our own customers and their customers support sustainable forest management. Metsä Group is committed to promoting sustainable forest management, certification and the diversity of forest nature. We use energy, raw materials and other natural resources efficiently and minimize emissions and waste. We are committed to mitigating climate change by replacing fossil fuels with biofuels produced from renewable raw materials and by improving energy efficiency. It is highly important for Metsä Fibre that its products are safe to use. 16 Materiality analysis

19 safety at work Our occupational safety has improved through long-term work. In 2014, Metsä Fibre s accident frequency was a record low, 4.9. Our goal is to reach zero accidents. We use an extensive occupational safety management system, which is based on proactive work. Observations from our personnel as well as safety walks and talks are an essential part of our safety efforts. Lost-time accidents /million worked hours metsä fibre Finnish paper industry Bioenergy Pulp mills make efficient use of wood raw material by producing bioenergy and biochemicals in addition to pulp. Not only are our mills self-sufficient in terms of energy, they also generate excess energy for the use of nearby communities. By-products from our production bark and wood dust are also used as fuel in power plants. In Joutseno, renewable fuel is produced from bark through gasification, which replaces fossil natural gas. self-sufficiency rate in electricity, % Comparison information from the Finnish Forest Industries Federation. Metsä Fibre s figures include all lost-time accidents (LTA1). Sustainable forest management Metsä Group supports sustainable forest management and wants to promote the diversity of nature. In this way, we secure the availability of sustainable wood also in the future. In total 87 per cent of the wood Metsä Fibre uses originates from certified forests. Less than 10 per cent of all the forests in the world are certified 10% 25% 25 per cent of supply of world s industrial round wood is certified 87% 87 per cent of the wood used by the Metsä Fibre comes from certified forests Material and energy efficiency We use our renewable wood raw material efficiently. A large portion of side streams generated in our production are directed to material reuse or energy production. In pulp production, wood is barked and chipped. The resulting bark and wood dust are used as biofuel or biogas in our own units with the excess being sold to further processing to be used as fuel or raw material. The amount of waste generated in production is reduced continuously and is directed for reuse as much as possible. Waste reuse rate, % Environmental efficiency Good environmental performance is a competitive advantage for us. Low emissions indicate good usability and consistent operation. Our mill s emissions to water and air are in accordance with the requirements of the best available technology. Reducing water consumption and chemical oxygen demand is among our key objectives. Chemical oxygen demand (COD) kg/pulp tonne Product safety Metsä Fibre s pulps comply with food safety regulations. We have certified the product safety systems of our mills. By taking care of the product safety of our products, we do our part to ensure that they can be safely used also in direct contact with food or people. Materiality analysis 17

20 management of environmental impacts Metsä Fibre s environmental performance improved in We maintain the environmental efficiency of our mills through investments and continuous development. Material balance EMISSIONS TO AIR Sulphur (SO 2 incl. TRS sulphur), t 1,164 1,183 NItrogen oxides (NO x ), t 4,079 4,046 Fossil carbon dioxide (CO 2 ), t 190, ,000 Particles, t 942 1,017 PRODUCTS Pulp, million t 2,257 2,297 Tall oil, t 84,605 84,525 Turpentine, t 3,726 3,642 Sawn wood, m 3 233, ,569 Electricity*, GWh Heat*, GWh Biofuel*, GWh 1,273 1,293 *Includes only sold energy MATERIALS RAW MATERIAL Wood, million m PROCESS FUELS Fossil fuels, GWh WATER Process and cooling water, m 3 116, ,233 EFFLUENTS AND WASTE EFFLUENTS Chemical oxygen demand (COD), t 26,164 29,223 Biological oxygen demand (BOD), t Phosphorus (P), t Nitrogen (N), t AOX, t SOLID WASTE Landfill waste, t 32,962 42,853 Hazardous waste, t Environmental impacts

21 In 2014, the most significant investments at Metsä Fibre included modernising the wood chip silo, its treatment of odorous gases and replacing the bottom and air system of the recovery boiler at the Joutseno mill. The new wood chip silo has increased the reliability of the mill s operations. The new odorous gas processing system has reduced the amount of odour emissions in the mill s locality remarkably. The modernisation of the recovery boiler s air system has reduced nitrogen oxide emissions. development projects During the Kemi mill s shutdown in 2014, we improved the collecting and treatment of mild odorous gases in causticising. This provided better control of combustion in the lime kiln and decreased its sulphur emissions. Metsä Fibre mills have been decreasing their process water consumption successfully. At the Kemi mill, in particular, the new water plant has made it possible to effectively utilise internal water fractions. At the same time, the mill s energy efficiency has improved by using the warm water fractions generated at the mill for the production of fresh water. Reducing water consumption also improves the energy efficiency of the mills by means of reduced pumping; moreover, it makes the operations of the treatment plants more effective as waste waters stay longer at the biological treatment plant. The load on waterways at all mills was in compliance with the permit limits, and the COD load of Metsä Fibre on waterways decreased. corrective actions Isolated deviations in the permit limits of emissions to the air were a challenge at the mills. At the Rauma mill, the permit limit of the odorous gas boiler was exceeded in terms of odorous sulphur-containing compounds; further, at the Kemi mill, the permit limit set for the chlorine dioxide (ClO 2 ) concentration of exhaust gas was exceeded. Both mills changed their internal operating methods and adjusted their process parameters as corrective measures. Particle emission to air from the lime kiln was a problem at the Joutseno mill. As corrective measures, mechanical improments were made on the electrostatic precipitator, and several studies and process trials were carried out to reduce the particle level. Under normal conditions, the mills processing rates of mild and strong odorous gases were on a good level. However, the treatment of mild odorous gases fell below its permit limit in June at the Joutseno mill, which was due to process issues at the recovery boiler prior to the shutdown. Also, the treatment rate of weak odorous gases at Kemi mill remained under the monthly permit limit after a sudden mill shutdown in December. Fossil CO 2 emissions 1,000 tonnes Effluent flow m 3 /pulp tonne Landfill waste kg/pulp tonne (wet) Chemical oxygen demand (COD) in effluent kg/pulp tonne Environmental investments, pulp mills EUR million 250, , , , , Wastewater FOX provides real-time data on discharges Working together with Technical Research Centre of Finland, Metsä Fibre has developed a method of calculating the waste water load of pulp mills. The Wastewater FOX enables real-time monitoring of the chemical oxygen demand (COD) of the waste water generated in the mill process. Previously, we monitored waste water COD by taking samples, which we analysed once a day. By the time the analysis results were in, they were already outdated, explains project leader Ari Poukka. With the help of Waste water FOX, the mill s process can be steered to lower the environmental load more efficiently. We are able to identify the root causes of deviations before they even occur. Compared to the old systems, this method is outstanding. Waste water FOX was first implemented at Metsä Fibre s Rauma mill in December Environmental impacts 19

22 environmental balance JOUTSENO KEMI RAUMA ÄÄNEKOSKI SVIR TOTAL 2014 TOTAL 2013 PRODUCTION Pulp t 593, , , ,255 2, ,296,596 Sawn wood m 3 233, , ,569 WOOD CONSUMPTION Total wood consumption 1,000 m 3 3,351 2,801 3,276 2, ,244 12,369 Certified wood % EFFLUENTS WASTE WATER Process water volume 1,000 m 3 16,258 15,590 14,855 11, ,721 60,955 Total suspended solids t ,368 1,378 Chemical oxygen demand (COD) t ,164 29,223 Biological oxygen demand (BOD) t Phosphorus (P) t Nitrogen (N) t AOX t AIR EMISSIONS Sulphur dioxide (as SO 2 ) t ,063 1,033 TRS (as S) t NO x (as NO 2 ) t 976 1, ,079 4,046 CO 2 from fossil sources 1,000 t CO 2 from biomass 1,000 t 1,237 1,305 1, ,822 4,911 Particles t ,017 WASTE Landfill waste t 9, ,824 10, ,962 42,853 Hazardous waste t ENERGY Wood based fuel use GWh 3,401 3,589 3,614 2, ,263 13,508 Fossil fuel use GWh Purchased electricity GWh Purchased heat GWh Environmental balance

23 Specific emissions from pulp mills in the Nordic countries Specific emissions from Metsä Fibre s and other Finnish and Swedish mills producing bleached sulphate pulp are compared below. Metsä Fibre s figures are from The other figures are from 2013 and they are based on the statistics of the Finnish Forest Industries Federation and the Swedish Forest Industries Federation. CHEMICAL OXYGEN DEMAND (COD CR ) kg/pulp tonne Metsä Fibre mills Other pulp mills in Finland Pulp mills in Sweden BAT max. PHOSPHORUS (P) G/pulp tonne Metsä Fibre mills Other pulp mills in Finland Pulp mills in Sweden BAT max. Joutseno Kemi Rauma Äänekoski CHLORINE AND OTHER HALOGENS BOUND TO ORGANIC MATERIAL IN EFFLUENT (AOX) KG/pulp tonne ,04 0,02 0 Metsä Fibre mills Other pulp mills in Finland Pulp mills in Sweden BAT max. Äänekoski Rauma Kemi Joutseno Joutseno Äänekoski Kemi Rauma EMISSIONS FROM THE NOTHERN PULP MILLS 21

24 Cover: Carta Integra 235 g/m 2, interior: Galerie Art Silk 130 g/m 2. Metsä Fibre 2015 Metsä FIBRE P.O.Box METSÄ, Finland Tel PEFC/