The first next-generation bioproduct mill in the world 1 Metsä Group Contents ‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ Project in brief Strengthening our market position Impacts for Metsä Group and Finland Prerequisites for the final decision Bioproduct mill – more than a traditional pulp mill A unique ecosystem for bioeconomy Maximal energy and resource-efficiency Availability of raw material Operational in 2017 Background material 2 Metsä Group New bioproduct mill in Finland 3 Metsä Group The first next-generation bioproduct mill in the world ‒ The biggest investment in the forest industry in Finland ‒ EUR 1.1 billion ‒ Annual pulp production 1.3 million tonnes (currently 0.5) ‒ Use of wood 6.5 million m³ annually (currently 2.4) ‒ Over 2,500 jobs in the whole value chain in Finland ‒ Internal financing approximately 40 per cent ‒ Advantages ‒ Efficient production of high-quality pulp ‒ Integrated production of new bioproducts ‒ Resource-efficient way of using all production side streams ‒ Helps Finland to reach its targets for the use of renewable energy ‒ Electricity generation 1 400 GWh/a ‒ District heating and steam 7 000 GWh/a ‒ Wood energy 1 200 GWh/a 4 Metsä Group Strengthening our market position further ‒ Global demand for softwood pulp grows steadily ‒ Growth is strongest in Asia, especially in China ‒ The investment supports Metsä Fibre’s growth and improves profitability in the long run ‒ The cost competitiveness of the new mill utilizing northern softwood fibre is good ‒ Location is logistically ideal for wood supply ‒ Existing industrial site and need to renew the old mill within few years ‒ Metsä Board’s paperboard mill located in the same integrate ‒ New products and bioenergy 5 Metsä Group Demand for softwood pulp Million tonnes +9% Demand for market pulp by region and end-product Demand Whole world Printing and office papers Tissue Paperboard Speciality products 40% 30% 10% 20% Europe China Rest of Asia North America 6 Metsä Group Significant financial impacts for Finland ‒ Estimated annual income effect on the Finnish economy approx. EUR 0.5 billion ‒ Increases the value of Finnish exports by EUR 0.5 billion annually ‒ Employment impact ‒ During construction more than 6,000 man-years ‒ When operational more than 2,500 jobs in the whole value chain in Finland (currently 1,000) ‒ Biggest impact in forestry and transportation ‒ The mill will diversify the Finnish forestry sector and bioeconomy structures and broaden the current product portfolio ‒ Finland has the need and ability to utilize the harvesting potential of fibre wood sustainably 7 Metsä Group Investment split Prerequisites for the final investment decision ‒ The final investment decision will be made during spring 2015 ‒ Factors impacting the decision include ‒ The outcome of Environmental Impact Assessment ‒ Environmental permit granted ‒ Financial development of the world economy and development trends especially in Asia ‒ Overall situation in the financial market ‒ Collaboration with various parties and authorities regarding e.g. wood supply, logistics, various permits, land use planning and subsidies 8 Metsä Group Bioproduct mill 9 Metsä Group Bioproduct mill − more than a traditional pulp mill ‒ Wood is refined into biomaterials, bioenergy, biochemicals and fertilizers sustainably and with great resource efficiency ‒ Raw materials and side streams will be utilized 100 per cent as products and bioenergy ‒ The mill will not use fossil fuels ‒ Energy efficiency will be emphasized when choosing equipment and machinery ‒ The operating model will be based on an efficient partner network ‒ New products will be created in collaboration with various experts joining the network ‒ Creates opportunities especially for small and medium-sized enterprises to produce innovative bioproducts with high added value 10 Metsä Group FIBRE WOOD PULP Modern, energy-efficient pulp mill as the core PULPWOOD BIOSLUDGE BIOGAS FERTILIZER PULP 11 Metsä Group Bioproduct mill’s product portfolio Current products as the core: ‒ Biomaterials: high-quality pulp ‒ Biochemicals: tall oil and turpentine ‒ Bioenergy: bioelectricity, process steam, district heating, wood-based fuels Potential new products: ‒ Biomaterials: custom-made pulp, lignin upgrades, new fibre products ‒ Biochemicals: raw materials for bioplastics, fertilizers and process chemicals ‒ Bioenergy: bio-oil, methanol, biogas, product gas, ethanol 12 Metsä Group Unique ecosystem for bioeconomy will be born ‒ The new bioproduct mill will create a globally unique ecosystem ‒ The emerging value chains will be extensive ‒ Significant opportunity for small and medium-sized enterprises ‒ New processes joining the ecosystem will create synergies for all parties ‒ Close collaboration with the city of Äänekoski in various areas incl. water purification and district heating ‒ Companies of a different size and in various development phases, focusing for example on biomaterials and bioenergy, will be invited to join the ecosystem 13 Metsä Group Maximal energy and resource-efficiency ‒ The bioproduct mill will increase the share of renewable energy in Finland by approx. 2 percentage points ‒ Energy efficiency and clean technology (cleantech) will be emphasized when choosing equipment and machinery ‒ The mill’s emission levels will be lower than allowed by Äänekoski mill’s current environmental permit ‒ All production side streams and waste will be utilized as efficiently as possible ‒ Material efficiency will be top in class 14 Metsä Group Wood supply 15 Metsä Group Harvesting potential can be utilized sustainably ‒ The bioproduct mill will increase the use of wood significantly ‒ The use of fibre wood will increase nation-wide by approx. 4 million m³ i.e. by 10 per cent from the current state ‒ The increase will be mainly softwood ‒ Sustainable increase for softwood fibre is 7 million m³ and for hardwood fibre 4 million m³ ‒ Wood can be sourced mainly from Finland. The increase will impact the whole country ‒ Over 90 per cent of wood is certified ‒ Requires that ‒ Wood supply from privately owned forests increases clearly in line with the growing demand ‒ Wood import stays at least on the current level ‒ Wood supply is secured by ‒ Metsäliitto Cooperative’s wide, solid owner base ‒ Metsä Group’s strong wood products industry ‒ Central location of Äänekoski 16 Metsä Group The amount of wood in the Finnish forests increases continuously Broadleaved Spruce 17 Source: Finnish Forest Research Institute Metsä Group Pine The use of domestic wood can be increased sustainably million m³ Forest growth Industrial use of wood Sustainable harvesting potential Imported wood Use of domestic wood 18 Source: Finnish Forest Research Institute Metsä Group The share of bioenergy will increase PRODUCTION OF BIOENERGY FOREST ENERGY 0.5 million m3 ROUNDWOOD 2.0 million m3 PULPWOOD 6.5 million m3 TOTAL 9.0 million m3 1.0 TWH SAWMILLS AND PLYWOOD MILLS 1.0 TWH BIOPRODUCT MILL 9.6 TWH Energy self-sufficient Fossil free 19 Metsä Group Increase of over 2.0 percentage points in the renewable energy in Finland 20 Metsä Fibre Aiming for operation in 2017 ‒ Environmental Impact Assessment (EIA) and environmental permit process are proceeding according to plans with the aim of completing them during the first quarter 2015 ‒ The contact authority’s (ely-centre) statement on Metsä Fibre’s EIA report will be ready in October 2014 ‒ The application for the mill’s environmental permit has been submitted in September 2014 ‒ Technical pre-planning of the mill is ongoing together with the suppliers and the leading designer company and will be finished in January 2015 ‒ Demolition of the old mill building will start in Autumn 2014 ‒ The final investment decision will be made during spring 2015, so that the new mill could be operational in 2017 21 Metsä Group The first next-generation bioproduct mill in the world 22 Metsä Group The environmental assessment process 2014 YEAR MONTH 5 - EIA programme prepared - Assessment group I - EIA programme submitted - Public EIA event - EIA programme on view (May–June) 2015 6 7 - - Resident survey 8 Contact authority’s statement on the EIA programme - EIA report on view - Public event II - Environmental permit submitted - EIA report prepared (May-August) - Assessment group II - EIA report submitted to the contact authority 23 Metsä Group 10 9 - - - Environmental assessment process ends in spring 2015 Possible investment decision on spring 2015 Contact authority’s statement on the EIA report Additional material 24 Metsä Group Metsä Fibre’s key figures 2013 ‒ Sales EUR 1,314 million (1,274 in 2012) Pulp deliveries in 2013 ‒ Operating result* EUR 197 million (148) ‒ Equity ratio 71% (65) Suomi Finland ‒ Gearing 12% (16) Kiina China ‒ Personnel at the end of the year 870 Italy Italia ‒ Pulp capacity 2,460 million tonnes Saksa Germany ‒ Use of wood 12.5 million m³ Turkki Turkey ‒ Self-sufficiency in electricity 144% Ranska France *excluding non-recurring items 25 Metsä Group Pulp prices (PIX) 2005–2013 USD EUR Source: Foex 26 Metsä Group Leading Bleach Softwood Kraft Pulp Producers in the World 2013/Q4 (excl. fluff, excl. dissolving pulp) 1 000 tonnes Source: Pöyry Management Consulting 27 Metsä Group Leading Bleach Softwood Kraft Market Pulp Producers in the World 2013/Q4 (excl. fluff, excl. dissolving pulp) 1 000 tonnes Source: Pöyry Management Consulting 28 Metsä Group Our pulp mills are located in Finland Rauma Joutseno Capacity: 650,000 tonnes Wood consumption: 3.4 million m3 ECF-bleached softwood pulp Personnel: 120 Capacity: 690,000 tonnes Wood consumption: 3.4 million m3 ECF-bleached softwood pulp Personnel: 133 Äänekoski Kemi Capacity: 530,000 tonnes Wood consumption: 2.4 million m3 ECF-bleached softwood and hardwood pulp Personnel: 171 Capacity: 590,000 tonnes Wood consumption: 2.9 million m3 ECF-bleached softwood and hardwood pulp Personnel: 169 Metsä Svir sawmill Capacity: 250 000 m³ Wood consumption :500,000 m3 Raw material: Spruce Personnel: 142 29 Metsä Group
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