LOS ANGELES
,
March 10, 2022
(Industry Intelligence Inc.)
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UPM Kymmene Oyj is forming a new business unit that combines biofuels, biochemicals, biomedicals and biocomposites under one division as part of the company’s transformation to “new innovation-driven businesses,” UPM president and CEO Jussi Pesonen told investors during the company's Q4 2021 earnings call. “The aim is to speed up the business growth and to leverage the capabilities and competencies across the project efficiently,” he said. The new unit will inherit the name of UPM Biorefining and will be reported as part of UPM’s other operations, at least for the time being, Pesonen said. Because the name UPM Biorefining is now taken, UPM Pulp and Timber will be reported as a new business area, called UPM Fibres. These changes were slated to take place in early 2022. Meanwhile, work on UPM’s €550 million biochemicals plant in Leuna, Germany, is “moving at a good pace,” Pesonen said. He added there’s “keen interest” on various products of the new, 100% wood-based biochemicals refinery, which “really confirms the business opportunity and long-term growth strategy in biochemicals.” The total annual capacity of the biorefinery will be 220,000 tonnes of bio-monoethylene glycol (BioMEG) and lignin-based renewable functional fillers. In addition, the biorefinery will produce bio-monopropylene glycol (BioMPG) and industrial sugars made from sustainably harvested beechwood sourced regionally in Germany. The decision to build Leuna was made in late January 2020, just before COVID-19 lockdowns, which was “a bit unfortunate,” he said. The pandemic slowed down completion of detailed engineering in the early part of the project, which normally would have been recoverable through mitigation actions, but successive waves of the pandemic and disruption of the global supply chain made that unfeasible. As a result, UPM updated its schedule and now expects to start up Leuna at the end of 2023. However, R&D facilities on site are being extended, and the application development center for rubber and glycols is now operational. “This enables us to continue the commercial activities and testing at the full speed with our future customers in various end uses,” Pesonen said. He also updated investors on UPM’s biofuels growth plan. Basic engineering of UPM’s next-generation biofuels refinery has now reached the point where the company has completed site assessments in Kotka, Finland, and Rotterdam, Netherlands. UPM has decided work will continue in Rotterdam, “where the operating environment is more favorable for the biofuels business." However, the current investment environment – in terms of costs, resources and logistics – “is very challenging for major projects like this,” he said. “Therefore, we are not planning to make further decisions until the end of 2022.”
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