UPM invests in next generation biochemicals to drive a switch from fossil raw materials to sustainable solutions

(UPM, Helsinki, 30 January at 12.15 EET) – UPM takes the next transformative growth step and enters the biochemicals business by investing in a biorefinery at Leuna, Germany. The biorefinery will produce a range of 100% wood-based biochemicals which enable a switch from fossil raw materials to sustainable alternatives in various consumer-driven end-uses. The investment opens totally new markets for UPM with large growth potential for the future.

UPM will invest EUR 550 million in an industrial scale biorefinery to convert solid wood into next generation biochemicals: bio-monoethylene glycol (BioMEG) and lignin-based renewable functional fillers. In addition, the biorefinery will produce bio-monopropylene glycol (BioMPG) and industrial sugars. The total annual capacity of the biorefinery will be 220,000 tonnes. The facility is scheduled to start up by the end of 2022.

The product range offers unique customer value and is expected to achieve a good cost position, comparable to the fossil-based alternatives. Once the facility is fully ramped up and optimized, it is expected to achieve the ROCE target of 14%.

“Molecular bioproducts form one of UPM’s three strategic focus areas for growth and are at the core of innovating for a future beyond fossils. We have successfully entered the biofuels business and built a profitable business platform. Now we are creating a totally new sustainable business in biochemicals with large growth potential. This is another major milestone in UPM’s transformation and a great showcase of focused and efficient R&D," says Jussi Pesonen, President and CEO of UPM.

“We help our customers to make their businesses more sustainable. Currently the supply of biochemicals is very limited. Due to this, high-quality sustainable alternatives are priced at a premium in the markets.”

A combination of sustainable wood supply, unique technology concept, integration into existing infrastructure at Leuna as well as the proximity to customers will ensure competitiveness of operations. The safety and sustainability of the value chain will be based on UPM’s high standards.