UPM Annual Report 2020

Circular economy is the basis of growth for biocomposites UPM Biocomposites offers innovative and sustainable composite materials for various uses in outdoor construction and consumer products. Over 50% of the raw material originates from renewable sources. The materials are based on UPM’s own research and development. UPM ProFi biocomposite utilises the cellulose fibres and plastic polymers generated as manufacturing surplus from self-adhesive label material production and from label customers’ label waste. The label waste is collected from UPM Raflatac’s 150 customers and partners from several European countries. Our target is to further increase the use of recycled materials in products. For example, UPM ProFi Piazza decking contains 75% recycled materials, which also includes post consumer recycled plastics. In 2020, our focus was on developing internal efficiency and digitalisation, as well as data-based forecasting models. The launch of UPM ProFi Piazza was a commercial success. We also joined the EU Circular Plastics Alliance to boost the use of recycled plastics in consumer goods and, in our case, in UPM ProFi products. UPM Formi composite material, made from wood-based fibres and polymers, is suitable for different types of industrial and consumer products such as furniture and home appliances. The material has a 30–60% lower carbon footprint than fossil-based materials. It complies with the requirements set by the EU for reinforced plastics in relation to the circular economy. The new UPM Formi EcoAce product range is based almost entirely on renewable resources. It contains certified wood or cellulose fibres as well as bioplastics made of wood-based feedstock from UPM Biofuels’ production. Production is ISCC Plus certified, which guarantees that the product meets environmental and social standards along the supply chain. In collaboration with customers, we launched two new UPM Formi EcoAce products, Akvila’s reusable cutlery and the MySoda sparkling water maker in 2020. Development of the UPM Formi 3D biocomposite continued in 2020. The focus was on developing technology around large-scale industrial 3D printing.

R&D’s role in different businesses

on building the right partnerships in the value chain with the sustainability conscious companies. A combination of sustainable wood supply, a unique technology concept and the proximity to customers will ensure the competitiveness of our operations. InfraLeuna GmbH, a company at the heart of European chemical industry, offers very competitive conditions for constructing the biorefinery with its existing permitting processes, logistics arrangements and infrastructure for various services and utilities. The safety and sustainability of the value chain are based on our high standards. Raw materials and key services for the biorefinery will be sourced from a region that enables local value creation and enhances sustainability. Once the biorefinery is fully running and has been optimised, it is expected to achieve the ROCE target of 14%. In 2020, we joined the Renewable Carbon Initiative (RCI), which promotes the goal of making chemicals more sustainable, more climate friendly and part of the circular economy in the future. Our investment was awarded as “The Bio Act of the Year 2020” by the World BioEconomy Forum. This recognition substantiates the fact that bioproducts boosting the circular economy are truly seen as fundamental in the fight against climate change. First clinical product to hospitals UPM Biomedicals develops and supplies innovative and sustainable wood-based biomedical products for a variety of uses. The main ingredient of our products is high-quality nanocellulose, extracted from birch. In the long term, we are aiming for personalised medicine, where treatments are developed from patient’s own cells. These cells can be used in manufacturing and in treatments. The key enabling factor is the fact that our gels are animal-free and therefore also do not introduce animal DNA to the patients. Meanwhile, we sell our products to two application areas: clinical and life science. In the clinical field, FibDex® wound dressing took the significant step of being introduced to market, when a medical device distributor Steripolar Oy started to sell the product to Finnish healthcare professionals and hospitals. Based on clinical investigation results, FibDex was granted the CE mark in 2019, allowing the marketing and sale of the wound dressing in the EU. Work towards registration with the US Food and Drug Administration (FDA) is ongoing. In life science, our main products are GrowDex®, a range of hydrogels for 3D cell culturing and GrowDase®, an enzyme to release the cells from the gel. The main application is in pharma. The nanocellulose ensures excellent compatibility even with the most demanding cells, such as stem cells and patient-derived cells. In addition to the existing GrowDex product family on the market, we launched GrowInk™, new biocompatible ready-to-use hydrogels for 3D bioprinting of cells in 2020. We work with global partners to develop new biomedical products and applications. In 2020, we joined in a new cancer immunotherapy focused research and innovation project, Cancer IO. The project will have a significant impact on clinical cancer research, healthcare systems, business and, most importantly, on the lives of cancer patients. The collaboration integrates immuno-oncology (IO) activities with universities, university hospitals, cancer patient organisations and major pharmaceutical companies.

BUSINESS AREA DESCRIPTION UPM Biorefining UPM Pulp

In 2020, special effort was invested in supporting UPM’s growth strategy and finding the right solutions for our state-of-the-art pulp mill scheduled to start in Uruguay in 2022. Joint development work was carried out by our technical customer service, development and research experts in Finland, Germany, Uruguay and China in order to understand how to best meet our customers’ needs. Good results were achieved within several end-use areas and regions resulting in improved production efficiency both on our side and on the customers’ side. To improve product quality and reduce production cost, development work was carried out to improve the level of digitalisation. New digital upper level control solutions were put into use in wood handling, cooking, bleaching and chemical recovery operations at our pulp mills in Finland and Uruguay. Quality to Trust development work on harmonising quality control and streamlining our processes was successfully implemented, improving and solidifying the ability to deliver the right pulp for the right end use. Collaboration for the development of new applications for renewable plastics based on UPM BioVerno naphtha is continued. The targeted development of UPM Lappeenranta Biorefinery has further improved operational efficiency and increased nominal capacity to 130,000 tonnes per annum. Piloting, research and process development continue to take place at the UPM Biorefinery Development Centre (BrDC). An improved hydrotreatment catalyst was evaluated and selected for our UPM Lappeenranta Biorefinery to improve diesel product cold flow properties and production efficiency, hence enabling better fulfilment of customer needs. UPM is also studying and testing the use of several new feedstocks that fulfil sustainability criteria, such as wood residues and feedstocks from carbon farming for our possible growth plans either in Kotka, Finland or Western Europe. The focus was on improving the cost-competitiveness and environmental performance of hydropower production assets and on developing competencies and business operations related to the optimisation of industrial energy consumption and demand-side flexibility. UPM Energy participated in several research programmes and undertook development work with the aim of improving UPM’s power generation and consumption operations in a changing electricity market. Research centres located at four sites (Finland, Poland, China, USA) support the product range expansion of paper, film and special products for global self-adhesive labelling business operations. Cost efficiency and product customisation requirements for various end-use segments were taken into account during the customer and market-orientated development phase. Global R&D focus continues to be in technology platform development for coatings and polymer development. Product safety and sustainable label material alternatives, i.e. Forest Film and RAFNXT+, had their role increased along with new requirements for solutions supporting plastic recycling. Continuous quality improvement continued to remain an essential part of product and process development. R&D and product development initiatives aim to enable high performance and efficiency in the value chain and to develop fibre-based alternatives for non-renewable materials. These initiatives also support growth targets by driving the innovation of products for new applications. In 2020, new papers grades were added to our kraft paper portfolio. We also introduced a packaging paper with no added optical brighteners. Moving forward, we continue to focus on co-creating sustainable packaging papers for increasingly demanding end-uses, together with the packaging value network; we currently have several co-creation initiatives ongoing. UPM Specialty Papers continues to develop release liner base papers to further improve efficiency and minimise the environmental impact of the value chain, through e.g. downgauging and developing our offering of grades with recycled content. UPM Specialty Papers also works to enhance the sustainability and efficiency of operations. In 2020, several improvements to water efficiency were made at Changshu Mill. The mill achieved a 1.3 million m3 reduction in total water consumption by optimizing operations on all three paper machines, i.e. -12%. Several water collection projects were completed; this means that rain water and waste water is collected and pumped to the waste water treatment plant for further treatment. Two natural gas boilers at the mill were upgraded and an exceedingly low NOx emission limit has been reached. R&D centres in Lappeenranta, Finland and Augsburg, Germany, focused on investigating new fibre concepts for various paper grades. RCF quality controlling also proceeded. Development of the product portfolio focused on key customer groups’ needs, as well as extending the approach to address new and profitable end uses. UPM Communication Papers has been initiating projects alongside its value chain partners designed to explore and develop solutions that can replace and decrease the amount of plastic used in packaging. One innovative project involved removing the plastic film traditionally used in office paper ream wrappers and successfully replacing it with renewable and responsibly sourced wood fibres from UPM. In the area of energy, the focus was on technological innovations that help minimise the energy needs at production sites. Paper mills were also developing intelligent operations to enable more and more demand-side management towards the electricity markets and networks to support system stability and decrease emissions in peak times. For operations efficiency, our R&D efforts concentrated on improving the efficiency of several mills for pinpointed efficiency supporting actions and also safety-improving areas. Digital solutions were developed, built and tested to optimise RCF delivery flows and machine performance measurement and to increase the machine reading of order information. Contributions from the R&D teams were valuable in helping meet the 2030 targets in the areas of energy, water consumption, effluent treatment and resource efficiency. UPM Plywood product management and development provides competitive products within selected end-use areas in collaboration with our customers, superior technical expertise and support for customers, as well as support for the commercialisation of newly developed products and applications. Our latest example of new functional products is WISA-SpruceWR, a water repellent plywood panel, which enables efficient and effortless construction even in changing weather and humidity conditions.

UPM Biofuels

UPM Energy

UPM Raflatac

UPM Specialty Papers

UPM Communication Papers

UPM Plywood

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