UPM Annual Report 2021

BUSINESSES

UPM

BEYOND FOSSILS

STRATEGY

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

UPM PASO DE LOS TOROS – WORLD-CLASS PULP MILL In Uruguay, the UPM Paso de los Toros pulp mill project was progressing intensively in all main areas.

• Construction of a state-of-the-art euca lyptus tree nursery, scheduled to begin operations in March 2022, progressed in Sarandí del Yí. • Preparing commercial readiness contin ued to proceed. • Ramping up all operations related to wood supply, contracting required ser vices for forestry and mill operations, and recruiting and training new resources advanced. • Mitigating actions to ensure the progress of the project were implemented due to the pandemic and tight global supply chains. • The project’s completion plan was fine tuned in January 2022. secured through our own and leased plan tations, as well as through wood sourcing agreements with private partners. Our plantation areas in Uruguay cover 466,000 hectares of UPM’s own and leased land. Sustainablymanaged plantations are highly productive, acting as a carbon sink while taking care of biodiversity. Eucalyptus’ fast growth rate and rotation time of 10 years make it the preferred plantation tree. We have created a permanent carbon storage of 55mil lion tonnes of CO 2 -equivalent in 30 years. Our Role of plantations Eucalyptus availability for the mill is

biodiversity programme has been implement ed in plantations since the early 1990s. In 2020, we defined the biodiversity indicators for the company-owned land as part of our global biodiversity programme. During 2021, we implemented an upgraded biodiversity strategy for biodiversity conser vationmanagement. At present, the network of formal conservation areas covers nearly 16,000 hectares. The aim is to increase these protected areas under UPM’s clearly defined conservation categories and to continue with the long termbiodiversity programme (right). Our plantation operations are also strengthening rural regions and communities through increased opportunities for edu cation and employment, as well as through developing services and infrastructure. Uruguay’s native forests are all pro tected. The country is located within a temperate climate zone so there are no rain forests. Plantations are established on for mer grazing lands classified for commercial forests. The Forestry Act sets strict rules for plantation design and structure. This includes location, tree types and identifying suitable forestry soils for plantation devel opment, as well as safe zones around roads, native forests and waterways.

We are currently constructing a new world class pulp mill near Paso de los Toros in Uruguay and an efficient pulp terminal in the port of Montevideo. The new pulp mill will be a significant step for UPM’s future earnings and shareholder value. When op erational, the UPM Paso de los Toros pulp mill, together with forestry, wood and pulp logistics and other related activities, will create around 10,000 new permanent jobs, of which 4,000 will be directly employed by UPM and its subcontractors. Project highlights in 2021 • More than 6,000 people have been work ing on the most intensive phase at the various construction sites under strict COVID-19 protocols. • The assembly phase, with mechanical erection, continued to progress in all

received customer services training at other edu cational institutes. The training included studies on sales and customer service - for example, what to say in everyday situations in a grocery store or restaurant. We have also provided training in IT services and entrepreneurship and distributed 20 schol arships for students to carry out tertiary studies in mechanics, electrical, chemistry and mecha tronics. Road safety training with the Automovil Club de Uruguay has also been organised in the community and at schools, with special attention on young motorists. We also want to detect concerns, needs and opportunities that arise from the local commu nity and address these by launching projects in cooperation with partners. main process areas at the pulp mill site in Paso de los Toros. Majority of large civil work was completed. Commissioning works have started. • Temporary and permanent housing for the mill construction workers in the nearby communities are in use. • The structure and roofing of the pulp warehouse were completed. The unloading line for the railway was also completed at the pulp terminal in the port of Montevideo. Piping, pipe bridge, auxiliary machinery and tank insulation work continues on the port basin. • Works on the Central Railway by Uru guayan government proceeded, but the overall rail project is delayed. • Works related to road infrastructure im provement in central and west Uruguay continued.

• Annual production capacity of 2.1 million tonnes of eucalyptus pulp • The total investment estimate is USD 3.47 billion • Investments in port operations in Montevi deo and local facilities in Paso de los Toros • Expected cash cost level of USD 280 per delivered tonne of pulp • Competitive wood supply, best available techniques and efficient logistics • Highest safety and sustainability standards • Scheduled start-up by the end of Q1 2023

Fabián Muñoz

CASE

PROTECTING BIODIVERSITY IN URUGUAY

In Uruguay, biological surveys have been carried out in areas owned by UPM since the early 1990s to help identify, classify, and protect species and native ecosystems. In 2020, we defined three biodiversity indicators for our land as part of the global biodiversity programme. In 2021, we imple mented an upgraded biodiversity strategy to increase biodiversity in the long term. The strategy has four key elements: diverse landscape management, value ecosystems conservation, endangered species conser vation, and alien species management. We aim to increase the protected areas, and to continue with the long-term monitor ing programmes. Our plan is to have 20% or more of our own land holding designat ed as under conservation management. We continually work with external experts to have an up-to-date list of total species, flora and fauna, and endangered species. Of the native flora species in Uruguay recorded by the end of 2021, 70% of those species were also present on land owned by UPM, for example. A new native flower species was also discovered on our conservation land for the first time in Uruguay. The white flower, Antiphytum charruasorum, shows how important it is to have conservation areas growing around the eucalyptus plantations.

www.upmpasodelostoros.com www.upmpulp.com

CASE

RAISING LOCAL COMPETENCE

The pulp mill project brings new opportunities for residents of Paso de los Toros and the surrounding area. We want to improve access to education and strengthen the entrepreneurial spirit in young people and women and local business networks. In 2021, we organised various training cours es with expert organisations to help the locals to benefit from the economic growth boosted by the project. People in the commercial sector are one key target group as the demand for services will increase. English language courses are popular be cause language skills give locals an edge on the job market. Of the nearly 100 people who have received English training, the majority have also

www.upm.com/biodiversity

42

43

UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021