UPM Pulp Matters 2/2023

UPM PULP MAGAZINE 2/2023 FIBRES FOR THE FUTURE PULP MATTERS

FIBRE PHENOMENA P. 6

IN FOCUS P. 16

CUTTING EDGE P. 18

NEW PULP MILL UP AND RUNNING

ENSURING CUSTOMER SATISFACTION

NORDIC FORESTRY LEADS THE WAY

18 SUSTAINABLE FORESTRY COMBINES ECONOMIC

OBJECTIVES AND ENVIRONMENTAL RESPONSIBILITIES.

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PULP MATTERS

CONTENT 2/2023

4–5 EDITORIAL MAKING A GLOBAL IMPACT 6–15 FIBRE PHENOMENA UPM PASO DE LOS TOROS OFF TO A GREAT START 16–17 IN FOCUS OPEN FEEDBACK BUILDS STRONG PARTNERSHIPS 18–23 CUTTING EDGE STRIKING THE BALANCE – A SUSTAINABLE FUTURE FOR FORESTS 24–25 PULP FACT THE PULP EXPRESS 26–29 THE PERSONAL TOUCH BEHIND THE WHEEL OF A FAMILY BUSINESS 30–31 BUSINESS BLUEPRINT ADVANCING CIRCULARITY 32–33 PULP PORTFOLIO Q&A: ACHIEVE EXCELLENT STRENGTH WITH UPM CONIFER

06 RAMPING UP The first months of the UPM Paso de los Toros mill have proceeded according to plan.

24 RIGHT ON TRACK

A renewed railway will soon connect the Paso de los Toros mill to Montevideo port.

34–35 NEWS

FORWARD FASTER INITIATIVE, ECOVADIS RECOGNITION & APPOINTMENTS AT UPM

PULP MATTERS ISSUE 2/2023 Alvar Aallon katu 1, PL 380,

Production and layout: Vapa Media Printing house: Grano

26 DRIVING SUCCESS Family business Lucián Transporte y Turismo made a huge growth leap, thanks to the new plant.

FI-00101 Helsinki www.upmpulp.com

PULP MATTERS is published in English and Chinese.

PEFC/02-31-80

Publisher: UPM Pulp Editor-in-chief: Sari Hörkkö Editorial board: Fang Deng, Sari Hörkkö and Damyanti Rathore

Promoting Sustainable Forest

Management www.pefc.org

Cover: UPM Fine 170 g Paper: UPM Fine 120 g

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EDI TORIAL

“OUR ACTIONS ARE ALWAYS BASED ON PRINCIPLES OF SUSTAINABLE FOREST MANAGEMENT, SCIENTIFIC RESEARCH, AND BEST PRACTICES.”

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Making a global impact Sustainable forest management can help to safeguard and increase the multiple benefits that forests provide. Dear Reader, The role of forests in the fight against climate change and the importance of wood-based alternatives to fossil raw materials is ever increasing. As a major forest owner, purchaser of wood, and producer of renewable products, UPM is in a key position to provide solutions for a future beyond fossils. One of the company’s unique strengths is our extensive experience of operating in different types of forests on a truly global scale. In total, we own over 900,000 hectares of forestry land in Finland, Uruguay and the US, and operate also in Central Europe. All of these platforms have their own characteristics, but what connects our actions is how they are always based on principles of sustainable forest management, scientific research and best practices. In this issue we highlight especially Finnish know-how in finding the optimal balance between economic objectives and environmental responsibilities when securing a sustainable industrial wood supply. Throughout its entire value chain the forest industry has various positive impacts – on a local, regional and national scale. This is true in Finland as well as Uruguay, where our pulp mills and related operations have created jobs, export income, educational opportunities and better transport connections, especially in rural inland areas. In our feature story we celebrate the successful ramp-up phase of the new UPM Paso de los Toros pulp mill – a project that could not have been realised without the committed work of local professionals. We also take a look at the current phase of constructing a direct rail connection from Paso de los Toros to Montevideo port – one of the most significant infrastructure projects in the history of Uruguay. At UPM we have taken notice of the increased discussions on forest-related issues and our customers’ greater need for information on these topics from a global perspective. In response to this we have established a new Global Forest Affairs team, which I will lead as part of my new position. We are happy to help our customers and advise you on all affairs concerning global forest advocacy, as well as themes such as climate-positive forestry and biodiversity. As highlighted in our story on UPM Pulp’s customer surveys, we are committed to going forward on the path of continuous development in close cooperation with our customers and value your active feedback.

Sauli Brander Vice President UPM Global Forest Affairs

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F IBRE PHENOMENA

TEXT: SAMI ANTEROINEN PHOTOS: UPM

OFF TO A UPM PASO DE LOS

The Paso de los Toros pulp mill is up and running in Uruguay – eventually boosting UPM’s current pulp capacity by more than 50%. GM Marko Sundqvist reports that the first months of the mill have proceeded according to plan.

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GREAT START TOROS

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F IBRE PHENOMENA W “We are moving towards reaching nominal capacity by the end of the year and then likely even pushing beyond it,” says Marko Sundqvist . The first pulp deliveries to customers were delivered in May. The UPM Paso de los Toros pulp mill has an annual production capacity of 2.1 million tonnes of eucalyptus pulp. The mill represents the latest and best available technology, featuring best-of-class energy efficiency with minimal environmental impacts and optimised maintenance. The total USD 3.47 billion project – covering the mill and Montevideo port terminal as well as investments in the local infrastructure – marks the largest investment in UPM’s history. Sundqvist acknowledges that running the vast undertaking has required extremely diligent planning and vigorous execution.

The UPM Paso de los Toros pulp mill features best-of-class energy efficiency with minimal environmental impacts and optimised maintenance.

“The final push took place in mid-April as we began starting up various production departments,” says Sundqvist, a UPM veteran whose first stint in Uruguay was way back in 2006. EYE ON QUALITY During an intense six-week troubleshooting period, Sundqvist and his team made the final adjustments for the big kick off. “We got off to a good start and have been able to maintain the quality of the product from the beginning,” he says, adding that the pulp produced at the mill stands toe-to-toe with Fray Bentos, the other local UPM pulp mill, with regards to quality. Fray Bentos, of course, is a key reason behind the smooth sailing of the new mill – the expertise gained from launching and running Fray Bentos has proved invaluable at Paso de los Toros. “We have people working here that had their start as UPM employees 17 years ago with the Fray Bentos project.”

“OUR PULP MILL IS A CLEAR FORERUNNER IN GLOBAL, SUSTAINABLE PULP PRODUCTION.”

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F IBRE PHENOMENA

BIG PICTURE Taken together, UPM’s total value chain in Uruguay – eucalyptus plantation operations, the Fray Bentos and Paso de los Toros pulp mills and related logistics – combined with its contractors creates approximately 7,000 direct and 10,000 induced jobs in the country. “Looking at Paso de los Toros, there are about 1,000 people coming in through the gates every day, but a big share of that number is logistics. The core production figure is closer to 450 people,” says Sundqvist. GOING DIGITAL Paso de los Toros also has great digital developments – for example the pulp mill encompasses about 3,000 sensors to provide data for predictive maintenance alone. “We utilise predictive maintenance to make sure that we stay a couple of steps ahead of the problems,” Sundqvist says. “From the viewpoint of perfecting our processes, our digital tools have really shown their usefulness,” he continues, adding that the digital team at the mill is top-notch. “We have a great group of troubleshooters taking preemptive measures.” In addition, honing processes makes for a safer working environment. Sundqvist says that the level of safety has been “really excellent” at the mill so far. “And that goes for both our own people as well as the contractors.”

LONG TIME COMING For Uruguay and the country’s economy – a 2% increase in GDP is estimated – the launch of the ultra-modern plant is a big deal. For a long time now the Uruguayan forest industry and UPM have been able to advance hand-in-hand, largely thanks to the national Forestry Law which was enacted in 1987. The aim of the law was to diversify the country’s industrial portfolio, ensuring sustainable land use and protection for its natural forests. Almost four decades later, it is easy to see that the legislation succeeded in ushering in a new, sustainable period for the forest and pulp industry. UPM was integrated into this transition almost from the beginning, planting its first eucalyptus seedlings in 1990. The country’s first pulp mill in Fray Bentos was eventually launched in 2007. Still hailed today as one of the best pulp production units in the world, Fray Bentos paved the way for a twin project, Paso de los Toros. UPM made its decision to invest in the Paso de los Toros pulp mill in 2019. GET IT 100% RIGHT Along the way the new pulp mill has gone through a comprehensive and thorough permitting process. “Uruguayan environmental authorities monitored the construction of the mill on site throughout the project.

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”IT WAS AN AMAZING FEELING WATCHING THE ENTIRE SYSTEM RUN SMOOTHLY AFTER PUTTING IN SOMUCH HARD WORK DURING THE COMMISSIONING PHASE.”

Romina Marquisá Mill Technician, Recovery

USD 3.47 billion investment in total 10,000 induced jobs in Uruguay

The environment was a key priority during the whole construction period, and we are committed to maintaining that focus now in the production phase,” Sundqvist says. The operating authorisation process included several inspections by the authorities, as well as third party audits by industry experts. Furthermore, UPM has its own extensive environmental monitoring programme in place covering water, flora and fauna, air, soil, noise and socio-economic aspects. According to Sundqvist, when it comes to environmental concerns you can never be truly successful unless you also communicate properly – every step of the way. We’ve made an extra effort to let the local community know what we’re doing and why with regards to the environment and other aspects as well.” PULP PIPELINE TO THE COAST To service the landlocked Paso de los Toros, a new pulp terminal in Montevideo started operations in October 2022. The terminal is used for receiving, handling and storing pulp and chemicals needed in pulp production. The highly specialised, fit-for-purpose terminal is open 24/7 every day of the year and it can handle over 2 million tonnes of pulp annually. But then there is the issue of getting the pulp from the inland mill to the port. For this logistical challenge, “Plan A” consisted

”I ENJOY THE CHALLENGES THAT COME UP EVERY DAY, ANDWORK ING TOGETHER TO SOLVE THEM AND DISCOVERING THE BEST WAY TO ACHIEVE THAT.”

3,000 sensors provide data for predictive maintenance

Alejandro Cordatti Mill Technician, Drying plant

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F IBRE PHENOMENA

”WE NEEDED EVERY TO THE COMMON C EVERY DAY TOWAR

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YBODY TO COMMIT CAUSE AND WORK RDS THAT GOAL.”

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F IBRE PHENOMENA

of rebuilding the 273-kilometre rail connection leading from Paso de los Toros to the nation’s capital. However, as the state is still putting the finishing touches on the improved railroad line, the pulp mill has been using trucks for transportation. Then “Plan B” has worked out well too: “The truck traffic has been running smoothly, largely thanks to the solid road infrastructure around the mill.” RAIL TRANSPORT KICKS OFF IN 2024 Along with pulp heading to the port, trucks are also en route to the mill with raw materials such as caustic acid, sulphuric acid and heavy fuel oil. UPM has a fleet of 170 pulp trailers and chemical tankers taking care of the logistics carousel. Still, the trucks are only a short term solution and UPM is eager to start putting pulp on the rails. That day is not far off. “Test runs on the rail connection will start in the beginning of 2024, with actual operations to commence after the tests. The rail operations will then be ramped gradually.” says Sundqvist. WORLD CLASS ACHIEVEMENT Marko Sundqvist is – appropriately so – very proud of the milestone achievement: Paso de los Toros pulp production puts UPM among the leading pulp suppliers in the whole world. The company now boasts a balanced asset base and wood supply in two hemispheres, with two pulp mills in Uruguay and three in Finland. “This is a great achievement for the entire organisation. Our pulp mill is a cost-efficient unit that brings much needed capacity, and it’s a clear forerunner in global, sustainable pulp production,” says Sundqvist, a pulp engineer who thrives on problem-solving. According to him, the massive undertaking comes down to great planning and hard work, while keeping in mind that nobody does it all by themselves. “It’s been such a big project that we needed everybody to commit to the common cause and work every day towards that goal,” he says, adding that the team-driven approach was the “secret sauce” of the entire operation. TEAM DYNAMITE Likewise, when asked about the best part of his job, Sundqvist replies that his motivation stems from working with people. “Along the way, you learn a lot about others as well as yourself.” At the mill, Sundqvist wants to foster a trust-based culture where everybody is encouraged to speak their mind. “When there is trust, you feel comfortable in expressing your opinions, no matter what. That’s a solid starting point for great things.”

“THE RAMP-UP PHASE HAS GIVEN US CONFIDENCE TOMOVE FORWARD AND PURSUE THE GOAL OF REACHING NOMINAL PRODUCTION CAPACITY.”

Fabricio Fagúndez Mill Technician, Fibre line

”I HAVE LEARNED TOMANAGE IN SITUATIONS WHERE DECISIONS MUST BE MADE QUICKLY, PERFORMING IN THE BEST WAY POSSIBLE.”

The core production team working daily at UPM Paso de los Toros has around 450 people.

Natalia Meneses Mill Techinician, Recovery A

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IN FOCUS

TEXT: TIMO NYKÄNEN PHOTOS: UPM

OPEN FEEDBACK BUILDS STRONG PARTNERSHIPS

UPM Pulp’s regular customer surveys provide valuable input for the continuous development of products and services and in ensuring customer satisfaction.

Through customer surveys, UPM Pulp is able to deepen its knowledge of customer attitudes, thoughts and perceptions. Surveys have provided valuable insights to help further improve the company’s standards of excellence and offer a tool for continuous development that brings an external customer dimension to performance management. UPM Pulp conducts a survey twice a year to measure customer satisfaction. The survey has been carried out in its current form for three years and this is sent out to around 500 customer contacts. According to Miikka Kangas , Senior Manager Commercial Development, Pulp Sales at UPM Pulp, the aim has been to keep the survey light and simple, with only two main questions. The first of these refers to the global NPS (Net Promoter Score) metric, allowing for industry benchmarking and providing a target for development. “We ask customers how likely they are to recommend UPM Pulp to their friends or colleagues, and how well they consider us to have performed compared to the pulp industry in general with regards to certain criteria. These include pulp quality and service, handling exceptional situations, and listening to and understanding customers,” Kangas explains. The latest NPS score was 46, comparing well to the benchmark average of 39. However, UPM has set a target NPS score of 53, which would place the company in the top 25% within the industry.

Tomas Wiklund (top) and Miikka Kangas point out that survey results are responded to promptly in customer teams.

COMBINING GENERAL SATISFACTION AND TOPICAL ISSUES

Although the survey is mainly a “happy or not” type of questionnaire, additional feedback can be provided to open questions on how, in

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UPM HAS SET A NPS TARGET OF PLACING IN THE INDUSTRY’S TOP 25%.

the customer’s view, UPM Pulp could improve on each of these issues. According to Kangas, one of the most common topics touched upon in open comments is the need for more communication, which he admits is something where you can never have too much. The survey also includes a region specific question that may vary between surveys. “In the latest survey carried out between October and November 2023, we asked customers in Europe about their experiences concerning the performance of our customer service, while in the APAC region the additional question concerned the digitalisation of services and solutions. Perhaps an upcoming question could be related to the ramp-up period of our Paso de los Toros mill and how we have lived up to customer expectations concerning communication of the different phases,” Kangas says. FOLLOW-UP IN DEDICATED CUSTOMER TEAMS Run for about two weeks in more than 20 languages, the survey typically reaches a response rate of around 30–40%. The NPS score measuring customer loyalty has remained at a stable level – with the notable exception of a drop in the curve in 2022, when UPM suffered from industrial action in Finland. “This was a completely understandable reaction, but we luckily recovered from the situation rather swiftly. This was reflected in very few mentions in open comments in the following survey after resuming normal operations,” says Tomas Wiklund , Senior Vice President, Pulp Sales at UPM Pulp.

Wiklund emphasises the importance of the survey in the constant development of UPM Pulp’s

offering, as the feedback is not anonymous, and can thus be responded to promptly and precisely. UPM Pulp’s external research partner provides analysis and conclusions on the survey results, which are examined on both a global and regional level. Analysis is also carried out in customer teams, and corrective actions are taken where necessary. “Our customer teams follow the results according to each customer and see if we have managed to follow the path of continuous improvement, or if there is some issue that stands out and requires addressing immediately,” Wiklund notes. FEEDBACK MAKES A DIFFERENCE Considering the attributes that customers value most, quality takes the top spot with a clear margin, followed by customer service then reliability in third place. According to Kangas, a positive signal is also that around half of the respondents are regular participants in the survey and they are committed to delivering feedback repeatedly. “I would like to thank all our customers for their active participation and urge everyone who hasn’t yet responded to take part in our next survey. Your feedback is extremely valuable to us and truly makes a difference in further strengthening our cooperation,” Wiklund concludes.

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CUT T ING EDGE

TEXT: ANNA GUSTAFSSON PHOTOS: UPM

Striking the balance – A sustainable future for forests Forests play a pivotal role in the fight

against climate change and in preserving biodiversity. With a sustainable approach, economic objectives and environmental responsibilities need not be at odds.

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The certification system lies at the heart of sustainable forestry in Finland.

C oniferous forests blanket vast territories in countries like Finland, Sweden, Canada and the United States. anada and the US account for over 15% of the world’s forests. Finland and Sweden both have forest coverage over 70%, making them the most heavily forested countries in Europe. The forestry sector balances seemingly conflicting pressures. On the one hand, forests act as vital carbon sinks, absorbing carbon dioxide. They are indispensable in the green transition, serving as sources for biofuels and materials to replace fossil based plastics. Innovations for textiles and the medical industry also originate from forests. On the other hand, global economic growth, particularly in developing countries, population growth, and urbanisation have spurred global demand for forest industry products. The challenge lies in protecting the forests for the health of people and our planet while utilising trees as a renewable material source. How are these two objectives reconciled? Antti Asikainen is the Executive Vice President of research at the Natural Resources Institute of Finland and chairman of the Finnish Forest Economy Science Panel. He emphasises the interconnectedness of climate, environment and economic issues.

“A combination of measures is needed to reach multiple objectives. We must enhance forest growth by optimising density and renewal and implementing biodiversity- enhancing measures. Both approaches are imperative to ensure a sustainable supply of industrial wood, but also to address climate and biodiversity concerns,” Asikainen explains. UPM took its first steps in the 1990s with the original biodiversity programme. The company is committed to creating a net positive impact on biodiversity in the UPM-owned Finnish forests and plantations in Uruguay by 2030. UPM is also implementing its Forest Action programme, a framework which combines forest responsibility actions and goals on climate, biodiversity, water, soil and social contribution. F inland is an interesting case for researchers and scientists, having gathered forest data for over a century. Statistics illustrate how diversifying tree species or incorporating retention trees and decaying wood influences the health, growth and biodiversity of forests. Overall, it is evident that a healthy, sustainably managed forest is more productive and grows faster. At the heart of sustainable forestry in Finland lies the certification system. Since

Antti Asikainen, Executive Vice President, Research, Natural Resources Institute Finland

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UPM is the only forestry company in Finland with its own tree nursery, located in Joroinen.

their inception in the 1990s, PEFC and FSC™ certificates have become well known among industry and forest owners and consumers. Now 90% of Finnish forests are certified, with the majority bearing the PEFC certification. “The progress made through certification has numerous advantages,” notes Elina Warsta , Senior Manager at UPM Global Forest Affairs. “One of the most significant benefits of certification is the establishment of numerous concrete and measurable goals. We can see that our efforts to promote the wellbeing of the forests, biodiversity, and sustainability are indeed demonstrated in the results,” Warsta affirms. Sustainable forest management continues beyond certificates, notes Sami Oksa , Director of Stakeholder Relations at UPM Forest. “We have been involved in several pilot projects at UPM to understand better how different actions impact the forest. It is already understood that increasing the number of broad leaved trees in a forest diversifies species and boosts forest growth. Specific insects and fungi thrive from leaving deadwood in the forests,” Oksa lists.

UPM is collaborating with the Natural Resources Institute Finland to develop more specific ways to measure forest biodiversity. The company has also set a target to double the number of broad-leaved trees in its forests in Finland, aided by UPM’s nursery in Joroinen. C anada’s vast boreal forests make it a global forestry powerhouse. Forests cover 40% of the country – approximately 347 million hectares. The forest sector is a significant contributor to the country’s GDP. The primary distinction from other conifer-rich countries in Northern Europe is that most forests in Canada are state-owned, and the state grants harvesting and renting rights to private companies. Besides working as a summer intern in Canada, Antti Asikainen has also visited various forest locations in the country since the 1980s. “Their approach is very different. Thinning is almost non-existent practice in many areas and a larger share of the forests are under public ownership. The scale and impact of natural disturbances on forest dynamics is much larger than in the Nordic countries. This leads, for

Elina Warsta, Senior Manager, Global Forest Affairs, UPM

Sami Oksa, Director, Stakeholder Relations, UPM Forest

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70% 90% EUR 20 bn of area covered by forest in Finland and Sweden of Finnish forests certified generated annually by forest industry in Finnish GDP

instance, to reduced forest growth and a decrease of carbon sinks,” Asikainen points out. The majority of trees in Canada are coniferous, with less than 30% being mixed forests with broad-leaved trees. This may, for example, cause the forests to be more susceptible to damage from pests. Extensive forest fires have also impacted Canada. According to 2020 statistics, fires and pests destroyed over 5% of commercial forests in the country. Widespread fires have also affected Canada’s neighbour. The US boasts a diverse variety of forest ecosystems, with coniferous forests located in the northern parts of the country. The forest industry contributes over 5% of US GDP. In the past two decades fires have devastated vast forested areas, at worst affecting over 4 million hectares of forests. In September 2023 the US Government allocated a new USD 20 million budget for researching technologies to restore forests and prevent fires. Like Finland, Sweden places a high priority on sustainable forestry. Actions related to forest management and laws governing the renewal of forests are similar to those in Finland, differing only in the larger scale of operations. Sweden has also successfully battled forest fires, which affected up to 2% of the country’s forests during

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The volume of trees in Finland has grown from 86 m 3 to 109 m 3 per hectare.

the worst years. Recently, adding more broadleaf trees has been on the agenda in Sweden. “Disturbances, such as fires, are an integral part of the forest’s renewal cycle, but when uncontrollable they can disrupt the forest industry and its ability to source materials locally. This can lead to a decline of the entire industry, as has happened in Western Canada,” Asikainen says. F orests have played a major role in Finland’s economic growth. The forest industry amounts to about EUR 20 billion in the country’s GDP annually. A distinctive feature in Finland is the large number of private forest owners, who possess 60% of productive forest land. The state owns 26% and private companies 9%, with the remainder belonging to other entities. Private forest owners wield considerable autonomy in decision-making regarding their forests. However, the Ministry of Agriculture and Forestry has crafted science based guidelines for forest management, describing the best practices to manage and utilise forests sustainably. The forest law also sets basic requirements for sustainability.

But what motivates forest owners to make decisions concerning their forests with sustainability in mind? Statistics show that healthy forests are less vulnerable to threats such as pests or fires and grow better. In recent years the volume of trees in Finland has grown significantly, from 86 m 3 to 109 m 3 per hectare. And although trees are harvested at a younger age, their density has improved. The forest industry in Finland does not cause deforestation, and natural disasters affecting forests have been exceedingly rare. Elina Warsta notes a growing interest in Finnish experiences and knowledge related to sustainable forest management. “There is tremendous interest in the origin of wood. As part of my work I enjoy taking groups such as members of the European Parliament, our buyers or stakeholder groups to our forests to demonstrate what we do in practice. It’s eye-opening,” she adds. Diverse measures, from optimising forest density and renewal to implementing biodiversity-enhancing practices, are crucial to securing a sustainable industrial wood supply. Measurable goals and continuous development are key to enhancing biodiversity and forest wellbeing – leading to a more sustainable future.

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PULP FAC T

THE PULP

Gonzalo Giambruno, Director of Industrial Logistics, UPM Uruguay

The rebuilt and improved railroad connecting UPM’s Paso de los Toros pulp mill to the port terminal in Montevideo will create an efficient supply chain to world markets.

TEXT: JOONAS KALLONEN PHOTOS: UPM

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EXPRESS

R ebuilding the railroad leading from Paso de los Toros to the capital is one of the most significant infrastructure projects in the history of Uruguay. The state-owned railroad is part of the Uruguayan government’s infrastructure plan, executed as a public-private partnership. The existing railroad was outdated and only partly in use, so along with the 273 km railway, also 246 level crossings, 66 railway bridges and 25 stations and passenger stops are being built. UPM will be one of the main users of the railway, but it brings new business opportunities also to other industries in inland Uruguay as well as the possibility to develop passenger traffic. UPM estimates that it will be running six daily trains, each carrying 1,664 tonnes of pulp. The Montevideo pulp terminal will feature five rail tracks leading directly to the Paso de los Toros mill. Two tracks are used for pulp and one for chemicals, while the other two are available for shunting and reserve use. But what other advantages does the new railway present to the people of Uruguay? Gonzalo Giambruno , Director of Industrial Logistics at UPM Uruguay – with 18 years’ experience in the company – comments on the progress of the project: “As Uruguay is a producer of export goods, such as food and forestry products, we cannot afford to ignore logistics. A railway connecting the backbone of the country to the port will offer a significant boost to the competitiveness of Uruguay, enabling all exporters to move their shipments via rail.” A NATIONWIDE TRANSITION The logistical infrastructure in Uruguay has not been actively maintained since the 1950s and it was almost shut down in the 2000s. A change was needed and the construction of the UPM pulp mill jumpstarted substantial investments from the Uruguayan government into logistical infrastructure, including a renovated railway connection. “It was basically a revolution for the logistics of Uruguay,” Giambruno says. “In March 2016 we started planning the pulp mill project and discussing the preconditions of this investment, including the railroad. The railroad is part of the so-called “Big Project” between the government of Uruguay and UPM – this entails public and private investments into roadworks, the railway, high voltage lines, the port of Montevideo and the Paso de los Toros

pulp mill. Since the beginning the idea was that it was not going to be just about the mill, but about building a full logistical platform.” As the railway continues directly to the pier, it benefits both UPM and the forestry sector but also other industries that want to transport products to Montevideo. “The development of infrastructure often brings economic growth and further investments into the public sector. It can benefit the less developed rural areas encompassed by the railway in terms of employment and economic opportunities,” Giambruno points out. SAFETY FIRST “Uruguay is changing the railway from the standards of the 19th century to match the standards of the 21st century. Our railway operator will use an ETCS (European Train Control System) level 1 European standard railway and the safest highly automated railway in America,” Giambruno notes. Railway transportation is the most environmentally friendly way of transferring pulp from Paso de los Toros to the port of Montevideo – the emissions rate is eight times lower compared to trucks, six times lower than barge transportation, and three times lower than average freight trains. Trains are also less prone to accidents or malfunction. At first transportation will be handled both via train and by trucks, but the transition to fully rail-based transportation will happen gradually beginning in 2024. “The government and key actors related to the railway project have been active in discussing the railway with communities that it concerns. The beauty is that we are aligning the rails mainly where they have been since the 19th century and not building fully new ones through private properties and communities,” Giambruno adds. ALMOST THERE Construction of the railway is nearly finished. Now only the last 5 kilometres remain, as they are located in the metropolitan area which is always the most demanding part of construction. “According to the government of Uruguay, the whole construction will be completed by the end of this year. After all signalling installations, the commissioning phase and certifications, the first UPM trains heading to Montevideo will leave the station in 2024,” Giambruno concludes.

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THE PERSONAL TOUCH

BEHIND THE WHEEL OF A FAMILY BUSINESS Ana Inés Lucián’s transport company was under threat during the pandemic. Now the Uruguayan family business founded by her mother has made a huge growth leap, driving workers to the UPM Paso de los Toros pulp mill 365 days a year.

TEXT: KUKKA-MARIA AHOKAS PHOTOS: ANA INÉS LUCIÁN

A na Inés Lucián , coordinates bus journeys from her hometown of Durazno, Uruguay. The transport company’s 17 drivers take tourists, business travellers and workers to their destinations every day of the year along Uruguay’s busy highways. “But staying in Durazno was not originally in my plans. I studied accounting and went to work in the capital, Montevideo, where I stayed for several years. However, here we are again,” she says. I nes’ mother founded Lucián Transporte y Turismo in 1995. At first, the business was small scale – minibuses, or micros in Uruguayan slang, transported children on school trips. In the early 2000s Uruguay was hit by an economic crisis, but despite that Lucián’s family business was

going strong. They expanded operations to business transportation and made cooperation agreements with travel agencies that needed trips for tourists. “Thank God, despite the crisis, the company was growing slowly but constantly,” Lucián says. The family needed help and asked Ana Inés Lucián to come back from Montevideo. She was faced with a choice: to stay in the capital or to go back to her home city? “I had to make the decision to support my family, as I saw that more responsibility was falling on their shoulders. I decided to devote myself to this because, after all, the company was founded by my mother.” Lucián’s family business is not uncommon in Uruguay – about 23% of the country’s population is involved in running a company, according to the National Institute of Statistics (INE). The number has risen continuously in the

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Ana Inés Lucián’s (left) mother Monica Lucián founded the family business in 1995.

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THE PERSONAL TOUCH

“I HOPE THAT OUR FAMILY BUSINESS WILL EVENTUALLY CONTINUE FROM ONE GENERATION TO THE NEXT.”

last 20 years, and as is common in Latin America some 97% of the companies are small businesses that employ four to 19 people. Lucián now runs the business together with her two brothers. Israel arranges the journeys and the drivers’ work shifts, the other brother Joaquín is responsible for maintenance of the vehicles, while she handles customer contacts and administration. Their professional skills complement each other. “In the 2010s we managed to hire more drivers, and in addition to the 15-seater minibuses we invested in bigger buses. Everything was looking good. Then the pandemic knocked us down.” I n 2020 Uruguay was living in the middle of a pandemic that had brought the entire country to a standstill. Tourism stopped, logistics stopped, Lucián had to lay off her employees and the company struggled with minimal income. “The pandemic affected our operations 100%, that’s how I would describe it. We were left with a minimal amount of transportation and reduced all costs we possibly could. The contract with UPM in 2020 could not have come at a better time.” UPM, which had started building a new pulp mill in Paso de los Toros the previous year, made a contract with Lucián Transporte y Turismo. It became UPM’s regular contract

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Ana Inés Lucián runs the business together with her two brothers, Israel and Joaquín.

driver, taking workers from nearby towns to the Paso de los Toros construction site and back. After the opening of the mill, even more workers needed a ride to work. There is no public transport in the area and the train line is still under construction, so it is difficult for employees to move around without their own car. Now the Lucián family business transports workers to the mill 365 days a year. Lucián mentions that the road leading to the mill is in very good condition by the standards of Uruguay – something that professional drivers need to think about day in and day out. However, the traffic in her home province Tacuarembó is not as frantic as in other parts of Latin America, “even then you have to be alert while driving,” she explains. “With the UPM agreement, our business has probably grown by several hundred per cent.” Now the family has invested in more vehicles and opened a second office in Paso de los Toros. For Lucián, a larger customer base means a heavier workload and more organisation. Problematic situations have to be solved quickly and sometimes the working hours are long. For her it’s a question of pride that the company maintains its excellent reputation. The siblings make all important decisions collectively, but she has had to learn to delegate more tasks to other people.

“In the beginning, I handled the company’s accounting myself but nowadays it’s outsourced to another firm,” she says. I n the early stages of her career Ana Inés Lucián would not have thought that the company would expand to such an extent. Neither did her parents. “My parents are immensely proud. They have already retired but are not left out of decision-making – they are still involved as legal partners and we consult them in difficult decisions.” How about her own future? Is she going to stay in Durazno? “I’m not going anywhere anymore. I’m going to retire from this company,” she says laughing. However, her wish is to study tourism when there’s more time. In addition to work, family life requires attention as she has two children of primary school age. Lucián hopes that in the future one of them will take over the business. “My children are interested in what I do. I have encouraged them to study languages so that they could work with international projects. My brothers also have children, so let’s see who is interested in jumping behind the wheel and continuing in our footsteps. I hope that our family business will eventually continue from one generation to the next.”

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BUSINESS BLUEPRINT

ADVANCING

The UPM Kaukas mill in Lappeenranta, Finland is a pioneer of the circular economy and the most versatile bioforest industry integrate in the world. None of the raw material used in its processes goes to waste.

PULP MILL • 700,000 tonnes of softwood pulp produced per year. • The pulp is used to produce tissue paper, board, lables, fine paper and magazine paper. • The side streams and residues of pulp production include crude tall oil, turpentine, lignin, ash for land construction and fertilisers, and green liquer dregs used in land construction. • The mill is more than self-sufficient in heat and energy generation. Half of the material from pulp cooking ends up as black liquor burnt in the recovery boiler.

SAWMILL • Production capacity 380,000 m 3 of pinewood sawn timber. • Delivered to the joinery,

packaging, furniture and construction industries.

CHIPS AND SAWDUST USED IN PULP PRODUCTION.

SAWDUST AND BARK USED IN ENERGY PRODUCTION.

ASH FOR LAND CONSTRUCTION AND FERTILISERS.

SUSTAINABLY MANAGED FORESTS • 5 million m 3 of wood raw material sourced from surrounding area. • Ash from pulp mill and biomass power plant used as fertiliser.

BIOMASS POWER PLANT • Produces renewable energy from biomass – including branches, bark, sawdust and waste water sludge – for the mill integrate and district heating for the surrounding area.

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CIRCULARITY

BIOREFINERY • Uses the crude tall oil

residue from pulp cooking to produce renewable diesel, naphtha, turpentine and pitch. 130,000 tonnes of biofuels for use in traffic and the petrochemical industry.

TALL OIL TO BIOREFINERY.

• Production capacity

BARK AND STEAM USED IN ENERGY PRODUCTION.

SOFTWOOD PULP FOR PAPER PRODUCTION.

• Over 90% of all energy and heating used in the mill integrate is produced with renewable energy. • Over 50% of the biomass used comes from the Kaukas mill site. • All of the steam generated in the processes of the integrate is utilised in regional heating.

PAPER MILL • 300,000 tonnes of MWC/LWC paper produced per year from softwood pulp. • End products include catalogues, magazines and newspaper supplements.

BARK USED IN ENERGY PRODUCTION.

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PULP PORTFOL IO

Q&A Achieve excellent strength with UPM Conifer

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The Conifer and Conifer Thin pulps produced by UPM have their origins in Nordic forests. Northern softwood makes for excellent pulp due to its strength and the length of its fibres. Here are a few reminders of what makes UPM Conifer one of the most versatile pulp products on the market.

HOW DO WE ENSURE THE SUSTAINABILITY OF UPM CONIFER PULP? Sustainability is one of the core concepts of UPM as a company. UPM is dedicated to following internationally accepted principles of sustainable forestry, with our wood originating from sustainably managed boreal forests owned both by private forest owners and UPM itself. Our pulp production is based on the EU’s Best Available Techniques (BAT) approach, and the philosophy to create more with less raw materials, water, energy, and environmental impact. Our chain of custody and controlled wood systems are verified by independent external auditors, ensuring that our wood is responsibly sourced. Our wood is certified with the FSC ® and PEFC forest standards, with 100% traceability to legal sources. UPM Conifer bleached softwood kraft pulp (NBSK) is best described as suitable for end uses that require strength. Made from slow growing pine and spruce grown in the northern hemisphere, its long and slender fibres give UPM Conifer its characteristically strong constitution and the pulp has a fast development of tensile strength during refining, which in turn opens a wide array of possible end uses. UPM Conifer pulp is made from both juvenile and mature wood, with roundwood and saw-mill chips as a part of its production. UPM Conifer Thin, in turn, has a high fibre count and features a smooth surface and good formation characteristics. Compared to regular Conifer, it is easily refined, as it responds well to low refining intensity. UPM Conifer Thin is particularly well suited for customers with limited refining capacity and/or co-refining applications together with hardwood pulp. WHAT ARE THE MAIN CHARACTERISTICS OF UPM CONIFER PULP?

WHAT KINDS OF END PRODUCTS IS UPM CONIFER SUITABLE FOR? UPM Conifer is especially suitable for end uses that require strength and flexibility. These uses are, among others, the production of magazines, fine paper, specialty papers and tissue paper. Our Conifer Thin pulp, with its high fibre count and smooth surface, is more suitable for specialty papers and tissue paper. WHERE IS UPM CONIFER PRODUCED? UPM Conifer pulp is produced in three modern pulp mills, all located between the vast forests and rapids of Finland: UPM Kaukas in Lappeenranta, UPM Kymi in Kouvola and UPM Pietarsaari. Combined, they produce 2.37 million tonnes of softwood and birch pulp annually. The sustainability of pulp production is secured by regular investments and in-depth maintenance work carried out in order to secure environmental and production efficiency. UPM is committed to developing its operations towards a low carbon energy economy, in which UPM’s pulp mills play a key role. HOW CAN OUR CUSTOMER SERVICE HELP YOU? You can find the perfect material for your end product by contacting UPM’s local sales and technical customer service teams for advice on the characteristics and features of UPM Conifer pulp and different furnishes. Our experts are happy to advise you on how to make the most of UPM Pulp’s products. We offer: • technical customer service • technical data • pulp quality reporting and benchmarking • claim handling • advanced troubleshooting • simulations and fibre furnish optimisation and much more!

2.37 100% million tonnes of softwood and birch pulp produced annually in UPM’s mills in Finland of wood traceable to legal sources

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NEWS

UPM joins the Forward Faster Initiative UPM has joined the UN Global Compact Forward Faster Initiative calling for business leaders all over the world to take measurable action to accelerate the progress of Sustainable Development Goals. A total of 138 companies from around the world are involved, including two from Finland. UPM is committed to promoting gender equality, paying living wages and operating in line with an ambitious net-zero emission target. Compact. Set ting shared, ambitious and transparent targets plays an important role in the Forward Faster initiative. We can make the biggest and fastest impact by working together,” Sami Lundgren , Vice President, Responsibility says. A commitment to Gender Equality means that a company is making a serious effort towards equal gender representation, participation and leadership at all levels of management, and that equal pay for equal work is guaranteed by 2030. Companies

According to the UN, today only 15% of the SDG targets are on track, progress on 48% is weak and insufficient and progress has stalled or gone into reverse on 37% of the goals. “It was very natural for us to join this initiative. While we are already working towards these goals, we recognise that we need to accelerate the pace. We also value the collaboration networks of Global

commit ted to the Living Wage must ensure that their employees earn a living wage by 2030. The commitment to Climate Action, in turn, challenges companies to set a science-based net-zero emissions target in line with the 1.5°C pathway and to achieve it by 2050 at the latest.

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UPM receives platinum in the EcoVadis responsibility assessment EcoVadis has recognised UPM with a platinum score based on the company’s sustainability performance in the following four categories: Environment, Labour and human rights, Ethics, and Sustainable procurement. UPM’s score – 87/100 – was one of the highest in the Manufacture of Pulp, Paper and Paperboard industry category. “Compared to last year, our carbon score improved the most. We are extremely proud that our climate change related management and strong decarbonisation ambitions were recognised with the highest possible Leader status. UPM’s top rating recognises the work we have done to promote sustainability in the whole value chain and embraces our work towards the future beyond fossils,” comments Sami Lundgren , Vice President, Responsibility at UPM.

Roberto Mirande to lead UPM Pulp Technical Marketing and Services Roberto Mirande will return to UPM after a few years working outside the company. Together with his Technical Marketing and Services team of experts located in key regions, Mirandeis responsible for technical cooperation and services for UPM’s pulp customers. He brings to UPM several years of pulp and paper experience from various roles in areas including technical and product services, quality and development. With the combination of Mirande’s and his team’s track records, UPM is confident it can bring plenty of value to customers going forward.

Aki Temmes appointed EVP at UPM Fibres As of 1 December 2023 Aki Temmes has been appointed Executive Vice President responsible for the UPM Fibres Business Area. Temmes is currently Senior Vice President in Business Control and Finance Operations. He joined UPM in 2003 and has held multiple roles in a number of business finance positions in Finland and France. “Aki has a wide interest in developing businesses and is keen to find the best potential in organisations and people. I am confident that with Aki’s input, UPM Fibres will proceed well in implementing its strategy,” comments Jussi Pesonen , President and CEO of UPM.

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