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March 20, 2017

Northern Europe pulp mills to revive businesses through by-products

Northern Europe pulp mills to revive businesses through by-products

Forestry firms in Northern Europe are trying to revive their pulp mill business by transforming by-products into glue, biofuel and carbon fiber for aircraft and wind turbines, considering the loss the paper business in favor of the internet.

Stora Enso, UPM-Kymmene, Metsa Group, SCA and Holmen are urged to look for more profitable uses for by-products they have mostly burned to help power the mills. Growing global demand for fossil-free materials is also helping to spur the innovation, Reuters reported.

Many of the companies haven't decided yet where to turn to on the market, considering that the research is still at the beginning. But there are some investors who believe that the industry might revive, after years of restructuring.

"If they can develop new materials to replace fossil based materials, the market is endless for them," said Sasja Beslik, head of sustainable finance at Nordea, one of the Nordic region's biggest asset managers and Stora Enso's seventh largest shareholder.

As Reuters reported, Stora Enso has already developed a refined version of lignin, a substance which accounts for at least a quarter of wood and binds tree fibers together, which is called kraft lignin. The company opened a kraft lignin plant in 2015, the first of its kind in the region, using a new technology developed in Sweden and marketed by Finland's Valmet, and decided to focus on using the material as a replacement for petroleum-derived phenols in glue.

The kraft lignin plant works at a capacity of 50,000 tonnes a year of refined kraft lignin and is integrated with its Sunila pulp mill in Finland. Kraft lignin differs from sulphonated lignin, an older-type industrial lignin which is derived from a less used pulping method, and used mainly in concrete. It's largest producer is Norway's Borregaard.

During the past decade, there has been a 25% drop in the European publication paper, but many Nordic export industry business have refocused their attention to other parts, such as packaging and hygiene products.

Many companies have focused on cellulose-based materials (greener textile fibers, nanocellulose, hemi-cellulose, etc). Also, the market for lignin-based carbon fiber is potentially large.

As Reuters reported, Metsa Fibre, part of Metsa Group which recently exited paper altogether, is building a 1.2 billion euro ($1.3 billion) pulp mill, a record investment for Finland's forest industry, able also to make a range of bioproducts including kraft lignin-based products.

UPM Kymmene, also engaged in multiple "bioinnovation" projects, is minded to follow Stora Enso in building a kraft lignin factory, said Christian Hubsch, head of lignin business at UPM's biochemicals division.

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