A sustainable and circular bioeconomybusiness model of the forest based industries – climate change mitigation potential

Tytti PeltonenVP, Corporate AffairsMetsä Group

8 February 2018 Metsä Group3

Key figures 2018

Pulp and Sawn Timber

Sales:

EUR 2.5 billionPersonnel:

1,200

METSÄ BOARD**

Paperboard

Sales:

EUR 1.9 billionPersonnel:

2,400

METSÄ FOREST

Wood supply and forest services

Sales:

EUR 2.0 billionPersonnel:

840

METSÄ TISSUE

Tissue and Greaseproof Papers

Sales:

EUR 1.0 billionPersonnel:

2,800

METSÄ WOOD

Wood products

Sales:

EUR 0.4 billionPersonnel:

1,500

METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 103,000 Finnish forest owners

METSÄ FIBRE

METSÄ GROUP | Sales* EUR 5.7 billion | Personnel 9,300 | Renewable energy 28,4 TWh

* Internal sales eliminated

**Listed on Nasdaq Helsinki

METSÄ SPRING | Innovation Company

Finland – the largest forest cover in Europe

02/07/20194

The area of Finland

Cities, villages and roads

Fields and agricultural use

Lakes and rivers

Forest

10%

10%

75%

5%

100+MILLION M3

• Finland is the most forested country in

Europe. Our forests grow more than they

are used

• More than 50% of Finland’s forests are

owned by private forest owners

• Metsäliitto Cooperative members own

nearly half of the private forest area in

Finland

• Sustainable forest management

safeguards biodiversity and enables

versatile use of forests

Bark, branches and top

for renewable energy

Pulpwood for pulp and

other bioproducts

Logs for sawn timber,

plywood and LVL

RENEWABLE ENERGY

PULPWOOD

PRODUCTS

ELEC-TRICITY

HEAT

PRODUCTGAS

Biogas

Industry

SULPHURICACID

Bio-composites

Newbioproducts

(in R&D)

PAPER-BOARD

TISSUE PAPER

COOKING PAPER

Pulp-based textiles

Paper,specialty products

LIME

Fertilisers

TALL OIL, TURPENTINE

LIGNIN

Construction

All products in BOLD are manufatured by Metsä Group.

All other products are manufactured within the industrial ecosystem.

Beyond traditional forest industry

New bioproducts improve existing value chains and create jobs

Processing

of wood

Recycling

and use of

side streams

More value

added & jobs

from one tree

Processing of

products

New products

from side streams

URBANISATION

POPULATION GROWTH RESOURCE SCARCITY

CLIMATE CHANGE

Biodiversity

Sustainableforestry

Forest renewal

RENEWABLE ENERGY

Climate change

mitigation – potential

of the forest-based industries

Mitigation actions

– Sustainable forest management

– Production: energy & resource

efficiency and breakthrough

technologies

– Recyclable and long-term use products

– Renewable energy from side streams

PULP-BASEDTEXTILES

LIGNIN-BASEDPRODUCTS

UTILISEDSIDE STREAMS

BIOCHEMICALS

Using fresh fibre

ensures

availability of

recycled fibre:

fibres are

used on avg.

3.5 times.

PROCUREDWOOD USED WOOD

PULP

PAPERBOARD

SAWN TIMBER

PLYWOOD ANDKERTO LVL

TISSUE PAPER

COOKINGPAPERS

81%of board packaging

is recycled in Europe

MAKE

R&D

USE AND

RE-USE

WE BRINGTHE FOREST TO YOU

• Increasing the amount of carbon

stored in forests and products

• Safeguarding biodiversity

• Responsible corporate culture

• Accident-free work environment

WE WORK FOR A BETTER CLIMATE AND ENVIRONMENT

• Fossil free mills

• Resource efficient production

WE OFFERSUSTAINABLE CHOICES

• Fossil free raw materials

• Sustainable supply chain

8

Metsä Group’s 2030 sustainability objectives Supporting UN Sustainable Development Goals (SDG’s)

WE CREATE WELL-BEING

Fossil CO2

emissions

Fossil fuels

9

Forestry* Production

Logistics

Growth+

Sales__

Products storing

carbon

- 26 000 000- 2 000 000

+ 1 500 000

+ 18 000 000Products replacing fossil

materials

- 8 500 000 tCO2

Metsä Group is a significant carbon sink

* Forests owned by the members of Metsäliitto Cooperative

• In 2015-2018 Metsä Group invested 2 billion EUR in the European

bioeconomy

– New bioproduct mill in Äänekoski, Finland (1.2 billion EUR)

• In 2018 Metsä Group established a new innovation company Metsä

Spring Ltd

– Identifies and develops new business opportunities in sustainable forest-

based bioeconomy and circular economy

– Textile fibre demo plant investment

• Metsä Group is planning three new investments worth 2 billion EUR

– New bioproduct mill in Kemi, Finland

– New pine sawmill in Rauma, Finland

– First phase in renewing the Husum pulp mill, Sweden

– Implementation in 2019 - 2023

10

Investments to support

low-carbon circular bioeconomy

• Competitive forest industry means upgrading

each part of the wood to its highest value

• Our products succeed in international market

and have great growth potential without

regulatory subsidies

• Healthy established businesses enable

investing into new innovations

• Public co-funding of R&D&I accelerates the

development of new high-risk technologies

11

Successful market-based

and resource-wise

bioeconomy