What quality do the reprocessors expect?

Craig Robinson Head of RCP Sourcing – UK & IrelandUPM Shotton

Summary

UPM overview What is quality? UPM specification Quality inspection methodology Quality statistics/trends Impact of low quality Costs of low quality

What do we want MRF operators to do?

UPMOne of the world's leading forest industry groups and number one in printing papers.

Main businesses are magazine papers, newsprint, fine and speciality papers, self-adhesive label materials and wood products.

In recent years, UPM has strongly developed new business opportunities including RFID tags and inlays, wood plastic composites and bio-fuels.

UPM

Changshu

Blandin

PAPER MARKETS

UPM - Paper and pulp mills in the world

KajaaniKaukas(also pulp)Kymi(also pulp)

Pietarsaari (also pulp)Jämsäkoski

KaipolaTervasaari (also pulp)

Rauma

Augsburg

Caledonian

Shotton

ChapelleDocelles

Stracel Steyremühl

SchwedtNordland

Schongau

Top Deinkers in the World - December 2008

Source: Pöyry, UPM

1.370

1.410

1.660

1.800

1.900

2.330

2.350

2.560

2.780

3.050

0 500 1.000 1.500 2.000 2.500 3.000 3.500

White Birch Paper

Myllykoski

Oji

Georgia-Pacific

SCA

Stora Enso

Norske Skog

Nippon Paper Group

AbitibiBowater

UPM

'000 tons

UPM Shotton – RCP SourcingConsume 640,000 tonnes/year of recovered paper (12,500 tonnes/week average)

Pre-consumer Over-Issue News Over-Issue PAMs (periodicals &

magazines) Customer press room waste

Post-consumer News & PAMs sourced from Local Authorities,

merchants, waste management companies, and community groups across the UK & Ireland

What is quality?

It's not just about the product Quality is now a prerequisite, not a market differentiator A customer's expectation is to buy a high quality product at

the lowest cost Customer expectations are continuously increasing

It is vital for all stakeholders to effectively manage their position in the whole supply chain

Under any market conditions, quality will always sell

UPM Shotton – News & PAMs specification summary

Optimum newsprint/magazine content

<6 months old Dry (<12.5% moisture

content) Max 10% white office paper <4% grey/white board <1% brown board <1% non-pulpable

SourceSegregation

Mixed Paper/Board

Co-mingled

UPM Shotton – RCP quality inspection

UPM Shotton inspects loose inbound deliveries using INGEDE Method

No.7 – Entry inspection for sorted graphic paper for deinking 1.11

This method assesses the following criteria: general condition odour mould and decomposition moisture age paper composition contamination composition

UPM Shotton – RCP quality inspection

This method utilises the following tools: Visual check (target - 100% of loads)

30m2 of surface area only

Gravimetric check (target - 10% of loads) 45kg random weight sample used as a calibration for

the visual check

Since January 2006, we have completed: 37,467 visual checks 2,700 gravimetric checks

Quality statistics/trends

Quality statistics/trends

Impact of low quality

Increased production variable cost Increased disposal cost Increased maintenance cost Reduced service life of capital equipment Reduced mill yield Reduced mill production efficiency Reduced competitiveness of UK manufacturing in a global

market place

Costs of low quality

2008 non-pulpable contamination

cost elements: raw material logistics handling storage processing chemical/water usage yield loss waste management disposal taxation

10,000 tonnes = £2.05m

What do we want MRF operators to do?

Engage with reprocessors during MRF design phase Invest in the right technology Align process to collection systems Inspect input/output quality and communicate the results Enforce input quality contractual conditions Have a customer focus throughout the organisation Adopt continuous improvement principles Adhere to maintenance schedules Re-invest/replace as required Do not run above optimisation capacity Protect your product

Thank you

Craig Robinson01244 28420607771 880303

craig.robinson@upm-kymmene.com