Forest and forest industry is the basis for wellbeing in Finland

November 13 2008

Mr Antro Säilä, Senior Vice PresidentFinnish Forest Industries Federation

23.11.2008

2

Finland – a land of forests and lakes

Area of Finland (Canada)• 338,000 square kilometres (9,984,000)• 10% is covered with water (8,9 %)• 187,888 lakes (34 million)• 69% forest (54 %)

The Finns:• 5.2 million (32 million)• 67% live in towns or urban areas (80 %)• 33% in rural areas (20 %)

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Three principal species: pine, spruce and birch

Pine (Pinus sylvestris) Spruce (Picea abies) Birch (Betula pendula or betula pubescens)

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Forest ownership is a family matter for the Finns

• Majority of forests owned by private people

– earlier hand in hand with agriculture– nowadays the number of urban forest

owners is growing• One Finn in five belongs to a family that owns

forest• Average size of a ”family forest” is less than

25 hectares

Forest ownership in Finland,% forest land 20.0 million ha

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Sustainable forest management: more protected forests than in any other country in Europe

• Forestry is steered by strict acts, regulations and ecological planning

• Continuous stakeholder processes– multiple uses of the forests– biodiversity

• 95 % of the forests are certified• Over 8 % of the forest area is strictly

protected (close to 2 million hectares)

Sources: Working group SUTI 2002, Working group ESSU 2000, Finnish Statistical Yearbook of Forestry 2003

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Development of forest resources and forest industry production in Finland 1921-2005

SOURCE: Finnish Forest Industries Federation, Finnish Forest Research Institute

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Pulp, paper and wood industries use the wood efficiently for different purposes

Forests

• Forest management• Wood procurement• Transportation• Sorting and drying of timber

Logs

Pulp wood

Forest residues: branches, stumps…

Bio-slurriesBy-products

Wood products

PulpPaperBoard

BiodieselHeatElectricity

Recycling

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Local communities have grown around the mills For example in Varkaus, Eastern Finland

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Finnish forest industry

Forest industry in Finland

• 40 paper and board mills• 38 pulp mills• 170 sawmills• 20 plywood, particle

board/fibreboard mills

- 3rd in Europe- 6th in the world

MetsäliittoStora Enso

UPM-Kymmene

Enso-Gutzeit

Veitsiluoto

Oulu

TampellaForest ja Tambox

Varkaus(Ahlström)

Corenso UnitedPori, Varkaus

Sunila

MyllykoskiPaper

SerlachiusMetsäliitonTeollisuus

Finnforest

Metsä-Timber

Kemi

Joutseno-Pulp

Metsä-Botnia

Metsä-Rauma

Kyro

M-real

YhtyneetPaperitehtaat

KajaaniKaukas

Schauman

Kymmene

RepolaRauma-Repola

Rosenlew

AhlstromKauttua

Jujo Thermal

Stromsdal

Metsä-Tissue Tervakoski

SCA-Packaging Finland

Peterson Packaging

Sonoco Alcore

Loparex

Pankaboard

Savon Sellu

- 4th in Europe- 8th in the world

Georgia-Pacific Nordic(Nokia)

- Biggest in Europe- 4th in the world

Finland in the global forest sector

24.9.2008

Percentage values of the world totals (%)

SOURCE: Finnish Forest Industries Federation

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Understanding the magnitude of the forest industry in Finland compared to some other countries

24.9.2008

Value (€) of forest industry exports per capita and its share of total exports

SOURCE: Finnish Forest Industries Federation; Statistics Finland

Finland 20 %

Sweden 13 %

Austria 8 %

Canada 10 %

Norway 2 %

Germany 3 %

France 2 %

USA 2 %

Forest industry exports / total exports, %

11

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Key figures of the Finnish forest industry: 2007*

*) Woodworking industries, pulp, paper and paperboard industries**) Includes internal sales of 5 bill. EUR***) Gross exports minus imported inputs

SOURCE: Statistics Finland, Board of Customs

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Finnish forest industry is strongly export oriented: 90 % of the production is exported

• Finnish forest industry produces paper products for 100 million and wood products for 50 millionpeople

– Products bind CO2 and are being used as bio-energy at the end of the life span

• Integrated production processes and right government policies have enabled efficient wood processing and bio-energy production

Main markets for the Finnish forest industry products are in the Europe

Total value of forest industry exports from

Finland in 2007 was EUR 12.5 billion

Share of the main export markets

GermanyUnited KingdomUnited StatesFranceSpainRussiaJapanBelgia

18 %11 %

6 %5 %5 %5 %4 %4 %

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Production capacity of the Finnish paper and pulp industry

Total capacity 38 mill. tons in 2007

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Annual average investments of the Finnish forest industry companies in Finland and abroad

0

0,5

1

1,5

2

2,5

3

3,5

4

1980-1996 1997-2006

Bill. EUR

Investments abroad*)

Investments in Finland

*) incl. acquisitions

Investments in Finland2005-2007 close toEUR 900 mill. annually

SOURCE: Finnish Forest Industries Federation

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Global market trends

North America

Latin America India

Russia

China

Mature / declining marketRestructuring

Western / Nordic EuropeMature marketRestructuring underwayTechnology leadership Huge coniferous fiber sources

Sizable market potentialPoor infrastructureInvestments needed

Huge growthNo fiber sourcesAggressive investments

Fiber sourcingPulp supplies and investments

Big potentialLimited own capacityNo fiber

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Finnish pulp and paper mills are world leaders in clean technology

• All mills have environmental permits according to EU IPPC directive and permits are based on the use of Best Available Techniques BAT

• The most effective and advanced techniques to prevent harmful emissions and other environmental impacts, or reduce them to acceptable limits

• Environmentally, economically and technically feasible solutions

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Emissions to air have decreased by 30-80% and landfill waste by 85% per produced tonne since 1992

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Increasing pulp and paper industry production – decreasing wastewater emissions

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Less is more

• Water is needed to produce your daily newspaper

– 10 litres 30 years ago

– 2,5–6 litres today

– in the future even less

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We use purified pulp and paper wastewater as high quality drinking water

• Drinking water of Helsinki metropolitan area is taken from a lake where pulp, paper and chemical mills and several cities release their purified wastewater

• 565 000 people live in Helsinki metropolitan area

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Renewable energy - forest industry is the main producer and user of bioenergy

• Forest industry produces 80 % of bio-energy in Finland– Around 40 % of the total wood raw

material in forest industry is used for bio-energy production

• The share of bio-energy in Finland is 20 % (total share of renewable energy 25 %)

Mill fuels of forest industry in Finland 2006Total 282 000 TJ

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Employment in the Finnish Forest Cluster

Energy sector about 4 000 Transport companies about 1 500

Maintenance companies about 5 000

Forestry about 20 000Research and developmentabout 3 000

Machinery and equipment manufacturersabout 15 000

Graphic industryabout 25 000

Packaging industry about 5 000

Others about 38 000

Almost 200 000 jobs in

the forest cluster in Finland

24.9.2008

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Employment in the Finnish Forest Cluster

Energy sector about 4 000 Transport companies about 1 500

Maintenance companies about 5 000

Forestry about 20 000Research and developmentabout 3 000

Machinery and equipment manufacturersabout 15 000

Graphic industryabout 25 000

Packaging industry about 5 000

Others about 38 000

Almost 200 000 jobs in

the forest cluster in Finland

SOURCE: Finnish Forest Industries Federation

Average annual earnings in wood products industry in Finland

10.7.2008

SOURCE: Finnish Forest Industries Federation

Applicants for forestry, woodworking and paper industry education in Finland 1996–2008

4.9.2008

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R&D of the Finnish Forest Cluster, million EUR

Annual R&D input approx. 400 M€

M€

MachineryChemicalindustry

Pulp and paper industry

Wood industries

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The Finnish pulp and paper industry invests in new products, efficient technologies and renewable energy: priorities in the research strategy

Renewal of the industry Sustainable developmentCompetitiveness

Customer solutions

for the future

Intelligent, resource-efficient

productiontechnologies

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Objectives of the National Research Strategy

• To double the value of the forest cluster's products and services by 2030 - half of the value coming from new products

• Significant increase in the cluster's R&D• Increased use of domestic wood

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Intelligent, resource-efficient production technologies

The goal is to develop radically

new production systems

• New energy and water saving processes• Natural and biodegradable process

chemicals/fillers and binders• Lower capital intensity• Higher flexibility

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Customer solutions for the future

Competitive customer-oriented products and

Services

• printed electronics and hybrid media• intelligent paper/board• printed intelligence in packaging• bioactive papers and biomarkers• green chemicals and bio-energy

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Biorefinery options for forest industry

Life cycles of some Finnish forest industry products

24.9.2008

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Shifting production and consumption from non-renewables to renewables fosters sustainable development

• Wood helps to mitigate climate change

• Reusable products• Side products and waste can be

used in the production of bio-energy and bio-fuels

• Controllable processes• High environmental standards• Meets customers’ needs

Wood products value chain

Antro Säilä

35

Thank you for your attention!Merci pour votre attention!