MEGaproject: UPM and its $600M gambit in renewable chemicals

From Finland comes the largest single corporate investment we’ve seen in years — UPM is taking  it’s “next transformative growth step” and is investing in a biorefinery at Leuna, Germany to convert solid wood into next generation biochemicals: bio-monoethylene glycol, lignin-based renewable functional fillers, bio-monopropylene glycol and industrial sugars.

UPM will invest €550 million ($611 million) in the industrial scale biorefinery  The total annual capacity of the biorefinery will be 220,000 tonnes. The facility is scheduled to start up by the end of 2022.

For those less familiar with the giants of the European pulp & paper industry, the Finland-based UPM is right at the top of the stack — the company’s symbol, the griffin, perched atop many of the signature pulp & paper mills around the world.

The UPM biochemical backstory

The story didn’t come out of nowhere. The company has been considering entering the biochemicals sector since the dawn of time, er, 2012.

We reported in 2017 that UPM was evaluating the potential for building a biorefinery in the Chemical Park Frankfurt-Höchst in Germany. At the time, reports were that the biorefinery’s annual production capacity would be 150 000 tonnes of bio-monoethylene glycol (bMEG), bio-monopropylene glycol (bMPG) and lignin. It would be based on the use of deciduous hardwoods grown in sustainably managed forests in Central Europe. At the time, it was thought that the decision would come in 12 months.

Instead, we have a decision some 28 months later, with a site 320 kilometers to the northeast in Leuna, the volume has increased from 150,000 to 220,00 tonnes, and the application set has widened to include industrial sugars.

The applications

The potential uses for the bio-materials that such a facility would produce present exciting opportunities to replace fossil-based materials with renewable alternatives.

• Bio-monoethylene glycol has application in textiles, plastic bottles and packaging and deicing fluids.
• Bio-monopropylene glycol is used for example in composites, pharmaceuticals, cosmetics and detergents. 
• Lignin can be used for example in wood resins, plastics or foams and coatings. Recently, UPM Plywood introduced the WISA BioBond gluing solution that replaces fossil-based phenol with lignin in plywood products.

The shift to Leuna

It’s not a well-known town in some respects, buried in the state of Saxony-Anhalt in the south-east of Germany, off the tourist track unless you’re headed to Prague, more or less.

However, Leuna is a big deal in the world of chemicals, home to the sprawling Leunawerke, a chemical industry complexes which checks in, in total, at 13 square kilometer in size. It’s so big you can clearly identify the complex from outer space. And, we might add, it’s surrounded by forest areas.

It really goes back to 2012

There’s one key word missing from the UPM release, and one website that’s saying nothing about the good news out of UPM.

It’s Renmatix. Where are they in this story? Rewind from this year of the Tokyo Olympiad, to the London Olympiad year for a sec. That’s when UPM and Renmatix first  entered into a joint development agreement in the area of biochemicals.

They had been effusive the one about the other.

UPM and Renmatix – why they chose each other

Partnership strategy. “Partnership is very important in this space and we kept our minds open in looking very broadly at the sector, and the companies. Michael Duetsch, Director of Biochemicals at UPM told the Digest in the past. In picking Renmatix, Duetsch noted the “very sound study” conducted on technology providers, adding, “and that effort continues.”

“In the end,” he said, “what was particularly outstanding for us in the process is that they are not using a lot of consumables. We are not a chemical company, so that is something we really like. It’s an excellent process, and a very fast process.”

It’s always important to have a cultural fit,” said Duetsch. We trust each other, and in Renmatix we saw a very professional team, from Mike Hamilton right down through the organization to the technical team. They’re very well managed.

In going with UPM, Renmatix CEO Mike Hamilton noted that “UPM has a very progressive strategy. They have been very progressive.They have put their capital into play to build assets. Their strategy, and that kind of commitment was a home run for us. Knowing UPM from our past lives, and knowing how they can leverage their existing sites, and knowing that they were looking for enabling partnerships with a licensing strategy, we were well aligned.”

So, who could it be, now?

Perhaps Sekab. As Envertis’ Frederic Clerc noted to the Digest, “UPM has been working with Sekab in the past few years through H2020 R&D project such as Valchem – I suspect Sekab is more likely to be the technology provider instead of Renmatix.”

A ray of hope dashed in 2017

There was heartache along the road to this project. The company, in fact, landed a a grant of €170M for a solid wood-based biorefinery (BTL) project in Strasbourg, France — under the EU’s NER300 program (New Entrants Reserve), funded by the sale of emission allowances to European companies. The project languished.

UPM’s BioFore strategy and progress in biorefining

Some time before that, UPM had set out on an ambitious BioFore strategy with a clear goal of leveraging its strength in aggregation and processing of wood resources into a series of new ventures in biofuels as well as renewable chemicals.

Impressively, and rarely for the cash-strapped pulp & paper sector, they had utilized their balance sheet in developing the world’s first wood-based renewable diesel refinery in Lappeenranta, starting construction last summer. UPM’s Lappeenranta biorefinery, constructed without any public funding, will produce diesel out of crude tall oil, a residue of pulp production. The process is based on hydrotreatment and production will start in summer 2014 — initial capacity in the sub-10 million gallon range but with a potential capacity to expand out to 55 million gallons per year.

Chemicals vs fuels

Renewable chemicals are part of UPM’s BioFore strategy — not wholly unexpected, though the fast-tracking of the foray into chemicals has caused surprise. One critical component was to establish a source of renewable sugars — and, in stealth mode over more than a year, UPM chewed through through a lengthy evaluation process for a technology partner, and ultimately selected supercritical technology and tapped Renmatix as the partner.

What is supercritical again?

For those used to the three traditional phases of water — solid, liquid and gas — add a fourth, the supercritical phase, seen under unusual conditions of pressure and temperature (think 250 atmospheres and around 373C – conditions never seen outside of a closed technology on Earth but which you might find deep in Jupiter’s clouds).

Under those conditions, water can diffuse like a gas and dissolve like a liquid, and act simultaneously like an acid and a base. It can depolymerize biomass by acting as both a powerful solvent and catalyst, creating rapid reactions.

Supercritical – a video primer

Professor Martyn Poliakoff demonstrates supercritical fluids in his office at the University of Nottingham.

[youtube]http://www.youtube.com/watch?v=yBRdBrnIlTQ[/youtube]

See Supercritical at the transition point

[youtube]http://www.youtube.com/watch?v=29oy1UCHJIE[/youtube

The Bottom Line

It’s been a long wait, but finally we have the market entry, and it turns out the wait has been worth it, for the project is 50 percent bigger than originally envisioned. That’s a rare thing, isn’t it?