The Pulp Division comprises all Lenzing Group business activities from wood procurement through to the production of fiber pulp and biorefinery products. In addition to the activities in Paskov and Lenzing, the division focused on the implementation of the major project in Brazil in 2021. The construction of the fiber pulp mill in Minas Gerais continues to proceed according to plan, despite the challenges caused by COVID-19. Commissioning is still planned for the first half of 2022. In addition to securing internal supplies, the new pulp mill also enables Lenzing to achieve an important milestone in its climate neutrality strategy. It will be one of the world’s most productive and energy-efficient mills and feed more than 50 percent of the electricity generated into the public grid as renewable energy. In 2019, Lenzing made a commitment to reducing its greenhouse gas emissions per tonne of product by 50 percent by 2030 compared with a 2017 baseline. The aim is to be climate-neutral by 2050.
In order to further boost closed loop recycling, Lenzing signed a partnership agreement with Swedish pulp producer Södra in June. The cooperation involves the transfer of knowledge between the two companies, which have been proactively driving closed loop recycling for many years, as well as a joint new process development for the recycling of textile waste. A capacity expansion for pulp from textile waste is also planned. The aim is to be able to recycle approximately 25,000 tonnes of used textiles per year by 2025. Lenzing has proactively developed and promoted innovations in recycling for several years (such as the REFIBRA™ and Eco Cycle technologies) in order to provide solutions to the global textile waste problem.
The Pulp Division’s revenue reached a level of EUR 759 mn in 2021. Divisional earnings (EBITDA) amounted to EUR 210.1 mn, and operating earnings (EBIT) stood at EUR 164.2 mn.
Developments on global commodity markets also had a significant effect on the wood market in 2021. A labor shortage in the value chain, increased demand for firewood and biomass as a consequence of high energy prices, as well as a high level of production in almost the entire wood processing industry have tightened the availability of various types of wood and prompted an upward price dynamic.
The Lenzing Group’s current procurement strategy entailing long-term master agreements achieved a good stabilizing effect on volumes and prices. Lenzing was consequently able to ensure a good supply situation with moderate price increases at its two pulp plants at the sites in Lenzing (Austria) and Paskov (Czech Republic) during the reporting period.
In 2021, an audit in accordance with the Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification™ (PEFC™) forest certification systems confirmed again for both sites that, in addition to stringent forestry laws in the supplier countries, all wood used derives from PEFC™ and FSC® certified or controlled sources.1
The Pulp Division supplies the Lenzing Group’s fiber production sites with high-quality fiber pulp, and operates its own fiber pulp plants at the Lenzing and Paskov sites. This covers around two-thirds of Lenzing’s pulp requirements. The remainder is largely purchased on the basis of long-term agreements. A total of approximately 600,000 tonnes of fiber pulp was produced at Lenzing’s two pulp plants in 2021.
The price of hardwood-based fiber pulp in China increased by 36 percent in 2021 to USD 991 per tonne as of December 31, reflecting high demand along the entire value chain, especially at the start of the year.
Increasing internal fiber pulp production forms a key element in the implementation of the sCore TEN strategy. Construction of the pulp mill in Brazil as part of the joint venture with Dexco (formerly Duratex) continued to run to schedule in 2021, and its commissioning is planned for the first half of 2022. The expected construction costs amount to USD 1.38 bn. The project is predominantly financed through equity and long-term debt.
To provide the biomass, the joint venture secured over 44,000 hectares of FSC®-certified commercial forest, and leased additional land, in order to have approximately 70,000 hectares of FSC®-certified land when completed.2 These plantations operate in full accordance with the Lenzing Group’s guidelines and high standards for the sourcing of wood and pulp.
In addition to pulp, the Lenzing Group’s biorefineries also produce and market biorefinery products so that further components of the valuable raw material wood are utilized. Renowned customers from the food, animal feed, pharmaceutical and chemical industries increasingly rely on biobased products from Lenzing.
Sales volumes of the biorefinery products LENZING™ Acetic Acid Biobased and LENZING™ Furfural Biobased rose on average by 3 percent and 14 percent, respectively. The price increases on the cost side were successfully passed on to sales products.
The biorefinery products business area also places a strong focus on sustainability. A lifecycle analysis performed by the research institute Quantis confirmed that the carbon footprint of LENZING™ Acetic Acid Biobased is more than 85 percent less than that of comparable products based on fossil resources. Customers increasingly perceive this product advantage as a benefit.
1 License code: FSC-C041246 and PEFC/06-33-92 (Lenzing), and FSC-C118737 and PEFC/08‑31‑0025 (Paskov)
2 FSC license code: FSC-C006042