The Lenzing Group’s investing activities in 2021 continued to focus on increasing its internal fiber pulp production, raising the share of specialty fibers, and implementing the climate targets in line with the sCore TEN corporate strategy.
Capital expenditure on intangible assets, property, plant and equipment and biological assets increased by 26.3 percent to EUR 844.3 mn in the reporting year. The sharp rise in the volume of capital expenditure is particularly due to the implementation of key projects in Brazil and Thailand.
In Brazil, Lenzing and its partner Dexco (formerly Duratex) are constructing the largest pulp mill of its kind with a nominal capacity of 500,000 tonnes per year. Dexco acquired a 49 percent interest in the LD Celulose joint venture, with Lenzing retaining 51 percent. Construction work also progressed according to plan in the year under review, despite the challenges due to COVID-19. For this reason, the commissioning of the mill is still planned for the first half of 2022. The expected construction costs for this largest project in Lenzing’s corporate history amount to USD 1.38 bn. The financing is mainly provided by long-term debt funding. IFC, a member of the World Bank Group, and IDB Invest, a member of the IDB Group, are supporting the investment program. Export credit agency Finnvera and seven commercial banks also participated in the approximately USD 1.15 bn financing package.
In Thailand, Lenzing worked at full speed in 2021 to complete the new state-of-the-art lyocell plant with a nominal capacity of 100,000 tonnes per year. Production started in the first quarter of 2022. The investment volume amounts to around EUR 400 mn.
In addition, Lenzing is investing more than EUR 200 mn in production sites in China and Indonesia to convert existing capacities for standard viscose into capacities for environmentally compatible specialty fibers. In Nanjing, Lenzing is working on converting a line to TENCEL™ modal fibers. The portfolio of the Chinese fiber plant will thereby consist entirely of specialty fibers by the end of 2022. As part of the investment in Purwakarta, Lenzing will bring its entire viscose production up to EU Ecolabel standards. The site will thereby become a pure specialty viscose supplier as of 2023.
In addition to the new lyocell plant in Thailand, which is designed to be carbon neutral, investments at existing sites are also in line with Lenzing’s targets to reduce carbon dioxide emissions per tonne of product by 50 percent by 2030 and to be climate neutral by 2050.
In 2021, Lenzing also announced plans for the largest open-space photovoltaic plant in the state of Upper Austria, covering an area of 55,000 m2 at the Lenzing site. In Grimsby (UK), the company is investing GBP 20 mn (equivalent to EUR 23.3 mn) in the construction of a new, state-of-the-art wastewater treatment plant, thereby implementing a planned measure to reduce wastewater emissions by 2022.
The year 2021 also saw the successful completion and commissioning of the air purification and sulfur reprocessing plant at the Lenzing site. Thanks to the new plant, carbon dioxide emissions will be further reduced and self-sufficiency in critical process raw materials will be increased. Lenzing has invested approximately EUR 40 mn in this project since the start of construction in 2019.