Large-scale pulp production in the heart of Uruguay 

In mid-April 2023, the largest investment in the history of UPM, the Finnish forest industry and Uruguay culminated in the inauguration of the new UPM Paso de los Toros pulp mill. In addition to a eucalyptus pulp mill, the project has included the construction of a pulp terminal at the deep-water port of Montevideo, as well as local infrastructure such as roads and housing. The total value of the investment is nearly USD 3.5 billion. 

The completion of the massive project demanded exceptional resilience, as the project was already well under way when the COVID-19 pandemic hit in the spring of 2020. National restrictions, strict regulations at construction sites, and the quarantines and logistical challenges brought about by the pandemic put the project organisation under considerable pressure. The situation was overcome by combining Finnish grit and Uruguayan positivity to create new operating models. 

Persistence and creativity were also needed to transport the machinery, equipment and structures necessary for the construction of the UPM Paso de los Toros pulp mill to the inland mill area. Large-scale cargo transfers were carried out during 2021 and coordinated together with national authorities. UPM was responsible for several road infrastructure improvements, including the construction of 28 bypasses and the repair of roads and bridges. 

Record investments in ecological rail infrastructure 

The construction of the UPM pulp mill triggered massive investments in logistical infrastructure by the Uruguayan government. The reconstruction of the railway from Paso de los Toros to the Montevideo port terminal has been one of the most significant infrastructure projects in the history of Uruguay to be carried out in cooperation between the public and private sectors. UPM is one of the main users of the railway, but it also opens up new opportunities for other inland industries, as well as for the development of passenger traffic. 

The renewed and improved rail connection between the UPM Paso de los Toros pulp mill and the Montevideo port terminal creates an efficient supply chain for the global market. UPM estimates that it will run six pulp trains every day, each carrying 1,664 tonnes. The Montevideo pulp terminal has five tracks with direct connections to the Paso de los Toros plant.  

The first trains transporting UPM pulp to Montevideo are planned to set off this spring, after which consignments will be gradually transferred onto the railway. 

Rail transport is the most environmentally friendly way to transfer pulp from Paso de los Toros to the port of Montevideo – the emissions are eight times lower than lorries, six times lower than barge transport and three times lower than average freight trains. 

Growth in all markets 

With its growth project in recent years, UPM has created a competitive industrial operating model in Uruguay that guarantees the supply of wood from plantations managed according to the principles of responsible forest management, the delivery of eucalyptus pulp that meets uniform quality requirements from two mills, and efficient logistics. This is a significant step in the company’s growth strategy and strengthens its position as a global pulp supplier.  

Aki Temmes, who started as Executive Vice President of UPM’s pulp, sawmill and forest business, that is, UPM Fibres, in December 2023, believes in the growth of the pulp market, especially in the area of tissue and speciality papers used in hygiene products and packaging materials. In addition to the main markets in Europe and China, growth is also being sought in North America. 

“With the expansion of our operations in Uruguay, we have started selling pulp to North America and established our own sales and customer service team there. I believe that we have a good chance of developing a profitable market there,” says Temmes. 

Utilising side streams 

The world is becoming ever greener and more responsible while urbanisation and a growing middle class increase the demand for hygiene and other consumer products made from pulp, as well as packaging materials. This means that the wood raw material that enters UPM’s mills is used efficiently, down to the very last twig. Pulp is a biodegradable material made from a renewable raw material, which is used in many plastic replacement solutions.  

Pulp and side streams and residues from pulp production are already being utilised in completely new types of products. These include, for example, renewable UPM BioVerno diesel and naphtha produced in Lappeenranta from crude tall oil which is created as pulp residue, as well as biomedical products made from pulp, such as hydrogel for cell culture and biodegradable wound dressing. There are still countless new opportunities out there, and in the future, pulp may also be an enabler of many new side stream-based businesses. 

“During these first months, I have already been able to visit several localities and different countries to meet and listen to Fibres colleagues, as well as our customers and other stakeholders. Very good work has been done in business operations in recent years, and now we need to move on from the weaker cycle by focusing on good performance. I believe that, in the long term, we will have very strong foundations for growth,” says Temmes.