UPM finalizes pending items with the new Government of Uruguay, UPM’s growth project proceeds according to plan

(UPM, Helsinki, 15 May 2020 at 17:40 EET) – UPM is proceeding at full speed with its investment project in Uruguay and has taken several steps forward. UPM and the new Government of Uruguay have signed a memorandum of understanding on pending items related to UPM’s growth project in Uruguay that will further strengthen the implementation of UPM's growth project and existing operations in Uruguay as well as the local economy.

Especially in the context of the COVID-19 pandemic and its potential impacts on Uruguayan society, UPM and the Government of Uruguay recognize the critical importance of ensuring the implementation of the project and realizing its benefits for the Uruguayan economy.

Both parties are fully committed and implementing the existing investment agreement signed between UPM and the previous Government of Uruguay in November 2017. Successful implementation of the project involves large number of aspects from construction work to infrastructure, energy and regional development. To this effect, UPM and the Government of Uruguay have signed a memorandum of understanding that refines and finalizes the scope and investments by the parties:

• Infrastructure: UPM will accelerate the earlier planned USD 60 million financing of the road infrastructure development in the Littoral area and Central Uruguay to support the growing wood transportation and high-performance vehicles while improving the road system in the area for all businesses and residents of the area.
• Electricity network: UPM will invest USD 68 million in electrical grid reinforcement that will create a bigger capacity for the grid, enabling UPM to fully utilize and sell the surplus energy of the Paso de los Toros mill in line with the specified project plans and higher energy efficiency performance of the mill. The investment will also further improve the stability and robustness of the electricity grid.

The total framework of UPM investment remains unchanged as communicated earlier in the context of the final investment decision, including the investment frame of USD 3 billion and the cash-cost of approximately USD 280 per delivered tonne of pulp.

These items will become effective upon signing the related contracts, which is expected to take place in the coming months.

"With the finalization of these pending items, both parties confirm their commitment to implement the project as agreed even in the unexpected circumstances prevailing under COVID-19,” says Petri Hakanen, Senior Vice President, Uruguay development project, UPM.

UPM also plans to invest in a new nursery in Central part of Uruguay. This planned third eucalyptus nursery would further enhance the plantation growth and competitive wood supply. The planned investment is estimated to be approximately USD 25 million and create over 120 new permanent jobs.

Furthermore, UPM has signed a long-term agreement with Kemira corporation regarding Kemira’s capacity expansion at Fray Bentos mill site to supply both Fray Bentos and the new Paso de los Toros mill. This expansion will further improve the efficiency and supply security through increased domestic production of pulp manufacturing supplies.

UPM Paso de los Toros pulp mill construction site in central Uruguay.

For further information please contact:

UPM, Media Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com

More information about our growth project in Uruguay at www.upmpasodelostoros.com

UPM Pulp

UPM is one of the world's leading producers of northern softwood, birch and eucalyptus pulp. We supply global customers in end use segments such as tissue, specialty and packaging as well as printing and writing papers, and board, through our own sales and technical service network close to customers. UPM Pulp operates four modern pulp mills, three in Finland and one in Uruguay, as well as eucalyptus plantations in Uruguay. UPM Pulp employs approximately 1,800 people. Annual pulp production capacity is 3.7 million tonnes. In 2019 we started the construction of a 2.1 million tonne/year greenfield eucalyptus pulp mill near Paso de los Toros in central Uruguay. The mill is scheduled to start up in the second half of 2022. Pulp Business is part of the UPM Biorefining Business Area which combines the integrated production of pulp, timber and biofuels with a synergistic supply chain of wood raw materials. www.upmpulp.com

UPM
We deliver renewable and responsible solutions and innovate for a future beyond fossils across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. As the industry leader in responsibility we are committed to the UN Business Ambition for 1.5°C and the science-based targets to mitigate climate change. We employ 18,700 people worldwide and our annual sales are approximately EUR 10.2 billion. Our shares are listed on Nasdaq Helsinki Ltd. UPM Biofore – Beyond fossils. www.upm.com

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