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ANDRITZ PULP & PAPER – focus on biomassMarket drivers, technologies, and products
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2 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass
Summary and conclusions
Contents
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3 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Full line supplierANDRITZ PULP & PAPER business lines
Bubbling fluidized bed boilers for bio-fuels.
Biomass gasifiers
Complete lines for tissue and board.
Stock preparation and approach flow.
Complete lines for chemical, mechanical, and recycled fiber production.
Main products
Power generating industry
Paper mills
Pulp mills
Customers
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4 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
processes offered by ANDRITZ
Market pulp
Market DIP
Market pulp
Tissue
Paper/board
Serviceincl. engineered wear products, upgrades, modernizations, maintenance packages, automation solutions, etc.
DryingBaling
Palletizing
Woodyard
Chemical pulp
Recycled fibers
Mechanical pulp
Stock prep.
Chemicalrecovery
Washing Screening Bleaching Dewatering DryingBaling
Board andtissue machines
Refining Bleaching DryingDewatering
Deinking Screening/Cleaning
Dewatering
Palletizing
Washing/Bleaching
Pulping
Cooking
Calanders
Coating
Processes and equipmentFull line capability
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5 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Strong growth through organic expansion and acquisitionsFocus: complementary products, technologies, and businesses
329
719
883
672
810885
1,327
1,462
1,304
1,033
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1990 Sprout-Bauer1992 Durametal1994 Kone Wood1998 Kvaerner Hymac1999 Winberg2000 Ahlstrom Machinery2000 Lamb Baling Line2000 Voith Andritz Tissue
LLC (JV)2002 ABB Drying2003 IDEAS Simulation 2003 Acutest Oy2003 Fiedler2004 EMS (JV)2005 Cybermetrics2005 Universal Dynamics
Group2006 Küsters2006 Pilão2007 Bachofen + Meier2007 Sindus2008 Kufferath2009 Rollteck
Acquisitions Sales ANDRITZ PULP & PAPER (MEUR)
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6 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Long-term development of profitability
Decline in profitabilityfrom 2004 to 2008mainly due to:
decline of service sales as % of total business area’s sales – resulting from the strong growth of the capital business and
investments in expansion of product scope(board machine, biomass power boiler, etc.).
* excluding restructuring
2.9*
5.0
6.05.86.27.3
6.15.86.1
4.3
5.5
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2009
EBITA margin ANDRITZ PULP & PAPER (%)
Average EBITA margin 2004-2008: 6.1%Average EBITA margin 1999-2003: 5.6%
5.6 6.1
EBITA ANDRITZ PULP & PAPER (MEUR)
13.5*
66.3
87.875.9
63.664.8
49.139.2
53.9
30.818.2
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2009
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7 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Europe: 61%
Asia: 9%
South America: 12%
North America: 18%
Europe: 41%
Asia: 20%
South America: 17%North America: 13%Others: 8%
Global presence of ANDRITZ PULP & PAPER
Sales by region 2008
Employees by region 2008 (5,102 employees as of end of 2008)
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8 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ is also engaged in the maintenance of most of these mills.
Important ANDRITZ PULP & PAPER references at a glance
CMPC Santa Fe Aracruz
Botnia Fray Bentos
VCP Tres LagoasVeracelSuzano Mucuri
UPM Pietarsaari
APP Jiang Lin
Mercer Stendal
Marusumi OheTiger Huaihua
Ence Navia
Sappi Umkomaas
Altri Figueira da Foz
Mondi Syktyvkar
April Riau Andalan
SCA ÖstrandSödra Värö
Bowater Catawaba
Soporcel Lavos
Visy Tumut
UPM Kuusankoski
SCA Obbola
VCP Jacarei
Arauco Valdivia
Andhra PradeshRajahmundry
Portucel CaciaMondi Ruzomberok
Ence Huelva
AmcorMaryvale
WeyerhaeuserAlbany
WeyerhaeuserCampti
Domtar Kingsport
Arauco Itata
Mondi Richards Bay
Zicunaga Hernani
WeyerhaeuserValliant
Cenibra Belo Oriente
Guizhou Chitianhua
CMPC Santa Fe Aracruz
Botnia Fray Bentos
VCP Tres LagoasVeracelSuzano Mucuri
UPM Pietarsaari
APP Jiang Lin
Mercer Stendal
Marusumi OheTiger Huaihua
Ence Navia
Sappi Umkomaas
Altri Figueira da Foz
Mondi Syktyvkar
April Riau Andalan
SCA ÖstrandSödra Värö
Bowater Catawaba
Soporcel Lavos
Visy Tumut
UPM Kuusankoski
SCA Obbola
VCP Jacarei
Arauco Valdivia
Andhra PradeshRajahmundry
Portucel CaciaMondi Ruzomberok
Ence Huelva
AmcorMaryvale
WeyerhaeuserAlbany
WeyerhaeuserCampti
Domtar Kingsport
Arauco Itata
Mondi Richards Bay
Zicunaga Hernani
WeyerhaeuserValliant
Cenibra Belo Oriente
Guizhou Chitianhua
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9 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Woodyard Cooking Bleach
plantPulpdryer
BalinglineWashers
Rec.boilerEvaps
WLplant
Order placed May 2007.
Start-up in March 2009.
Complete fiberline from digester to finished bales.
Complete white liquor production plant.
VCP – Votorantim Celulose e Papel, BrazilWorld’s largest single-line pulp mill (1.3 mill. t/a pulp production)
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10 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Woodyard Cooking Bleach
plantPulpdryer
BalinglineWashers
Rec.boilerEvaps
WLplant
Hunan Tiger Forest & Paper Group Co., Ltd., China400,000 t/a pulp production
Start-up August 2008.
Softwood pulp production.
Andritz’s scope of supply comprises:wood handlingcookingwashingscreening and bleachingpulp drying and bale handlingchemical recovery boiler and evaporation,lime kiln and recausticizing.
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11 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Reference picture
Chenming Zhanjiang, China700,000 t/a pulp production
Start-up 2011.
Hardwood pulp production.
Andritz’s scope of supply comprises:wood handlingcookingwashingscreening and bleachingpulp drying and bale handlingchemical recovery boiler and evaporationlime kiln and recausticizing.
Woodyard Cooking Bleach
plantPulpdryer
BalinglineWashers
Rec.boilerEvaps
WLplant
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12 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass
Summary and conclusions
Contents
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13 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Biomass – what is it?
Woody/tree cropsWood chips, HW and SW-residual (birch, poplar, eucalyptus, etc.).Engineered high efficiency wood-crops (hybrid poplar, shrub willow, etc.).
Cereals Corn stover/stalks, cobs and corn fiber.Wheat and barely straws.
Sugar crop residualSugar cane and energy cane bagasse.Sweet sorghum residual.
Forages & grassesSwitch grass (panicum virgatum) and other prairie grasses.Alfalfa.Jose tall wheat grass, wild rye, bermuda grass (cynodon dactylon), bahia grass (paspalum notatum), napier grass (pennisetumpurpureum).Miscanthus, arundo donax (giant reed) and other high yielding grasses.
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14 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Process offered by ANDRITZ
Thermo-chemicalconversion
Bio-chemicalconversion
Mechanical-chemicalconversion
Solid biomass
Pelletising
Gasification
Fermentation of starch basedBiomass
Pretreatment fermentationof cellulosic Biomass
Pressing of oil out of seedsand oil rich plant + conversion
PyrolysisPyrolysisoil
Syntheticgas
Power boiler
Households
Integrated gasificationcombined cycle
Synthetic natural gas
Bio-DieselFischer-Tropsch
Dimethylether
Power boiler
Bio-Ethanol 1st
generation
Bio-Ethanol 2nd
generation
Bio-Diesel 1st
generation
Heatingwarm water
Biofuel
Heat/electricpower
Biofuel
Biofuel
Biofuel
Biofuel
Biofuel
Heat/electricpower
Heat/electricpower
Ways of converting biomass into heat/electricity and fuels
Market expectations
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15 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Fast growing energy demand worldwide.
Biomass is highly competitive.
The need for renewable carbon sources in the chemical and metal industry will be in addition to the huge need for renewable energy.
The costs for CO2 emissions (and other emissions) will be high.
Growing environmental regulations and implementation of support mechanisms.
Future supply and costs for fossil carbon sources (biomass the only viable alternative).
Technology for biomass conversion show a fast development and biomass productivity is also possible to increase considerably, this will bring the costs down drastically for biomass based products.
The reserves of coal and biomass are in more political “secure areas”.
Driving forces for increased use of biomass
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16 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Climate change: need for reduction of green house gases.
US Energy Independence and Security Act of 2007:Increase production of renewable fuels from 4.0 billion gallons to 36.0 billion gallons by 2022; thereof, 21 billion gallons to be derived from non corn starch products this would mean approximately 350 plants for 2nd generation ethanol production (each plant: 200.000 m³ethanol/y).
EU target by 2020:20% renewable out of total energy consumption.10% renewable for transport fuel out of total fuel consumption.
Drivers for production of renewable fuels out of biomass
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17 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Source:Renewable energy road map,Commission of the European Communities, 2007
Final energy consumption EU-25, 2020, TWh100% = 15,000 TWh
Target 2020
100%
20% EU efficiency
target
20%
120%
Rene-wables
20%
80%
Businessas usual
2020
Non-renewables
1,450
3,000
445
2020 renewable
targets
1,105
Trans-portation
Heating and cooling
Electricity
Renewable energy deployment by sector:
Ambitious targets of the European Union
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18 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Canada: “Green transformation program”0.16 CAD/liter black liquor fired – max. 1 billion USD.Funds must be spend during next three years for energy efficiency improvements, upgrades, and new equipment for energy.24 mills are eligable for funding.
USA: Black Liquor Credit expires at the end of 20090.13 USD/liter of alternative fuel used in producing an alternative fuel mixture.As a result, US companies receive ~175 USD/t of pulp or paper produced, representing ~50% of manufacturing cash costs.Total spending: 6-7 bn. USD/a.
BCAP credit: will start January 1, 2010Biomass Crop Assistance Program allows to get subsidy for biomass being used in energy production; pulp and paper industry can take benefits out of that.Program pays suppliers of biomass to approved facilities 45 USD per ton of dried material.RISI has calculated that this tax credit is around 50 USD per ton of pulp:
for kraft pulp mills annual subsidy 2.4 billion USDfor non-kraft mills 140 million USDfor lumber mills 1.3 billion USDother wood industry 200 million USD
Fuel tax credits in the USA and CanadaGovernment backed incentive programs to stimulate investments
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19 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass:Biomass and recovery boilers2nd generation biofuelsGasificationPelletizing
Summary and conclusions
Contents
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20 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Pulp mill – biomass conversion into pulp and energyThe process
Chemicalplant
Water and effluent treatment
FiberlineWoodyard
Recovery islandPower boiler Biomass boiler
Drying line
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21 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ExampleRecovery island
Recovery island incl. biomass boiler for pulp mill with capacity of 1 mill. t/a:
Recovery efficiency of chemicals: 98%.
Green electricity produced: 160 MW.
Excess power generation: up to 80 MW recovery boiler.
Investment in recovery boiler: ~150 MEUR.
Investment power boiler: ~50 MEUR.
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22 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ biomass boilersNew business with technology for green electricity markets
Driver: high feed in tariffs in different countries depending on local legislation.
Market outlook very good for Europe and US.
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23 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Growing reference base for green energy productionFirst boilers in operation
Total order intake of the following orders more than 140 MEUR:
Ence Navia, Spain, start-up 2008:steam flow 120 t/hpower output 30 MWe
Ence Huelva, Spain, start-up 2010:steam flow 195 t/hpower output 50 MWe
Portucel Cacia, Portugal, start-up 2009:steam flow 58 t/hpower output 15 MWe
Portucel Setubal, Portugal, start-up 2009:steam flow 58 t/hpower output 15 MWe
CHP plant in Estonia, start-up 2010:steam flow 94 t/hpower output 18 MWe
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24 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass:Biomass and recovery boilers2nd generation biofuelsGasificationPelletizing
Summary and conclusions
Contents
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25 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Only 2nd generation biofuels fulfill the ultimate goal to cut green house gas emissions substantially:availability of raw material,CO2-efficiency,no competition with food.
Strong believe only in processes with highest efficiency and lowest investment cost supported by clear demand for those final products.
Deep insight knowledge of entire process chain – from raw material handling up to the final product.
Able to build large scale equipment and processes to achieve economies of scale.
Why ANDRITZ focuses on 2nd generation biofuels?
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26 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Ethanol productionComparison 1st and 2nd generation
New challenges producing cellulosic ethanol vs. corn ethanol:
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27 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Source: http://www.energy.gov/news/4827.htm
Cellulosic ethanol vs. corn ethanol
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28 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
BiomassWood chipsgrasses Agrarian residuals
HydrolysisPre-hydro (Dil. Acid)SteamEx PreTreatment(some hemi’s dissolved)
Lignin
Ethanol
CO2
From biomass to ethanol
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29 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ’s expertise in 2nd generation fuels Patents, pilot plants, and test laboratory
Development of pretreatment system ready and several patents filed:Sold six pilot plants based on ANDRITZ patents to leaders in the industry.
Own test laboratory in full operation:1,900 m2 laboratory facility opened in 1991.Offering “contract” lab services to customers.Pulping and biofuel R&D, fiberline process and product engineers.
Offering semi and full scale plants to major players in ethanol industry.
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30 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Feedstockhandling
Pre-hydrolysis
Washing
Enzymatic hydrolysis
Enzymatic hydrolysis
C6C5
Fermentation
Distillation
LigninSeparation
Power boilerDehydration
Ethanol Power
Steam explosion
Evaporation?
ANDRITZ corecompetence
ANDRITZ bio-ethanol process
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31 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass:Biomass and recovery boilers2nd generation biofuelsGasificationPelletizing
Summary and conclusions
Contents
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32 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Atmospheric 10-50 MWth.
Pressurized 30-150 MWth.
Bubbling fluidized bedAtmospheric 20-150 MWth.
Pressurized 50-300 MWth.
Circulating fluidized bed
Limited in size (~10 MWth).
Gas quality limits applications.
Fixed bed
Biomass gasificationTechnology alternatives
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33 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
20-150 MWth.
Atmospheric CFB.
(Co-)firing(boiler)
10-50MWth.
Pressurized BFB.
IGCC(gas turbine)
10-50 MWth.
Low pressure BFB.
Electricity by gas engine units.
Co-generation(gas engine)
150 MWth.
Pressurized BFB or CFB.
Development phase.
Syngasproduction
10-60 MWth.
Atmospheric CFB (BFB could be used as well).
Fuel gasfor kilns
Biomass gasifier applications
Pulp and paper and cement industries
Municipal utilities Utilities and all industries with large fossil fuel fired boilers
Utilities andindustries who aim for new mid-size power plant with max power
BTL producers(P&P & others)and utilities
Green power
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34 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
UPM-Kymmene is one of the leading global forestry companies.
UPM announced in October 2006 that it prepares to become a significant producer of renewable biofuels, like biodiesel.
UPM, ANDRITZ and Carbona cooperate on the development of the technology for biomass gasification and synthesis gas cleanup for bio-liquids production.
The pilot plant of the Gas Technology Institute in Chicago isused for oxygen gasification/gas cleanup testing and development.
Gasification of different forest biomass types and related gas yield and quality has been verified.
Design data for scale-up and process integration has been accomplished.
Operation parameters for the full scale plant have been generated.
UPM – Biofuel To Liquid (BTL) project
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35 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass:Biomass and recovery boilers2nd generation biofuelsGasificationPelletizing
Summary and conclusions
Contents
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36 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Development of global wood pellet market
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Mill
ion
tons 18% growth p.a.
25% growth after 2010
Source: ProPellets analysis 2008 + presentations by Essent, Rotterdam Port & AEBIOM
Other projections (2020):Essent 142 mill. t/aRotterdam Port 130 mill. t/aAEBIOM 150 mill. t/a 2008
9.2 mill. tons
Strong growth expected
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0
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37 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
The current pellets are excellent feedstock for co-firing with coal, dedicated biomass powered plants, and residential heating.
Cellulosic biomass
Coal substitute Co-firing in boilers
Residential heating white pellets
Opportunities for ANDRITZ:Clear trend to large scale pelletizing plants (500,000-1,000,000 t/a).
ANDRITZ only company worldwide who is able to offer complete turnkey plants based on own technology.
Drivers for growth of pellet consumption
Conversion to pellets:WoodyardDryingPelletizing
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38 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Well proven technologiesANDRITZ – global market leader in wood pelleting plants
Global installed base is about 440 wood based pellet production plants.
ANDRITZ has supplied equipment to more than 250 of these wood pelleting plants.
Half of the global production of wood pellets is produced by ANDRITZ machines.
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39 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Example: pellet mill, confidential customerCapacity of 1,000,000 t/a
Complete ANDRITZpellet plant with clear
responsibilities
Bark pile
Chip silo 10,000 m³
Woodroom2,400,000 m3 wood/adebarking 2 x 190 m3/h
Drying4 x 31 t/h
Pellet production125 t/h36 pellet machines
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40 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Excellent “pellet chip” quality is produced by the HHQ-Chipper™
CleaningDebarkingChippingScreeningStoringMixing and dozing to drying
Wood infeed(softwood & hardwood)
Preparation of raw material for drying/pelleting
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41 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Dry product
Sludge Drying
35-50% dry solids.
Low heating value.
Biological active.
>60-97% dry solids.
Free flowing.
Increased heating value.
Biological stable.
Reduced bulk density.
Drying systems
Wet inlet material
DryingPreparation/refining of biomass for further usage
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42 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009
ANDRITZ PULP & PAPER – overview
Biomass and market drivers
ANDRITZ’s products in biomass:Biomass and recovery boilers2nd generation biofuelsGasificationPelletizing
Summary and conclusions
Contents
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43 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Strong market growth to continue due to growing stringent environmental regulations and support mechanisms from various governments.
Fast growth of technology for biomass conversion will increase competitiveness of biomass based products.
Growing project activity for biomass and recovery boilerexpected during the next few years.
Biomass market
Expand product portfolio for bio-boiler markets.
Further expand and grow new markets (gasification, complete pelletizing plants).
Develop full line competence in 2nd generation biofuels.
ANDRITZ strategy
Summary and conclusions
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44 ANDRITZ PULP & PAPER – Capital Market Days 2009, Spain
Certain statements contained in this presentation constitute ‛forward-looking statements.’ These statements, which contain the words ‛believe’, ‛intend’, ‛expect’ and words of similar meaning, reflect management’s beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially.
As a result, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so under applicable law.
Note: 2008 figures restated.
Disclaimer