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Södra to invest $190 million in kraft lignin production facility

SWEDEN (News release) -- Södra is now establishing a new business to become a world leader in the production of kraft lignin. Södra's production facility will be the first commercial facility in Sweden and the largest of its kind in the world. This is an investment of over SEK 2 billion and expected to be in operation in 2027.

Kraft lignin can replace fossil materials in, among other things, glue, batteries, rubber, composites and form the basis for new biofuels and biostimulators. The market and demand for replacements for fossil chemicals are increasing and Södra has for some time been exploring the opportunities on the market, had dialogue with potential customers and signed offtake agreements for a significant part of the production volumes. There is good possibility for kraft lignin production both to contribute to the green transition and the profitability of the forest estate.

"The forest is being called on for many things as society seeks to replace fossil-based materials. To succeed in that transition, sustainability and profitability need to go hand in hand and Södra's kraft lignin investment is a good example of that. We will make more out of every tree and strengthen our profitability. This is a big investment for Södra and the green transition," says Lotta Lyrå, CEO of Södra.

Today, lignin is used for generating energy, but the refining process Södra is investing in will make more use of the raw material as a product. This is in line with Södra's strategy to make more of each tree and create more value for the forest estate.

"Innovation is a necessary and important part of our business to ensure our competitiveness today and in the future. We are constantly working to create the most possible value from each tree, both with today's processes and through new opportunities. Within Södra's strategy, we see several future energy and chemical products with great potential as alternatives to fossil-based materials in society, of which kraft lignin is one," says Catrin Gustavsson, Executive Vice President at Södra Innovation.

Södra's new facility will have the largest capacity for kraft lignin production in the world. Production is planned to start in 2027 and is enabled through the Swedish Energy Agency and The Industrial Leap.

Södra is the largest forest-owner association in Sweden, with more than 50,000 family forest owners as members. Together, the members of Södra own a world-leading industrial operation that processes forest raw material into renewable products such as pulp, timber, building systems, liquid bioproducts and energy.

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