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UPM favouring Rotterdam over Kotka for billion-euro biofuels refinery plant

Although a final decision is not expected until the end of this year, the Finnish forestry company said the operating environment in the Dutch port city is "more favourable".

UPM currently operates a biorefinery plant in the city of Lappeenranta. Image: Kari Saastamoinen/ Yle

Finnish forestry firm UPM has announced that plans to build a next-generation biofuels refinery in the Dutch port city of Rotterdam are progressing.

"Work continues in Rotterdam, where the operating environment is more favourable for the biofuels business," CEO Jussi Pesonen wrote in a statement (siirryt toiseen palveluun) announcing the company's 2021 financial results.

The second option for the location of the refinery is the southern Finnish city of Kotka.

However, the statement added that due to the "challenging" investment environment, no final decision on the location of the plant has yet been made.

"The current investment environment is very challenging for new major projects like this in terms of resourcing, schedules and costs. Therefore, we are not planning to make further decisions before the end of this year," Pesonen said.

UPM has previously stated that factors influencing the decision include the availability and price of raw materials, labour and logistical costs, and the price of energy.

The company has also estimated that the planned biorefinery would have an annual capacity of 500,000 tonnes of high-quality renewable fuels, including aviation fuel.

UPM currently operates a biorefinery in Lappeenranta, but the annual production of the new plant would be five times the output of the Lappeenranta facility.

Authorities in the city of Kotka reserved a 30-hectare space, located at an old power plant site in the Mussalo harbour region, when UPM initially announced plans to build a new biorefinery. The city has since spent about eight million euros preparing the site for UPM's use.

Losing the refinery to Rotterdam would therefore be a significant setback for the city of Kotka, as UPM has estimated that the project would employ several thousand people during the construction phase and the plant itself would employ a further 100 workers.

Wider hopes that UPM would choose Finland over the Netherlands for the plant's location had been high. Minister of Economic Affairs Mika Lintilä (Cen) told Yle last year that the state was making every effort to get the biorefinery to Finland.