Swedish forest owners association and forest industry major Södra has announced that it is investing over SEK 2 billion (≈ EUR 177.7 million) to build the country's first, and the world's largest commercial kraft lignin extraction and refining plant at its Mönsterås pulp mill complex. The plant is expected to be operational in 2027.
Lignin is the component in wood that holds the fibres together and ensures that trees are strong and stable. It is a biopolymer comprising a series of interconnected aromatic compounds.
In the pulp-cooking phase, lignin is removed so that the fibres can be released and become pulp or dissolving pulp. This means that large amounts of lignin are created at pulp mills and that part of the lignin can be separated and become a product.
Currently, lignin is used for bioenergy purposes at Södra’s pulp mills of which the excess is supplied to district heating networks and the electricity grid.
However, kraft lignin can replace fossil-derived components in, among other things, asphalt, adhesives, batteries, rubber, and composites and form the basis for new biofuels and biostimulators.
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, said Lotta Lyrå, CEO of Södra.
Offtake agreements in place
According to Södra, the market- and demand for replacements for fossil-derived chemicals are increasing.
The company has been exploring the opportunities on the market for quite some time, has had dialogue with potential customers, and has signed offtake agreements for a significant part of the production volumes.
With kraft lignin in our product portfolio, we are strengthening our position as a supplier of sustainable alternatives. Södra has seen potential in kraft lignin production for a long time. Now that we see growing market interest, we can offer a product that contributes to the green transition, said Johannes Bogren, VP for Södra Bioproducts.
There is a good opportunity for kraft lignin production to contribute to the green transition and the profitability of the forest estate, and the investment 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, said Catrin Gustavsson, EVP at Södra Innovation.
Investment grant
Södra’s new facility will be the first commercial plant of its kind in Sweden and the world’s largest for kraft lignin extraction. Production is planned to start in 2027.
The Swedish Energy Agency has awarded the project a SEK 300 million (≈ EUR 26.7 million) investment grant under its “Industrial Leap” (Industriklivet) program.
This program is part of the EU’s Recovery and Resilience Facility (RRF), a funding instrument that provides grants and loans to support reforms and investments in EU Member States. RRF is a core instrument within the Next Generation EU investment plan, ensuring the EU is prepared for future challenges and opportunities.
Södra’s investment is a large and important measure that not only has the potential for reduced emissions but can also bring about a shift in the market for lignin. In this way, we use the raw material that is available as efficiently and sustainably as possible, remarked Robert Andrén, Director General of the Swedish Energy Agency.
