A refinery unlike any other

Dermot Carey has overseen many construction projects at Leuna Chemical Complex, but even for him, a timber storage yard was a new challenge. Originally from Ireland, he has been employed for more than ten years at InfraLeuna, which operates the chemical site in Saxony-Anhalt. As Head of Site Development, Carey goes to great lengths to meet the needs of companies setting up oper­ations in Leuna. How much electricity will the ­facility need, how much water, how much steam? Where is a road connection needed, where should access roads run, and what permits need to be obtained? Each of these points involve numerous contracts. In the case of the major investment by Finland’s UPM Biochemicals, they form “a masterpiece”, Carey says with a laugh – one very thick book.

The world’s first wood-based biorefinery

Over the past few years, UPM has built the world’s first biorefinery producing biochemicals from sustainably sourced hardwood in Leuna and is now putting it into operation step by step. The timber storage yard was needed to store locally sourced beechwood for the first stage of the process. Trains and lorries now arrive at the new storage yard every day, bringing timber from sustainably managed forests. At the refinery, the wood is turned into materials used in products including clothing, packaging and rubber products such as car tyres.

UPM has invested around 1.3 billion euros in the new facility, with the state of Saxony-Anhalt providing 20 million euros in funding for the project. It is the largest investment at the long-established Leuna chemical site since the opening of the oil refinery operated by French energy company Elf Aquitaine (now TotalEnergies) in 1997.

Environmental regulations provide investment certainty 

Why did Finnish company UPM choose Germany as the location for this major investment? “Ger­many is the European centre of the chemical ­industry and sustainable forestry,” says Harald Dialer, Executive Vice President, UPM Next Generation Renewables and Chief Technology Officer at UPM. Another reason the company was willing to embark on the project was the growing importance of sustainable products as major consumer brands pursue their sustainability strategies. One major incentive for the investment was demand for renewable ingredients in packaging and textiles, and also in industrial products such as cars and in the construction sector. The EU is currently working on regulations aimed at making products such as packaging and textiles more sustainable. These include discussions about introducing rules requiring a minimum proportion of bio-based solutions. “These regulations are essential if we are to actively shape the transition from fossil-based to renewable materials,” says Dialer. “Rules like these provide investment certainty and drive demand for precisely the products we manufacture in Leuna.”

The biorefinery is what industry experts call a FOAK project – “first of a kind”. “Since there was no precedent for the project, we needed new solutions on both the technical and regulatory sides,” says Dialer. Everyone involved was aware of this when the first talks between UPM and the Saxony-Anhalt state government took place in 2018. But it was agreed that a project like this was something they could accomplish together. Construction of the facility was completed in 2024, and the first products have been manufactured there since the end of 2025. Alongside UPM itself and the state government, other partners also contributed to the project’s success: Saxony-Anhalt’s investment and marketing agency, which supported UPM in setting up operations there, and InfraLeuna, which operates the chemical site.

In constant dialogue

In addition to the technical issues, InfraLeuna took care of permits and coordination with the rele­vant authorities. “Right at the start, we brought all the relevant authorities and UPM together for what is known as a scoping meeting,” says Dermot Carey. “That made the requirements transparent for both sides.” In fact, close communication is the most important thing of all on a project of this scale. Carey and his project managers ­supported the planning, construction and commissioning of the facility over a period of around seven years.

There was plenty to discuss: the project included building a bridge over a railway line and InfraLeuna taking over operation of the timber storage yard – including the traffic management plan and the introduction of an IT system to document timber deliveries arriving by heavy goods vehicle. Wastewater was another complex issue. “UPM’s wastewater requires pre-treatment, so we built a special facility for this purpose, which is now in operation. That was something else we’d never had at the chemical site before,” says Carey.

Staying flexible

But not everything can be planned. Raisa Vermasvuori is discovering that right now. Vermasvuori is a chemical engineer who is respons­ible for innovation at Group level and for technology development at UPM Next Generation Renewables – the division that brings together UPM’s renewable fuels and biochemicals businesses, including the refinery in Leuna. She and her team are supporting the commissioning of the biorefinery. “To be perfectly honest, when you build a facility that is the first ever of its kind in the world, you’re constantly learning.” For ex­ample, she and her team had carefully modelled how certain materials would flow through a pipe and used this to determine its precise diameter. “But once operations began, we found that the material behaved differently from how we’d expected, so we had to replace the pipe.”

That is why UPM is deliberately bringing the facil­ity into operation on a step-by-step basis. Once everything is up and running, “we will be producing materials here that will transform entire industries,” says Vermasvuori. “Among other things, we will produce a completely new material based on lignin, a component of wood.” This can be used as a filler in rubber products such as car tyres. Until now, carbon black has often been used instead, generating large quantities of CO2 during production. 

Another UPM product addresses a widespread problem in plastics recycling: many sorting facilities cannot detect black plastic. As a result, it often fails to enter the recycling stream and is incinerated instead. UPM has developed a wood-based material that can be used as a black pigment without this problem. “We’re constantly looking for new applications for our products,” says Vermasvuori.

In line with the High-Tech Agenda

Harald Dialer believes Germany offers a good investment climate for innovative companies such as UPM. “In my view, new technologies and products remain one of the most important drivers of Germany’s economy,” he says. “In our sector in particular – the industrial bioeconomy – various programmes are available to support innovation.” Dialer was very impressed with the Federal Government’s new High-Tech Agenda. “It addresses highly relevant fields for the future, such as sustainable, resource-efficient materials and solutions for decarbonisation.” He believes the roadmaps for implementing the agenda, presented in May 2026, are an excellent fit with UPM’s plans. 

To drive innovation, UPM has established its own research and development department in Leuna as part of Raisa Vermasvuori’s team. Vermasvuori says that partnerships have also been established with numerous universities and research institutions in the region. “We’re currently pursuing joint research projects with Martin Luther University Halle-Wittenberg, the Fraunhofer Center for Chemical-Biotechnological Processes and Anhalt University of Applied Sciences, to name just a few.”