In a circular economy, the efficient utilization of all materials as valuable resources, with a focus on minimizing waste, is paramount. This study shows the possibilities of upgrading the lowest-valued residuals from the forest industry into a new product with both liming and fertilizing properties on forest soil. Hydrothermal carbonized sludge mixed with bark and ash in the proportions of 45:10:45 was densified into fertilizer pellets that meet the nutrient requirements of 120 kg N per hectare when 7 tons of pellets is spread in forests. The pellets met a high-quality result according to durability and density, which were above 95% and 900 kg/m3. However, pellets exposed to wet and cold conditions lost their hardness, making the pellets dissolve over time. Small amounts, <5‰, of nutrients, alkali ions, and heavy metals leached out from the pellets under all conditions, indicating good properties for forest soil amendment. The conclusion is that it is possible to close the circle of nutrients by using innovative thinking around forest industrial residual products.