German Pellets to build plant in Texas

Sept. 16, 2011, London, UK – Biomass
producer German Pellets will build a pellet production facility near Houston,
Texas. Agreements for the site in Tyler County were signed in August 2011.

The plant, which will have an overall
production capacity of 500,000 tonnes/year, is set to start producing pellets
in mid-2012 and will require more than 1 million m³/year of green wood. It will
be built on the site of an existing chip mill, so will use an established wood
basket and proven supply structure.

“There is a tremendous amount of raw
material available in the United States at a lower cost than in Europe,” German
Pellets U.S. activities and business development chief Peter Sucher says. “This
high volume of raw materials makes the region of Tyler County an especially
attractive and very sustainable location for us and supplements our existing
sources of supply.”

Sucher says that 100% of production at the
plant will be shipped to Europe on account of the huge growth expected in the
European pellet market over the next 10–15 years, particularly in the
Netherlands, UK, Denmark, and Sweden.

German Pellets has already signed the first
supply contracts on an FOB basis. The company has discussed using an index as a
basis for pricing long-term contracts, which the supplier is looking to secure.
“We are seeing some trends developing, but at the moment indexes appear to be
strongly influenced by utilities,” says Sucher. “We hope in the near future
there will be more participation from the producing side.”

The plant will be constructed less than 100
km from Port Arthur, which will be the company's main harbour for shipping.
Pellets will be transported to the port by barge or truck. German Pellets also
plans to construct a 90,000-tonne storage facility at the port.

The company says it is starting to focus on
higher quality pellets for consumer and medium-sized commercial operations, as
currently it cannot meet the prices for industrial pellets. But Sucher predicts
that pellet prices are on the rise owing to extra demand, so the industrial
markets may become more attractive in the future.

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