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IDC closes South African wood pellet plant

January 22, 2013, London, UK — South Africa's Industrial Development (IDC) has shut down production at its 100,000 t/yr EC Biomass (ECB) pellet plant in Port Elizabeth, South Africa, because of unfavourable export economics, the company told Argus.


January 22, 2013
By Argus Media

IDC exported its final cargo of 9,000t wood pellets to Europe in December, and is looking for a buyer for the ECB plant and the 80,000 t/yr Zebra Pellets plant in Sabie, which has been idle since last year.

“We are looking to put up both plants for auction,” ECB and Zebra Pellets acting chief executive Mohammed Sooliman told Argus. “At this stage there is no price set, but we would still welcome offers. We have had interest from a few local companies, but nothing definite.”

A lack of available raw material meant the ECB plant was running at less than half of its capacity, and that production costs became too high to break even. “We were producing at maximum available raw material capacity, around 4,500 t/month,” Sooliman said. “But availability of raw material is a critical success factor, and our raw material suppliers indicated that they were looking to reduce supply even further as they wish to supply to particle board manufacturing.”

IDC's exports to European consumers are also uncertain, as a result of bearish prices and a lack of demand, coupled with volatile exchange rates. “The European market is very volatile in terms of currency,” Sooliman said. “Due to this volatility, the best market is the local market as it removes all the uncertainty. But the local market is developing for biomass to energy in a direct form and consumers favour chips over pellets.”

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Sooliman is consequently developing two biomass combined heat and power (CHP) plants in other areas of South Africa. Both will be owned by the forest-owners that supply wood chips to the plant. “There is no market for their [forest-owners'] chips as it is too far from market and transport is very prohibitive to deliver it locally or for export,” Sooliman said. “But they have enough raw materials for CHP plants. No imports will be considered as the projects are self-reliant.”

IDC took over the ECB plant in January 2011, and acquired Zebra Pellets in September 2010. Feedstock for both was FSC-certified forest sawmill pine residues. The company — in conjunction with South Africa's state-owned utility Eskom and forestry company Safcol — is exploring converting Zebra Pellets into a torrefied plant as an alternative to a sale, according to Sooliman. This plant would supply torrefied pellets to Eskom, although it is still in the development phase.

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