Japanese company buys Australian wood pellets

Nov. 22, 2010, Tokyo, Japan – Japanese
trading house Mitsui has signed a contract to buy wood pellets from Australian
biomass producer Plantation Energy Australia. The 4.5-year contract deal is
worth in excess of AUD $71.8 million and began in October 2010. Mitsui declined
to comment on volumes, but the trading house is expected to buy a few hundred
thousand tons of wood pellets over the contract period and sell them to
regional electric utilities, mainly Japanese generators, operating coal-fired
power plants.

The pellet producer will manufacture and
export the wood from the first of several planned pellet manufacturing
facilities operating in Albany, Western Australia. Plantation Energy already
has supply deals in place with European utilities and said the latest agreement
is the largest of its kind in Japan in both volume and value.

“As Europe has been doing for many years,
Asian markets are beginning to understand the cost and logistical advantages of
co-firing wood pellets to meet increasing renewable energy obligation targets,”
comments Bob Warburton, chair of Plantation Energy.

“Mitsui believes wood pellets will play an
increasing role in both Japan and the rest of Asia as companies take a
portfolio approach to meeting their emissions targets,” says Mitsui general
manager Yukio Takebe. “The market for wood pellets in Japan is forecast to grow
rapidly over the next five years, and we are pleased to be able to turn to
Australia to meet the market's needs.”

Plantation is looking to increase pellet
capacity with the construction of two 250,000-tonne/year plants. One is in
Heywood, Victoria, and the other near Mount Gambier in South Australia. The
company, which is backed by U.S. private equity group Denham Capital, opened
its first wood pellet plant last year in Albany, Western Australia. The Albany
plant has a capacity of 250,000 tonnes/year.

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