Canadian Biomass Magazine

News
Rentech is New Pellet Player

Rentech Inc. has acquired Georgia-based Fulghum Fibres Inc. and two facilities for conversion to wood pellets in Ontario, along with contracts for the sale and transport of more than four million tonnes of wood pellets over 10 years.


June 5, 2013
By canadian biomass

Rentech Inc. has acquired Georgia-based Fulghum Fibres Inc. and two facilities for conversion to wood pellets in Ontario, along with contracts for the sale and transport of more than four million tonnes of wood pellets over 10 years.

Biomass_Grinder  
Rentech originally hoped to convert unused Ontario Crown timber to jet fuel, but plans have since moved to converting over 900,000 cubic metres of residuals and roundwood once destined for particleboard and OSB production into wood pellets at two mothballed plants. 


 

The acquisition includes interests in the conversion of two mothballed wood products facilities to pellet mills in Wawa and Atikokan, Ont., as well as logistics agreements with CN Rail and the Port of Quebec for pellet export.

Take-or-pay contracts are in place with two utilities in Canada and the U.K. to supply a combined 445,000 tonnes of wood pellets annually over 10 years. To supply the pellets, Rentech plans to convert two decommissioned wood fibre mills in Eastern Canada into pellet mills that will employ a total of 65 full-time employees and help to create jobs for construction and wood supply from sustainable Crown forests in Ontario. The two plants would make Rentech the largest producer of industrial wood pellets using fibre from Eastern Canada.

Advertisment

“This launches us into the wood fibre and pellet supply business, with immediate cash flow and significant growth opportunities, and allows us to take advantage of our fibre relationship in the province of Ontario,” said D. Hunt Ramsbottom, president and CEO at Rentech. “With sustainable fibre supply from Crown forests, Rentech will continue to pursue First Nations partnerships and opportunities for economic development associated with our Ontario projects.”

Markets secured
Rentech says the investment is based on the expectation that global demand for wood pellets is projected to triple by 2020, to 50 million tonnes. Moreover, the deal includes access to two established contracts with Ontario Power Generation (OPG) in Ontario and Drax Power Ltd. in the U.K. 

Drax has signed a 10-year offtake contract for the delivery of approximately 400,000 tonnes of pellets annually from Rentech’s Wawa and Atikokan facilities, with prices indexed for inflation, fuel and fibre costs. The contract establishes a strategic relationship with Drax, which plans to invest approximately $1 billion through 2017 to transform the largest coal-fired power station in the U.K. to use mostly wood pellets. With the conversion of three of six generating units from coal to biomass, Drax is expected to require seven million tonnes of pellets per year by 2017.

Rentech has entered into a long-term contract with Quebec Stevedoring at the Port of Quebec to provide stevedoring, terminalling and warehousing services for its Drax shipments, and to allow it to use large Panamax vessels and covered storage for 75,000 tonnes. Pellets will be shipped to the port via CN Rail under long-term contract.

OPG, which is phasing out the use of coal to produce electricity at its power plants, has signed a 10-year offtake contract for the Atikokan project to supply 45,000 tonnes of pellets annually. OPG has the option to expand the contract to 90,000 tonnes annually. Rentech will acquire the OPG contract as part of the acquisition of the Atikokan facility.

To meet these volumes, Rentech has exclusive rights to acquire a former oriented strand board mill from Weyerhaeuser in Wawa, Ont., which Rentech expects to convert for production of approximately 360,000 tonnes of pellets annually. The full output of pellets from this facility will be sold under a long-term contract to Drax, with the first delivery scheduled for the fourth quarter of 2014. The facility is expected to consume 710,000 tonnes of certified sustainably managed Crown fibre annually and to employ 40 full-time employees.

Rentech has also entered into an agreement to acquire a former particle board processing mill from Atikokan Renewable Fuels in Atikokan, located just 18 kilometres from the OPG power station, It will be converted to make 125,000 tonnes of pellets annually, with 45,000 tonnes annually going to OPG, and the balance to be sold under the Drax contract unless OPG exercises its option on the additional 45,000 tonnes. The first delivery is scheduled for the first quarter of 2014. The mill is expected to consume 250,000 tonnes of Crown fibre annually and to employ 25.

Rentech has formed a partnership with Great North Bio Energy to continue to work with First Nations in the development and operation of the Atikokan project.


Print this page

Related



Leave a Reply

Your email address will not be published. Required fields are marked *

*