By Maria Church
Feb. 21, 2017 - Equipment and operational issues as well as an uncertain market for wood pellets are cited as reasons behind Rentech's decision to idle its pellet plant in Wawa, Ont., in two weeks.
The Wawa facility replaced problematic conveyors last fall but continued to experience equipment and operating challenges, the company said in a news release. Idling the plant will allow Rentech to conserve liquidity as it formally explores “strategic alternatives for the plant including ongoing discussions with third parties.
“While we believe that the issues we have been experiencing at the facility can be resolved with additional capital investments, we have concluded that it is not economical to pursue those investments or to continue to operate the facility at this time.”
The company expects the idle period to be complete in two weeks, at which time a small group of employees will maintain the plant to keep it in working order for potential buyers.
Rentech’s Atikokan wood pellet facility is reducing its production to 45,000 tonnes per year, which meets the company’s contract with Ontario Power Generation. The facility will stop shipping pellets to the Port of Quebec.
“We expect the Atikokan facility to generate cash flow in the range of break-even to slightly positive in 2017 under this revised operating plan,” the company said.
Sales at the company’s New England Wood Pellet were negatively impacted by the warm winter and low cost of heating oil and propane, but the company believes the issues are temporary and expects business to return to historical levels of profitability.