Serbian wood processing unit Simpo has concluded an agreement with Slovakian firm Grafobal for the setting up of a biomass plant.

The plant will have a 5MW capacity and will employ wood chips as fuel.

Steam produced by the facility will be used to power Simpo’s presses while the plant will also supply electricity and communal heating for the Kursumlija municipality in Siberia.

The proposed facility is expected to require an investment of $27m, reported Bloomberg.

Simpo vice president Ljubomir Ilkic told the news agency that Grafobal will finance the plant and the two companies are expected to ink a binding contract to finalize the terms.