To be built with a cost of $99m, the new wood pellet factory will be located in Alabama and will annually produce 360,000 metric tonnes
Canadian renewable energy company Pinnacle Renewable Energy has announced that it plans to build a new industrial wood pellet production facility in Alabama, US.
The company stated that the new facility will be located in close proximity to its Aliceville facility, adjacent to an existing large sawmill in Demopolis. The annual production capacity of the new facility is expected to be 360,000 metric tonnes.
Pinnacle plans to sell wood pellets through its contracted backlog long-term, take-or-pay off-take contracts. The wood pellet plant could be commissioned in the second quarter of 2021.
Pinnacle CEO Rob McCurdy said: “Building on our early success at the Aliceville Facility, which is currently producing wood pellets ahead of the commissioning curve, we are pleased to be expanding our presence in the U.S. southeast and leveraging the existing relationships and infrastructure we have established in the area.
“The U.S. southeast expansion further aligns the Company with our partners and fibre suppliers and allows for flexibility to optimize fibre flow between the facilities, while further diversifying our business in the region, which will see approximately 660,000 MTPA of pellet production once fully commissioned.”
Pinnacle to operate Demopolis facility
Pinnacle stated that the new facility will be operated under a partnership with The Westervelt Company (TWC), and Two Rivers Lumber Company (TRL), with 70%, 20% and 10% stakes, respectively.
TWC will sell 10% of its existing 30% stake in Aliceville Facility to TRL. Under the partnership terms, Pinnacle will operate the new Demopolis facility and manage all aspects of customer relations, marketing, sales and logistics.
Pinnacle estimates a capital cost of $99m to construct the new wood pellet facility and will fund its portion from its existing credit facilities.
To be located on the same river system as the Aliceville Facility, the Demopolis facility, will be built to ensure that finished pellets can be barged and loaded at the port in Mobile, Alabama, which is the same port used by the Aliceville Facility.
Currently in its final stages of design and construction planning, permit applications have started for the Demopolis Facility.
The Westervelt Company president and CEO Brian Luoma said: “Since we began working with Pinnacle last year at the Aliceville mill, we have built a strong partnership based on our shared commitment to safety, quality, environmental responsibility and our communities.
“This new venture with Pinnacle and Two Rivers allows Westervelt to participate in a growing market while capturing the advantages of the abundant resources in this area. Whether it’s industry experience, supply chain advantages or land management expertise, this partnership will benefit from the strengths of each of the companies involved.”