Rentech Inc. plans to increase wood pellet production for another 550 thousand tons in 2014
California-based Rentech Inc., which owns and operates wood fiber processing and nitrogen fertilizer manufacturing capacities, expanding its business on the biomass market. Thus, in 2013 the company acquired one of the largest manufacturers of wood fiber Fulghum Fibres Inc. that owns two pellet mills in Ontario which are under construction and in 2014 – the largest producer of wood pellets for heating the U.S. market New England Wood Pellet (NEWP).
NEWP, established in 1992, operates three wood pellet facilities with a combined production capacity of 240 thousand tons. The cost of the company amounted to $ 34,5 million.
Pellet mills in Ontario will produce about 550 thousand tons of pellets per year. Thus, the expected production capacity of Atikokan plant is 125 thousand tons and of Wawa plant is more than 400 thousand tons. The company plans to supply pellets for Drax power plant in UK and OPG (Ontario Power Generation) in Canada. The cost of the projects as part of Fulghum Fibres purchase amounted to $ 112 million.
According to Rentech company plans, the mills in Canada must be put into operation in 2014. Thus, first deliveries of pellets are scheduled for the first half of 2014. However, Engaged Capital and Lone Star Value Management, which together own about five percent of company ownership, accuse the board of the company for continued heavy spending on other projects without yet having started wood pellet production at mills in Ontario. The shareholders also express concern about the failure of the largest Baltic producer of wood pellets Granuul Invest to participate in the construction of the pellet plants, questioning the economics of the project and the reasons for its departure.
Rentech claims in response that it adheres to the long-term strategic plan for the development of the company on the wood pellet market. Rentech also says that it is going to cooperate with Graanul in other projects and regions.
It is seen that Rentech has taken one more step towards its goal to become one of the largest wood pellet manufacturers in the world. Thus, for the 2013-2014 the company has already acquired the two largest companies with the summary produced capacity of its pellet facilities of about 800 thousand tons. And despite loses in the previous year, the company expects a significant improvements in 2014 due to two pellet mills in Ontario.
Author: Ivan Prokhorov
Rentech Inc. plans to increase wood pellet production for another 550 thousand tons in 2014
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