Pinnacle Renewable Energy, one of the world’s largest producers of wood pellets, has announced plans to construct a new industrial wood pellet facility in the US. The new production facility in the southeast US, close to Pinnacle’s Aliceville, Alabama plant, will produce 360,000 metric tonnes per annum (MTPA) and is expected to cost around $99 million (€89 million) to build.
Wood pellets produced at the Demopolis facility, as it will be called due to its location adjacent to an existing large sawmill in Demopolis, Alabama, will be sold through Pinnacle’s contracted backlog of long-term, take-or-pay off-take contracts. Commissioning of the Demopolis facility is expected in the second quarter of 2021.
The new facility will operate under a single partnership with Pinnacle, The Westervelt Company (TWC), a diversified land resources company, and Two Rivers Lumber Company (TRL), a McElroy Enterprises company, holding a 70%, 20% and 10% interest respectively. TWC will sell a 10% interest of its currently held 30% interest in the Aliceville facility to TRL.
Under the partnership, Pinnacle will operate the Demopolis facility and manage all aspects of customer relations, marketing, sales and logistics. The plant is currently in the final stages of design and construction planning and applications for permits have already been submitted. Long-term fibre supply agreements have been completed with the majority of suppliers, including TWC and TRL.
“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 US southeast and leveraging the existing relationships and infrastructure we have established in the area,” said Pinnacle CEO Rob McCurdy.
“The US southeast expansion further aligns the company with our partners and fibre suppliers and allows for flexibility to optimise fibre flow between the facilities, while further diversifying our business in the region, which will see approximately 600,000 MTPA of pellet production once fully commissioned.”
Brian Luoma, president and CEO of The Westervelt Company, 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 Lumber 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.”
Jay McElroy, president of Two Rivers Lumber, added: “We are excited to partner with Pinnacle and Westervelt in the expansion of their US southeast wood pellet production. Both organisations have great reputations and success stories. This partnership accomplishes our goal to further expand our investment into wood products and build upon our businesses in the region.”