Rentech expands wood chipping capacity and processing services in Chile

Rentech, an owner and operator of wood pellet production and wood fibre processing businesses, has announced a new long-term processing agreement between its subsidiaries, Fulghum Fibres Chile, Forestal Pacifico and Forestal Los Andes, and Astillas Exportaciones (Astex), the Chilean subsidiary of Japan's Mitsubishi.

The new processing agreement would expand the volume of eucalyptus wood to be processed and sold under contract to Astex. The five year contract includes the mutual option to extend for two additional five-year terms.

Fulghum will rebuild its current mill in Concepcion, Chile to increase production capacity. With the expansion, the annual processing capacity of the mill will increase from 180,000 bone dry tonnes (BDT) to 400,000 BDT of logs with bark. Additionally, the facility's capacity to process logs without bark will increase from 40,000 to 100,000 BDT per year. The mill will become Fulghum Fibre's largest chip mill in South America.

Rentech's subsidiary Forestal Pacifico will process the bark produced from the mill and sell it as biomass fuel to local industrial customers. Rentech's trading subsidiary, Forestal Los Andes, will utilise uncommitted capacity at the mill to produce chips for sale in South America or abroad.

Rentech CEO says: 'The growth and demand we are seeing in our wood processing business is outstanding. This agreement highlights the success of our wood fibre processing strategy and our approach to building and operating complementary platforms in chipping and pellets. The relationship with Astex and Mitsubishi will help drive Fulghum's diversified growth and leadership in the expanding global wood fibre industry.'

Rentech senior VP of fibre business development, Sean Ebnet, adds: 'Our proprietary eucalyptus debarking system gives us a unique value proposition in Chile by providing a critical cost compeititve solution for the wood processing needs of our customers. Clearly, Astex recognises this value and has expanded its debarking and chipping business with Fulghum Fibres.'

The total cost of the new chipping mill and debarker is expected to be $8.6 million (€6.3 million). The full capital cost of being financed with debt from Chilean banks. Construction of the new chip mill is expected to begin within the next several weeks with full commissioning scheduled for early 2015.