Viridis Energy in supply agreement with BC producer

Viridis Energy has announced its wholly owned subsidiary, Viridis Merchants Canada, has secured an additional 45,000 tonnes of wood pellets per year over the next two years from a western Canadian manufacturer.

The additional wood pellets are expected to be available this month and will be sold to Viridis' existing customers in the US and South Korea, which will support a greater expansion into southeast Asia.

Viridis projects the added supply will generate a minimum of $21 million (€16.7 million) over the initial two year term of the agreement, depending on the producer's ramp-up.

The initial term of the supply agreement runs from September 2014 to December 2016, with an automatic renewal for an additional 12-month period. The agreement also provides for an additional 15,000 tonnes of EN Plus A1 quality wood pellets per year.

The agreement extension plus the potential additional 15,000 tonnes of pellet supply could increase the potential revenue over the full term of the agreement to a total of $40 million.

Commenting on the transaction, Viridis CEO Christopher Robertson says: 'As we continue to increase our organic production capacity, Viridis Merchants' transactions has supplemented this growth, creating an overall total wood pellet manufactured and aggregated capacity of over 300,000 tonnes annually. Viridis is well on its way to reaching its goal of 1 million tonnes over the next couple of years.'

In addition, Viridis announced that its Scotia Atlantic facility has received an order from a large European utility company for 50,000 tonnes of wood pellets to be shipped by March 31, 2015.

The order, facilitated by the company's distributor Ekman, calls for a higher quality industrial pellet than previously shipped by Viridis.

Robertson adds: 'As wood pellet demand continues to increase, we are visibly noticing that pricing for pellets is strengthening in Europe.'