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Pellets & Solid Fuels

Enviva reveals new development JV and acquisition of Colombo Energy plant

The world's largest utility pellet producer US-based Enviva Holdings, LP has announced that its development subsidiary, Enviva Development Holdings, LLC has entered into a new joint venture, Enviva JV Development Company, LLC, with affiliates of The John Hancock Life Insurance Company to "acquire, develop and construct wood pellet production plants and deep-water marine terminals" in the southeastern United States (US). The first investment is the acquisition of a pellet plant in South Carolina.

John Keppler President and CEO of Enviva here seen addressing delegates at the 2017 US Industrial Pellet Association’s (USIPA) exporting pellets conference held in Las Vegas, NV last October.

According to a statement, the new joint venture (JV) will be managed by Enviva and supported by the Hancock Renewable Energy Group (HREG), a unit of the Hancock Natural Resource Group. In addition, the new joint venture has agreed to acquire a 500 000 tonne per annum wood pellet production plant in Greenwood, South Carolina (SC), subject to certain customary closing conditions.

We are very pleased to announce the extension of our development relationship with John Hancock and HREG. The new joint venture is expected to develop and construct new production plants and marine terminals required to serve the growing Asian and European markets. As the plants and terminal assets contemplated in the joint venture become fully contracted and reach commercial operation, we expect to offer them to Enviva Partners, LP, providing additional visibility into the partnership’s potential drop-down inventory, said John Keppler, President and CEO of Enviva in a statement.

New Joint Venture

Through their affiliates, Enviva and John Hancock will provide the capital to the new JV needed to fund the acquisition of the Greenwood plant as well as the planned development of a deep-water marine terminal at the Port of Pascagoula, Mississippi and at least two additional wood pellet production facilities, subject to certain terms and conditions.

The parties have agreed that Enviva Wilmington Holdings, LLC, their existing development JV, and Enviva Development will contribute certain wood pellet production plant and marine terminal development projects in the southeastern United States to the new JV. Enviva will serve as the managing member and operator of the new JV.

Pellet plant acquisition

The first investment of the new JV is expected to be the acquisition of the Greenwood plant and related assets from The Navigator Company, S.A., a large Portuguese paper and pulp company. The acquisition is expected to close in the first half of 2018.

Located in Greenwood, SC, the Colombo Energy plant commenced operations in October 2016. The new JV expects to complete the production ramp and invest incremental capital in the Greenwood plant required to improve the operational efficiency and increase the production capacity of the facility.

Colombo Energy uses the Port of Wilmington, NC for its pellet export. Railcars bring the pellets to the port (photo courtesy Prodesa).
Using railcars, Colombo Energy transports its pellets to the Port of Wilmington, NC for export (photo courtesy Prodesa). Colombo Energy uses the Port of Wilmington, NC for its pellet export. Railcars bring the pellets to the port (photo courtesy Prodesa).

The production of the Greenwood plant initially will be sold to Enviva Partners, LP under a take-or-pay off-take contract and will continue to be exported from the Partnership’s deep-water marine terminal in Wilmington, North Carolina (NC).

The Greenwood plant is well-constructed, strategically located in a deep natural resource basin and has a strong manufacturing base to build on. Enviva is a proven acquirer and we are excited to bring this team into the Enviva family and to grow this plant into a world-class production facility. As the Partnership has continued to extend its contracted position, high-quality, low-cost pellets from Greenwood will be an important part of meeting its growing customer demand, said Keppler.

Hamlet operational Q1 2019

The existing JV between affiliates of Enviva and John Hancock will retain ownership of Enviva Pellets Hamlet, LLC, the entity constructing a 600 000 tonnes per annum production plant in Hamlet, North Carolina (NC). Enviva expects the Hamlet plant will be operational in the first quarter of 2019. Production from the Hamlet plant is contracted to supply MGT Power’s Teesside Renewable Energy Plant, which currently is under construction in the UK.

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