US-based Enviva Partners, LP (Enviva), the world's largest industrial wood pellet producer, has announced financial and operating results for the third quarter of 2021, declared its 25th consecutive quarterly distribution increase and announced its first direct contract with a non-power industrial customer, a European counterparty that processes solid biomass pellets into advanced biofuels that ultimately become high-grade fuels like sustainable aviation fuel (SAF) and renewable diesel.
Enviva announced the signing of a new 10-year take-or-pay off-take contract to supply its first direct industrial customer with 60 000 tonnes-per-annum (tpa) of wood pellets to be used as a feedstock in the refining process for SAF and other renewable fuels like renewable diesel.
Deliveries under the initial tranche of the contract are scheduled to commence in 2023, with volumes potentially increasing to approximately 1.2 million tpa by 2027, through a series of additional 10-year take-or-pay tranches, as the customer builds incremental production capacity.
Enviva will be the sole supplier of this customer’s incremental wood pellet needs. The initial tranche’s conditions precedent, are expected to be met during 2022.
For the third quarter of 2021, Enviva delivered financial and operational results that represent an important step forward for us, and we are positioned for a solid finish to what has been an incredible year for our company, our team, and our equity holders. Today, we are very pleased to announce our inaugural contract in the rapidly growing industrial sector, with a customer who will process our solid biomass into refined liquids that ultimately become high-grade renewable fuels like sustainable aviation fuel and biodiesel. We expect this important milestone to be just the first of many as we work with large industrial customers who can use our products to make difficult-to-decarbonize industries less GHG-intensive and more sustainable, said John Keppler, Chairman, and CEO of Enviva.
Evolving into Enviva Inc
Enviva has also completed the Simplification Transaction, whereby Enviva acquired 100 percent of the ownership interests of Enviva Holdings and eliminated all outstanding incentive distribution rights without assuming or issuing any debt, or incurring any significant drawings under its revolving credit facility.
The future has never been brighter for Enviva. With our transformative Simplification Transaction and Conversion, along with our expanding production capacity underpinned by our existing assets, the plant expansions underway, and the commissioning of the Lucedale plant and the Pascagoula terminal, we are entering 2022 with increased size and scale, a significantly improved cost of capital, and a broadening customer base. With the potential of exponential growth ahead for our product, driven by global commitments to ‘net zero,’ we are continuing to build a company and a platform that delivers real climate change benefits, today, while consistently and sustainably delivering superior returns to our stakeholders, John Keppler said.
The former owners of Holdings are now direct investors in Enviva and have agreed to reinvest all dividends related to 9 million of the 16 million new units during the period beginning with the distribution for the third quarter of 2021 through the dividend for the fourth quarter of 2024.
Fifteen plant sites
As part of the Simplification Transaction, Enviva acquired projects at 15 plant sites, all in various stages of evaluation, expansion, new build, and development.
The Northampton expansion is complete and the Southampton expansion continues its commissioning ramp, while construction on the Greenwood expansion is also nearing completion. Further, the company has made “significant investments” in the “Multi-Plant Expansions,” commencing at Enviva’s Sampson and Hamlet plants, with Cottondale to follow.
One of these acquired sites is the fully contracted Epes plant, which is currently under development and expected to commence construction in early 2022, with an in-service date scheduled for mid-2023.
The Epes plant is designed and permitted to produce more than one million tpa of pellets, which would make it the largest pellet production plant in the world.
A prospective production plant in Bond, Mississippi (MS) is the next most likely to be constructed and is being developed to produce between 750 000 and more than 1 million tpa of pellets. The Bond plant’s proximity to the Port of Pascagoula positions the company to transport its production efficiently by truck from the plant to its port terminal.
Enviva expects construction of the Bond plant to commence once the Epes plant is operational, but the timing of construction could be expedited depending on the schedule and delivery requirements of additional off-take contract opportunities under negotiation and general market conditions.
Following on the heels of our successfully completed Simplification Transaction, we are very excited about our pending Conversion to a traditional corporation. By evolving our same great business into an even better corporate structure, we believe we are creating a unique opportunity for investors across the globe to participate in the step-change accretion we have ahead of us, whether by directly investing in Enviva Inc. or investing passively through one of the many indices in which we will become eligible for inclusion, said John Keppler.
Enviva expects the Conversion to take effect as of December 31, 2021.
