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Pellets & Solid Fuels

From rice milling to wood pelleting

What do you do when the bottom falls out from your core business, twice? For Wiroj Seeneang who owns a 10 000 tonne per annum rice mill in central Thailand, the answer was set up a wood pelleting plant for export to South Korea only to find he had to develop a local market.

Wiroj Seeneang, Managing Director of S.R. 2015 International Co., Ltd. He owns a rice mill and now he also runs a pellet mills in the same place.
Wiroj Seeneang, Managing Director of S.R. 2015 International Co., Ltd. He owns a rice mill and now he also runs a pellet mills in the same place.

Of Thailand’s 51 million ha land area some 9.4 million ha is used for rice production. According to the April 2016 world rice production update from the US Department of Agriculture (USDA), Thailand will have an estimated 2015/2016 production of 15.8 million tonnes putting it as the sixth largest producer. Wiroj Seeneang Managing Director of S.R. 2015 International Co., Ltd owns a rice milling plant in Ban Mi district in the western part of Lopburi Province, central Thailand. In recent years however he has seen his rice milling business grind down to a halt and, while some may be attributed to the somewhat speculative Rice Pledge Policy for unmilled rice introduced in 2011, the main reason is drought with local farmers switching to other crops instead. For Seeneang finding an alternative business that could tap into available raw material resources and utilise existing building and equipment assets became a survival necessity.

Korean pellet buyers

In late 2014, Wiroj Seeneang met up with some Korean wood pellet buyers and was getting US$150 per tonne FOB (Free on Board) enquiries from them. Sensing an opportunity he began to investigate this new field of business and found that local farmers could supply him with wood from plantation thinning.

– Local farmers get THB 800-1 000 per tonne (≈ US$22-28.5) for the miscellaneous wood from thinning they send to the pellet plant. We are receiving around 50 tonnes per day at the moment, said Wiroj Seeneang.

After visiting several pelleting equipment producers in China, Seeneang finally signed a contract with Chinese company Shandong Rotex Machinery Co., Ltd. According to Rotex its vertical ring die pelletiser combines the advantages of horizontal and flat ring die principles resulting in higher output, lower failure rate and to a lower cost. The deal was for a 2 000 tonne per month capacity pelleting plant consisting of four vertical ring die pelletisers to be set up at the rice mill facility. Installation works commenced in July 2015 and the whole line was commissioned in September 2015.

– The wood pellet we produce has over 4 200kcal/kg gross calorific value and 2.4 percent ash content. This quality meets the Korean grade three pellets standard requirement, said Wiroj Seeneang.

Solar drying

The rice mill has large storage spaces and open ground providing ample space for wood receiving and storage. Farmers deliver the roundwood to the plant and the logs are then chipped on site directly into a rice spreader tipper truck. The chips are then spread out onto the vast outdoor concrete rice drying pads for drying under the sun and are turned and raked using existing equipment.

The rice plant has large storage and open ground. Woodchips are normally dried out in the open like rice was previously. The rice spreading equipment, a tractor with a rake, seems to work quite well for its new task to evenly spread the woodchips on the ground.
The rice plant has large storage and open ground. Woodchips are normally dried out in the open like rice was previously. The rice spreading equipment, a tractor with a rake, seems to work quite well for its new task to evenly spread the woodchips on the ground. The rice plant has large storage and open ground. Woodchips are normally dried out in the open like rice was previously. The rice spreading equipment, a tractor with a rake, seems to work quite well for its new task to evenly spread the woodchips on the ground.

Dusk to dawn production

In all Wiroj Seeneang invested some THB 20 million (≈ US$586 000 for the pelleting machinery and another THB 10 million (≈US$ 293 000) in construction, modification and improvement. In late 2015, just as pellets were coming off the production line from the new facility, the next blow came as the price to Korean market had dropped to US$90-95 per tonne FOB. According to Seeneang, increased competition and oversupply from Vietnam together with apparent quality issues from Thai producers in the south not meeting Korean standards have pressed prices down. The dramatic Korean price decrease leaves little if any profit margin for Thai wood pellet producers like him.

– We simply cannot sell pellets to the Korean market at US$90-95 tonne FOB. It is lower than our production cost, said Seenean notably disappointed with the Korean situation.

To reduce production costs the plant operators carry out maintenance during the daytime and produce pellets in the evening. It is because the electricity price for weekend and 10 pm-9 am in evening during weekdays is only one third of the daytime price.

– Now we running at half capacity, about 800-1 000 tonnes per month, producing only for local industrial boiler users within a 200 km radius and selling at THB 3 200 – 3 300 per tonne (≈US$91-94), said Wiroj Seeneang.

Looking ahead Seeneang is cautiously optimistic. He views this as a temporary market situation expecting that with the development of overseas markets- such as Japan and China- demand and prices will increase enabling him to run the plant profitably at full capacity.

– If it really picks up then we have also plenty of space for expansion, ended Wiroj Seeneang.

Text & photos: Xinyi Shen

5276/AS

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