Canada-headed Pinnacle Renewable Energy Inc., (Pinnacle) the world's second-largest wood pellet producer has announced the planned construction of a new industrial wood pellet production facility in the southeast United States (US) in close proximity to Pinnacle's Aliceville facility in Alabama. The new facility will be located adjacent to an existing large southern yellow pine sawmill in Demopolis, Alabama (AL).
The planned Demopolis Facility is expected to have an annual production volume of 360 000 tonnes that will be sold through Pinnacle’s contracted backlog of long-term, take-or-pay off-take contracts. Commissioning the Demopolis Facility with initial industrial wood pellet production is expected in the second quarter of 2021.
New single partnership
The Demopolis Facility will operate under a single partnership with Pinnacle, The Westervelt Company (TWC), a diversified land resources company, and Two Rivers Lumber Company, LLC (TRL), a McElroy Enterprises company, holding a 70 percent, 20 percent and 10 percent interest, respectively. TWC will also sell a 10 percent interest of its currently held 30 percent interest in the Aliceville Facility to TRL.
We are excited to partner with Pinnacle and Westervelt in the expansion of their US southeast wood pellet production. Both organizations have great reputations and success stories. This partnership accomplishes our goal to further expand our investment into wood products and build upon our businesses in the region, said Jay McElroy, President of TRL
The pellet plant is planned to be built adjacent to Two Rivers Lumber Company’s state of the art dimensional southern yellow pine (SYP) mill located near Demopolis at the confluence of the Tombigbee and Black Warrior Rivers.
Since we began working with Pinnacle last year at the Aliceville mill, we have built a strong partnership based on our shared commitment to safety, quality, environmental responsibility, and our communities. This new venture with Pinnacle and Two Rivers allows Westervelt to participate in a growing market while capturing the advantages of the abundant resources in this area. Whether it’s industry experience, supply chain advantages or land management expertise, this partnership will benefit from the strengths of each of the companies involved, said Brian Luoma, President, and CEO of The Westervelt Company.
Leveraging existing infrastructure
To be located on the same river system as the Aliceville Facility, Demopolis will be constructed to ensure finished pellets can be barged and loaded at the port in Mobile, Alabama, which is the same port used for pellets produced at the Aliceville Facility.
The project is currently in the final stages of design and construction planning and permit applications have commenced. Long-term fibre supply agreements have been completed with the majority of suppliers, including TWC and TRL.
Under the terms of the partnership, Pinnacle will operate the Demopolis Facility and manage all aspects of customer relations, marketing, sales, and logistics. Anticipated capital costs to construct the Demopolis facility is expected to be approximately US$99 million, and Pinnacle will fund its portion of the capital costs from draws on its existing credit facilities.
Building on our early success at the Aliceville Facility, which is currently producing wood pellets ahead of the commissioning curve, we are pleased to be expanding our presence in the US southeast and leveraging existing relationships and infrastructure we have established in the area. The US southeast expansion further aligns the Company with our partners and fibre suppliers and allows for flexibility to optimize fibre flow between the facilities, while further diversifying our business in the region, which will see approximately 660 000 tonnes per year of pellet production once fully commissioned, said Rob McCurdy, CEO of Pinnacle.
