At the beginning of October, just ahead of USIPA’s Exporting Pellets Conference in Chicago, Zilkha Biomass Fuels I LLC announced the completion of a US$59.8 million refinancing of the Zilkha Biomass Selma LLC pellet mill operation in Selma, Alabama (AL). During USIPA, Bioenergy International spoke with Larry Price, CEO of Zilkha Biomass Fuels to find out more.
A lot has happened since 2015 when then Zilkha Biomass Energy began production of “Zilkha Black Pellets” (ZBP) at the former Dixie Pellets wood pellet plant in Selma Alabama (AL).
Using its proprietary steam explosion process, the 275 000 tonne-per-annum nameplate capacity plant was to produce advanced bio-mass pellets with coal-like properties. These were touted as a drop-in biomass fuel alternative for coal-fired energy utilities in Europe and elsewhere.
An off-take deal was reached with an energy company in Belgium and the first shipments were sent to a customer in France. At the end of 2016, a management buyout by NextGen Black Pellets LLC occurred.
About the same time, disagreements arose with our purchaser. Those disputes included a non-payment for the last shipment from Selma that shipped on Christmas Eve 2016. This led to the termination of the supply agreement and put financial pressure on the Selma operations. Idling the mill was the only feasible option then, explained Larry Price.
Complete refinancing
In January 2017, Selma production staff were laid off and the plant was idled but maintained while NextGen Black Pellets set about reworking the business plan, sorting out the legal aftermath, and attracting new capital.
We looked at several different scenarios with a number of potential parties including selling the facility outright. On September 14 this year we completed a U$59.8 million refinancing of the Selma plant, said Price.
Headquartered in Houston Texas (TX), Zilkha Biomass Fuels I LLC, which now owns the Selma facility, is a subsidiary of NextGen Black Pellets LLC.
The new capital will be used for new CAPEX projects and to provide working capital for the mill to build inventory for sale in the primary markets in Europe, Asia, Africa, and the Caribbean.
We also used the time to go through the plant in significant detail looking at process optimization and efficiency to improve throughput and reduce operating costs while maintaining product quality and consistency. The upshot is that we plan to invest around US$10 million in such optimization and efficiency projects at Selma, including an onsite wastewater treatment plant, Price revealed.
Production restart in Q1/2019
According to Price, the Selma mill is to resume commercial production in the first quarter of 2019 and expects to produce around 5 000 tonnes per month during the first year of operation.
This is sufficient to meet the current demand for Zilkha Black Pellets for firing trials and smaller industrial us-ers while it allows for a staged production ramp-up – to around 200 000 tonnes per annum in 2020 and 240 000 tonnes in subsequent years.
We have feedstock supply agreements in place including, I’m very glad to say, with previous suppliers that have stuck by us. Likewise when it comes to the re-hiring of experienced staff that know the plant inside out, remarked Price.
Licensing ZBP technology
In addition, Price said that the company is seeking operators worldwide who will utilize the patented Zilkha Black Pellet technology in the United States and abroad to supply the growing renewable energy markets.
We have purposely kept the Zilkha Black Pellets brand as it is an integral part of the technology licensing concept, he explained.
In July this year, Monticello Economic Development Commission (MEDC) in Arkansas took repossession of an 80-acre greenfield site in Monticello where Zilkha Biomass Energy had originally planned to build a second manufacturing facility.
It was over four years ago that the site was reserved with a view of building a plant. Our focus for the immediate future is on getting Selma up and running with output matching demand in terms of quality and quantity. At the same time, MEDC cannot be expected to wait indefinitely when there are other ventures ready to go ahead and build something interested in the site, said Larry Price adding it was an amicable decision.
This article was first published in Bioenergy International no. 5-2018. Note that as a magazine subscriber you get access to the e-magazine and articles like this before the print edition reaches your desk!
