Viridis Energy seizes pellet industry opportunities
A $15.5 million off-take agreement with another pellet manufacturer marks British Columbia-based Viridis Energy LLC’s first bulk overseas pellet supply agreement and the company expects to quickly grow its business through an acquisition-based business model.
Viridis secured the contract with a European customer and will supply a minimum of 166,000 metric tonnes of pellets through 2014. The company operates Cypress Pacific Marketing, which entered the biomass industry about six years ago. Though the company initially focused on marketing other pellet manufacturers’ products into the North American bag market, it became apparent that opportunities surrounding actually producing pellets were too great to ignore, according to Viridis Head of Operations Geordie Munro.
As a result of that decision, Viridis was formed about two years ago. The company quickly entered the market by acquiring its own production with the purchase of Westwood Fiber, a 60,000-tonne pellet plant in Kelowna, British Columbia, and changed the name to Okanagan Pellet Co. “We began selling that product mostly into the New England market, with great success,” Munro said.
Munro said that while building its own plants is definitely an option that is on the table, the current economy is conducive toward acquisitions. “We have a greenfield site tied up and we plan to move forward with it, but there is a lot more opportunity in acquisitions right now as well,” he said. “There are many plants that are struggling and don’t necessarily have access to the markets we have.”
The Okanagan brand that Viridis offers from its Kelowna plant is well-recognized, he said, and along with the plant’s assets, the company inherited strong contacts for exporting. Though this new off-take agreement is the company’s first bulk overseas agreement, he said the plant had a history of supplying to overseas customers before it was acquired by Viridis.
While the company plans to continue to take advantage of growing biomass fuel demands in countries outside of North America, the residential market is still a piece of the pie that Viridis plans to maintain, according to Munro. “This off-take agreement it is a very good thing for us though, because besides allowing us to expand and look for additional new opportunities, it eliminates a lot of the ebb and flow of the residential bag market,” he said. “It allows for very consistent production, because there’s not an offseason like the residential market has. We can run full-tilt and find the efficiencies in the plant.”
Munro said aside from North America, world markets are taking heavy interest in biomass, especially in China and Korea. “They’re looking for product in very large quantities,” he said. “The opportunities are out there, and we’re looking to expand quickly.”