Tanac announces plans to construct pellet mill in Brazil

By Tanac S.A. | December 03, 2014

Tanac S.A. is pleased to announce its plans to construct a wood pellet manufacturing facility at its Rio Grande port site, in the south of Brazil.

Construction of the 400,000-metric-ton-per-year plant commenced in October and is scheduled to complete in early 2016, with the first pellets due for export in mid-2016. A long term agreement for the supply of wood pellets has been entered into with Drax Power Ltd., part of the U.K.-based Drax Group.

Tanac’s $60 million investment will strengthen the company’s operations and create jobs, directly and indirectly, within the forestry supply chain, forest management and industrial operations sectors of Rio Grande do Sul.

Tanac’s primary product is vegetable tannin, a high value-added product mainly used by the leather industry, and in water and wastewater treatment. Tannin is extracted from the bark of Acacia mearnsii (also known as Black Acacia or Black Wattle). After removing the bark, the remaining wood is chipped at Tanac’s woodchip mill, a proportion of these woodchips will provide the feedstock for the new pellet mill.

The move to wood pellet production is a natural step for Tanac. The company has a long-standing and strong tradition in sustainable forest management as well as local sourcing. All of Tanac’s own plantations are FSC Forest Management certified and local sourcing operations all carry FSC Controlled Wood certification. Further, an important requirement under the Drax agreement is for an independent, carbon stock assessment to be conducted on the plantation area in the Rio Grande do Sul State every two years to ensure carbon stock levels are being maintained.

As well as managing its own plantations, Tanac manages a considerable outgrower program comprising a community of 40,000 families farming in Rio Grande do Sul State. Acacia mearnsii has been cultivated by farmers in the State since the early 1900s. The new pellet mill will ensure a market for the Acacia mearnsii plantations of small and medium size farmers, helping local rural communities through job creation and revenue certainty.

Tanac’s wood pellet mill is strategically located in the southern part of Brazil and will be the largest plant in Latin America. The operation will broaden Tanac’s product portfolio offering, customer base and geographic markets.