PHI Group partners with AG Materials on Florida pellet plant

PHI Group Inc., a company focused on energy and natural resources, announced in late January it signed an agreement with AG Materials LLC to jointly establish a 200,000 metric-ton wood pellet plant in Live Oak, Florida. The joint venture will form Cornerstone Biomass Corp., which will be the entity handling the project.

Prior work by Frank Stankunas, president of Cornerstone, and the principles at AG Materials allowed the joint venture to secure approximately 400,000 short tons of Southern yellow pine feedstock per year from Klausner Lumber One, a subsidiary of the large Austrian conglomerate. “We know we’ll have a stable source of raw materials, so the real liability of the product going to our customer will be very predictable,” said Henry Fahman, CEO of PHI. ”We are very fortunate to work with Klausner to have an agreement to acquire all of their byproduct for a feedstock.”

The pellet mill’s proposed location is on a 15-acre site adjacent the lumber site in Suwannee County where Klausner is constructing a sawmill. The pellet mill’s feedstock would come from the site’s sawmill residue. “I’ve met with Thomas Mende, president of international business development with Klausner Trading USA, and they have about 6 million acres of yellow pine wood property, so it’s going to be a very stable, reliable source of raw material for us in the long run,” Fahman said. “The beauty is our factory is situated just next to theirs, so we don’t have to move any raw materials. Once they have the byproducts they can just transmit to us by conveyor belt.”

Besides a long-term contract, PHI and AG Materials are negotiating the purchase of a decommissioned pellet mill in Europe, and will be relocating that mill to Florida. The approximately $100 million European pellet plant had to close in 2012 due to insufficient amounts of feedstock. Amongst the equipment to be acquired for the Florida plant is PM30 pellet machines manufactured by Austria-based Andritz Group. “We’ve come in to buy it back from them at a very special price,” Fahman said.

Live Oak is the Suwannee County seat and just east of the capital city Tallahassee. Fahman said because of the location they were provided with favorable support and policy from the local government in terms of licensing and permits. “It’s a catalyst zone in the state of Florida, and we have a lot of advantages—the time for permitting,  local support, job creation and so forth—it’s very favorable,” Fahman said.

The facility’s location is also not too far from the Port of Jacksonville where the plans are to ship pellets to European buyers. “Right now we are targeting more toward the industrial users in Europe,” Fahman said.

According to Fahman, the company is currently in the process of finalizing the purchase of land. The agreement is in place, and he expects it to close within a few weeks.

The project is anticipated to break ground in April and take eight to 12 months to construct.