Sumitomo buys stake in Canadian wood pellet producer

By Anna Simet | July 24, 2017

Wordwide general trading company Sumitomo Corp. has acquired a 48 percent stake in Canadian wood pellet producer Pacific BioEnergy Corp.

PBCE currently manufactures pellets at three British Columbia locations—Prince George, Chetwynd and Ft. St John—that collectively produce more than 550,000 metric tons of pellets annually. PBCE markets its pellets to European and Asian customers, according to the company, and since its founding in 2008, has exported some 3.5 million metric tons to those continents.

Japan has set a goal of increasing its renewable power consumption to 22 to 24 percent by 2030, and subsequently implemented a feed-in tariff system designed to promote renewable energy in heat and power plants. As a result, Japanese power producers are increasingly using biomass. Sumitomo owns multiple biomass-using energy plants in Japan, and in statements regarding the transaction, the company said that by acquiring the stake in PBEC, Sumitomo is seeking to establish a steady wood pellet supply for the long-term.

With Sumitomo's investment, PBEC indicated plans to intensify its' activities focused on recovering and processing Mountain Pine Beetle-damaged forest assets.

Concurrent to Sumitomo purchasing PBCE shares, PBEC acquired a 34 percent minority interest in Pacific BioEnergy Limited Partnership, the Prince George manufacturing facility, from its' European partner, allowing for full ownership of the facility.

In partnership with the Nazko First Nation in Quesnel, B.C., PBEC also operates a 200,000-metric-ton-per-year biomass processing facility that converts low-grade timber into merchantable saw logs, high-quality pulp chips, furnish for pellet manufacturing and hog energy fuel.