Enviva announces new joint venture, acquisition of pellet plant

Enviva Holdings LP recently announced that its development subsidiary, Enviva Development Holdings, LLC, entered into a new joint venture, Enviva JV Development Co. LLC, with affiliates of The John Hancock Life Insurance Co. (U.S.A.) to acquire, develop and construct wood pellet production plants and deep-water marine terminals in the Southeastern United States. The new joint venture will be managed by Enviva and supported by the Hancock Renewable Energy Group, a unit of the Hancock Natural Resource Group. In addition, the new joint venture has agreed to acquire a wood pellet production plant in Greenwood, South Carolina, subject to certain customary closing conditions.

“We are very pleased to announce the extension of our development relationship with John Hancock and HREG. The new joint venture is expected to develop and construct new production plants and marine terminals required to serve the growing Asian and European markets,” said John Keppler, president and CEO of Enviva. “As the plants and terminal assets contemplated in the joint venture become fully contracted and reach commercial operation, we expect to offer them to Enviva Partners, LP, providing additional visibility into the partnership’s potential drop-down inventory.”

New joint venture

Through their affiliates, Enviva and John Hancock will provide the capital to the new joint venture needed to fund the acquisition of the Greenwood plant as well as the planned development of a deep-water marine terminal at the Port of Pascagoula, Mississippi, and at least two additional wood pellet production facilities, subject to certain terms and conditions. The parties have agreed that Enviva Wilmington Holdings LLC, their existing development joint venture, and Enviva Development will contribute certain wood pellet production plant and marine terminal development projects in the Southeastern United States to the new joint venture. Enviva will serve as the managing member and operator of the new joint venture.

Production plant acquisition

The first investment of the new joint venture is expected to be the acquisition of the Greenwood plant and related assets from The Navigator Company S.A., a large Portuguese paper and pulp company. The acquisition is expected to close in the first half of 2018.

The Greenwood plant commenced operations in October 2016. The new joint venture expects to complete the production ramp and invest incremental capital in the Greenwood plant required to improve the operational efficiency and increase the production capacity of the facility. The production of the Greenwood plant initially will be sold to Enviva Partners LP under a take-or-pay off-take contract and will continue to be exported from the Partnership’s deep-water marine terminal in Wilmington, North Carolina.

“The Greenwood plant is well-constructed, strategically located in a deep natural resource basin and has a strong manufacturing base to build on,” said Keppler. “Enviva is a proven acquirer and we are excited to bring this team into the Enviva family and to grow this plant into a world-class production facility. As the partnership has continued to extend its contracted position, high-quality, low-cost pellets from Greenwood will be an important part of meeting its growing customer demand.”

Hamlet plant

The existing joint venture between affiliates of Enviva and John Hancock will retain ownership of Enviva Pellets Hamlet LLC, the entity constructing a 600,000 metric tons per year production plant in Hamlet, North Carolina. Enviva expects the Hamlet plant will be operational in the first quarter of 2019. Production from the Hamlet plant is contracted to supply MGT Power’s Teesside Renewable Energy Plant, which currently is under construction in the United Kingdom.