Rentech provides update on Ontario pellet projects

Rentech has begun construction of its planned pellet facilities in Atikokan and Wawa in eastern Ontario and is on schedule to meet pellet delivery obligations to Ontario Power Generation and Drax next year, said CEO Hunt Ramsbottom in a quarterly earnings update.

The projects mark Rentech’s first within the pellet sector, after changing its focus from biobased jet fuel and diesel fuel production. Though the company successfully demonstrated its Rentech-ClearFuels and Rentech-SilvaGas biomass gasification technologies, as well as the Rentech Fischer-Tropsch process, early in the year, Rentech announced it would change its focus on nearer-term profitable growth opportunities—wood fiber processing and nitrogen fertilizer—and sold off the site of its planned Natchez, Miss., biofuels production complex. The company still owns the aforementioned technologies, however, and is seeking to license or sell them.

 Rentech has acquired Georgia-based Fulghum Fibers Inc., the leading provider of contract wood chip processing services in the U.S., as well as the Wawa and Atikokan, Ontario, wood processing facilities that it is converting to wood pellet plants. For the conversions, Rentech has retained affiliated firms AgriRecycle and EAD to perform engineering and project design.

Demolition work at the sites has been completed within budget, according to the update, and Rentech has placed orders or received bids for all major equipment.

 The design of the facilities have been modified to add capacity—the expected production of the Wawa plant has increased to approximately 450,000 metric tons and is expected to supply the entire 400,000 metric tons of annual pellet deliveries contracted to Drax, with the remaining available for sale to Drax or other customers. Production of the Atikokan facility is now expected to be approximately 100,000 metric tons, which will fulfill the existing contract with OPG for 45,000 metric tons, with the remaining 55,000 metric tons available for sale to OPG or other customers.

The update also said that Rentech believes that an IPO (initial public offering) of the fiber business as a master limited partnership is possible, depending on market conditions, and could best be accomplished at a scale somewhat larger than that of the Wawa and Atikokan projects combined with Fulghum Fibres. If the wood fiber processing business is able to achieve a larger scale through development and transactions, Rentech believes that it could accomplish an IPO in approximately two years or less.