and study author Jean-François Arsenault agrees that, should Rentech wish to, it would qualify as a suitable export-focused producer to be a leader for the other pro-ducers. “Definitely,” Arsenault says. In fact, at the eastern Canadian Pel-let Logistics Workshop that QWEB and WPAC organized last summer, Rentech announced, “… we are able to consolidate volume and provide a conduit for other producers to the export marketplace.” On the production end of the supply chain, in 2013 Rentech purchased two decommissioned fibre mills in Ontario: a former strand processing mill in Wawa from Weyerhauser, and a former particle board processing mill in Atikokan from Atikokan Renewable Fuels. Rentech is converting the Wawa mill for the produc-tion of approximately 450,000 tonnes of pellets annually, and converting the Atikokan mill for the production of ap-proximately 100,000 tonnes of pellets annually. To feed the facilities, Rentech will pur-chase between 900,000 and 1,000,000 tonnes a year of Canadian Crown fibre. “The Ontario government has provided use rights to the fibre supply for as long as we continue to use it,” says Julie Cafarella, vice president communications, Rentech. Rentech is selling the pellets from the facilities under two long-term contracts: Under a ten-year contract, OPG, Ontar-io’s provincial power utility will purchase 45,000 tonnes annually from Atikokan, with an option to purchase an additional 45,000 tonnes annually from Atikokan. OPG will receive its first shipment in the first half of 2014. Also under a ten-year contract, Drax is purchasing 400,000 tonnes of pellets from the Wawa facility, with the first delivery scheduled for the fourth quarter of 2014. Both facilities have on-site access to mainline rail service. Wawa, for example, has a rail siding with room to store rail cars. Arsenault notes that virtually none of the other eastern Canadian pellet pro-ducers have direct access to a railhead. This poses a serious challenge. “Truck-ing to railhead is unlikely to be viable for the large majority of producers, but of course, this depends on the price,” Ar-senault says. Under long-term contracts with Ren-tech, CN will transport the pellets from the Wawa facility 1,100 kilometres to the Port of Quebec City. The journey is di-rect, with no switches to other carriers. “The specific tenure of the long-term con-tract with CN has not been disclosed,” Cafarella notes. “OPG will purchase the pellets from the Atikokan facility FOB at the plant gate.” The large volume of pellets that Rent-ech is committing for transport, with long-term guarantees, allowed Rentech to negotiate the most cost-effective rail and car lease rates. (Rentech will be leasing around 200 covered hopper rail cars from a third party to move the pellets.) “Rail was the most cost-effective on a long-term contractual basis,” notes Rentech in a combined Rentech/Drax presentation titled “A Case Study in Logistics and Ex-port Strategies in Eastern Canada.” The Port of Quebec is not the only port on or leading to the Atlantic Ocean that handles pellets. Thunder Bay, Trois-Rivieres, Belledune and Halifax, for example, handle pellets. But Rentech has made an exclusive arrangement with Quebec Stevedoring Limited (QSL) that LIGNA 2015 Innovations – Solutions – Efficiency ■ The most important event for the industry world-wide with more than 1,500 exhibitors from almost 50 countries. ■ See all the latest technical innovations and solutions in the wood working and processing sector. ■ So don’t miss it. Make sure of your ticket now and register! 11 – 15 May 2015 ▪ Hannover ▪ Germany ligna.de Making more out of wood Canadian German Chamber of Industry & Commerce ▪ Tel. +1 416-598-7114 ▪ [email protected] Canadian BIOMASS 19
Canadian Biomass January-February 2015: Page 19
