only operates and performs as well as the people that operate it. A well-trained and disciplined operations team is essential. An operations-oriented company that recognizes how important the 30 per cent is and maintains a focus on their peo-ple-first culture to support a high level of motivation and professionalism is more likely to succeed and provide the project with the IRR that is expected. Training prior to startup and during commissioning by seasoned operations experts is critical. Even if all of the cri-teria for fibre supply and plant design are on the mark, the operation is much more likely to emerge from the valley of death sooner if the operators are not learning from their own mistakes, and are instead benefiting from the wisdom of those that have already seen all of the wrong ways to make wood pellets efficiently. LOGISTICS We have seen several projects fail to properly estimate the costs of moving the wood pellets from the mill to the market. Understanding the variables that impact logistics costs are critical to properly assessing the potential degradation in project IRR from some the following: • Unexpected costs from demurrage (truck, rail, or ships/barges); • Unexpected costs from dead freight or non-performance penalties; • Currency risks; • Payment terms and timing and the impact on working capital needs; • Unexpected costs from sampling and record keeping while loading cargo; There are many other potential logis-tics pitfalls that a trucking, rail, barging, and/or shipping company with experi-ence in wood pellet bulk cargo should advise on early in the project cycle. SUMMARY there is a market for the pellets at prices that support a project, making wood pel-lets can produce decent margins. But just one large or a few small bad surprises can erase those margins. In any manufacturing business, knowing how to vet the critical compo-nents of the process from front to back can expose shortcomings before they get baked into the hardware or into the software of operating logic and operator protocols. The best way to avoid bad surprises and losing money making pellets is to have seasoned, expert advice as early in the project cycle as possible and to ask challenging questions that are informed by operational experience. • For more features on wood pellet operations, visit www.canadianbiomassmagazine.ca. Bad surprises are never good in any busi-ness. In the wood pellet business, it is too easy to think that a conceptually simple process of taking low cost fibre and drying, milling and pressing wood into pellets should be a money machine. Putting aside wood pellet market dynamics, the global supply and demand for pellets, and the impact of these fac-tors on the demand for new production capacity, at the project level, assuming Canadian BIOMASS allied blower biomass novdec14.indd 1 19 2014-11-18 2:22 PM
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