Foresta secures 10-year wood supply agreement for planned low emissions fuel plant at Kawerau

Thursday 11th April 2024

Foresta has secured a critical 10-year wood supply agreement to underpin production from its planned low emissions torrefied wood pellet manufacturing plant at Kawerau.

New Zealand’s largest forestry services company, PF Olsen, has agreed to supply 150,000 tonnes of logs, stumps and slash sourced from sustainably managed, Forest Stewardship Council accredited forests.

"This is another significant step forward for our manufacturing plant with the supply representing around 61% of the total quantity of raw feedstock required for Stage 1AA and 1A of the plant," said Foresta Managing Director Ray Mountfort.

The plant will produce torrefied black wood pellets which are a seamless drop-in replacement for coal as a fuel source in boilers without any loss of energy intensity while also significantly reducing carbon emissions. A recent Genesis trial at Huntly power station using similar pellets reduced emissions by at least 90%.

Foresta plans to invest some $300 million building the plant which at full production will employ more than 100 workers.PF Olsen is responsible for planting around 30% of all new forestry in New Zealand as well as managing over 160,000 ha in New Zealand.

"We’re excited to be partnering with such a respected and significant player in the New Zealand forestry industry.

"The supply agreement represents another piece in the jigsaw which means, pending funding, we can proceed with confidence with our plans to develop our manufacturing plant and begin construction later this year."

Foresta last week announced the signing of a 30-year lease (with a 20 year right of renewal) on a 9.6 ha property in Kawerau with Putauaki Trust.

Foresta has also secured an off-take agreement with South Island energy distribution company Tailored Energy & Resources Ltd to supply 65,000 tonnes of pellets annually to its industrial customers and a harvesting contract with Silvertree Biomass Solutions.

The planned plant will also produce natural pine-based chemicals (rosins and terpenes) from pine trees which can replace petroleum sourced chemicals. These are used in everyday items including flavours, fragrances, chewing gum, paint, ink and tyres.

ENDS

Contact for media: Mike Jaspers / 0276 778875 / mike@capitalnz.com

Background on Foresta

Foresta is positioning itself to become New Zealand's first supplier of natural and renewable pine chemicals and black pellets. It has developed a proprietary process to naturally extract pine chemicals by employing the tree’s own solvent chemicals to extract rosin and terpenes. These products are commonly used in industrial manufacturing and are a key input to everyday end products.

Q&As

When will the plant ramp up to full production?

The plant will reach full production three years after opening, with estimated production of 52,000 tonnes pa of chemicals and 210,000 tonnes pa of torrefied pellets.

How long will it take to build the plant?

Foresta expects to complete obtaining all consents and begin construction in the last quarter of 2024. Construction of the first production line is expected to take two years with Stage 1a of the plant opening in 2026.

How are the black wood pellets produced?

The raw materials - timber and stump - are firstly reduced into wood chips which are then washed to extract the pine chemicals (rosins and terpenes), which are used to produce other end products. The timber is then dried and pressed into wood pellets. The torrefaction process involves heating the wood pellets to between 200 and 300 degrees Celsius in the absence of oxygen. The torrefaction process is a thermochemical process that reduces the volatile content of the wood, thereby improving the energy density, hydrophobic behaviour, eliminating biological activity and improving grindability, which makes the black wood pellets a drop-in replacement for coal.

Where will Foresta source the raw material feedstock?

Foresta expects to secure supply agreements with forest owners within 120km radius of the plant. It has recently signed a harvesting contract with Silvertree Biomass Solutions to harvest 243,000 tonnes per annum of logs, stumps and other approved biomass which accounts for the total raw feedstock requirements for Stage 1a of the plant.

What is Foresta’s long term vision for production in New Zealand?

Foresta is committed to producing more than 2 million tonnes per year of torrefied wood pellets by 2030 from seven regional plants located near the pine resource. The wood pellets will be a direct replacement for the 2.1 million tonnes per year of coal consumed nationally in energy production.

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