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Ukrainian producer signs Italian wood chip deal

16 Aug 2013 15:56 (+01:00 GMT)
Ukrainian producer signs Italian wood chip deal

London, 16 August (Argus) — Ukrainian biomass producer Active Energy has signed a contract with Italian generator Biomasse Italia to supply at least 240,000t of wood chip over a two-year period.

The wood chip will be loaded from Active Energy's deepwater port in the Black Sea in 15,000t shipments from January. Biomasse Italia runs two retrofitted power stations in southern Italy that produce up to 500 GWh/yr, burning 700,000 t/yr of wood chip.

Active Energy has been running successful test shipments to Biomasse Italia over the past two months and is now targeting other emerging wood chip consumption regions in the power generation market. The producer is the largest supplier of biomass in the Ukraine and believes the higher calorific value of its wood chip and proximity to the European market give it a competitive edge over international exporters. A lack of reliable suppliers in the region has resulted in high levels of interest for its product.

“The energy industry is experiencing great pressure, across Europe, with tightening supply of wood chip and forestry products in general,” Active Energy chief executive Richard Spinks told Argus. “We have the expertise and advantageous geographic locations to procure, process and ship quickly and efficiently, and this will form a stable and profitable base upon which we can build.”

Active Energy has access to substantial forestry resources in Ukraine and believes the country could become a major supplier to several key chip markets such as Italy and Turkey because of its existing rail and port infrastructure.

Earlier this year, Active Energy paid £3.75mn ($5.86mn) to acquire Cypriot trading company Nikofeso Holdings and its principal subsidiary company, Nikwood, which specialises in exporting high quality wood chip for power generation and MDF manufacturing in Ukraine.

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