Corrects capacity in table
Vietnamese wood pellet producers are building new pellet mills and manufacturing facilities to increase production capacity this year to meet an anticipated increase in demand from Japan.
Producers such as Uniexport — Vietnam's biggest wood pellet producer — and Tam Sen have planned expansion projects, the firms told Argus, and the country could add around 800,000 t/yr of production capacity by the end of 2026, with at least half of this likely to be developed by the end of 2025.
The additional capacity would cater for Japanese utility demand, in line with the country's growth in generation capacity. Japan's biomass-fired capacity rose by over 500MW in 2024, and additions of around 700MW are expected for 2025. The simultaneous start-up of many plants could lead to logistical challenges at first.
Vietnam has been unable to meet South Korean demand because of its shortage of wood pellets, exacerbated by rains and port congestions, that has prompted suppliers to focus on clearing backlog. The new lines will hence also help Vietnam to provide more supply to South Korea.
Uniexport aims to complete most of its expansion projects, which are spread across the country and total 412,500 t/yr of wood pellets, by the fourth quarter of 2025. Uniexport has also planned to have an additional 315,000 t/yr of capacity by the end of 2026, with the overall expansion set to take its total production capacity to 1.46mn t/yr (see table).
The new plants will use varying types of feedstocks, such as sawdust from sawmills, and wood chips from lumber processing activities, depending on the location of the facility.
Tam Sen aims to complete the construction of its new wood pellet mill in Binh Duong in southern Vietnam by September 2025. The wood pellet factory will have a 80,000 t/yr production capacity and will mainly use wood residue from sawmills as feedstock for pellet manufacturing, said Tam Sen's factory director, Mai Ly. The expansion will take its total production capacity to 380,000 t/yr.
Meanwhile, Japanese energy company eRex has also started up the 150,000 t/yr Tuyen Quang pellet factory in northern Vietnam in March, with plans to build up to 20 wood pellet factories in the coming years.
| New pellet production capacity | t | |||||
| Region of Vietnam | Plant | Location | Operational | Annual supply capacity | Estimated capacity | |
| 2025 | 2026 | |||||
| Central | UNE Gia Lai | Gia Lai | 1Q2025 | 150,000 | 150,000 | 150,000 |
| HDV Daklak M'Drak | Daklak | 4Q2025 | 150,000 | 37,500 | 150,000 | |
| Southern | Unifor Renewables | Vung Tau | 4Q2025 | 120,000 | 30,000 | 120,000 |
| Northern | UNE Phu Tho | Phu Tho | 1Q2025 | 120,000 | 120,000 | 120,000 |
| UNE Nghi Son | Thanh Hoa | 3Q2025 | 150,000 | 75,000 | 150,000 | |
| UNE Bac Giang | Bac Giang | 4Q2026 | 150,000 | - | 37,500 | |
| Sub-total | 412,500 | 727,500 | ||||
| Source: Uniexport | ||||||
