CMB ramps up pellet capacity in US

Danish trading firm Copenhagen Merchants Biomass (CMB) aims to increase its wood pellet producing capacity in the US to 850,000 t/yr by the end of 2022 through recent acquisitions and ongoing investments in new plants.

CMB recently acquired three wood pellet producing plants from US firm Mohegan — in Crossville, Alabama, at Quitman in Mississippi, and in Jasper, Texas — with 100,000 t/yr of capacity each, in a deal that closed on 1 February, CMB partner Todd Bush told Argus. The company has spent more than $3mn on capital improvements to increase the safety and reliability of these plants.

CMB inherited existing long-term contracts from Mohegan for almost all of the production at these plants and expects additional supply to become available in the future as it increases investment to boost production capacity. The industrial-grade pellets produced at the plants are SBP-certified and are mostly sold to northwest Europe.

CMB also took over the existing port contract in Mobile, Alabama, for these deliveries as part of the deal.

The firm aims to start up production at two more plants in the US with a combined capacity of 250,000 t/yr that are planned to be built by the end of 2022, with most output to be shipped to northwest Europe. This would increase the number of plants it operates in the US to a total of nine, with a combined production capacity of 850,000 t/yr.

The company acquired forestry firm Ekman's bioenergy subsidiary in November, which added around 150,000-200,000 t/yr of pellet supply to its portfolio, including the 40,000 t/yr pellet production plant in Vildbjerg, Denmark, which is currently operating at almost full capacity.

The wood pellet supply situation is likely to remain tight for a few more years, Bush said, as building new plants will take longer than before as a result of supply chain issues and the lack of clear price signals from 2027 onwards, when state-backed support of pellet-fired generation in the UK, the world's largest pellet consumer, is scheduled to halt.

By Erisa Senerdem and John Cooper