NZ forester signs $1b deal for us wood pellets - reports

Mt Maunganui forestry company Des Wilson Forestry Ltd has signed a 15-year $US757 million ($NZ1.07 billion) contract to supply wood fibre to an American company commercialising its renewable bio-energy business.

In a coals-to-Newcastle deal, the NZ company will supply Sea 2 Sky Corporation with 250,000 tonnes of wood fibre over the first two years, increasing to 500,000 tonnes a year for the remainder of the contract. Sea 2 Sky is based at Ferndale, in Washington State, near the heartland of America's forestry industry.

Mr Wilson, who lives at Papamoa, also controls Taumarunui Saw Milling Ltd, according to the companies register.

Sea 2 Sky said the NZ wood fibre will allow it to provide wood pellets, "with Europe and Asia having substantial multi-billion dollar product requirements," the Seattle Post Intelligencer website reported.

The $US757 million figure was based on a wood fibre market price of $US233 per dry tonne, it said.

Sea 2 Sky was set up in April and said it used a high-heat process to convert wood and fibre into a non-polluting, high-energy alternative to coal, essentially cooking the biomass at temperatures of 200degC to 340degC in a thermo-chemical treatment it calls torrefaction.

The wood fibre partly decomposes, but the pellets are claimed to have about 30 percent more energy content even though they weigh less.

The company will turn the NZ wood fibre into a "coal-like product" with about 70 percent of its initial weight and 90 percent of the original energy content, but without the fossil-fuel carbon emissions of coal.

Sea 2 Sky has estimated potential market demand of more than $US500m a year.

With the Des Wilson agreement in place, "we have achieved a historic milestone of opening up new markets in the forest industry by harnessing strong international sources of supply in stable democratic states that we can now market," said a company director, David Siebenga.

With the supply question resolved, Sea 2 Sky is "exploring and evaluating several alliances" and also plans to market torrefied biomass to existing coal plants. It could be used by itself or with coal in pulverised coal boilers.

- NZPA