Province confident N.L. can compete in pellets

Talks continue with Rentech on central and Northern Peninsula resources

Ashley Fitzpatrick
Published on August 23, 2014
New Brunswick has started a $400,000 study into the feasibility of a wood pellet plant in that province. The move has prompted questions of where this province is in developing its own pellet export sector. — TC Media file photo

This week, the province of New Brunswick announced it will spend $400,000 on a wood pellet plant feasibility study, raising the question of where Newfoundland and Labrador stands on its development of wood pellet exports.

The Government of Newfoundland and Labrador offered up about $10 million in commitments to Holson Forest Products for a new wood pellet plant at Roddickton, on the Northern Peninsula, between 2008 and 2012, only to be left with an idle facility, reportedly due to a lack of storage and port infrastructure.

The facility has since been tied into ongoing negotiations between the provincial government and American-based wood processor Rentech Inc., on a potential new forestry enterprise in the province.

According to CBC News reports in early April, old infrastructure in Botwood was also being looked at by Rentech.

Contacted this week, a spokeswoman for the Department of Natural Resources said Minister Derrick Dalley was not available for an interview.

“Discussions are currently ongoing with Rentech Inc. regarding forestry resources in Central Newfoundland and on the Northern Peninsula,” she told The Telegram Friday.

“These negotiations take time to ensure due diligence is given. We will be in a position to provide you with a further update once the process is completed.”

Liberal MHA Chris Mitchelmore said the trouble is when a veil is dropped it might be used to cover a lack of progress on the file. And having asked the department more than once for more information on the discussions with Rentech, he said he has been rebuffed.

He wants the province to offer up an idea of what is on the table.

“I think we have a lot of opportunity (in forestry), but it’s having a significant impact on the people when the resources are not being utilized or utilized fully,” he said this week, claiming the province was getting into exporting people rather than product.

Looking specifically at pellets, he said he believes Newfoundland and Labrador can be competitive and can see the Roddickton plant come into play, regardless of what might be happening in New Brunswick and other provinces.

He said there will be a need for new transportation infrastructure for pellet exports.

“The Roddickton case shows there’s still needed infrastructure investment,” agreed NDP MHA George Murphy.

The NDP representative said caution is required in looking at any new government spending, as opposed to private spending.

“They’ve got to be very careful on this one,” he said.

“If they’re going to be investing taxpayers’ money, they better be open and transparent about it.”

Staff with the Department of Natural Resources have expressed confidence in the ability for this province to be viable in wood pellets.

“We are confident that a pellet plant in this province would be competitive with a similar plant in New Brunswick,” reads the emailed response to questions.

More specific comments were made during meetings of the government’s public accounts committee in February 2014.

“The demand for wood fibre, even though the pulp and paper sector is declining, is increasing and it will increase over the next 10 to 20 years. A lot of people need cellulose and lignin products,” said Wade Bowers, an assistant deputy minister with the department.

“Pellets have their place on that value chain. They are not the highest, they are not the lowest, but it is a viable product and it is a product that you can make a profit with given the facilities that we are promoting. We are seeing evidence of that in the Eastern Seaboard in the U.S.; we are seeing it in other parts of Canada.”

On transportation challenges, Bowers said companies in British Columbia are producing pellets, shipping them down the coast, through the Panama Canal and then over to Europe.

“They are five times the distance from the marketplace than we are and they are still making profits,” he said.

Under questioning, he added the department was working to see exports become a reality.

As for Rentech’s position, it issued second quarter results on Aug. 7, with president and CEO D. Hunt Ramsbottom highlighting the planned start to commissioning of two new wood pellet plants in Ontario, in the second half of the year.

“We are focused on execution at our operating businesses while pushing forward on specific opportunities to significantly expand our wood chipping and pellet businesses,” he said, in a written statement.