Pinnacle and Tolko plan to build a new industrial wood pellet production facility in Canada
November 21, 2019
CANADA (News release) -- Pinnacle Renewable Holdings entered into a limited partnership agreement with Tolko Industries Ltd. to build a new industrial wood pellet production facility in High Level, Alberta, Canada.
The facility further diversifies the company's fibre supply using high-quality wood fibre sourced primarily from Tolko's existing sawmill in High Level. The facility is expected to have a run-rate production capacity of 170,000 to 200,000 metric tons per annum. Annual production volumes from the facility will be sold through Pinnacle's contracted backlog of long-term, take-or-pay off-take contracts. Under the terms of the partnership, Pinnacle and Tolko will each own a 50% interest in the facility.
Pinnacle will operate the facility and manage all aspects of customer relations, marketing, sales, and logistics. Tolko will supply both heat energy and fibre to the facility under long-term supply agreements. The facility, which is being constructed on land owned by Tolko, will continue through November 2019 at which time winter weather conditions reduce the efficiency of construction activities. Initial wood pellet production at the facility is expected to commence in the 4Q 2020. The capital cost of the facility is expected to be approximately $54 million, with 50% funded by Pinnacle and 50% by Tolko. Pinnacle is funding its portion of the capital costs from draws on its recently expanded credit facilities.
Pinnacle is an industrial wood pellet manufacturer and distributor and the third largest producer in the world.
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