Wood pellet producer Pacific BioEnergy Corporation has landed a pair of long-term contracts with Japanese power producers that represent a purchase order worth $500 million over the course of their lives, according to the company's CEO.
Deliveries are to begin in 2020 and by 2022, the company will be supplying a combined 170,000 metric tonnes per year to fuel two newly-built biomass power plants.
The contracts will last until 2030 and 2035 respectively and will be intermediated through Sumitomo Corporation, PacBio's 48-per-cent shareholder and marketing partner.
"This is signed and sealed, now we have to deliver," PacBio CEO Don Steele said this week.
The plant currently employs about 50 people and produces between 300,000 and 400,000 metric tonnes per year of pellets, made from sawdust and slash. The new contracts will replace a portion of that total while the remainder will be over and above that level.
"We will be expanding our activities marginally," Steele said and added the business could be grown as much as fivefold if it's given access to the beetle-killed pine that remains standing. Instead, he said it remains at risk of being lost to wildfire.
"We are wasting millions and millions of tonnes of material that could and should and must go to market," he said.
Accessing those stands will require a change in attitude by the government in terms of the way the regulatory system and tenure work.
He said Sumitomo is one of the largest corporations in the world and holds about $100 billion in assets.
"If we were saying we just brought Microsoft to town, everyone would be going wow," he said. "Sumitomo is in that scale."
He said PacBio has been working for the past dozen years to develop a market in Asia and that the contracts are the result of the Japanese turning away from nuclear power following the Fukushima disaster and towards sources of renewable energy.