News | October 2014

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KiOR Points Finger At Structural Design

KiOR Inc., the company that claimed to develop a proprietary catalytic process that allows it to produce cellulosic gasoline and diesel from biomass, and which started up a small commercial facility in Columbus, Miss. and made cellulosic diesel and gasoline shipments in the second quarter of 2013, says structural design bottlenecks limited the amount of wood that the operation could introduce to its proprietary BFCC (Biomass Fluid Catalytic Cracking) system, causing the facility to run significantly below its nameplate capacity of 500 bone dry tons per day and limiting the plant’s production capability.

The revelation was part of a 10-Q quarterly report filed by KiOR with the U.S. Securities and Exchange Commission at the end of June. The report also emphasized KiOR’s dire financial situation.

During 2013, the company intermittently operated the Columbus facility but in January 2014 elected to suspend operations in order to attempt to complete a series of optimization projects and upgrades. The company says it identified changes to the BFCC, hydrotreater and wood yard that it felt would improve the throughoutput performance, and identified enhancements that would improve the overall yeld of transportation fuels from each ton of biomass, which had been lower than expected. How­ever, the company suspended the optimization work and brought the facility to an idle state.

In the 10-Q, the company states, “We have substantial doubts about our ability to continue as a going concern. To continue as a going concern, we must secure additional capital to provide us with additional liquidity.”

The company says if it receives all of the funding available to it through a previous agreement, the company expects to be able to fund its operations and meet obligations for a short period, but will need to raise additional funds to contnue operations. If additional funding doesn’t become available, the company says it will likely be forced to seek protection under the U.S. Bankruptcy Code.

The company also states, how­ever, that if it can raise the capital and complete its optimization projects at the Columbus plant, that it intends to begin construction of its next commercial production facility.

The company says it has incurred substantial net losses since its inception, including $55 million for the six months ended June 30, and $348 million, $96 million and $64 million for the years 2013, 2012 and 2011, respectively. As of June 30, it had an accumulated deficit of $629 million.

Meanwhile, the company reports that two lawsuits were filed against the company and some of its current and former officers. In one case the plaintiff alleged that the market price of the company’s common stock was artifically inflated by allegedly false or misleading statements concerning the timing of projected biofuel production levels at the Columbus facility.

New Pellet Mill Calls On Industry Veterans

A company led by a private investor and two veterans of wood pellet production plans to build a $130 million, 500,000 metric ton per year wood pellet facility in Pine Bluff, Ark.

Highland Pellets is a privately held company that plans to export its production into the United Kingdom industrial utilities markets.

“While this plant is the first built under the Highland brand, our colleagues Mike Ferguson and Scott Jacobs bring decades of industry leading experience in the engineering and operating of industrial wood pellet plants,” Highland Pellets Chairman Tom Reilley says. “Together with Highland’s leadership team who are veterans of Cargill, Black River, JP Morgan and EnerNOC, we are excited to complete our Pine Bluff facility and expand our footprint.”

Jacobs, who is director, business development, and Ferguson, director, engineering and operations, previously worked with Ozark Hardwood Products in Seymour, Mo., and also operate a construction company specializing in wood pellets, AgriRecycle, Inc. Jacobs is a former president of Pellet Fuels Institute.

The Arkansas Economic Development Commission and Economic Development Alliance for Jefferson County worked closely with Highland Pellets on this project.

Highland Pellets states it is working with first class industry partners including a leading forestry company to provide sustainable fiber feedstock and Cooper/Consolidated for the management of the logistics supply chain for export.

Groundbreaking is expected to commence in October and deliveries from the plant to begin March 2016.

Highland’s web site states: “Starting with our first pellet facility at Pine Bluff, we are establishing a supply chain portfolio of several geographically dispersed wood pellet facilities which provide sustainable, high quality, and consistent pellets, tailored to the specific requirements of our end customers.”

The Pine Bluff project is expected to create 35 direct jobs, impact another 482 indirect jobs and generate a direct financial impact of $86 million annually for the area.

Pellets will be taken from the facility to the Port of Pine Bluff, down the Mississippi to the Gulf, and then shipped to Europe.

Lou Ann Nisbett, president and CEO of the Economic Development Alliance, says they were first contacted about the project in May 2013, and a site visit was arranged for company executives a few weeks later. They were shown several available buildings, along with a 108 acre greenfield site the Alliance owns in the Jefferson Industrial Park. A second visit a month later was focused on the industrial park site, followed by a due diligence phase and the sign­ing of the lease agreement nearly a year after the first the first visit.

The Alliance also helped the company work with the Arkansas Economic Development Commission and the Jefferson County Economic Development Corp. to apply for and secure a package of incentives.

Highland Pellets LLC is receiving $495,000 for its capital investment and job creation plans. This is the fourth company to get these incentives under the three-eighths-cent sales tax approved by voters in the county in 2011. The project will additionally be eligible for state incentives and tax breaks.

Highland Pellets Chairman Reilley started his career in financial services and was a senior managing director at Bear Stearns from 1997 to 2007. Marshall Chapin is the chief operating officer.

Bandit Partners WIth Detroit Firm

Huron Capital Partners, Detroit, Mich., and Bandit Industries, Mount Pleasant, Mich., have entered into a letter of intent to recapitalize Bandit as a private company with Huron providing resources and capital to reinforce Bandit’s continued growth while accelerating the company’s global growth strategy.

Jerry Morey will continue to run the business as President & CEO. Upon closing, a CEO succession plan will be initiated to recruit and train a top caliber executive to lead the business into its next phase of growth. Mike Morey Sr. and Dianne Morey will remain with the company in consulting roles. Bandit will be co-owned by Jerry Morey, Mike Morey, Dianne Morey and Huron Capital.

“When we announced last year that we were looking at companies for a potential sale or merger of Bandit, we were adamant that it had to be the right fit for our company, our community, our dealer network and most importantly, our employees,” say Jerry Morey. “We were only interested in partnering with an organization that would respect and be committed to our company culture. Huron Capital has a long history of growing companies while maintaining their independent operations and that was a significant factor in our decision to partner with the firm. It also feels good to be working with another Michigan-based company that understands our challenges and shares our hometown pride. We are very much looking forward to the future for both Bandit and our mid-Michigan community.”

Bandit Industries will remain at its current 280,000 sq. ft. headquarters between Remus and Mount Pleasant. All existing operations, including the workforce, management teams, distribution and dealer network will remain in place.

“Bandit’s history as an independent, family-run business is an important criteria for us,” says Mike Beauregard, senior partner at Huron Capital. “Our investment in the business will preserve the legacy and culture of this business while continuing to expand globally under the Bandit brand.”

Founded in 1983, Bandit Industries is a leader in the design, manufacture, distribution and service of hand-fed and whole tree wood chippers, stump grinders, forestry mowers, Beast recycling machines and other specialty wood and waste processing equipment. Bandit serves professionals in the logging, forestry, tree care, land clearing, recycling and renewable energy markets through a global dealer network of more than 160 locations.

Fulghum Expands Production Capacity

Rentech, Inc., Los Angeles, Ca., has a new long-term processing agreement between its subsidiaries, Fulghum Fibres Chile, Forestal Pacifico and Forestal Los Andes and Astillas Exportaciones Limitada, the Chilean subsidiary of Japan’s Mitsubishi Corp.

The new processing agreement would expand the volume of eucalyptus wood to be processed and sold under contract to Astex Ltda. The five-year contract includes the mutual option to extend for two additional five-year terms. The contract provides for guaranteed minimum volumes using a base fee, excess fee and shortage fee arrangement similar to the tolling contract structure of Fulghum’s North American contracts.

Fulghum will rebuild its current mill in Concepción, Chile near the port of Puchoco to increase production capacity. With the expansion, the annual processing capacity of the mill will increase from 180,000 bone dry metric tons (BDMT) to 400,000 BDMT of logs with bark. In addition, the facility’s capacity to process logs without bark will increase from 40,000 to 100,000 BDMT per year. The mill will become Fulghum Fibres’ largest chip mill in South America.

Rentech’s subsidiary, Forestal Pacifico, will process the bark produced from the mill and sell it as biomass fuel to local industrial customers. Rentech’s trading subsidiary, Forestal Los Andes, will utilize uncommitted capacity at the mill to produce chips for sale in South America or abroad.

“This agreement cements Fulghum Fibres’ position as a significant world player in the pulp, paper and packaging industry,” says Sean Ebnet, senior vice president of fiber business development for Rentech. “Our best-in-class proprietary eucalyptus debarking system gives us a unique value proposition in Chile by providing a critical cost competitive solution for the wood processing needs of our customers. Clearly, Astex Ltda. recognizes this value and has expanded its debarking and chipping business with Fulghum Fibres.”

The total cost of the new chipping mill and debarker project is expected to be $8.6 million. Construction of the new chip mill is expected to begin immediately with full commissioning scheduled for early 2015.

Gilchrist Selected For Bio Program

Interfor Corp.’s Gilchrist Div. has been selected by the U.S. Secretary of Agriculture to accept biomass deliveries under the federal Biomass Crop Assistance Program so it can create clean heat and electricity to dry lumber.

“This program generates clean energy from biomass, reduces the threat of fires by removing dead or diseased trees from public forestlands and invests in rural businesses and new energy markets,” Agriculture Secretary Tom Vilsack says.

Gilchrist is one of 36 energy facilities across the nation chosen to accept forest or agricultural residues as part of a national strategy to improve domestic energy security and reduce carbon pollution.

“Gilchrist dries all of its lumber products in kilns fueled entirely by biomass,” says Interfor’s Chuck Burley. “Under this federal program, we can buy more biomass from operations that are improving the health of our public forests by reducing the threat of fire and infestations.”

'Black' Pellet Mill Planned For Monticello

Zilkha Biomass Energy announced it is building a facility in Monticello, Ark. to manufacture Zilkha’s “Black” pellet, the first commercially available “advanced pellet” in the biomass industry, according to the company. Zilkha plans to invest $90 million in the facility and create 52 jobs.

“Power companies across the globe are looking for renewable energy alternatives and biomass wood pellets stand as one of the most practical and cost-effective solutions,” says Jack Holmes, CEO of Zilkha Biomass Energy. “This plant in Monticello will be one of Zilkha’s largest and will help us capture more of the growing biomass energy market. Our Black pellets have a set of ­beneficial qualities, such as water resistance, that make it a more attractive option than traditional wood pellets.”

Zilkha Black pellets can be ­easily integrated into coal-fired plants to create cleaner emissions, allowing plants to more easily comply with clean air regulations, and energy companies to build fewer new power plants, Zilkha claims. The pellets are water re­sistant, which allows them to be transported and stored outside like coal.

“Monticello is proud to have been chosen as the site for Zilkha Biomass Energy,” says Nita McDaniel, executive director of the Monticello Economic Development Commission. “The manufacturing of Zilkha Black Pellets is a natural fit for the community alongside the University of Arkansas at Monticello’s School of Forest Resources. Our heritage is rich in the timber industry and this heritage continues to move us forward with sustainable wood-based products.”

Zilkha Biomass Energy LLC is headquartered in Houston. Its web site reports that another Zilkha plant, Zilkha Biomass Selma (ZBS), will be commissioned to produce Zilkha Black pellets in Selma, Ala. this year. This plant will have production capacity of 275,000 metric tons of pellets per year. The plant is at the site of the former Dixie Pellets plant, which Zilkha is retrofitting with ZBE process technology to produce the Zilkha Black pellet.

Former OSB Mill Will Make Pellets

E-Pellets, LLC reports it has acquired the shuttered Louisiana-Pacific OSB mill in Athens, Ga. and will convert the operation into a wood pellet production facility, producing approximately 450,000 metric tons annually. The wood pellets will be exported to the European Union to be used as an alternative to coal as fuel in power plants. The conversion is expected to cost $150 million.

E-Pellets says it has a long-term port agreement with Georgia Kaolin Terminal, Inc. (GKT), which will provide sufficient capacity to export up to 1.35 million metric tons per year of pellets through the port facility in Savannah, Ga. E-Pellets previously purchased a wood pellet facility in Nahunta, Ga. and intends to expand its production volume.

The company, which is exploring other development opportunities in Georgia and South Carolina, is led by newly appointed CEO Doug Albrecht, who has wood products experience offshore. He is supported on the ground by Chief Operating Officer Ken Ciarletta, who previously managed the Georgia Biomass wood pellet plant in Waycross. Ben Easterlin is in charge of Development.

“We have an incredibly talented group of human resources with unparalleled know how in this sector, along with supporting capital partners, customers, vendors and suppliers and we hope to grow with all of them,” Albrecht comments.

E-Pellets Group, LLC is headquartered in Waycross, with additional offices in Atlanta and New York City. E-Pellets was formed through the combination of its existing wood pellet facility in Nahunta with the acquisitions of the Athens facility.

Black Hills Plan Moves Forward

Attorney General Marty Jackley announced that the United States 10th Circuit Court of Appeals has affirmed Colorado and Wyoming Federal District Court decisions denying environmental group challenges to the Black Hills Forest Plan including the portions addressing the mountain pine beetle infestation. The Federal Eighth Circuit Court of Appeals had previously affirmed the South Dakota Federal District Court’s decision denying environmental group challenges to the Black Hills Forestry Plan.

“This decision is critical since both the state and federal mountain beetle efforts are intertwined and must be aggressive and consistent to address the destructive infestation,” Jackley says. “While the environmentalist groups have been well intentioned, the pine beetle infestation requires a responsible forestry plan to protect our forest, wildlife, and surrounding private lands and this decision now allows us to continue with this much needed plan.”

In 1997, environmental groups challenged the new forest plan for the Black Hills National Forest. Over the years, the environmental groups challenge has been litigated in the federal courts of South Dakota, Wyoming and Colorado. The State of South Dakota has intervened in all the jurisdictions because of the importance placed in protecting the Black Hills National Forest from pine beetles and wild fires.

In 2013, Colorado and Wyoming District Courts issued rulings in favor of mountain pine beetle control in the Black Hills National Forest. The rulings arose from a claim by environmental groups that a revised 2005 federal forest plan should have relied on long discarded rules instead of contemporary requirements, including the need to handle the mountain pine beetle infestation. The federal court held among other rulings that the environmental groups had unreasonably delayed their claims and current efforts to thin trees and otherwise address mountain pine beetle should move forward. 

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