A Thunder Bay businessman has received the first allotment of Crown fibre in the province's wood supply competition.
Ed Fukushima of Atikokan Renewable Fuels is officially the first company out of the gate in accepting an offer to access 279,000 cubic metres of poplar and birch annually over the next 10 years to make wood pellets.
The Ministry of Northern Development, Mines and Forestry made the announcement Jan. 31. The Northern Ontario Heritage Fund is chipping in $1 million toward plant renovations at the former FibraTech oriented strand board mill in Atikokan which will grow out to be a $15-million operation.
Together with partner Larry Levchak, Fukushima has been renovating the former Atikokan mill, 170 kilometres west of Thunder Bay, in anticipation of producing wood pellets for Canadian and international clients by this year's third quarter.
The operation will create 45 plant and yard jobs, and employment for 60 in harvesting and hauling.
“The phone hasn't stopped ringing,” said Fukushima of the incoming calls from laid-off area forestry workers and Atikokan residents.
“We'll have a lot of automation, but the skills we need are strictly people who want to work hard.”
The plan is to produce 140,000 tons of European-standard, power-plant grade, pellet for the industrial, commercial and residential markets. The company has struck an agreement with Rainy Lake Tribal Contracting to do the complete fibre hauling and handling.
The ratio of wood used to pellets produced is roughly 2-to-1 based on a formula of a 50 per cent moisture content. “If we get drier wood, we make more pellets,” said Fukushima.
Fukushima said the operation is easily expandable, adding there are plans in place to buy more wood on the open market.
He was unable to talk about what forest management unit he was drawing wood from, but it will be within 100 kilometres of the plant.
“Our main goal was to have an economical haul distance to keep the price of our product competitive.”
Fukushima said the next step is to confirm that the fibre alloted is actually there before they sign agreements with various stakeholders.
The operation involves putting round wood through a banded biomass grinder. Five pellet presses will each be capable of producing five tons per hour.
Fukushima will shortly be ordering the equipment from a U.S. manufacturer, California Pellet Mill.
There will also be a 10-megawatt co-generation facility to heat the plant and for the driers once a provincial power purchase agreement is signed.
The Atikokan Renewable Fuels plant is only 14 kilometres from Ontario Power Generation's (OPG) Atikokan Generating Station, which is undergoing a multi-million dollar conversion from burning coal to wood pellets.
Both sites are connected by road and rail.
Despite the geographical advantages, it's not a given that Fukushima's company will be the supplier of choice. They have applied to OPG through a separate bidding process but were told no decisions are being made until the province's wood supply competition is complete.
If any case, Fukushima's company has also been talking with potential customers ranging from big box stores to European interests, from selling 50 pounds of pellets for residual use, to shipping boatloads of fuel overseas for power production.
“What Europeans now are interested in is reliability of supply. The ministry allotment gives them that. If we were based on sawmill residues, that's an unknown. The price still has to be fair, but they're more interested in guaranteed sources of supply.”
The Atikokan plant conversion has created work for Fukushima's other companies in Thunder Bay – MGM Electric, Mahan Electric and Automation Now – which are refurbishing the plant's electrical systems, wood driers, and installing new automation systems.
He's also a technical partner in a Parks Falls, Wisc. business called Renewable Densified Fuels which makes a biomass-based pellet with a waterproofing polyethylene binder.