A leading clean-technology company looks to be the first tenant of a proposed bio-hub complex at the former Espanola pulp and paper mill.
CHAR Technologies is focusing on setting up shop at the idled Espanola site to produce renewable natural gas and a bio-coal product from residual wood waste.
The innovative Toronto company has teamed up with the BMI Group, the property’s pending new owners, to be co-developers in creating a renewable energy production facility at the mill site, now being dubbed Bioveld North.
BMI is in the process of buying the property from Domtar, which closed the mill in 2023. The deal is expected to close this month.
Last week, the two companies inked a “strategic partnership” agreement that involves BMI making a $2-million investment in CHAR to become a major shareholder and help fast-track CHAR’s flagship Thorold facility into commercial production later this year.
BMI CEO Paul Veldman was not available for comment, but in speaking at CHAR’s annual general meeting on May 8, he called the two companies’ relationship as a natural “hand-in-glove” fit that advances each other’s respective growth strategies.
The BMI Group, led by the Veldman brothers, John, Justus and Paul, promotes itself as a leading redeveloper of industrial brownfield sites, specifically targeting idled pulp and paper mills in Ontario, Quebec and Michigan. Their Northern Ontario holdings include former mill sites in Iroquois Falls, Red Rock and Fort Frances.
Due to contraction in the North American forest products sector, Veldman said they expect to own 10 sites by the end of this year with upcoming acquisitions in Saskatchewan and British Columbia.
CHAR has projects of its own on the go in Northern Ontario, including a proposed biocarbon and renewable gas facility in northwestern Ontario through a joint venture with Lake Nipigon Forest Management. It’s in the early stages of construction.
At the AGM, CHAR CEO Andrew White said the partnership with BMI provides for future capital investments for an “even bigger pipeline of opportunity to grow these projects out.”
Galen Cranston, CHAR’s director of stakeholder relations, told Northern Ontario Business it’s too early to comment on the size and scale of what an Espanola production facility would look like until the fall. He said engineering development work begins this summer.
The two companies’ tight relationship begins on the Niagara peninsula, where CHAR is a tenant at BMI’s Thorold site, itself a former pulp and paper plant, situated alongside the Welland Canal.
CHAR possesses a proprietary technology that converts wood waste – such as tree tops, limbs, bark, sawdust and other unmerchantable wood – into two products, a renewable natural gas and a biocarbon (biocoal), through a high temperature pyrolysis process.
Commercial production at Thorold could start as early as November. Espanola would be CHAR’s second plant.
“We see a really great opportunity to replicate Thorold across these other industrial sites,” said White this week.
“What we’ve accomplished in Thorold makes a whole lotta sense for the infrastructure they have up in Espanola," said Cranston.
An Espanola facility could, conceivably, be larger in scale than Thorold based on the access to wood fibre in the area.
The Thorold plant will be consuming 75,000 green tonnes of wood waste material a year.
One of CHAR’s modular kilns can process between 37,000 to 38,000 tonnes a year of woody biomass to produce 250,000 gigajoules of renewable natural gas (the energy equivalent of 277-kilowatt hours of electricity) and 30 tonnes a week of biocarbon pellets for the steel industry or a smelter operation.
Veldman told CHAR investors this week that the former Espanola Domtar operation used about 500,000 tonnes of wood chips annually.
“All of that chipping and grinding equipment remains on site,” he said.
While the region’s forestry sector was hurt by the idling of Espanola, Veldman said there’s a lot of excitement to put those chips and the area’s wood basket “back to work.”
“We certainly want to be part of that ecosystem,” said Cranston, who tempered expectations for Espanola, adding there are no guarantees CHAR would consume a comparable amount of wood that Domtar once did.
On the job creation side, running such a facility is not a big employment generator. CHAR’s Thorold facility will run two kilns and the highly automated system only fills up to 12 positions. The real opportunities will come indirectly in the upstream wood supply side, Cranston said.
“We will be a significant impact to that whole sector once we start standing up a couple of facilities in Ontario.”
Questions on where waste feedstock will be sourced will be answered by fall once the engineering study work is done.
“We know the wood’s there. We just need to know specifically from who and where and at what price?” said Cranston.
White said CHAR has customers either signed or queued up to sign off-take agreements once they begin commercial production in Thorold.
For its renewable gas, White said there is a “robust” market with utilities like FortisBC and Quebec's Energir who are “very, very eager” to sign 20-year agreements.
But the steel industry, in particular, is a key catalyst for growth. ArcelorMittal, the world’s leading steel producer, is CHAR’s largest shareholder.
ArcelorMittal has a procurement agreement with CHAR to ship to its biocoal product to the Dofasco steel plant in Hamilton, just 60 kilometres down the QEW highway from CHAR’s Thorold plant.
The biocoal product was developed as a drop-in replacement to reduce the industry’s reliance on fossil-based carbon sources, specifically metallurgy coal.
The CHAR's carbon product has been successfully tested in Dofasco’s blast furnaces and will be used in its new electric furnaces (EAF). Even with the EAF process, White said, a bit of carbon is still needed in the steelmaking cycle.
For Dofasco's benefit, CHAR has upgraded the biocarbon product from a light, fluffy, charcoal-type material into a denser pellet form to use in steel production.
As to whether CHAR is making any inroads with Algoma Steel in Sault Ste. Marie, just 240 kilometres west of Espanola, Cranston declined comment if CHAR is in any discussions with other steelmakers. A query to Algoma’s corporate affairs spokesperson produced no response.
