Green energy business Active Energy (LSE:AEG) sat flat at 0.43p on Wednesday morning after announcing its entry into the saw-logging export market.
The £5.2m organisation has entered into a joint venture with a supplier of saw-logs, pulpwood, and wood chips to international and domestic markets called Renewable Logistics Systems (RLS). As part of this deal, the pair have formed a company called Renewable Energy Systems (RES) that will initially be based at Active’s Lumberton site in North Carolina.
Active aims to make the Lumberton site the primary base for all of its US CoalSwitch operations. CoalSwitch is a proprietary piece of technology that transforms biomass material into high-value green fuels. According to Active, it is the world’s only drop-in biomass fuel that can be mixed at any ratio with coal or completely replace coal in existing coal-fired power stations without requiring plant modification.
RES will establish a fully-functional saw-logging operation at Lumberton, entering into export contracts that are expected to generate short-term revenues. Active believes that the throughput of RES’s activity will be between 200-500 containers of saw-logs per month.
Alongside saw-logging, RES will also support Active’s CoalSwitch activities at Lumberton. For example, it will receive and store feedstock, provide additional feedstock for pelletised fuel production, co-ordinate with Active’s customers for pellet delivery, and organise and operate a material handling facility.
Active will hold an initial 30pc position in RES, although it will have a right to increase this to 49pc once it has brought a 50tph CoalSwitch plant into operation. The business expects to meet this milestone before the end of next year.
Michael Rowan, chief executive of Active Energy, said the JV forms ‘another important milestone’ for the firm, providing a ‘further complementary revenue stream’.
‘It also establishes an additional source of feedstock supply for the production of pelletised fuels, and importantly accommodates all the near-term logistics requirements for Lumberton for the supply of existing and new pelletised renewable fuels to customers,’ he added. ‘Revenue from the JV will be utilised for the future development of Lumberton and further demonstrates the value of our new operational centre, as it provides valuable commercial opportunities for the Company through being an industrial hub located strategically in the heart of America’s forestry industry.’
The Lumberton site will be Active’s first permanent production facility, employing up to 50 personnel, and is being developed as part of a $50m project finance investment plan. It includes c.415,000 square feet of covered factory space and around 151 acres of surrounding land. What’s more, it is located strategically adjacent to Active’s joint venture partner Georgia Renewable Power and prime lumber districts. The company will use the latter to secure feedstock for CoalSwitch.