Drax to buy a bigger stake in US pellet plants

Energy company, Drax Group, has agreed to buy a 20 per cent minority interest in Alabama Pellets, the joint venture which owns the Demopolis and Aliceville pellet plants, for £21.5m.

The firm owns and operates Drax Power Station near Selby
The firm owns and operates Drax Power Station near Selby

The firm, which owns and operates Drax Power Station near Selby, is buying the stake from The Westervelt Company.

The acquisition will increase the Drax's interest in Alabama Pellets to 90 per cent and will provide Drax with economic control over a further 130,000 tonnes of biomass production capacity per year. Completion is expected to take place later this month.

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Drax's acquisition of Pinnacle Renewable Energy earlier this year included a change of control provision over Alabama Pellets.

Drax has been in discussions with Alabama Pellets' joint venture partners regarding future working relationships, including their minority interests. The remaining joint venture partner, Two Rivers Lumber, holds a 10 per cent economic interest.

The Demopolis and Aliceville plants are located in Alabama, in the US southeast, close to the group's existing US operations and have a combined nameplate production capacity of 660,000 tonnes per year.

Aliceville was commissioned in 2018 and Demopolis is expected to be commissioned in 2021.

Drax has 13 operational pellet plants (including Aliceville) plus satellite plant developments and Demopolis, with total nameplate production capacity of 4.9 million tonnes per year once commissioned.

These plants are geographically diverse and sited in three major fibre baskets (British Columbia, Alberta and the US southeast) with access to four deep water ports providing routes to markets in Asia, Europe and the UK.