PORT ALLEN (AP) — The energy company planning to build a $120 million wood pellet plant in Port Allen says it has signed a construction contract, and the Conti Group is expected to begin work in early spring.

Construction at the Port of Baton Rouge is to start at the end of the first quarter of 2012, said William L. New, the firm’s chairman and chief executive officer. “We need to start deliveries in the second quarter of 2013,” he said.

He said he has contracts with European utilities which plan to burn the pellets with coal to reduce the amount of carbon released into the atmosphere. He wouldn’t identify the utilities.

The pellets are made from pulpwood and forest thinnings — small trees cut down so others will grow faster.

The plant is expected to have 87 workers with a $6 million-plus payroll, and to bring about $825,000 a year to the Port of Baton Rouge.

The port’s board approved a 20-year lease last year with Point Bio. The company is currently based in LaPointe, Wis., but its headquarters will be in Baton Rouge.

Copyright 2011 The Associated Press