Drax Group, a British power company with operations at the Port of Greater Baton Rouge, was the winning bidder at an auction for a bankrupt LaSalle Parish wood pellet plant.
A federal bankruptcy judge is expected to approve the $35.4 million bid for the Louisiana Pellets plant Tuesday. Pending approval, the sale of the plant in Urania is set to close at the end of April, if not sooner, said David Malkin, a spokesman for Drax.
Drax operates two wood pellet producing plants in the U.S.: one near Bastrop, the other in Gloster, Mississippi. The plants take in low-quality trees and shreds the soft pine down to wood pellets. The pellets are then trucked to the Baton Rouge port where they are stored in large domes until they are transferred to the United Kingdom. Once the pellets arrive in Britain, they are smashed into sawdust and burned as fuel for power plants, instead of coal.
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The Louisiana Pellets plant is capable of producing about 450,000 metric tons of pellets per year, which makes it similar in size to the Bastrop and Gloster facilities, Malkin said. The company filed for bankruptcy in February 2016 and the plant has been idle recently, with only a skeleton crew of employees maintaining the facility.
Louisiana Pellets Inc., which is owned by German Pellets GbmH, said it was forced to file for bankruptcy because of higher-than-expected costs and production delays.
By building the Bastrop and Gloster plants from the ground up, Malkin said Drax has shown itself to have “a good track record” manufacturing wood pellets. That makes the company confident it can be successful with the Urania plant. “We’ve learned, starting up these facilities, that there are a lot of variables that impact pellet manufacturing, including weather, supply and demand,” he said. “We’ve learned how to accommodate for those things and still produce consistently high quality pellets.”
Drax also has developed good relationships with local and state officials and timber suppliers. There may be a little overlap between the fringes of the supply for LaSalle Parish and the Bastrop plants, but Malkin said it shouldn’t impact overall operations.
It’s too early to talk about hiring at the Urania plant, Malkin said. “We don’t know what staffing will look like because the plant has been idled,” he said. In May, Drax said it had about 150 employees between its Atlanta office, its two pellet production plants and at the port.
But the increased volume of wood pellets bound for the port improves the case for building a rail chambering yard across the Intracoastal Waterway from Drax’s storage domes. The chambering yard would enable port tenants to accept rail shipments and have them backed up on port property during lengthy import or export operations that otherwise could slow down area traffic.
Port commissioners approved the facility in January 2015 and Louisiana Agriculture Commissioner Mike Strain has dedicated $1 million to the rail development. “This underscores how important the chambering yard is and how it will benefit the entire region,” Malkin said.