Rentech Expands Wood Chipping Capacity and Processing Services in Chile
16 June 2014 - 9:00PM
Business Wire
Rentech Subsidiaries Sign Long-Term
Processing Agreement with Astex Ltda., a Mitsubishi Corporation
Subsidiary
Rentech, Inc. (NASDAQ:RTK) today announced a new long-term
processing agreement between its subsidiaries, Fulghum Fibres Chile
(Fulghum), Forestal Pacifico and Forestal Los Andes, and Astillas
Exportaciones Limitada (Astex Ltda.), the Chilean subsidiary of
Japan’s Mitsubishi Corporation.
The new processing agreement would expand the volume of
eucalyptus wood to be processed and sold under contract to Astex
Ltda. The five-year contract includes the mutual option to extend
for two additional five-year terms. The contract provides for
guaranteed minimum volumes using a base fee, excess fee and
shortage fee arrangement, similar to the tolling contract structure
of Fulghum’s North American contracts.
Fulghum will rebuild its current mill in Concepción, Chile, near
the port of Puchoco to increase production capacity. With the
expansion, the annual processing capacity of the mill will increase
from 180,000 bone dry metric tonnes (BDMT) to 400,000 BDMT of logs
with bark. In addition, the facility’s capacity to process logs
without bark will increase from 40,000 to 100,000 BDMT per year.
The mill will become Fulghum Fibres’s largest chip mill in South
America.
Rentech’s subsidiary, Forestal Pacifico, will process the bark
produced from the mill and sell it as biomass fuel to local
industrial customers. Rentech’s trading subsidiary, Forestal Los
Andes, will utilize uncommitted capacity at the mill to produce
chips for sale in South America or abroad.
“This agreement cements Fulghum Fibres’s position as a
significant world player in the pulp, paper and packaging
industry,” said Sean Ebnet, senior vice president of fibre business
development for Rentech. Mr. Ebnet continued, “Our best-in-class
proprietary eucalyptus debarking system gives us a unique value
proposition in Chile by providing a critical cost competitive
solution for the wood processing needs of our customers. Clearly,
Astex Ltda. recognizes this value and has expanded its debarking
and chipping business with Fulghum Fibres.”
“The growth and demand we are seeing in our wood processing
business is outstanding,” said D. Hunt Ramsbottom, president and
chief executive officer of Rentech. “This agreement highlights the
success of our wood fibre processing strategy and our approach to
building and operating complementary platforms in chipping and
pellets. The relationship with Astex Ltda. and Mitsubishi will help
drive Fulghum’s diversified growth and leadership in the expanding
global wood fibre industry.”
The project’s unlevered return is expected to be in the high
teens based on the guaranteed minimum volumes under the new
agreement with Astex Ltda. Utilization of any uncommitted capacity
of the expanded mill would result in higher returns.
The total cost of the new chipping mill and debarker project is
expected to be $8.6 million. The full capital cost is being
financed with debt from Chilean banks. Construction of the new chip
mill is expected to begin within the next several weeks with full
commissioning scheduled for early 2015.
About Rentech, Inc.
Rentech, Inc. (NASDAQ:RTK) owns and operates wood fibre
processing, wood pellet production and nitrogen fertilizer
manufacturing businesses. Rentech offers a full range of integrated
wood fibre services for commercial and industrial customers around
the world, including wood chipping services, operations, marketing,
trading and vessel loading, through its subsidiary, Fulghum Fibres.
The Company’s New England Wood Pellet subsidiary is a leading
producer of bagged pellets for the U.S. heating market. Rentech
manufactures and sells nitrogen fertilizer through its
publicly-traded subsidiary, Rentech Nitrogen Partners, L.P. (NYSE:
RNF). Please visit www.rentechinc.com and www.rentechnitrogen.com
for more information.
Safe Harbor Statement
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995
about matters such as: our ability to complete the wood chip mill
on a timely basis and on budget; the expected returns and increased
production rates of the project; and the outlook for our wood
processing business. These statements are based on management’s
current expectations and actual results may differ materially as a
result of various risks and uncertainties. Other factors that could
cause actual results to differ from those reflected in the
forward-looking statements are set forth in the Company’s prior
press releases and periodic public filings with the Securities and
Exchange Commission, which are available via Rentech’s website at
www.rentechinc.com. The
forward-looking statements in this press release are made as of the
date of this press release and Rentech does not undertake to revise
or update these forward-looking statements, except to the extent
that it is required to do so under applicable law.
Rentech, Inc.Julie Dawoodjee CafarellaVice president of
Investor Relations and Communications310-571-9800ir@rentk.com
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