UBC Undergraduate Research

Feasibility study for a pellet mill in the Lower Mainland of British Columbia Smidstra, Robert


This report is to look at the possibility of establishing a pellet mill in the Lower Mainland of British Columbia. It will do an analysis on wood fibre supply and wood pellet demand, as well give an overview of market characteristics and operating prices, Later, the report will go over the strengths, weaknesses, opportunities, and threats a mill in the Lower Mainland would have. There is great potential in the Lower Mainland to establish a pellet mill. There is a large source of quality fibre from numerous sources. The mill would have the unique chance to use urban wood waste as well as of local slash wood fibre as well as the traditional sawdust and chip fibre from local sawmills. The cost of sawdust and chip fibre in Vancouver is quite expensive due to the over competition from multiple users. Therefore, material costs maybe would be higher than an average mill. In addition, the wood pellet industry is very competitive, and it is hard to be profitable when prices of fibre, transportation, and final sale are always changing. However, since transportation cost is the majority of the total cost of most pellet companies, a Vancouver mill would have a competitive advantage over other mills in Western Canada. The demand for wood pellets globally is expected to double in all markets and become one the main drivers to reduce GHG emissions with the change of power plants co-firing with wood pellets. There is a question whether how sustainable shipping wood pellets across oceans can be, but hopefully Canada will develop a larger bioenergy market to reduce the reliance on European sales to make a profit. The goal of this product is to sell into any viable market but mainly Asia since being it is the closest international market except for the United States, it would have the lowest freighting costs associated with it. With the current analysis, I believe the market is attractive and it would be a good idea to start a pellet mill in the Vancouver region.

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