Weyerhaeuser and Mitsubishi to partner on biomass

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Mitsubishi Corporation and Weyerhaeuser Company (NYSE:WY) announced Tuesday that the two companies signed a strategic memorandum of understanding to explore the possibilities of collaborating in the biomass-to-energy business.

The companies are specifically interested in assessing the feasibility of jointly investing in and operating a commercial-scale bio-pellet production facility in the United States by 2011. The first facility is likely to be located near Weyerhaeuser existing operations in North America, according to company spokesman Anthony Chavez.

Depending on the success of the joint feasibility study, more facilities could follow in addition to the initial production facility, in aspiration to become a world class bio-pellet producer. The bio-pellets will be produced using wood based biomass, targeted from U.S.-sourced sustainably managed forest resources or by-products and sold to utilities and industrial users for energy production.

The agreement signals the belief of both companies that there are existing and emerging opportunities in an expanding bio-energy market. The partnership brings together two industry leaders and leverages the strengths of both companies: Weyerhaeuser’s capacity to produce renewable biomass at scale from its sustainably managed forests and Mitsubishi Corporation’s worldwide network and experience in the energy sector and bio-pellet manufacturing business. Mitsubishi Corporation currently operates two bio-pellet facilities in Japan and is also actively involved in the management of Vis Nova Trading GmbH, a major producer of bio-pellets in Germany.

In a statement, Wayerhaeuser CEO Dan Fulton said: "This opportunity has the potential to offer a significant renewable energy option here in North America and beyond while also creating green jobs in our operating communities. At the same time, we have the opportunity to enhance the value of Weyerhaeuser timberlands by converting residuals from our forest management activities into a new revenue stream."

Bio-pellets are a renewable and carbon-neutral fuel made from biomass, which can include by-products from forest management. The biomass is compressed and molded into small, cylindrical pellets. There is increasing evidence that the use of wood pellets is a viable alternative for coal-fired power plants.