From sawdust to fuel

Wood pellets are a renewable and sustainable biomass fuel. South Africa is well positioned to take its share of this globally growing market.

The rolling hills of Sabie, Mpumalanga, are home to one of South Africa’s largest timber-growing areas.  It’s here that Zebrapellets has established a factory that not only turns waste from nearby sawmills into something useful, but is a model for development in a rural area.   

Using technology that dries, mills and presses compact sawdust into 6 or 8mm cylindrical pellets, Zebrapellets is transforming waste into clean-burning combustible pellets. The company will produce 80 000 tons of the pellets each year at full capacity from about 160.000mt of sawdust, woodchips, shavings and off-cuts.

“Because wood pellets are extremely dense and can be produced with a low humidity content of below 10%, they burn more efficiently than other types of fuel,” says Jaco Scholtz, Senior Account Manager of the Wood, Paper & Other Industries SBU at the IDC.   “They are also carbon neutral, compact to store and can be transported more affordably over long distances than other types of fuel such as coal or oil.”

It takes just 2,2 tons of pellets to produce the same amount of power as 1,000 litres of oil, saving approximately 2 tons of CO₂for the same energy output. 

The project enables the further beneficiation of waste material from the sawmilling process and an opportunity to develop an integrated value chain.

It was the project’s ability to support a range of government’s objectives including stimulating green technologies, emerging industries and effectively using waste materials that sparked the IDC’s interest in the project.  After investigating and negotiating with two foreign renewable fuels trading companies, Grupo CGC and GF Green Energy, the IDC committed R66 million to the project in the form of  R56m in debt financing and R10m in equity funding.  The other shareholders contributed about R25m and ThyssenKrupp an additional R5m, bringing the total value of the joint venture to R97m.  

“The IDC acquired a 29% stake and reserved 10% of this for a worker’s trust to be established through IDC development funding,” says Scholtz.  “Workers will obtain a direct shareholding in the company from which they will benefit when the project is fully operational.”  

Zebrapellets is expected to reach a turnover of R100 million/year, depending on exchange rate fluctuations.  It has also created 61 direct jobs in a rural area where formal employment opportunities are hard to come by.  “In addition, the project enables the further beneficiation of waste material from the sawmilling process and an opportunity to develop an integrated value chain,” says Scholtz.

With the rising cost of fossil fuels and pressure for companies to reduce their carbon emissions, there has been a surge in demand for wood pellets globally.  Most of the 14 million tons of wood pellets produced globally are used as a feedstock for power stations in the UK and Europe. The total global market is worth about US$1 billion/year.  However, most European countries do not have available resources to develop and grow the industry and the result has been a shortage of supply.

Zebrapellets’s wood pellet factory in Mpumalanga.

“South Africa has extensive and professionally managed forest resources which makes it suitable for wood pellet production,” says Zebrapellets chairman, Klaus Vorgang.

“The pellets will be produced mainly for the export market, since the feeding and firing equipment of local power stations is not configured to use this type of fuel,” says Rentia van Tonder, head of the Wood, Paper & Other SBU.  “However, we are investigating local opportunities through various initiatives where pellets can be used as a fuel source.”  

She says one of the advantages of switching from coal to wood pellets is that the user can claim carbon credits, which can provide additional income (see the article on carbon credits). “If we could develop a local market for the pellets it would not only benefit the pellet producers by reducing their transport costs but would also create the opportunity for the user to sell carbon credits,” says van Tonder.

The IDC also played a role in recently establishing the Biomass Pellet Association in order to create a platform for local producers to develop the industry. The local industry has mushroomed from one to four producers over the past four years which potentially can produce about 260 000 tons of pellets a year.   

Scholtz says the technology could also be particularly useful for indoor heating in South Africa as it leaves almost no ash or waste – preventing health problems associated with indoor wood and coal-burning stoves.   

“We’d like to expand the production capacity of Zebrapellets and eventually create a local South African market for biomass pellets used to generate electricity or cleaner renewable fuel as opposed to the use of fossil fuels such as coal,” she says.