Our Pellet Solution
Fiber
Our strategy has been to locate our pellet plants in the area with the best availability of sustainable fiber. This ensures we have access to the lowest priced wood and provides the best possible risk mitigation against short term supply shocks caused by weather, as well as protecting against any future increase in fiber demand. Our Pine Bluff plant needs almost 1.7m tons of fiber each year. Highland is able to source 3.5m tons of softwood pulpwood each year within a 75-mile radius of Pine Bluff, which is around 2.2 times more than what we need.
Highland sources predominantly Loblolly Pine (Pineus taeda) which is a species of Southern Yellow Pine. Fiber is sourced from privately owned Semi-Natural Planted Forests and any waste wood provided by local sawmills.
The wood fiber that we take from the forests is mostly thinnings – small trees which must be removed to prevent overcrowding and enable the remaining trees to obtain more light, nutrients and water to grow into a healthy forest. If forests were not thinned, there would be an increased risk of forest fire, disease and the value of the trees would be less because they would not grow into high quality saw logs for the lumber market.
For commercial and environmental reasons, Highland’s fiber strategy is to purchase the lowest cost pulpwood of the required quality to make high specification pellets. We therefore don’t put any bark or pine needles into our pellets, but we do use unwanted treetops, tops that have been removed when cutting the saw logs to size. We will also use any rejected trees that cannot be used as saw logs because of disease or damage. Highland therefore provides a market for the lowest value wood which provides a much-needed source of regular income to local landowners. In this manner, Highland helps to keep the local forests commercially viable and so reduces the risk of the land being converted from forest to other uses.
Highland will not source any wood from protected sources or if the wood has a higher value in an alternative market. All the following is excluded from our Supply chain:
- Fiber from Conservation lands
- Areas of Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
- Saw logs
- Longleaf Pine
- Cypress
See our Sustainability section for more information on how Highland is working to promote sustainable forestry.
Operations
Safety is our priority. We firmly believe that a safe working environment is essential for higher productivity, as this will minimize disruption and enable the plant to keep operating 24/7 throughout the year. Reduced operating risk is also achieved by the following:
Design of the Plant: The Pine Bluff plant consists of four independent operating lines so that if any one line fails, the other three lines continue to operate.
Established operating procedures: We identify the safest and most efficient method of executing different operating procedures. The accepted method is then documented for training future workers. We are continually looking for ways to exceed industry best practice.
A robust preventative maintenance schedule: Pre-emptive maintenance is cheaper and less time consuming than waiting for working parts of the plant to fail. Every day we are working on keeping the plant up and running to its full capability.
Wood Storage: We can store around 82,000 short tons of wood on our site to buffer against short-term supply shocks (such as when it is too wet to source wood from the forests). This prevents unnecessary disruption to production from temporary curtailment in fiber delivery.
Our People: Our team has extensive experience in the pellet and wood manufacturing industries which provides an invaluable pool of knowledge and cross-training learning that helps to achieve the very best operating experience.
Pellet Storage: We can store almost 15,000 metric tonnes of pellets in our rail cars and storage silos. This provides us with a buffer and enables the plant to keep operating if there is disruption to logistics further down the supply chain.
Logistics
Managing logistics is a key part of the Highland business to ensure that the supply chain is maintained and that pellets reach their destination in a reliable and timely manner. With strategic site locations next to rail spurs, river barge or direct access to ports, we can take advantage of optimal logistic solutions to meet our customer needs.
Our Pine Bluff plant has a double rail loop track on site to facilitate the smooth receiving and loading of trains. Our rail solution is designed to enable an 80-car unit train to deliver almost 6,500 metric tonnes of pellets to the port of Baton Rouge and return to site every four days. Each of these trains are nearly a mile long and help to minimise our logistic costs and carbon footprint through economies of scale.
Location of end markets in Europe and Asia means that the length of supply chain from our pellet plant to consumer is thousands of miles long. Our pellets need to be delivered to port and will then spend several days at sea in a ship. It is therefore crucial that our pellets can withstand the journey without breaking into small particles. We manage this risk by making a hard pellet with 99% durability so that it is less likely to break during transit.
Off-Take
Our approach to managing market price risk has been to enter long term contracts with our customers, so that both parties benefit from knowing the price of pellets in future years. Highland is well positioned to offer customers long term contracts for 10-20 years. This approach also enables a strong relationship to develop with our customers so that we can be responsive to their changing needs on delivery times, storage needs or quality requirements.
