The company’s first major export deal for densified biomass pellets produced from plantation tree harvest residues will be initially supplied from its new $25 million plant on Down Road.

The plant is in its final days of testing before production starts in earnest for the first 10,000 tonne pellet shipment from Albany in early July.

“It is very encouraging,” Plantation Energy business development manager Jarrod Waring said.

“Production is imminent and we had the main power put on last week.

“We are days away from commencing production.”

Plantation Energy expects the first stage of the plant to produce up to 125,000 tonnes of pellets a year.

Mr Waring said the production plant had gone through a rigorous testing process over the last couple of weeks.

A second identical production line is also being constructed and will come on line in September.

When completed it will double the facility’s production to 250,000 tonnes.

Mr Waring said Albany could potentially handle the company’s first supply agreement.

But it would eventually be joined by the company’s other factories in Victoria and South Australia which are still to be constructed.

The three-year supply agreement with Belgium-based Electrabel NV, a subsidiary of Gd-Suez, is the first of its kind in Australia.

“We also believe there is great potential to supply the domestic market over time as fuel pellets become more widely understood and accepted here in Australia,” Mr Waring said.

Electrabel biomass purchase manager Rudy Willemse said the agreement supported his company’s continued efforts to replace fossil fuels with renewable sources.

“(It) helps us to retain market leadership in this segment,” he said.

“The extremely efficient logistics of the Plantation Energy Albany plant fully preserve the CO2 neutral character of their product.”

DBF pellets are used extensively in Europe, where they are burned with coal in power stations.

Demand for pellets exceeded eight million tonnes in 2008 and is expected to top 16 million tonnes by 2014.

Last February, Plantation Energy signed a 12-month agreement for the supply of plantation harvest residues.

This followed a $12 million contract it signed with the Forest Products Commission in October 2007 for the supply of low-grade plantation pine logs.

The low-grade logs are a by-product of an existing FPC operation to thin and export logs from 3,500 hectares of radiata pine planted around Albany in the late ’80s and early ’90s.