Borregaard (BRG) and Rayonier Advanced Materials (RYAM) have concluded a market, technical and engineering analysis regarding a new lignin operation at RYAM's Fernandina Beach site in Florida to serve the growing demand for natural lignin-based products.
The final review of the investment by the companies' boards of directors is anticipated during the second half of 2016 upon receipt of final permits and incentives from government entities. If the companies elect to proceed, operations are expected to commence approximately 18 months later.
Cost of construction of the lignin plant is expected to be $135 million over two phases of the project. Phase one, which will have a lignin capacity of 100,000 metric tons, is estimated to cost $110 million. An estimated incremental $25 million will be required in phase two to increase the total capacity to 150,000 metric tons. LignoTech Florida intends to access the debt markets to fund a portion of the capital requirements.
Lignin, a natural component of wood, is a co-product of the sulphite cellulose manufacturing process. The new operation will process the lignin into value-added products that provide environmentally friendly alternatives to fossil fuel-based products used globally in construction, agriculture and other industrial applications.
The new company, LignoTech Florida LLC, is to be owned 55 percent by Borregaard and 45 percent by RYAM.