The Canadian Society for Bioengineering The Canadian society for engineering in agricultural, food, environmental, and biological systems. La Société Canadienne de Génie Agroalimentaire et de Bioingénierie La société canadienne de génie agroalimentaire, de la bioingénierie et de l’environnement Paper No. 06-103 ECONOMICS OF PELLET PRODUCTION FOR EXPORT MARKET Mozammel Hoque, Shahab Sokhansanj*, Tony Bi, Sudhagar Mani*, Ladan Jafari, Jim Lim, Parisa Zaini Department of Chemical & Biological Engineering, University of British Columbia, 2360 East Mall, Vancouver BC, Canada V6T 1Z3 Staffan Melin Delta Research Corporation, 501 Centennial Parkway, Delta, BC, Canada V4L 2L5 Taraneh Sowlati Department of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC, Canada V6T 1Z4 M Afzal Forest Engineering Program, University of New Brunswick, Fredericton, NB E3B 6C2 Written for presentation at the CSBE/SCGAB 2006 Annual Conference Edmonton Alberta July 16 - 19, 2006 Abstract Due to its renewable, clean-burning and cost-stable for home heating, wood pellet is gaining popularity day by day throughout North America. The use of pellets in co-firing with coal enhanced its utilization suddenly in Europe. As a result, some countries in Europe are planning to import wood pellets from Africa, America or neighboring European countries due to the shortage of wood in long term basis. This study focuses on the pellet production in Canada and its export to Sweden or the Netherlands. The transport and supply logistics were analyzed. The results showed that the total production cost of pellets was US$46.8 per metric tonne and among which 4.5 US$/tonne was the capital investment. The transport and supply logistics cost estimated as US$ 96.1 or 89.1 per tonne for exporting to Sweden and the Netherlands, respectively. The internal rates of return for the two cases were estimated as 24 and 37%, respectively, with a plant life of 10 years and the payout periods of 4 and 3 years, respectively. Keywords: wood pellet, sawdust, pellet transportation, supply logistics. Papers presented before CSBE/SCGAB meetings are considered the property of the Society. In general, the Society reserves the right of first publication of such papers, in complete form; however, CSBE/SCGAB has no objections to publication, in condensed form, with credit to the Society and the author, in other publications prior to use in Society publications. Permission to publish a paper in full may be requested from the CSBE/SCGAB Secretary, PO Box 23101, RPO McGillivray, Winnipeg MB R3T 5S3 or contact bioeng@shaw.ca. The Society is not responsible for statements or opinions advanced in papers or discussions at its meetings.