Drax Group (LSE:DRX) PLC has agreed to acquire the pellet sales contract book of Pacific BioEnergy Corporation, a Canadian wood pellet fuel provider.
The deal adds 2.8mln tonnes of orders for sustainable biomass supply to counterparties in Japan and Europe. The contracts are for delivery between 2022 and the mid-2030s, of which 300,000 tonnes is for delivery in 2022.
The total incremental revenues over the contract period are around C$675mln, Drax said.
Drax said the deal would increase the group's long-term third-party sales book by 15%, to around 23mln tonnes, with total revenues of more than US$4.5 billion.
"This deal supports Drax's ambition to double our sales of sustainable biomass by 2030 to markets in Asia and Europe where demand for biomass is increasing as countries transition away from coal. It also demonstrates Drax's commitment to the growth of sustainable biomass in Japan specifically, where we expect to establish a new office in 2022,” said Will Gardiner, the chief executive officer of Drax.
"We look forward to working with our partners in Japan and other markets across Asia and Europe as part of our aim to be a global leader in sustainable biomass, making an even greater contribution to the world's efforts to reach net-zero,” he added.