MILLINOCKET, Maine — Cate Street Capital has purchased for more than $20 million the North American rights to the technology to manufacture biocoal, a huge step toward adding the production of treated wood at its Katahdin Avenue paper mill and creating several hundred jobs, officials said Thursday.
Cate Street subsidiary Thermogen Industries LLC secured exclusive rights from Scotland-based Rotawave Biocoal to manufacture a type of machine — called Targeted Intelligent Energy System, or TIES — that makes biocoal, or torrefied wood, which would replace coal burned at electricity plants, Cate Street spokesman Scott Tranchemontagne said.
“It is the most tangible sign of our commitment to moving this project forward,” Tranchemontagne said Thursday of the $20 million deal. “We have the technology. We have a wonderful site at the end of the Golden Road and we have a labor force that is ready and willing to work. Those are some key pieces to any business looking to start up.”
If Thermogen’s plans reach fruition, Cate Street senior vice president Richard Cyr said, Thermogen’s production of biocoal would help transform the state forest products industry.
Thermogen and Cate Street subsidiary Great Northern Paper Co., which operates the East Millinocket and Millinocket paper mills, would also benefit from several independent and ongoing governmental and private business initiatives.
Those initiatives include the $10.5 million reconstruction of 233 miles of northern Maine railroad tracks, the expansion of the shipping port in Searsport, Gov. Paul LePage’s proposal to extend a natural gas line to the Katahdin region by 2013, and Cate Street’s own revitalization of the mills.
By acquiring the rights to TIES, Rotawave Biocoal’s microwave-based biocoal production system, Thermogen has solidified plans to install five or six TIES machines in Millinocket starting in November 2012. Creating jobs for 22 to 25 workers directly and dozens of truckers, loggers and other support providers indirectly, the first $35 million TIES machine would supply United Kingdom utilities with biocoal, Cyr said.
Millinocket would be the site of the first of four or five biocoal mills eventually nationwide, Cyr said. Rotawave’s attempt to sell its technology rights to a Vancouver company that would have built a biocoal factory in British Columbia last year fell through, he said.
“We have been looking for a home for Thermogen for two years. Over that time we have been studying a lot of technologies,” Cyr said, calling Rotawave’s “the one that created the best end product.”
Engineers are developing plans now to site the machines at the Millinocket mill as Cate Street assembles its financing and seeks engineers to build the Rotawave machines, Cyr said. Cate Street hopes to have the design and financing ready within four months, with mill site work possibly beginning then as well, Tranchemontagne said.
Cate Street hopes to have Thermogen producing 100,000 tons of biocoal annually by the end of 2012, eventually increasing that to 1 million tons. Cate Street leaders believe the federal government will effectively force electricity manufacturers that burn coal to seek alternative fuel sources when it unveils stringent new air-quality standards in the next few years.
The British government is already doing this, Cyr said.
Thermogen would ship its product to Searsport for transport to the U.K. while receiving raw materials from logging crews, trucks and over rail lines. Its operations would complement and be independent of the mills’ papermaking, which will be partially powered by natural gas.
The paper mills and Thermogen use many of the same raw materials and infrastructure. Both benefit from proximity to the Golden Road and its vast supply of wood, Cyr said.
Rotawave’s “is the core technology and has all these other pieces that have to come together to make it work. This is what makes that area up there so perfect for us,” he added.
Millinocket Town Manager Eugene Conlogue said he saw the logic of Cate Street’s interest in biocoal and its attraction to the Katahdin region and its papermaking almost immediately. He called the holding company’s $20 million deal the best example yet of its credibility.
“This is becoming a giant octopus with its tentacles reaching out in all different kinds of directions, all benefiting parts of the state. This has good news written all over it,” Conlogue said Thursday. “They are keeping their word. They are not coming in here with highfalutin’ promises that are not being fulfilled. They have a very good plan, they are following the plan and it will do nothing but benefit Millinocket as well as the entire Katahdin region.”
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