A company from California has won the harvesting rights to a large wood supply in central Newfoundland that once belonged to Abitibi-Bowater.

CBC News has learned that Rentech now has ownership of the 280,000 cubic metres of wood that once belonged to the former newsprint producer, which shut down its Grand Falls-Windsor mill in early 2009

Rentech, mainly a fertilizer company in the U.S., is looking into producing wood pellets in Canada.

The company has access to a large wood resource in Ontario, and also owns two wood pellet plants in that province.

In November, the company purchased in idled mill in Wawa, Ont. to convert it into a pellet production facility. It has yet to produce any pellets, but the company said it does have customers.

Botwood seen as shipping point

Scott Jamieson, the publisher of industry news magazine Canadian Biomass, said if the company has customers, it could soon be in business.

"If they have those export agreements, and if they can manage the logistics for shipping, I don't see why they wouldn't have the same success as the larger operations in British Columbia," Jamieson said.

According to industry insiders, Botwood would serve as Rentech's shipping point, and a pellet plant could also be built in the town.

They also said the Newfoundland and Labrador government is prepared to invest $20 million to help in the construction of the pellet plant.

The company, as well as officials with the provincial government, wouldn't agree to an interview until a deal is publicly announced.

With files from Leigh Anne Power