Resolute Forest Products will build a plant in the Thunder Bay area to make industrial wood pellets.

The company will spend $10 million to construct a plant adjacent to its sawmill on the Fort William First Nation, creating 24 jobs as a result. Pierre Choquette, Canadian director of public affairs for Resolute, said it's the company's first venture into the pellet business.

“Well it's the first step towards Resolute developing a new sector, a new product,” he said. “We're talking about pellets that are basically made out of the sawdust.”

Industrial wood pellets are made from sawdust. (CBC)

Choquette said construction of the plant will begin soon, with completion set for 2014. Wood pellets will be shipped to Atikokan for use at the Ontario Power Generation plant outside that community. Resolute has signed a 10-year agreement to supply OPG with 45,000 metric tons of pellets annually.

"This project provides the opportunity to enhance the use of our existing asset base to produce biofuel for a strategic, committed consumer and allows the company to gain valuable manufacturing experience in commercial biomass production,” Richard Garneau, president and CEO, was quoted in a press release, which also noted the venture would improve “the long-term viability of the sawmill and the approximately 350 jobs that it supports.”

‘Good news for us’

Atikokan Renewable Fuels is also welcoming a contract from Ontario Power Generation.

The company will supply half the biomass wood pellets the power plant will need after it's converted from coal. Resolute Forest Products will supply the other half.

Ed Fukushima said the contract means he can proceed with getting machinery into the former fiberboard plant in Atikokan.

“We've owned that empty facility for three years, and it's been a struggle,” he said.

“We've had to fund the whole project by ourselves up to this point until we actually obtained a supply contract. So this is very good news for us.”

Fukushima said it's also good news for Atikokan, because his company will employ about 45 people.

He says he's been told another 100 workers will be needed in woodlands operations.

Although it has a contract with OPG for the Atikokan generating station, Atikokan Renewable Fuels will send most of its product to Europe. The plant capacity will be 140, 000 tons per year. At total of 45,000 tons will go to the OPG plant.

"We had hoped that we would get a larger percentage of (the contract) but OPG always said they were going to use multiple suppliers,” Fukushima said.

According to information from OPG, the Atikokan plant will be the largest capacity, 100 per cent biomass-fuelled plant in North America. It will have more than 200 megawatts of generating capacity.