20th European Biomass Conference and Exhibition- Milan 2012

Introduction and methodological approach

Economic analysis of manufacturing costs of pellet production for export from México to European markets: a study case for a

tropical rural area in the region of Veracruz R. Tauro, E. Maletta*, D. Aguayo, F. Manzini and E. Riegelhaupt

Corresponding author contacts: emiliano.maletta@ciemat.es Tlf. +34 664107873

Results and conclusions

Acknowledgements: The authors want to give special acknowledgement to Begoña Fernández, expert in International trading, who provided assistance determining export costs. This research had been supported through CIE-UNAM by the Sectorial Mexican Fund “CONACyT-SENER” for Energy Sustainability Ref. Nº 117808.

Map of Veracruz with sites with available biomass in this study and the port

Small carpenters with available sawdust in Misantla

Municipality of Misantla

Perote

Huayacocotla

Port of Veracruz

Sawmill in Perote (western Veracruz). Left: sawdust ; right: slabs

Scenarios Pelletizing capacity Biomass resource Pellet type

A 0.5 ton/hr Hedgerow prunings B

B 0.5 ton/hr Sawdust A1

C 0.5 ton/hr Logging residues A2

D 4 ton/hr Hedgerow prunings B

E 4 ton/hr Sawdust A1

F 4 ton/hr Logging residues A2

G 8 ton/hr Hedgerow prunings B

H 8 ton/hr Sawdust A1

I 8 ton/hr Logging residues A2

In Latin America, and particularly in central and southern Mexico, biomass is an abundant resource that may be available at low cost. An economic analysis of a pelletizing process and manufacturing/logisitcs/transport costs under nine different scenarios was performed for the conditions in the municipality of Misantla, State of Veracruz (México) considering the economic viability of exportation of wood biomass pellets to the European Union (EU) market.

Scenarios were built selecting three plant capacities (0,5t/h 4t/h and 8t/h), and three sources of biomass: hedgerow prunings (scenarios A, D and G); sawdust from small carpenters from Misantla (B) and bigger sawmills (E and H); and slabs plus logging residues from distant sawmills (C, F, I).

Sawdust from small carpenters and hedgerow prunings are a local source (< 30 km). Green sawdust, slabs and logging residues are available at 70 – 300 km (Perote and Huayacocotla areas). Biomass availability was estimated by visiting sawmills, sampling hedgerows, reviewing previous studies and statistics. Only sawdust and slabs were considered apt to produce A1 and A2 certified pellets, respectively.

About 58,000 tons / year of available biomass from hedgerows pruning within a 40km radio from Misantla (Veracruz)

Scenarios for wood pellet costs analysis

020406080

100120140160180

CIF

Woo

d pe

llets

cos

ts

(bul

k) in

€/t

Sea freight toRotterdamLoad and Freight FOB

Transport to Port

Certifications Costs

Operating Costs

Capital Cost

Tranport to Plant

Raw Material FOB

020406080

100120140160180200220

CIF

Woo

d pe

llets

cos

ts

(bag

s) in

€/t

Sea freight toRotterdamLoad and Freight FOB

Transport to Port

Certifications Costs

Operating Costs

Capital Cost

Tranport to Plant

Raw Material FOB

Nine scenarios under study considering three sources of biomass and three pelletizing capacities

1) Wood pellets A1 and A2, bagged, are viable alternatives when considering a retail price of 220€/t, since CIF costs are lower. Mexican A1 and A2 wood bagged pellets could be exported in containers to EU residential heating market at a CIF cost in Rotterdam of 181€/t (scenario B) 163€/t (scenario E: 4t/h) and 169€/t (scenario H: 8t/h). Biomass availability from big sawmills limit the volume that can be produced by the last two scenarios.

2) Hedgerows’ pruning are good potential business for A2 export pellets (scenario F and I, with a cost lower than 180 and 200€/t respectively) and our results suggest that logistics might be improved to obtain lower pellet costs, since availability is much higher.

3) Bulk pellets are unlikely viable alternatives: CIF-cost at Rotterdam exceeds July 2012 reference prices in EU markets of 132,70€/t (source: www.apxendex.com). Scenario E and H has lower costs but there is not enough biomass availability in the sawmills to ensure stable and secure shipping arrangements. To load one ship (30,000 t) per month, total plant capacity should be above 50 t/h, calling for a very wide collection area.

4) Location, location, location: Biomass transport costs resulted too high for 4t/h and 8t/h capacities since Misantla has mostly small carpenters. The larger plants required to bring biomass from longer distances (Scenario H and I) (Huayacocotla, Perote) resulting in transportation costs as high as 39,87 €/t. The proximity of Misantla to the port of Veracruz does not compensate for the higher costs of raw materials transport.

5) Delivering pellets to domestic market could be a better business than to export in bulk to EU. Fuel oil costs in Mexico are currently (April 2012) at 15,39€/GJ when ex-works bulk pellet costs in Misantla are 5,45€/GJ.

6) Further work has to be done in order to identify more efficient and lower cost alternatives for wood pellets production and marketing in the tropics of Mexico.