The State forestry agency Coillte has entered a €68 million partnership with energy giant BP and listed UK chemicals company Accsys Technologies.
The three companies have formed a consortium to open a factory in Hull that will make Tricoya wood chips treated with special chemicals.
These will then be shipped to Coillte’s Medite plant in Clonmel to manufacture MDF fibreboards, which Coillte says can be utilised in outside environments where it was never possible to use MDF before.
This will open up new markets for its use in new weather-proofed products as MDF cladding, and even as MDF windows and doors for large-scale builders.
Fergal Leamy, the former Terra Firma private equity executive who took over as Coillte chief executive in 2015, says the deal will help copper-fasten the long-term sustainability of the Medite plant, which employs 160 workers.
He confirmed that Coillte is now on the hunt for more such international partnerships, as it tries to pivot its part of its business away from commodity production into the more lucrative market for “value-added products” such as cladding.
“Before, we might have sold fibre boards for €30 to €50 per panel. But with the special treated wood chips, the Tricoya boards can be sold for between €300 and €400 per panel. It moves us up the value chain.”
The wood chips are treated with a form of acetate, a compound that is a byproduct of BP’s fuel production. It is usually used in cigarette filters. BP owns the plant in Hull, while Accsys owns the technology used to coat the woodchips in the substance. Coillte makes the boards, and owns certain associated patents.
The three companies have roughly a third each of the overall intellectual property for the production of the boards, which will be sold to big builders and construction products distributors across Europe.
If the joint venture successful, Mr Leamy said, distribution may be expanded even further afield and Coillte has an option to participate in the expansion. The deal with BP and Accsys took about 15 months to conclude.
“This gives the Clonmel plant more depth of production and makes it more sustainable. We’re looking for more deals along these lines,” said Mr Leamy.
Accsys and BP also talked up the deal. Accsys said it believes the market for Tricoya will be “substantial”, while BP Petrochemicals said it is aiming to “transform” the wood manufacturing industry.