DEVELOPMENT of a $200 million engineered lumber plant at Albany has moved a step closer after project company, Lignor Limited, completed a $5 million capital raising this week.
Development of a $200 million engineered lumber plant at Albany has moved a step closer after project company, Lignor Limited, completed a $5 million capital raising this week.
The capital raising comes after five years of preparatory work and $3.3 million of research and testing by the privately owned company.
If all goes to plan, construction of the Lignor plant will commence in mid 2006, with first production in early 2008.
At full capacity, the plant would support 140 direct jobs and produce 260,000 cubic metres of engineered lumber worth $270 million each year.
This would provide a major fillip for the Great Southern region and realise some of the potential for value-adding investment in the state’s expanding timber plantations.
The founding shareholders of Lignor include wealthy Albany farmer William Harvey and Queensland-based agribusiness consultant Peter Burton, who will soon move to Perth to work on the project.
They were joined in 2003 by Sydney-based Simmonds Lumber, which is one of Australia’s biggest independent timber wholesalers.
Simmonds holds a one-third stake after being the main investor in the capital raising, which was coordinated by Grange Consulting.
Completion of the capital raising will allow Lignor to formally appoint international engineering group WorleyParsons to proceed with more detailed planning for the project, which will use proven German technology to convert hardwood timbers into engineered strand lumber.
In short, the plant will shred the timber and then glue it back together in either lumber or board form.
It will be the second engineered wood plant to be built in WA, after Dennis Cullity’s Wesbeam built an $85 million laminated veneer lumber plant at Neerabup, near Wanneroo, last year.
Lignor managing director Glyn Denison, who joined the group last year after 16 years with technology company ERG, emphasised the differences rather than the similarities between the two projects.
He said the manufacturing processes were different and the end-products were not direct competitors.
“We will not be competing against LVL, although the markets do overlap,” he said.
The technology to be used by Lignor has previously been used overseas to process softwood timbers, and Lignor will be the first company to process hardwoods.
Mr Denison said the hardwood ESL was 40 per cent stronger than the softwood equivalent, and also featured superior durability and weather resistance.
He said these features paved the way for a number of premium applications, including external decking, handrails, outdoor playgrounds, floors for shipping containers and scaffold planks.
Simmonds has agreed to buy 40 per cent of the plant’s output and Mr Denison said other timber merchants had been very enthusiastic in their response.
On the supply side, Lignor plans to buy most of its timber from blue gum plantation managers but also had an agreement with the Forest Products Commission to buy karri, jarrah and marri residue.
Mr Denison said Lignor had finalised negotiations with Landcorp to acquire a 26-hectare site in the Mirambeena industrial estate, just north of Albany.
One of the outstanding issues for Lignor is the question of State Government assistance, to help with infrastructure such as power and water and extension of a rail spur-line to the plant.
Lignor has already secured $1.36 million of Federal Government funding and Mr Denison said he was keen to work with the State Government to bring environmentally sustainable manufacturing jobs to the region.