Drax Group to Invest $40M in 3 New Plants, Create 30 Jobs

Drax Group of Selby, United Kingdom, a sustainable biomass production and supply company, announced Thursday that it will begin building the first of three new “satellite” pellet plants in Arkansas later this month.

In total, the company said it will invest $40 million and create about 30 new direct jobs in Arkansas.

The three plants will be located at sawmills and are expected to produce about 120,000 metric tons of sustainable biomass pellets a year from sawmill residue.

The company aims to increase supplies to its power station in the U.K., which has become the largest decarbonization project in Europe after being converted to use sustainable biomass instead of coal. Drax’s strategy is to increase self-supply to 5 million tons by 2027; it is also working toward being carbon negative by 2030.

Each Arkansas plant is expected to produce around 40,000 tons. The first one is being built near a West Fraser sawmill in Leola (Grant County) and is expected to be operational in October. The others will be built in the coming months at sites the company would not disclose.

“By building these new pellet plants, Drax is bringing jobs and opportunities to rural communities in Arkansas, boosting the state’s post-COVID economic recovery,” CEO Will Gardiner said in a news release. “Through this investment, Arkansas will play an important role in combating climate change, supporting Drax to increase the amount of sustainable biomass we produce as part of our plans to pioneer bioenergy with carbon capture and storage.

“By using sustainable biomass, we have displaced coal-fired power generation, reduced carbon emissions and provided renewable electricity for millions of homes and businesses in the UK.”

Arkansas’ forest industry has been fertile ground for wood pellet manufacturers. In February, Dansons USA announced plans to open the country’s largest barbecue wood pellet mill and distribution center in Hope, creating 50-100 jobs there over the next three years.

And in December, Highland Pellets LLC reached a $135 million capital partnership with Orion Energy Partners LP to fund the expansion of its wood pellet facility in Pine Bluff — a facility that first opened in 2017.

The Arkansas Economic Development Commission said the company qualifies for two incentive programs: Tax Back, which provides sales tax refunds on building materials, taxable machinery and equipment associated with the project; and Advantage Arkansas, which provides a state income tax credit of 1% of total payroll.

“Drax’s ambitious company vision combined with the renowned tenacity and loyalty of Arkansans make this partnership an excellent match,” Gov. Asa Hutchinson said in the release. 

Drax owns and has interests in 17 other pellet plants and development projects across the U.S. and Canada.