March 2001 - Logging and Sawmilling Journal -

Despite the lack of success with two strawboard plants, a consortium is planning a $150 million straw based MDF project for Alberta.

In spite of the unsuccessful record of two Alberta strawboard plants (see sidebar story), a proposal is now being made for a $150 million straw based medium density fibreboard (MDF) plant north of Edmonton, near the village of Thorhild. The plant promoter is a Toronto consortium consisting of four companies working under the name of Prairie Board Products Corporation. At the present time, consortium member Project Capital Group is attempting to attract a project owner based on a concept they-along with consortium partners Roche Consulting from Quebec City and the State Group- have for the plant. The consortium hopes to have an owner shortly with construction beginning as soon as the spring of 2001.

Project Capital Group managing partner Gregory Hill says the recent failure of two other plants in Alberta has caused a slight setback in the industry, but he adds that a knowledgeable investor will be able to easily differentiate between the failed endeavours and what they are proposing. The consortium believes it has a cost-effective approach to manufacture a competitive straw based MDF product and hopes the publicity surrounding the industry casualties won't detract from their own proposal.

The Project Capital Group was responsible for raising the money for the successful Isobord Enterprises strawboard plant in Elie, Manitoba. "As part of our process, we're looking for a complete guarantee around the process, as well as on the engineering procurement and construction," says Hill. "We are anticipating that we can be competitive against wood products just by the fact that we have a more efficient process. You have to prove that it is viable before you get the true owner/investor on side.

They've got to see it almost from soup to nuts before you can get their interest ." Hill says the Prairie Board consortium is aware of the cost challenge posed by the availability of cheap residual wood for the manufacture of wood based MDF. He adds that one reason why the Prairie Board Products proposal can compete with wood based MDF is because their process involves new proprietary technology in its straw refining process. They intend to use atmospheric -rather than pressurized-refining. "Straw is already relatively size reduced, so it is a much easier process to size reduce it further," says Hill.

Typically a wood based MDF plant achieves fibre size reduction by using pressurized refining, involving heat, steam and the grinding action of disks. An atmospheric refiner, however, relies solely on machining, or the action of the disks, to reduce the fibre, without the use of steam or water pressure. "It's much more environmentally friendly as there is no effluent coming from our plant," says Hill. "Also, in relation to energy and capital costs, this process is much better. Much of the rest of the process is similar to a standard plant. The size reduction is where your huge energy costs are."

He adds that the whole process of size reduction is "pretty mature technology". What is new in terms of the Prairie Board Products proposal is its application to straw. It has been successfully laboratory tested. The consortium also intends to use less costly urea formaldehyde as the binding agent, as opposed to using the more expensive industry standard of methylene diphenyl isocyanate (MDI). The Alberta Research Council (ARC) helped develop this new technology.

Wayne Wasylciw, technical manager for the ARC testing laboratory, says they have developed a substitute for MDI called melamine urea formaldehyde and, Hill says, their process will be similar to what has been developed by the ARC. "You don't have the dangerous off gasses property that you would have with urea formaldehyde," says Wasylciw, "but it allows you to get away with some of the technical issues of using MDI ."

He adds that MDI is a "fantastic binder", but it has its own special handling characteristics and safety issues. "It sticks to the press so you have to use release agents on it," says Wasylciw, "and it is very expensive. Melamine urea formaldehyde resins are certainly not cheap, but they're easier to work with and they are slightly cheaper than MDI." Wasylciw concludes that using a cheaper resin to produce a more cost competitive MDF product is a favorable economic scenario.

He has identified the cost competitiveness of straw based particleboard, especially in an area where wood waste is cheap, as the Achilles heel of the strawboard industry in Alberta. Hill says they are aware of the stigma attached to the use of urea formaldehyde, but the reality is that almost all interior wood panels manufactured in North America still use urea formaldehyde as the binding agent.

Environmental concerns are less pronounced outside of California and, as long as the product is laminated on both sides, it is deemed safe for mobile home construction use. "There is still a strong push for quality, but at a certain price," he adds. The Thorhild straw coop is highly supportive of the Prairie Board Products proposal, despite the fact that they are the third company to express an interest in constructing a strawboard plant in the community.

The co-op consists of area farmers willing to supply excess straw to the plant. "Their proposal is completely different than other plants up here that have failed," says Henry Zolkewski, chairman of the Thorhild Gold Stem Coop, which would supply the proposed Prairie Board strawboard plant. "For example, the Wanham plant was a strandboard plant and the board was made from fescue fibre. So it was altogether different, using different technology. You can't compare the two, yet an awful lot of people are doing that." He says the coop has not lost any membership since the demise of the Wanham and Forestburg, Alberta plants or the lack of progress on the two previous plant proposals.

In fact, the coop hopes to attract farmers who had contracts to supply Forestburg. Even before Prairie Board Products arrived on the scene, the local government had already shown that it was serious about attracting a value-added industry to this largely agriculture based community. Having cleared a site and built a paved access road, its aim was to attract a strawboard plant to the Thorhild area. With Prairie Board Products, Zolkewski says he senses an entirely different attitude toward constructing the plant compared to the village's two other strawboard plant promoters. "Prairie Board has done a substantial amount of work and they really seem to know what they are doing," he says. "They give us timely reports and they actually come out to our area on a regular basis. They are living up to their commitments."

One obstacle to the project's timetable is the deregulation of the electrical industry currently underway in Alberta. The consortium is having difficulty pinpointing what their energy costs will be. However, Zolkewski is confident that problem can be overcome. Hill concludes that the failure of two strawboard plants in close proximity to their proposed project has not damaged market interest in their MDF product. "The market is still showing quite high interest in the product," says Hill. "The failure of those other plants was not a marketing failure, but was more a technological business failure. Our initial feedback from major buyers is that they do appreciate and like the characteristics of our product and are willing to pay MDFlike prices."

Failure of Strawboard Plants is a Blow to Fledgling Industry

The failure of two Alberta strawboard plants over the past year represents yet another economic setback for farmers who were expecting extra income from the sale of surplus straw fibre. But on a broader scope, the plant failures in Wanham and Forestburg, Alberta have also raised questions about what type of strawbased composite board is viable in areas where wood waste is plentiful.

Wayne Wasylciw, technical manager for the testing laboratory and lead contact for the use of alternate fibres in composite panel manufacture at the Alberta Research Council (ARC), says strawbased panels intended to compete with OSB may be a better choice for Alberta, as opposed to the manufacture of strawbased particleboard.

Wasylciw says in the case of the Wanham plant, the technology was sound because a strawbased composite board plant based on the same technology is still operating in North Dakota. It was simply a matter of poor communication between the equipment supplier and engineering company, with the owners running out of working capital before the plant became fully operational.

The plant closed two months after strawboard production began. With the Forestburg plant, Wasylciw says it appears that the technology used wasn't capable of consistently producing high quality strawboard under the high volume production conditions required by the owners to meet contract commitments.

During the planning phase, it was likely easier to attract $10 million to $14 million in investment capital rather than the $100 million that was probably needed to build the plant. While the failure of both the Wanham and Forestburg plants was not unexpected with these considerations, Wasylciw says these types of industry glitches tend to catch the attention of the naturally conservative panel board industry-success stories like the recentlybuilt Isobord Enterprises strawboard plant in Elie, Manitoba hardly get a mention.

"I think it probably hurts a lot of people that are trying to get their new ventures off the ground," he says, concerning the publicity that failures within an evolving industry tend to attract. In terms of challenging the availability of cheap waste wood, Wasylciw believes that a structural product based on straw that would compete against OSB would make much more sense in this part of North America. "Here in Alberta, wood residues are cheap," he says. "They are practically giving it away. To pay a farmer for his straw and then use an expensive resin to try to make a cheap product doesn't really make sense ."

By extension, the same scenario would hold true for any region of Canada where grain farming exists in close proximity to a developed forest products industry that produces plenty of wood waste as a byproduct. What has happened to the Wanham plant since its demise helps to make his point. It was purchased recently by Northern Engineered Wood Products based in Smithers, BC, which has converted the plant to produce particleboard from wood waste, having replaced about half of the existing equipment in the process.

Wasylciw adds that because the OSB industry creates strands from a complete log rather than from cheap wood residue, their input costs are considerably higher than particleboard plants. As a result, input costs would be more evenly balanced between OSB and structural panel strawboard manufacturers.

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