Making biomass pellets with plywood waste is a smart idea. There are many plywood factories in Indonesia. Develop wood pellet production can generate more earnings.

1. A Feasibility Study of
Making Biomass Pellets
with Plywood Plant Waste
in Indonesia

2. CONTENT
1. Introduction............................................................................................1
2. Project Description................................................................................ 2
3. Advantages and Feasibility of the Project...........................................4
3.1 Abundant Raw Materials Potential in Plywood Manufactures.......4
3.2 Relatively Intensive Production Circle........................................... 5
3.3 Domestic Policy Support.................................................................6
3.4 Development of Pellet Equipment.................................................. 6
3.5 Vast Oversea Market........................................................................7
4. Benefit Analysis of the Project............................................................11
4.1 Solving Plywood Factory Waste Disposal Problem......................11
4.2 Bring Economic Benefits to the Plywood Industries....................11
5. Prospects of the Biomass Pellet Investment......................................12
6. Conclusion............................................................................................ 13

3. 1
1. Introduction
Energy is the foundation and important constraint of modern economic and social
development. With the growth of national economy and population, world energy
demand is rising in recent years. It can be said that to solve the energy problem is to
solve the problem of economic development. Traditional energy consists of oil, gas
and coal. They have some obvious defects: non-renewal, harm to the environment
after firing and the high price. These reasons lead to a prompt decrease in their using.
Renewable energy resources quickly enter into the market and the energy market will
reach to a diversified energy fix.
With the increasing awareness of energy conservation and environmental protection,
international community’s demand for energy saving standards has become higher
and higher. Thus, the development and utilization of clean energy have been gradually
carried out in many areas. At the same time, biomass energy has been popular in
many countries because of its cheap price and renewable nature. Biomass fuel
program has become an important part of world sustainable development strategies
and it can provide a win-win solution for the government: low prices can reduce
energy use costs; reduce carbon emissions to honor their commitments to the Kyoto
Protocol; reduce the dependence on oil country which is distant, political instability
and still dangerous; it is conducive to energy security.
Increasing demand for biomass, the pellet industries are rapidly developed all over the
world. With abundant forest resources, cheap labors and vast oversea markets,
Indonesia has great potential to develop wood pellet fuel industry. Indonesia has the
second large number of plywood manufacturers in the world. Also, Indonesia is the
world’s largest plywood exporter. The plywood plants generate a tremendous amount
of wood waste every year. Development of wood pellet fuel can help reduce the
impact of these wastes on the carrying capacity of environment in Indonesia, also
helps to reduce waste and promote income-generating efficiency of Indonesian

4. plywood manufacturers, further ease the resource shortage contradiction. Plywood
manufacturers should actively develop biomass pellet fuel, on one hand, it can help
resolve the waste problem, protect environment; on the other hand, the biomass
pellets can be sold, increasing economic income.
Green
Economy
2
Energy
Crisis
Sustainable
Development
( environmental
friendly and low
carbon)
Wood Pellet Industry
Figure 1. The Challenge of Overcoming Energy Crisis
2. Project Description
The target object of this investment is plywood waste biomass pellets. The raw
materials are mainly plywood fragments, slag and scrap. They can be made into
biomass pellets through chipping, crushing, drying, pelletizing and cooling.

5. 3
The production processes are as follows:
1. Transport biomass wastes to the crusher;
2. Drying the raw material by dryer;
3. Transport to the pellet mill for pelletizing;
4. Cooling the biomass pellets with cooler;
5. Packing pellets into bags.
The investment of wood pellet production line can better deal with the waste problem
of plywood factories. It can recycle the wastes to produce new alternative energy -
wood pellets. This production line have several advantages: a clear division of labor,
complete support equipment, high degree of automation, high productivity and
convenient operation. In addition, this production line can be operated only by six
persons. It adopts three-tier structure dryer new technology, which is more effective
than single-layer; equips with flue gas filtration equipment to reduce pollution; adds a
more effective control system. Azeus Wood Pellet Machinery Company can allocate
different size pellet production line according to customers’ requirements. And also
they can support technical guidance and after-sales service to ensure the smooth
running of production.
Example: Biomass pellet production line equipment list
Wood Crusher Machine * 1 set
Rotary Drum Dryer * 1 set
Flue Gas Filter * 1 set
Wood Pellet Machine * 2 sets
Cooler Machine * 1 set
Transportation Equipment * 4 units
Wood Pellet Weighing and Packing Machine *1 unit
Electricity Control Center *1 unit

6. 4
3. Advantages and Feasibility of the Project
Plywood manufacturers have more potentials to develop wood pellets. This project
has shown many advantages and feasibility on developing wood pellet in Indonesian
plywood industries.
3.1 Abundant Raw Materials Potential in Plywood Manufactures
Relying on the rich forest and cheap labor resources, there is a rapid development on
Indonesia’s timber industry, especially plywood and furniture manufacturing based on
raw materials such as logs and saw timbers. And these are increasing year by year.
Among them, plywood industry has become a major part of Indonesian economy.
Plywood manufacturing process is as following:
Logs→Log grading→Debarking & bucking→Peeling & dipping→Drying→Veneer
selection & repairing→Lay up→Glue spreading→Cold & hot processing→Sizing &
sanding→Laboratory test→sorting & grading→Packing
There are so many wastes in the process of plywood production and these wastes are
mainly produced in four steps of the process. First of all, the length, the curvature and
the defects of logs have a direct impact on the production rate of plywood. The wastes
are small logs, truncated and sawdust. The loss rate in cutting step is generally
3%-10%. Secondly, there exists so many barks in the process of peeling. Thirdly,
veneer peeling is the biggest loss step in plywood production process. In this step, it
results in a huge number of substandard broken veneer, irregular pieces of wood and
damaged wood core. The loss rate may reach to 15%-25%. Finally, it is the leftover
materials in the step of sizing and sanding.
There are hundreds of plywood manufacturers in Indonesia, with an annual output of
more than 900 million cubic meters of plywood. In accordance with the overall

7. utilization levels of 65% in Asia, Indonesia plywood industries have generated an
extremely alarming number of wastes every year.
5
Figure 2. Plywood
3.2 Relatively Intensive Production Circle
The distribution of Indonesian plywood manufacturers is relatively concentrated.
Information and data has shown that large-scale plywood manufacturers spread
mainly in three regions in Indonesia. They are regions nearby Jakarta, Semarang and
Surabaya. Relatively concentrated distribution of industries can conductive to form a
co- production of wood waste recycling circle. They can also recycle and process the
wood waste dealing in a unified way. Manufacturers gathered not only solve the
disadvantages that small manufacturers can not afford to waste recycling alone, but
also meet large manufacturers’ demands for raw materials that they purchase complete
sets of machinery for production. They can reduce the cost and enhance the
technology sharing in these cycles.

8. 6
3.3 Domestic Policy Support
Indonesia is an important exporter of processed timber. State policy prohibits the
export of logs, however it encourages the development of the plywood industries and
the wood pellet fuel production industry. Under the influence of the Kyoto Protocol,
Indonesian government introduces policies to promote the development of biomass
pellet fuel. In this way, it can help to ease the pressure on energy use and
environmental carrying capacity. On January 31, 2012, Indonesian government
promulgated several tax subsidies for the development of bio-energy, bio-gas and the
re-utilization of other solid waste. Plywood industries should respond to the national
policies and take full uses of the advantages to open up a new approach which
contains plywood production, waste disposal and wood pellet processing. In a
relatively mature time of pellet technology development, they should take the
shoulder to develop such a process, and by the way these developments can benefit
them, too.
3.4 Development of Pellet Equipment
Development of science and technology has also promoted the development of pellet
equipment industries. Modern pellet equipment has entered a era which has been
called a complete production line of crushing, cooling, drying, pelleting and
packaging. The entire production line is flexible and easy to operate. It can
significantly promote the production efficiency under a condition of using less energy.
There is no doubt that these new machines’ development will make it possible for
plywood manufactures to work on the recycling and further develop the wood pellet
fuel production. Plywood manufacturers can easily participate in the production of
biomass pellets themselves without affecting their major productions. They can
recycle the wood wastes for another using so as to achieve the goal to get more
benefits.

9. 7
Figure 3 . Azeus 500kg/hour Mobile Wood Pellet Plant
3.5 Vast Oversea Market
At a stage of rapid development in biomass pellet manufacturing, Indonesia has a vast
overseas market. Global wood pellet consumption expectation will have a great
development in 2020. Wood pellets are used worldwide for heating (63%) and
electricity generation (37%), of course there are some differences between countries.
For example, wood pellets are mainly used for heating in Germany, Austria and Italy;
while they are used for electricity generation in the Netherlands and Belgium. On the
other hand, wood pellets are used for heating and electricity generation in Sweden,
Denmark and Finland. The retail price for wood pellets is 200euro/tonne (330,000
won/tonne) and $300/tonne (370,000 won) in Europe and America. The increasing
demand is bound to affect the development of primary pellet producing countries. As
a main representative of low-cost manufacturing region, Indonesia will gradually

10. become one of popular wood pellet fuel exporters to European and American
countries.
8
Figure 4. World’s Pellet Consumption Outlook
Demand for the biomass pellet in Asia market is also rising, three of the obvious ones
are China, Japan and South Korea. And their pellet consumption is projected to
exceed that of Western Europe by 2020. The East Asia nation saw an increase in pellet
consumption, with 2013 figures estimated at 500,000 tons, compared to 174,000 tons
in 2012. According to the assessment report of ITA (International Trade
Administration) in 2014, China will account for one quarter of the biomass pellet
consumption in the export market. China is rich in natural resources, but the demand
for fuel is still in a state of extreme shortage. China has a vast market and a relatively
advanced machinery manufacturing technology. It can meet the domestic needs
through investment in technology and capital to develop pellet fuel production. As a
country rich in biological resources, Indonesia should strengthen the cooperation in
production styles and technologies and the sharing of market supply with China. It is

11. 9
a win-win choice.
Due to a shortage of domestic resources and a growing demand for the electricity for
the development of industry, South Korea and Japan urgently need to develop new
fuel energy to meet the demand of domestic production. Both countries have focused
on the Southeast Asia regions and carried out the project of biomass pellet fuel
through investment or cooperation. South Korean has imported a large number of
biomass pellets. Korea is the world’s 10th largest energy consumer, fifth-largest oil
importer, second-largest coal importer. 64% of its electricity is produced from fossil
fuels. Further more, it also actively looks for the right opportunity to invest and build
factories in neighboring countries. Indonesia is one of the main targets. According to
the data from Korea, Indonesia offers the cheapest pellet. Japan has a similar situation
as South Korea. Lack of energy resources, coupled with the development of the
industrial economy’s dependence on energy, Japan has become the other biggest
market in Asia. The great demand of biomass pellets in South Korea and Japan could
be a great opportunity for Asian countries. We have learned that there have been many
biomass pellets plants in China, Indonesia, Malaysia, Pakistan, Nepal, India and Sri
Lanka etc. Yet more pelletizing plants are needed, and more countries and regions will
use biomass pellets in the future.

12. 10
Figure 5. Biomass Pellet and Coal Consumption in China, South Korea and Japan
Figure 6. Pellet Production and Consumption in Korea and Japan

13. 11
4. Benefit Analysis of the Project
Indonesia plywood manufacturers have so many advantages to develop the wood
pellet production. Here are several analysis of the benefits.
4.1 Solving Plywood Factory Waste Disposal Problem
Indonesian plywood production ranks top three in the world. Plywood industry is an
important part of the economy. According to the statistics, Indonesia’s current annual
production of plywood is over 900 million cubic meters. Due to the continuous
expansion of world market, these productions are still on an upward trend. In the
utilization of wood, Asian developing countries have a definite gap with developed
countries. The rate is about 60%, which means that in this level, wastes that
Indonesian plywood industries annually produced have reached to a number of
millions cubic meters. Improper handling of waste wood materials will bring many
consequences, sometimes even seriously pollute the environment and be harmful to
human’s health. Accumulation of wastes is also likely to lead to social security issues,
breed theft and fire phenomenon. It has become public topics about how to solve the
problems of wood materials recycling and utilization and to promote sustainable
development of plywood industries. Investment on wood pellet production line can
precisely solve these problems. The rest of the wood chip slags and scraps after the
plywood production are the excellent raw materials to make wood pellet. Pellet
production can also solve the problem of pollution caused by unreasonable treatment
wastes. Enterprises should bear the social responsibility to protect the environment
and achieve a sustainable development.
4.2 Bring Economic Benefits to the Plywood Industries
Investing on the production line can not only solve the problems regarding waste
disposal and environmental pollution of the plywood manufacturers, but also bring

14. better economic benefits to them. Currently, the world’s awareness of energy rises to a
new level. Wood pellet fuel has become a popular target that developed countries and
some developing countries highly demand for. And in this way, it steps on a new rank
in energy groups. The tendency of developing biomass pellet can not be changed.
Plywood industries have many advantages that other industries do not have. Through
recycling the waste into treasures, plywood manufacturers can bring in a substantial
amount of revenue.
12
5. Prospects of the Biomass Pellet Investment
Nowadays, many countries begin to strengthen national concerns and attentions on
global warming and low carbon economy. Wood pellets, which can be used to fuel
power plants and for heating, are compressed biomass deriving from sawdust and
waste from saw milling. Many forum participants said the energy from wood pellets
was “renewable, clean and economical”. More and more countries have started a
project which updates the power plants from using coal as their main energy to burn
the wood pellets and straw pellets as the leading. It can be obviously found that most
power plants in western countries have already utilized biomass pellets as their main
fuel. There has been a great increase in the demand for biomass pellet overseas. The
global production of wood pellets will grow by more than 30 percent a year and the
demand is anticipated to be 150 million tonnes by 2020. The conflict between various
new requirements on the environment proposed in the Kyoto Protocol and the
insistent requirements of energy from economic development has gradually grown.
Exploration of new alternative fuels has become a new topic in the process of
industrial development. Wood pellet is one of the new alternative burning fuels. It is
belonging to a part of sustainable development and warmly welcomed by many
countries. According to statistics, South Korea has set several investment for factories
in Indonesia to develop pellet production. The market is large. Plywood
manufacturers should size the opportunity to open a new path for their own

15. 13
development.
6. Conclusion
Development of the plywood manufacturers in Indonesia will drive the promotion of
wood pellet industries, as the development of wood pellet industries will bring new
profits for plywood manufacturers. This is a win-win investment. Wood pellet
machines produced by Azeus Pellet Machinery have the first-class level in Asia. This
company has some high-top technologies differ from other similar industries and also
provides first-class technical guidance and after-sales services. The machines combine
high efficiency, energy saving, equipment sophisticated and hard quality features. It
should be a better partner for every wood pellet manufacturer. Indonesia has huge
potential in biological resources. Plywood industries have their own advantages to
develop biomass pellets. Enough raw materials reserve, low labor cost and convenient
transportation will certainly accelerate the transformation of this industry. They
should match the energy saving trend and accompany by the advantage of large world
market demand to invest on the wood pellet production. This is a new breakthrough of
the future development of the plywood industries.