Drax Group Plc · LSE:DRX
Drax — Investor Day (October 2013)
21 slides from Drax's investor day presentation, Oct 17, 2013
Slide 1: US Supply Chain Investments
US Supply Chain Investments Capital Markets Day 17 October 2013
Slide 2: Agenda
Agenda Chuck Davis – CEO, Drax Biomass International JR Stone – Senior Vice President, Project Management US Forest Resource US Investment Objectives Drax Biomass International Gulf Cluster Investments Options for Expansion Drax Group plc 1
Slide 3: US Forest Resource
US Forest Resource US has >750M acres of forest land US Forest Cover and Ownership >35% of the landmass and 25% of global industrial wood production US forests are growing Protected by statutes, regulation and certification • Designed to ensure forests continue to grow / flourish • Best practices in
Slide 4: US Investment Objectives
US Investment Objectives Main driver is to deliver secure and reliable pellet supply Forest Insights into technology and business • Become better informed buyer • Assist suppliers with technical issues Harvesting • Support production process development Mobilise further capital for supply chain inve
Slide 5: Drax Biomass International (DBI)
Drax Biomass International (DBI) DBI established in December 2011 Strong team – local US expertise supplemented by Drax expatriations Morgan Stanley Chuck Davis Verenium / BP CEO InterGen Ken Budreau JR Stone Steve Drayton Evie Wheeler James Dix Janet SVP Engineering, Gallagher SVP SVP VP Human SVP
Slide 6: Gulf Cluster Investments
Gulf Cluster Investments Two 450kt pa pellet plants US Gulf Region Amite (Mississippi) Morehouse (Louisiana) Baton Rouge Port facility Up to 3Mt pa throughput 80kt storage Rationale: Abundant fibre supply Access to deep water port Transportation interconnections Supportive local authorities Drax Gro
Slide 7: Fibre – Sources
Fibre – Sources Fibre requirement Each plant requires c.1Mt pa • Forest / mill residues, thinnings, tree tops and limbs – lower value fibre Sustainable sources Plum Creek is one of the largest landowners in the US Plum Creek Approximately 6.4 million acres • 770kt pa of timberlands • 10-year contrac
Slide 8: Fibre – Amite
Fibre – Amite 5M forested acres within the catchment area(1) Amite(4) Site – Harvest Radius • Covering 56% of the landscape Total forest growth is 21.9Mt pa(2) • Total drain is 8.8Mt pa • Growth to drain ratio(3) = 2.5 Generates 4.4Mt pa of forest residues • Low to no utilisation Sited near closed f
Slide 9: Fibre – Morehouse
Fibre – Morehouse 5M forested acres within the catchment(1) area Morehouse(4) Site – Harvest Radius • Covering 50% of the landscape Total forest growth is 21.7Mt pa(2) • Total drain is 14.8Mt pa • Growth to drain ratio(3) = 1.5 Generates 4.4Mt pa forest residues • Low utilisation c.10% Sited near cl
Slide 10: Operational Readiness
Operational Readiness Recruitment Training Key management hired Safety Currently 38; moving to c.130 in Equipment / task specific spring 2014 Maintenance Detailed operational planning OEM service contracts Development of operational / maintenance manuals Major maintenance support IT / ERP systems In
Slide 11: Manufacturing Process
Manufacturing Process Enhanced features Basic plant features Green size Dry Dry size Inject water and (chip to <5mm) (moisture from (0.5mm to 4mm) pelletise c.50% to c.8%) Drax Group plc 10
Slide 12: Storage and Loading
Storage and Loading Aggregate up to 80kt Through rail and truck dumpers Store pellets in climate controlled environment With appropriate fire management systems Rapidly load onto ships up to 65kt 1,200t/hr Baton Rouge – Site Section Drax Group plc 11
Slide 13: Safety, Engineering and Procurement
Safety, Engineering and Procurement Safety – principal focus Equipment and technology Experienced safety team supported by Drax Pellet plants – same vendors for both: cost- UK expertise effective procurement and consistency • Working closely with contractors / sub- • Construction, operations, mainte
Slide 14: Construction Contracts
Construction Contracts Manufacturing Storage and Loading Haskell Companies Gray Construction • Headquartered in Jacksonville, Florida • Headquartered in Lexington, Kentucky • Providing design, construction and operations • Design-build contractor offering architecture, services to a range of industr
Slide 15: Consolidated Schedule
Consolidated Schedule Capital investments progressing on schedule and budget Targeting commercial operations: Amite and Baton Rouge Q1 2015, Morehouse Q2 2015 Full capacity: 6 months after commercial operations begin 2013 2014 2015 Gulf Cluster Investments Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Amite B
Slide 16: Amite – Progress
Amite – Progress Drax Group plc 15
Slide 17: Morehouse – Progress
Morehouse – Progress Drax Group plc 16
Slide 18: Baton Rouge – Progress
Baton Rouge – Progress Drax Group plc 17
Slide 19: Construction Summary
Construction Summary Construction progress to date Site clearing Grading Storm water management systems Foundations Near-term activities Dryer equipment Site access Construction is on schedule and budget Drax Group plc 18
Slide 20: Options for Expansion
Options for Expansion Gulf Cluster Forestry Cover – US East Coast and Gulf Region Assessing opportunity for expanding manufacturing capacity in region • Scale improves economics for region and port facility Opportunity to purchase pellets on a delivered basis East Coast Performed extensive analysis
Slide 21: Summary
Summary Strong team Local expertise supplemented by Drax expatriations Good locations Abundant fibre and efficient logistics Robust contracts Capped price, date certain with performance guarantees Execution on track Evaluating options for expansion Drax Group plc 20