THE Port of Tyne has signed a £16m deal with power giant Drax to handle and store wood for power generation and is hopeful of announcing another major agreement within months.
Work will start early in the new year to build a handling and storage area at South Shields to take between 0.5 million and 1.4 million tonnes of biomass each year, which will be burnt at Drax power station in North Yorkshire.
The deal, initially for 10 years, will bring ships carrying up to 75,000 tonnes of sustainably-sourced biomass to the deep water dock on the south bank of the Tyne, where it will be unloaded and stored before being dispatched to Drax by train.
Port chief executive Andrew Moffat said: “This agreement is in line with our strategy for sustainability and ensuring there continues to be a vibrant working port on the River Tyne.
“Strategically, this development represents another major long-term investment for the Port of Tyne that will take full advantage of our excellent deep water berths and facilities, infrastructure and manpower.
“This is the kind of long-term project which not only ensures the port’s viability but also ensures future employment opportunities.”
It will take a year to build the new facility on the south side of the river, which comes just a few months after it was revealed MGT Power is to build a biomass power generation plant on the north bank.
Mr Moffat said: “That’s two – and we’ve got some other opportunities. I’m hopeful there will be a third in the coming months.”
The port, which is the UK’s fourth biggest coal importer, also imports coal for other power companies including EDF and Scottish and Southern.
It has handled coal for Drax since 2004. The new biomass deal comes as the power giant moves towards producing more electricity from sustainable sources. Drax, which provides around 7% of the UK’s electricity, aims to produce 12.5% of its output from renewable fuels by the middle of next year.
Drax chief executive Dorothy Thompson said: “This project represents a major commitment to the Port of Tyne by Drax and we are looking forward to continuing our good working relationship.
“Our venture into biomass is a key part of Drax’s commitment to reducing the carbon footprint of UK power generation.”
The port’s coal imports, which account for around 80% of the cargo it handles, were mainly responsible for last year’s record-breaking 20% rise in turnover to £48.6m.
It also has import and export facilities for Nissan cars. After the credit crunch sent the new car market into freefall, volumes fell but Nissan exports going through the port have increased on the back of the Government’s scrappage incentive scheme.