Rayonier Advanced Materials (RYAM) announced that it has entered into a non-binding letter of intent (LOI) with Borregaard ASA to form a joint venture (JV) at its Fernandina Beach facility for the manufacturing, marketing and sale of natural lignin-based products. The new company will be owned 45 percent by RYAM and 55 percent by Borregaard.

"This partnership between Rayonier Advanced Materials, the world's leader in cellulose specialties, and Borregaard, the global leader in lignin-based products, is significant for both companies," said RYAM CEO Paul Boynton. "For us, the project advances our strategy of leveraging the value of our assets and co-products while further enhancing the competitive position of our Fernandina plant.”

According to Borregaard, the project increases their lignin products sales capacity by 30 percent. “The Fernandina Beach project represents an excellent growth opportunity for our lignin business in a global market which for some time has been supply constrained,” stated Per A. Sorlie, President and CEO of Borregaard.

Lignin, a natural component of wood, is a co-product of RYAM’s cellulose specialties manufacturing process and is currently used for its energy value by the facility. The planned JV would process the lignin into higher value products that provide environmentally friendly alternatives to petroleum-based chemicals used globally in construction, agriculture and other industrial applications.

It is anticipated that the project will be completed in two phases over five years. The parties estimate an aggregate capital investment of $110 million for a capacity of 150,000 metric tons per year. The first phase is expected to commence commercial operations in 2017.

Completion of the JV is subject to board approval by both companies and conclusion of definitive agreements, as well as final engineering, refinement of capital estimates, and obtaining required permits and other approvals.

“Pursuing this opportunity with the leader in lignin-based chemistry significantly enhances the prospects for success while reducing operational and market-based risk,” stated Boynton. “As we have stated previously, our focus in 2015 is to take advantage of the value of our co- product streams, reduce our costs and working capital, optimize our assets and grow our business. This opportunity is one example of how we expect to deliver on these goals.”