Active Energy reduces reliance on Ukraine

10th Apr 2014 10:59

Active Energy (AEG) has completed the relocation and restructuring of its Ukraine operations and made progress with its intention to expand into Montenegro and Spain.The group has completed the relocation of its Ukrainian MDF wood chip operations into a single dockside facility at Yuzhny Port, near Odessa, in the south-west of the country.It has has signed a supply agreement with a well-established local partner, NK Energija DOO, which will enable AEG to ship BFE wood chip to its Italian power plant customers in less time and at less cost than has previously been possible from Ukraine.The firm, which sells products for Biomass for Energy fuel (BFE), also revealed established a procurement and shipping centre in Spain, to source finished BFE wood chip for onward delivery to power plants in Italy."Crucially, these arrangements have the potential to substantially reduce the group's overall reliance on Ukraine as its primary source of BFE feedstock," the firm explained. "AEG expects that these new sources are capable of being scaled-up pursuant to success of the trial cargoes. In addition, these arrangements are intended to improve operating margins and ensure a stable and flexible supply channel for the group's Biomass fuel business." The expansion is being funded by a recently agreed unsecured working capital facilities of up to $2m from its largest shareholder. Additionally, the company has agreed with its Turkish MDF customers to reduce deliveries whilst the current uncertainties in Ukraine continue. AEG explained that the mutually-agreed supply contract revisions reflect both its and its Turkish customers' intention to maintain and later re-build the Black Sea trade in MDF-quality wood chip, while in the meantime working together to alleviate the group's risk profile. The shares fell 4% to 1.80p at opening trade.NR