What should I check before buying a wood pellet plant?

A pellet plant is a production line first and a business second. If the machinery runs poorly or the fibre supply is shaky, nothing else matters much. So begin on the floor, then move to the contracts and the books. Bring someone who knows pellet equipment to the site visit, much as you would with a pallet business, and do not rely only on the seller’s description of what works.

The mill, dryer and bagging line

Ask for the age, maintenance records and replacement history of the pellet mill, its dies and rollers, the dryer, the cooler and the bagging line. Watch the plant run, if you can. A valuation of used equipment is a separate job from judging the business, so consider an independent inspection of the main machines.

Fibre supply as a fact to confirm

Find out where the raw fibre comes from, who delivers it and whether the arrangements are written down. Ask whether a supplier could end the arrangement when ownership changes, and have your lawyer read those agreements. Also ask what happens to the plant’s output when fibre is short or wet.

Customers and seasonal swings

Learn how sales divide between dealers, retail bagged pellets and bulk deliveries, and whether a few buyers account for most of it. Heating demand moves through the year, so ask to see monthly results across several years. Your accountant can show you how stock on hand, deposits and prepaid orders affect the picture.

• Maintenance logs and a list of spare parts held.
• Written fibre supply arrangements and who holds them.
• Customer list by type, with the largest accounts flagged.
• Month-by-month sales and stock levels over several years.