First of all, it must be explained that LVM offers two types of energy wood. The first is roundwood materials (firewood, technological wood), which can be further processed into wood chips and used for heating, or processed into pellets from the prepared wood chips. The second is energy wood chips, produced from logging residues, scrub and small-diameter wood – branches, tops, offcuts and small trees.
Now, regarding the market. While there are no issues with the sale of roundwood, it was a different story for energy wood chips. In 2020/2021, we produced around 400,000 m3 of energy wood chips, which we sold with great difficulty, as cheaper Belarusian wood chips were entering Latvia in large volumes at that time. Consequently, for example, we stopped producing energy wood chips in the Latgale region due to a lack of buyers.
The situation changed drastically in the spring of this year, when information appeared about sanctions against Russia and Belarus, followed by a ban on wood chip imports from these countries. At that moment, the entire volume of energy wood chips that we were offering for sale for this year and the next two years was, effectively, “snatched from our hands”. Demand is still growing, so we made the decision to resume wood chip production in Latgale (previously, extraction was stopped right there due to lack of demand).
An additional 150,000 m3 is the volume we can realistically offer to the market right now for the 2022/2023 heating season. This volume is possible because, when preparing energy wood chips from logging residues, they must dry for a certain period (4-18 months), depending on the time of preparation and the tree species.
The specifics of this business are that we supply wood chips to the buyer in loose cubic metres, but payment is settled in megawatt-hours. The greatest number of megawatt-hours, or the greatest heat, can be obtained from wood that has about 35-40% moisture. You can put wet wood into a furnace, but the heat output will be much lower. Deciduous energy wood chips obtained in the spring will have already dried during the summer months, so they can be delivered to the buyer this autumn. Coniferous wood has a much longer drying cycle.
Can, for example, a private homeowner go to the nearest LVM forest district and order a couple of loads of wood chips?
This is indeed a question people have, however, forest wood chips cannot be used in a private home. Private homes use boilers designed for “premium” class or light-coloured pellets. These are produced from sawdust, from white, barked wood. Energy wood chips contain sand impurities and residues, which can only be burned in the powerful and specific boilers used by heat production companies.
So, private individuals are not applying for these additional volumes. It is possible to buy firewood from us, for example, from one to three timber lorry loads; we are prepared to supply it at the market price to private individuals who also use wood-burning stoves. (...)