Leaf Resources Acquires Essential Queensland
We are thrilled to announce the acquisition of Essential Queensland Pty Ltd (EQ), an Australian private company, which utilises proprietary extraction technology to produce sustainable and renewable pine chemicals for sale into global markets.
EQ was established in early 2017 to develop and commercialise sustainable extraction and processing technology to produce pine chemicals. Since establishment, EQ has developed a proprietary process to extract rosin and terpenes from pine logs, producing the highest quality, clean gum rosin and terpenes which are used in a multitude of consumer products, including perfumes, cosmetics, food additives, adhesives, disinfectants, synthetic rubbers and printing inks. The global market for pine chemicals was estimated to be approximately US$10 billion in 2018 and growing at a rate of ~1% p.a. above world growth rates [ Pine Chemicals Association].
In 2019, EQ commissioned a pilot plant with 4,000 tonne through-put capability at its Apple Tree Creek site in Isis Central, Queensland. Currently, EQ is constructing an 8,000 tonne per annum commercial scale pine chemical plant on the same site. The new fully funded plant is expected to be commissioned in the final quarter of this calendar year, with full operating capacity expected in June 2021.
In addition, EQ has secured supply of pine logs from an existing sustainable pine plantation to meet production requirements. This supply provides EQ with full control of the logs from harvest to production and includes delivery to EQ’s Apple Tree Creek site at commercial rates.
LER and EQ Technology Synergies
Leaf and EQ technologies enable the replacement of petroleum-based chemicals and plastics with the aim of moving society towards the bio economy. EQ and Leaf have highly aligned goals and aims. Both Leaf and EQ:
(a) focus on sustainable and renewable products produced from woody biomass; and
(b) possess proprietary organic solvent extraction technologies.
Accordingly, the Company believes the Acquisition is highly complementary to LER’s current technology, projects, and operations and presents a significant opportunity for short-term and long-term growth to enhance shareholder value.
Further, LER notes that there is an established commodity market for pine chemicals, with multiple large customers and strong demand for quality products and it is the view of the boards of LER and EQ that following completion of the Acquisition, LER and EQ will be well positioned to exploit this market.
EQ’s growth strategy as the lowest cost producer in the global pine chemical market includes potential brownfield expansion at the existing site as well as the development of multiple commercial scale extraction plants at different locations in Australia and overseas. This too, is complementary with the Company’s growth strategy of providing sustainable product to the large and growing global markets for renewable chemicals.