It follows a decision by Leaf to move its operations to New Zealand after an explosion in 2021 devastated its operations at Apple Tree Creek near Bundaberg.

Leaf produces chemical products from pine trees which replace the need for products using fossil fuels and it announced today that its letter of intent with Formosa was for an offtake of 300,000 tonnes of wood pellets. Formosa has annual revenues of about $130 billion.

But there was also the opportunity for a massive expansion of the offtake amount.

The deal also includes a placement to Formosa’s two Australian companies of 445 million shares to raise about $5.35 million.

The placement would need shareholder approval and would be followed by a 1 for 5 renounceable rights issue to existing shareholders.

The offtake would come from Leaf’s as-yet unbuilt processing plant in Rotorua which it said would be operational in the fourth quarter of 2023.

The offtake also includes an option to expand the deal and would be carried out over a three-year period.

Formosa’s interest in Leaf is part of its carbon offset program and the funds from the placement would be used to expedite the construction of the Rotorua facility.

“In line with the company’s growth aspirations, the letter of intent provides that Formosa has the option to purchase production of premium wood pellets from additional facilities operated by Leaf in the future of up to 9 million tonnes a year,” the company said.