The pellets are mainly used to replace fossil coal as the energy source in heat and power generation.

Steam exploded black pellets comprise improved durability, water-resistance and higher energy content, as well as offer lower shipping costs, and reduced dust problems compared to other types of bio-based pellets.

Zilkha Biomass Energy CEO Jack Holmes said the Valmet is a highly regarded technology provider in the pulp, paper and energy industry.

"Through this five-year collaboration, we are partnering with a well-established technology and equipment supplier to offer advanced solutions for the growing biomass market. We are very excited about this arrangement," Holmes added.

Valmet bio technology and environmental systems, pulp and energy business line vice president Rickard Andersson said, "The market for steam exploded black pellets is expected to grow rapidly in coming years as the pressure to replace fossil fuels with sustainable environmentally friendly alternatives is getting stronger."