ATHENS -- The state's third wood-pellet mill began production two weeks ago on Route 150.

Maine Woods Pellet Co. is producing about 120 tons daily of wood pellets for industrial use, co-owner Robert Linkletter said Tuesday. Brothers Robert and Richard Linkletter, owners of timber-harvesters Linkletter & Sons of Athens and George Rybarczyk, who owns Maine Biomass Fuels LLC of Belmont, have joined forces in the enterprise.

Other wood-pellet mills are in operation in East Corinth and Ashland. A fourth mill in Strong is to begin operating by late autumn.

Maine Woods Pellet will employ 18 workers at its Route 150 mill and at least 22 more in the woods, Richard Linkletter said.

"We're not making a perfect product yet, we're just selling industrial use," Linkletter said.

Wood-pellet mills use some low-grade wood, a portion of which in the past wood-cutters have left on the forest floor. Hard wood will comprise up to 80 percent of the wood used at Maine Woods Pellet, Linkletter said.

Jim Batey, executive director of Somerset Economic Development Corp., helped arrange grants to build the Athens plant.

The U.S. Department of Agriculture provided a $500,000 renewable-energy grant and a $300,000 value-added grant, both from its Rural Development sector. The state came up with a $250,000 Community Development Block Grant.

Maine Wood Pellets installed a $2 million dryer for its newly-built mill. Three pellet machines and three grinders cost another $200,000 to $300,000 apiece.

Batey said wood pellets represent an environmental plus.

"It's renewable, which is a great thing," Batey said. "It's carbon-neutral, which is a great thing, and it's much less expensive per BTU than oil. And, it puts local people to work."

Maine Woods Pellet expects to produce 100,000 tons of pellets annually, which is the equivalent of 12 million gallons of oil, Batey said. That amounts to a reduction in greenhouse-gas emissions of 260 million pounds, he said.

Sappi Fine Paper of Skowhegan is providing Maine Woods Pellet with one large industrial customer, Batey said.

Batey said he hopes to reveal the name of another industrial customer during a grand opening/open house, scheduled for 10 a.m. to 1 p.m. May 23.

John Richardson, commissioner of the state Department of Economic and Community Development, will speak at the May 23 event. Batey said U.S. Rep. Michael Michaud also will attend, and that invitations are out to Gov. John Baldacci and Sens. Olympia Snowe and Susan Collins.

For now, Linkletter said, the mill is producing at about half capacity -- four tractor-trailer loads of pellets daily.

The pellets meet industry standards for moisture content -- less than 5 per cent -- and ash content -- less than 2 percent, Linkletter said. But the company wants to get the pellets at the desired density of more than 42 pounds per cubic foot, he said.

"It's how hard you pack it together," Linkletter said.

Maine Woods Pellet could produce all of its raw material, but is buying some hardwood.

"We're trying to line up people we can depend on, so we can expand," Linkletter said.

Linkletter would not tell the cost. Industrial customers will purchase pellets by the ton and others can buy them in 40-pound bags, he said.

Larry Grard -- 861-9239

lgrard@centralmaine.com