Major Port of Tyne partner faces finance watchdog probe

Drax is facing a probe by the Financial Conduct Authority (FCA) into the source of wood for the biomass pellets it uses as fuel to create electricity.

The pellets are found globally and transported by sea to the port, then moved by rail to Drax’s giant power plant in Selby, North Yorkshire.

The Port of Tyne and Drax began their relationship in 2009 and in 2023 signed a new four-year contract around pellet importation.

It involved a £1.5m investment at the port on improved onsite facilities and rail infrastructure.

Two years earlier, the port handled its largest single shipment for Drax - 62,522 metric tonnes of pellets, enough to power around 1.3 million homes.

Drax’s plant is the UK’s largest power station and produces around five percent of the country’s electricity – and more at peak times.

But it relies heavily on financial subsidies from the Government and environmental campaigners have questioned its green credentials.

The FCA plans to examine statements made by the stock market listed firm in regard to its pellet sourcing between January 2022 and March 2024.

It will also look at its compliance in regard to its annual reports from 2021, 2022 and 2023.

The Port of Tyne declined to comment on the FCA’s investigation but has previously celebrated its dealings with Drax.

When the four-year contract was announced, it said the deal would ensure the uninterrupted supply of sustainably sourced biomass pellets to the Selby site.

It confirmed up to a million tonnes of pellets would enter the port each year and be stored in a specialist facility, before being transported.

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To support the partnership, it said the deal would utilise ‘a meticulously planned rail network’ and that £1.5m was being invested.

According to the port, the partnership sustains around 17,800 jobs across the UK through direct employment and operational support.

At the time of the giant 2021 shipment, Drax said the pellets had been sourced from its US mills.

It added the shipment “highlights the critical role played by infrastructure such as the ports and rail in our supply chain”.