MONTREAL  - Resolute Forest Products (NYSE: RFP) (TSX: RFP) has begun work on an industrial wood pellet plant converting wood waste into biofuel for electric generators.

It will employ 24 at a site adjacent to the wood products firm's Thunder Bay, Ontario saw mill.

Construction of the plant is scheduled for completion in 2014; Resolute (the former AbitibiBowater) says it has signed a 10-year  deal to supply Ontario Power Generation with 45,000 metric tons of pellets annually.

The plant will be built adjacent to the Company's sawmill in Thunder Bay, Ontario, creating approximately 24 new jobs when fully operational and improving the long-term viability of the sawmill and the approximately 350 jobs that it supports.

Richard Garneau, president and CEO, said the effort allows Resolute to diversify.

"This project provides the opportunity to enhance the use of our existing asset base to produce biofuel for a strategic, committed consumer and allows the company to gain valuable manufacturing experience in commercial biomass production."

Resolute Forest Products says it will invest approximately $10 million in the construction of the wood pellet plant.