Big Island Carbon LLC said it will break ground this month on a $20 million plant in Kawaihae that will convert macadamia nut shells into granular activated carbon for use in pharmaceuticals and other products.

The plant is being built on on four acres in the Kaie Hana Industrial Park leased from the state Department of Hawaiian Home Lands. Funding for the project is from Denham Capital, a leading energy-focused global private equity firm.

The plant will turn the shells into carbon using a biomass conversion process, according to a news release from the company.

"Macadamia nut shells have been proven to have superior properties to other feedstock, which allows Big Island Carbon's product to be used for higher-value specialty applications in air and water purification," according to the release.

The conversion process is similar to the method used for centuries to turn wood into charcoal, using heat. However, the process at the Big Island Carbon plant will occur in a closed system under a vacuum to achieve constant quality, the company said.

The combustible gases from the process will be recycled to fuel a boiler used for steam generation. A significant quantity of bio oil will also be produced as a by-product and sold on-island as biofuel. It will also be used as a fuel source by Big Island Carbon.

"We have worked long and hard to bring Big Island Carbon's plant to reality," said Rick Vidgen, chief executive officer.

"This is an ideal industry that will provide quality year-round employment unrelated to the cycles of tourism while supporting agriculture with a positive cash flow to the struggling macadamia industry. Big Island Carbon's plant will help to diversify the island's economy, create new high-tech jobs, support agriculture and be 'green' in the process."

Big Island Carbon is to begin site work later this month, but did not provide an exact date. The construction phase, expected to be completed by the end of this year, will employ more than 100 workers. After the plant is finished, it will employ an estimated 30 people, the company said.

The project also fits into the state's efforts to reduce its dependency on foreign oil and DHHL's energy policy, which includes promoting the use of diverse renewable energy resources.

"The production of combustible gas and biofuel is considered a firm renewable energy source and an important part of our overall energy policy," said Micah Kane, chairman of the Hawaiian Homes Commission and director of DHHL.

"Reducing our dependence on foreign oil is important for the state and our economy, and we are pleased to partner with Big Island Carbon LLC on this renewable energy project," he said.