A company began preparing a site on the Big Island yesterday to build a $20 million facility to convert macadamia nut shells into granular activated carbon for use as an industrial purifier, largely for pharmaceutical and chemical processors outside Hawai'i.

Big Island Carbon LLC started transferring several years of conceptual planning onto 4 acres in the Kaie Hana Industrial Park in Kawaihae leased from the state Department of Hawaiian Home Lands.

Construction and installation of equipment is expected to employ about 100 people and be finished by the end of the year. Plant operations after that are forecast to employ about 30 people.

"It's a pretty good feeling," said Rick Vidgen, the company's chief executive officer who saw the opportunity to use carbon activation technology as the former president of macadamia nut processor MacFarms of Hawaii Inc.

Big Island Carbon anticipates annually processing roughly 10,000 tons of shells to produce 1,800 tons of activated carbon.

The company has an agreement to use shells stockpiled by an adjacent tenant in the industrial park, Hamakua Macadamia Nut Co., and also plans to truck shells to the plant from MacFarms. Vidgen said he also hopes to reach an agreement with the Big Island's largest processor, Mauna Loa Macadamia Nut Corp., which is owned by Hershey Foods.

Vidgen said there are 12,000 tons of shells on the site now, which will allow Big Island Carbon to start processing shells once the plant is operational.

"We look forward to beginning actual production following the construction phase," he said.

The groundbreaking is a milestone in a new high-technology career for Vidgen, who left MacFarms about five years ago after an ownership change. The agribusiness veteran became a real estate broker at Clark Realty Corp. in Kailua, Kona, before spending the last three years more or less full time on the activated carbon project.

Vidgen said there are no major hurdles for the venture that haven't already been cleared. He said the company has financing from Houston-based Denham Capital Management, an energy-focused private equity firm. The company also has permits it needs to operate.

Big Island Carbon is producing an environmental assessment, and recently submitted a draft to the state. But Vidgen said the document is being prepared as an extra precaution for DHHL.

The DHHL site is already zoned for industrial use, and the property leased by Big Island Carbon was previously used by a landscaping business.

Vidgen said producing activated carbon is a "green" industry because it uses an underutilized byproduct of macadamia nut production to make a higher value product. Byproducts of the conversion process are combustible gas and a biofuel that will be recycled to help power the plant.

The biomass conversion process is similar to the method used for centuries to turn wood into charcoal, using heat. However, Big Island Carbon said its plant achieves constant quality using a closed system under a vacuum.

Typically, macadamia nut processors burn shells to produce steam that helps fuel the production process. Big Island Carbon said it will supply some steam to Hamakua Macadamia Nut for its use. The company also plans to sell some of the oil byproduct as a biofuel.

Gov. Linda Lingle, who attended yesterday's groundbreaking ceremony, said the project fits well with state efforts to reduce its dependency on foreign oil.

Micah Kane, DHHL director and chairman of the Hawaiian Homes Commission, said the agency was pleased to have Big Island Carbon as a tenant. "The production of combustible gas and biofuel is considered a firm renewable energy source and an important part of our overall energy policy," he said.