Wood pellets are made either from the by-product from wood processing (e.g. the sawdust from timber mills), or from whole tree-stems where higher-value uses are not available.
The wood is reduced to small particles in a number of steps, which may include a chipper, hammer mill and grinder, depending on the input (e.g. sawdust or whole tree) and preferences of the producers. The wood is dried to a low moisture-content (< 14%) after the chipper and normally before the grinder.
The fine, dry particles are squeezed through a die - typically a drum with lots of holes and a press rotating inside. The temperature of the wood increases under the pressure, as it passes through the holes. The raised temperature further reduces the moisture content to < 10%. The combination of temperature and pressure causes the lignin in the wood to melt and bind the particles together, creating solid cylinders of wood as they emerge from the holes in the die. The pellets are cut by a "knife" or "breaker bar" just outside the press, before they reach the maximum allowed length (e.g. 40mm in the case of ENplus-A1 wood pellets)
The pellets are cooled as they are moved away from the die, and screened to remove the smaller particles that were not successfully bound into the pellets. Once the pellets are cool and clean enough, they are put into store, ready either to be bagged or loaded loose onto lorries for delivery in bulk.