By Ron Brochu
An emerging goal of regional economic developers – tapping wood-based natural resources for the growing biochemical industry – took another step forward at Tuesday’s Iron Range Resources and Rehabilitation Board meeting.
Segetis, a green chemistry business based in Golden Valley, was approved for a $20 million loan from the Douglas J. Johnson Trust Fund, which IRRRB administers, to construct a facility at Laskin Energy Park in Hoyt Lakes. Initially, the company would extract and refine sugars from corn grown in southern Minnesota. It would transition by 2018 to extracting sugars from about 90,000 cords of wood annually harvested in a seven-county area. Those sugars can be used to make biochemicals, which are considered more ecologically friendly than petrochemicals.
IRRRB also agreed to provide a $1.2 million loan to Hoyt Lakes to buy an existing structure from Nott Corp., which ceased light manufacturing operations in Laskin Park during the recession. Segetis would use that structure during its start-up phase.
ALLETE Inc., which generates electricity at the park, would invest $3 million for infrastructure improvements, including a utility building, steam boilers and storage for industrial gases needed by Segetis and future tenants. The Minnesota Department of Employment and Economic Development would provide a $7.1 million grant.
Segetis represents the third significant investment into Northeast Minnesota’s new biochemical industry, following Sappi’s production of cellulosic fiber in Cloquet and Lonza’s production of larch arabinogalactan in Cohasset, said Minnesota Power Director of Regional Development Nancy Aronson Norr.
“This is exciting because it identifies emerging technology to promote the sustainable use of our massive wood basket,” she said. “This also puts Minnesota on the radar for other international opportunities.”
UPM, owner of Blandin Paper in Grand Rapids, also has entered the biochemical market. Last June, the Helsinki-based corporation entered into a joint development agreement with U.S.-based Renmatix, which manufactures celluslosic sugar for the biochemical and biofuels markets. The long-term goal is to make cost-competitive bio-based alternatives to petrochemicals. Area officials have declined to comment on how the development might play out regionally.
Segetis will provide 70 percent of the funding for its $105 million project. The company estimates it will contribute $55 million to the regional economy. It has customer commitments to purchase 75 percent of its output.
According to a University of Minnesota Extension study, the Segetis plant would employ 70 persons and provide a $3.1 million payroll.
By supporting the project, “We will be putting our flag in the ground as the region interested in developing a cluster of biochemical businesses willing to use our wood resources, improve our environment and create good jobs on the Iron Range,” IRRR Commissioner Tony Sertich said in a letter to his board.