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IRRRB considers biochemical project in Hoyt Lakes

Iron Range Resources and Rehabilitation Board Commissioner Tony Sertich

Iron Range Resources and Rehabilitation Board Commissioner Tony Sertich announced on Thursday the possibility of putting up $21 million for a major biochemical project.

The board plans to meet Tuesday in St. Paul to consider a $21.2 million loan for Segetis Inc., a renewable biochemical company, for the building of a profitable-scale plant in Hoyt Lakes at the Laskin Energy Park. The loan would come from the Douglas J. Johnson Trust Fund, a trust fund supported with Iron Range tax money, and would be used to support plans and programs that are made to maintain a productive workforce, expand the economy and improve minerals. The overall investment for the project is $105 million.

According to IRRRB documents, in addition to $21.2 million from IRRRB, Segetis will foot $73.8 million for the project, in addition to $3 million from Allete, the Duluth-based parent company of Minnesota Power, and another $7.1 million from the state Department of Trade and Economic Development.

“This is a step forward to diversify the Iron Range,” said Minnesota House Rep. David Dill. “This definitely ranks up there as one of the biggest projects.”

Segetis Inc., founded in 2006, produces flexible plastic products, cleaning products and other consumer goods, according to the company’s website.

IRRRB has worked with Segetis since 2006. The agency staff kept in contact with the company as it has established its technology. This could be the first commercial-scale plant in Hoyt Lakes.

The Segetis venture is anticipated to have a yearly $55 million economic influence on the area, helping to create or sustain more than 545 jobs, according to an independent study from the University of Minnesota Extension Center for Community Vitality. Jobs would include 10 support staff and warehouse jobs, 30 skilled craft and plant operator jobs, 10 new management jobs, 140 indirect supply chain jobs for initial operation, 230 conversion to wood indirect supply chain jobs, 245 construction jobs and 20 additional jobs.  

“We would use our wood fiber resources to help make the biochemical project,” Dill said. “This project is good for the community, it creates a ton of jobs … there is a lot of opportunity here.”

According to Sertich, “the Segetis project is an ideal fit for the Iron Range and would help position the region as a leader in the biochemical economy.”

If successful, the products could take the place of fossil fuels for the manufacturing of plastics and other items. The company eventually plans to use 90,000 to 400,000 cords of northern Minnesota wood annually.

“We are excited about being a part of catalyzing the biochemical industry cluster in the Iron Range,” Atul Thakrar, CEO of Segetis, said in a statement. “This project means we will be the first to start developing sustainable manufacturing in this region usually locally sourced feedstock.”

Allete, Minnesota Power’s parent company, also is planning to develop a “utility island” next to Segetis with steam boilers, electricity, industrial gas and other items that would provide multiple utilities to Segetis and other future tenants, said Nancy Norr, director of regional development for Minnesota Power.

“This is going to put northern Minnesota on the map globally on the cutting edge of biotechnology,” Norr said. “To be able use our underutilized wood basket, our forest resources, to produce biochemical is a huge leap forward of our region.”

The project is projected to create an additional 140 spinoff jobs for suppliers, which could expand to 230 if Segetis expands as proposed.

The board also will consider infrastructure plans that will help business developments. The construction of the project is anticipated to be finalized in 2015.

News Tribune staff writer John Myers contributed to this report