When Segetis, a Golden Valley, Minnesota, biochemical firm first proposed a $105 million project near Hoyt Lakes, it stoked some badly needed hope for the Iron Range. The Iron Range Resources and Rehabilitation Board approved a $21.5 million loan package with little opposition.
Science! Smart people in lab coats would help save the local economy.
But as this Bill Hanna story in Sunday’s Mesabi Daily News points out, it was all too good to be true.
Segetis is barely alive. It has a handful of employees left and has sold many of its patents to other companies. The only good news is that the $21.5 million allocated to the Iron Range project was never disbursed.
There remains some hope for those who believe that the Iron Range’s proximity to forest resources could attract biochemical companies like Segetis. The Sweetwater project proposed for Mountain Iron is still kicking, though has yet to raise necessary funds. That’s the same part of the process where Segetis failed.
The IRRRB is doing better in protecting its investments in situations like this. In 2003, the agency issued the second of two loans totaling $9.5 million to Excelsior Energy’s Mesaba Energy Project. The money was used by the company to operate, speculate, and lobby for federal funds. After the feds issued their grants, the company failed. The company has yet to pay back anything but $100,000 and some interest. So at least that’s not the case this time.
Nevertheless, this Segetis situation shows how tough large-scale economic development can be. Everyone wanted the dream of harvesting wood to make advanced chemical products to be real. For most Rangers and our elected leaders it would be so … easy. Some fancy science people will take care of all the details.
Successful economic development will likely require a more hands-on approach. Perhaps Sweetwater pans out and perhaps not. The iron mining outlook will eventually improve, but only after significant cost-cutting.
On-the-ground community building with small businesses and homegrown innovation will need to be treated with the same importance as big companies with big proposals. Both have the ability to create jobs. Only the prior can be controlled by the people who live and work here in Northern Minnesota.
Disappointed that this didn’t come to fruition but I think incredibly low oil prices made it all but impossible for this product at this time. This type of industry if able to stand on its own without ethanol type subsidies would be a great step in the diversification of our local economy with real jobs. Sorry but serving drinks to tourists doesn’t pay well or offer significant fringe benefits.