IRRRB to discuss $26 million biochemical project in Mt. Iron

A smorgasbord of biomass sources that Sweetwater Energy says it can convert into sugars for use in valuable chemical products. (Sweetwater Energy)

A smorgasbord of biomass sources that Sweetwater Energy says it can convert into sugars for use in marketable biochemical products. (Sweetwater Energy)

Friday, the Iron Range Resources and Rehabilitation Board will meet to discuss new projects and public works spending. A number of interesting items will be on the docket.

Topping the list is a proposal to loan $18 million as part of a state and Iron Range package of $26 million to a company called Sweetwater Energy. Sweetwater is a startup company that seeks to turn biomass into sugars to generate a variety of biochemical products.

Sweetwater wants to build two plants, one in Rochester, New York, where the company is based, and one on the north side of Highway 169 in Mountain Iron. The company would employ 35 people in Mt. Iron to start, with the possibility of more hiring later.

The money would not be given until certain benchmarks were achieved by Sweetwater. The details of the deal will be discussed at this week’s meeting.

If all this seems kind of familiar, it’s because the IRRRB OK’d $21 million for a company called Segetis which promised a similar kind of technology last year. By all accounts I’ve heard, that deal has dried up.

John Myers had a story in Thursday’s Duluth News Tribune exploring the Sweetwater project and also digging into the status of the Segetis project. Apparently Segetis isn’t responding to calls by reporters or even the commissioner of the IRRRB.

Some big questions should be asked at this meeting about Sweetwater and Segetis. What exactly are the products and who will buy them? Why is there so little private financing relative to the public investment?

I think the benefits of using this kind of technology on the Iron Range are clear, but the thin details about products and markets are a good reminders that caution is appropriate. Twenty-some million dollars is a lot to ask for a startup, especially one barely matching the public investment with private dollars.

This will also be the first meeting since May 19, a long stretch, and the first since the death of chairman Rep. David Dill last summer. As such, the board will elect a new chair. By practice, the board rotates between the House and Senate members every two years, so a House member will likely be elected to fill out Dill’s term. Rep. Tom Anzelc, the senior House member and Iron Range delegation chair, is a candidate, though I’ve heard Rep. Carly Melin may run as well.

Additionally, $2.3 million in public infrastructure spending is proposed, detailed (along with the rundown of the Sweetwater loan) in Friday’s board packet.


  1. Is lignin-cracking(?) super energy intensive . This could plug and play nicely with Blandin and Potlatch mono-crop farm ( yes, sustainable ) models , but . Also ” data-centers” is specifically vague . What , big time multi-acre rackspace ? Although coal-fired, the input-intensive mines definitely ensure reliable electric infrastructure, but don’t the major cloud players tend to site heavily tax-broke newbuilds with a federally-rebate-able green power component ?

  2. Aaron, just a couple comments. The Segetis project is not at all similar to the Sweetwater project. Totally different technologies, with different products. The bio industry is not all inclusive as there are many different sectors within the industry. Also the products prodcuced by Sweetwater have been and will be fully described to the extent that can be disclosed without compromising the IP. The investment from Sweetwater is not minimal but will have to match the dollars being proposed for the loan before they can access any funds. This is a mutil billion dollar industry and Minnesota needs to on the front end if we are truly interested in diversification . Just my two cents worth

  3. Independent says

    I am very interested in learning more about this industry and what it could bring to our area if done successfully. I have had a hard time finding answers about the status of Segetis over the last six months. I know they had a major shakeup in their C suite not that long ago. Anyone know anything about their current state?

  4. Thanks for the comment, Steve. I look forward to learning more after tomorrow’s meeting. I agree that Northern Minnesota belongs in this industry, I just hope the project is as good as the idea. It will be a long time before I get over the PTSD if the Excelsior project of years past, hence my heightened skepticism of deals like this.

    • Understood Aaron, we are doing our best to bring solid deals that have long term sustainable solutions to our region.

  5. I looked at the Sweetwater website. Nothing of substance there. It would be very foolish of the IRRRB to give funds to these folks unless and until they can demonstrate successful commercial operation elsewhere–by which I mean both technical and economic success.

    • Hello Alan, just a quick note…the IRRRB is not “giving” any funds to Sweetwater, this would be a loan with many contractural obligations

      • Well, yes, in theory. But how much of the funding of, say, Excelsior Energy will ever be paid back? How many collapsed projects have the ability to repay?

        Of course, economic development projects carry risk, and they should. Nothing ventured, nothing gained. But I see many, many projects funded by economic development orgs that have fundamental deficiencies basic due diligence would expose. Sweetwater seems an example of this, based on a very cursory read.

      • Steve, it is not the semantics of whether the IRRRB is loaning or giving the money, it is the history of “forgiving” their loans that is a concern to us Rangers. Delta call center comes to mind and the embarrassing scene of our Governor and his fellow IRRRB board members begging Essar for OUR taconite tax dollars back with Essar’s response of we’ll let you know. Cash is always king in business deals, with the IRRRB having 25M to dole out to a startup, please do your dudilagence and strike a deal that reflects you have the leverage, for once!!

  6. Walks like a duck maybe mock duck hopefully someone at meeting will ask how much oil $/bbl gotta be

  7. Sweetwater’s CEO was quoted in the April Biofuels Digest stating, “with todays low price of oil and corn, biomass can’t compete. With these low prices, attracting private investment becomes particularly difficult. Hmmm.

  8. It is not the semantics of whether or not the IRRRB is giving or loaning the money, it is their history of “forgiving” paybacks of these loans that has many Rangers rightfully concerned. I’m all for new startups here but please do your dudilagence and strike a deal that benefits the Range and reflects the leverage that having 25M cash on hand to a startup has!! Fool me once shame on you, fool me twice shame on me, fool me with 3/4 of the deals you do, get a whole new system!!

  9. You’re right on Ken, a new system is in order. Having politicians making these investment decisions is simply two ways. They’re inherently biased, they’re politicians and more importantly they don’t have the skills. If the “board” was made up of the right talent, and from outside the region, the investment success rate would improve overnight. But good luck in removing the politicians from the process..

  10. The more difficult point to make in Minnesota is that biofuel schemes, however artfully packaged, are fundamentally unsound. Unless one wants massive clearcuts, air pollution, accelerated climate change, and increased fuel costs and taxes (to pay for all the subsidies), the only sensible answer is “NO.”

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