Biomass Feasibility Project Final Report - Xcel Energy

egion encompassing approximately 13,000 square miles that stretches from Crosby, Minn.,
across the state's Cuyuna, Mesabi and Vermilion iron ranges to the North Shore of Lake Superior.
The agency and its programs receive no money from the state general fund. The agency's
funding comes from a percentage of production taxes assessed in lieu of property taxes on the
area’s iron mining companies. The production tax provides approximately half of the agency's
budget. The other half comes from non-mining sources, such as revenue from its facilities,
interest earned on its fund accounts, and interest generated from its loan programs.
The TAA includes much of Minnesota’s forests and many of its forest industries. Papermills and
OSB/waferboard plants are biomass energy plants to begin with because they generate heat,
steam and power from wood waste. But they have even greater potential to leverage biomass
resources to produce larger amounts of energy, as we note elsewhere in this paper. A likely ally
in that endeavor is Minnesota Power (MP), the Duluth-based utility that serves most of
northeastern Minnesota. MP already has forged waste-to-energy partnerships with papermills in
Duluth and Grand Rapids.
The Taconite industry also is a player in biomass energy. U.S. Steel’s Minntac plant in Mountain
Iron burns sawdust fuel supplied by Hill Wood Products in Cook, MN. Like papermills, taconite
processing plants have untapped potential. MP is planning a series of co-generation facilities to
capture waste heat from sources like Minntac. Much of that heat derives originally from fossil
fuels, but MP’s plan at least conserves energy that otherwise would be wasted by venting it into
the air.
Two IRR programs that spur economic development will play an important role in the energy
future of northeastern Minnesota: the Business Development Financing Program and the
Venture Capital Investment Program.
Iron Range Resources Business Development Financing
The purpose of the Iron Range Resources' Business Development Financing program is to
increase, expand and diversify the area’s economic base by assisting private investment in
manufacturing or innovative technologies. It can finance up to 50% of eligible project costs for
start-ups or expanding businesses. Preference will be given to:
• Manufacturing or assembly operations
• Projects which attract income and investment from outside of the TAA
• Technologically innovative projects
Except in equity stock purchases, Iron Range Resources requires personal guarantees from all
company owners whose interest is 20% or more. Corporate guarantees will be required if a
separate corporation owns 20% of the company seeking financial assistance from the agency.
IRR Business Development Financing takes three forms: Bank Participation, Direct Loans, and
Loan Guarantees.
Bank Participation Loans: Iron Range Resources purchases a portion of a loan originating with a
commercial bank or other regulated lender, sharing with the lender a first position lien on the
financed assets and/or other assets as required. Generally, the participation by Iron Range
Resources in any single project is limited to $250,000.
The interest rate on the agency's purchased participation will be set as low as 3 percentage
points beneath credit obligations of the United States Government with a comparable term, but
Identifying Effective Biomass Strategies: Page 109
Quantifying Minnesota’s Resources and Evaluating Future Opportunities