You’ve probably never heard of levulinic acid. But it could become one of the building blocks of modern life, for use in plastics and cleaning products, just to name two applications. Northern Minnesota potentially has an abundance of the base material that could yield the stuff.
That potential has led Atul Thakrar, president and CEO of Golden Valley-based Segetis, to the Iron Range. Another attraction is the $21.2 million that the Iron Range Resources and Rehabilitation Board (IRRRB) is chipping in for a Segetis biochemical plant in the Northland.
Seven years ago, Thakrar joined Segetis to produce “green” alternatives to petroleum-based chemicals. Over several years, Segetis has raised primarily venture-based equity—including $25 million in 2012—to utilize proprietary technology that converts biomass to levulinic acid and its derivatives, for use in flexible plastic products, cleaning products and other consumer goods.
The company’s current customers include two cleaning-products businesses, Method Products and Seventh Generation. In late April, Segetis announced it would build a commercial-scale plant in Hoyt Lakes. Construction could begin next year.
Based on market studies, there is an opportunity for a $50 billion-plus market that may find use for levulinic acid, Thakrar says. “The key, of course, is to get it started. The larger the scale, the more cost-effective this material will be.”
Currently, Segetis extracts levulinic acid from corn sugars. But there’s another potential source of levulinic acid—cellulosic sugars from trees, like those in abundance in northern Minnesota.
The state of Minnesota has available about 5 million cords of “sustainable harvest” timber per year. Most of Minnesota’s timber has been used for making paper or for specialized products such as oriented strand board used in construction. The decline in paper usage in the digital age and the recessionary slowdown in homebuilding has left many more trees standing. In the past few years, Minnesota’s timber harvest has been around 2.3 million cords.
“We are greatly underutilizing our wood assets,” notes Don Fosnacht, director of the Center for Applied Research and Technology Development at the University of Minnesota Duluth’s Natural Resources Research Institute (NRRI). “So this plant would have ample wood resources that [Segetis] could go after.” Those species could include the aspen, birch and pine that the paper mills once used, and underused species such as tamarack and red pine.
Wood has three main components—cellulose, hemicellulose and lignin. Lignin holds everything together, Fosnacht says. “You need techniques that basically split those things apart so that you can get to the cellulose, so that you can get to the sugars.”
One problem: There’s as yet no technology that can pull out the cellulosic sugars needed to make levulinic acid. Corn sugars are plentiful. There are a number of efforts underway to unlock the cellulose from timber. Scientists worldwide are experimenting with possible techniques. The NRRI is focusing on heat treatments that would change the structure of the wood to more easily break apart its components.
“I don’t know who’s the most advanced,” Fosnacht says. But developing a process to liberate cellulose from trees is “a key factor in us being able to use our forest resources in a manner that could lead to very interesting developments for that Hoyt Lakes facility.”
Segetis itself isn’t involved in developing a process for obtaining cellulosic sugars. But Thakrar hopes that if a successful, scalable method arises, a company built on the method would locate near its Hoyt Lakes plant.
That’s the IRRRB’s hope, too. “We as a region have been assessing what our strengths are to do value-added natural resources economic development,” IRRRB Commissioner Tony Sertich says. “Early on, doing that assessment, we knew that our wood basket [the amount of available timber] was such an asset that we looked at where investments would be.” After “a long courtship of three or four years,” he adds, the IRRRB was able to lure Segetis to Hoyt Lakes.
“I believe it’s just one company that would be in a cluster using our wood basket for value-added [products],” Sertich says. Thakrar sees a cellulosic sugar facility as part of that industrial infrastructure. The proximity of Hoyt Lakes to Duluth-Superior, a port as well as a rail center, “would provide the ability to transport things out in a cost-effective way all over the world,” which could help form the basis of this biochemical cluster, Thakrar says.
But Thakrar also acknowledges the Hoyt Lakes plant and a bio-based chemical industry to support it is “a work in progress.” Much remains uncertain, particularly how soon cellulosic sugars might be available. The market for green chemistry also needs to grow. Thakrar knows about the importance of scale, given his background in the oil and gas industry and the chemical sector. “The larger the plant, the larger the scale, the more economics you get and the lower the cost,” he notes. “The lower the cost, the more the market gets excited about finding uses for it.”
Much of the interest on the Iron Range about the Segetis plant stems from the fact that it has nothing to do with iron. Though the taconite industry expects a good year, unemployment on the Range remains stubborn. And with the timber sector in the doldrums, a sustainable new industry is worth dreaming about, and pursuing. That’s despite the risks and uncertainties ahead. As Thakrar describes it: “This is a journey.”
Segetis isn’t the only Minnesota company working with northern trees for industrial purposes. Circle Pines-based Biogenic Reagents has begun taking biomass, primarily from timber, to produce carbon products for use in emissions control, iron and metals production, and energy generation. It now has a plant making ultra-absorptive carbon for air and water purification in Michigan’s Upper Peninsula. The company obtained $9.5 million in financing last year.
Atul Thakrar, Segetis CEO
Gene Rebeck is TCB’s northern Minnesota correspondent.