Bioenergy could bring new life to shuttered mill

There may be hope for the shuttered Ainsworth lumber mill in Grand Rapids, which closed three years ago, a victim of the housing market crash and the Great Recession.

The J.M. Longyear company of Marquette, Mich., has signed a purchase agreement for the 120-acre site, and will take control of the mill in 2014. Company officials have been tight-lipped about their intentions, but some wood and timber experts predict it could become part of an emerging bioenergy industry.

The Grand Rapids Ainsworth plant once employed close to 200 people, but those jobs are long gone. Its closing also erased a major timber market for northern Minnesota loggers.

Since it closed, the Grand Rapids plant has been in the hands of the Itasca Economic Development Corporation, which purchased the property for redevelopment aimed at putting its timber resources to good use.

Itasca president Mark Zimmerman said the Longyear operation likely will involve timber and new technology.

"There's a very good amount of research right now that they're doing on what to do with wood from a new technology standpoint," Zimmerman said. "And the fact that they bought it in the middle of the wood basket, is indicative. They would love nothing more than to continue working with loggers and making that some kind of productive plant."

The J.M. Longyear company has ties to Minnesota that date back to the late 1800s, when the company's namesake bought up ore and timber reserves across the Iron Range.

Longyear operates timber and mining businesses in Michigan, Minnesota and Canada. The company owns and manages timber and mineral rights on thousands of acres.

While there's been speculation among locals that Longyear might use the Grand Rapids property for a mining-related enterprise, timber industry experts point to the company's recent history.

Longyear is already involved in turning timber into liquid biofuel. The company is part owner of a new $232 million cellulosic ethanol plant under construction in Kinross, Mich. The commercial-scale facility will convert hardwood into ethanol. Scheduled to open in 2014, the project has financial backing from the U.S. Department of Energy and the State of Michigan.

There has been a rapid expansion of cellulosic wood technology over the past few years, making Minnesota's northern forests attractive, said Jim Lane publisher of Biofuels Digest, an online daily focused on the bioenergy industry.

Lane doesn't have specific knowledge of Longyear's plan for Grand Rapids, but he said companies in the United States and abroad already are turning wood into biofuels like ethanol, diesel, gasoline and jetfuel, along with other chemicals.

"The technologies are giving companies that have access to the wood basket a tremendous set of options they didn't have before, to take something that's available at $50 to $70 a ton and turn it into molecules that sell for $700, sometimes even $800, $900 per ton or more," Lane said. "So that's, it's a real uplift in value. And that makes towns that were wondering where their next jobs were coming from suddenly very hot targets."

There was hope for that in Bemidji, where a redevelopment company called The Idea Circle bought another shuttered Ainsworth plant in 2009. Mary Eaton, president of The Idea Circle, said her company has tried to attract bio-energy businesses. But the effort has stalled, largely because of the timid economy, she said.

"There's got to be markets for it, there's got to be policy, both at the state and federal level that will support the kind of work that we want to happen, and really looking at investment opportunities as well," Eaton said. "So we've got a lot of moving parts right now."

The last big capital investments in Minnesota's forest products industry pumped $5 billion of new equipment into lumber and paper mills. But that was more than 20 years ago and many of those plants have shut down.

Shuttered plants need the kind of investment that will reinvent them for emerging technologies, said Wayne Brandt, executive vice president of the Minnesota Timber Producers Association.

"We've seen the harvest level drop from 4.2 to 2.6 million cords of wood a year," Brandt said. "So there's the potential for a substantial amount of wood to be available for converting into products that we use. And hopefully that will once again drive innovation and investment in our state."

Analysts expect construction of more than 10 new cellulosic wood biofuel plants over the next three years in North America.

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