MARQUETTE - The Marquette County Board approved a lease reassignment and six-month rent waiver Tuesday for a group of investors looking to acquire, and breathe new life into, the assets of the renewaFUEL operation at K.I. Sawyer.
In September, after renewaFUEL's inability to generate products at designed capacity, parent company Cliffs Natural Resources suspended operations and later began looking for potential buyers.
The $19 million facility opened in 2010 and was expected to produce 150,000 tons of biomass cubes per year, using sustainably collected wood and agricultural feedstocks, for Cliffs' Michigan operations and other entities, including the Marquette Board of Light and Power.
A group tours the renewaFUEL facility during a ribbon cutting ceremony in September 2010. (Journal photo by Johanna Boyle)
Jim Mennell, who was the founder of renewaFUEL and past president for five years, said Tuesday he was very disappointed that his company wasn't able to get the plant to operate at the levels they'd hoped to achieve.
"That said, I do believe that we can turn that facility into a successful operational biofuel production facility," Mennell said. "And I'm currently working with a group of investors that would like to acquire the renewaFUEL facility and operate it as a biomass production facility per the original plan."
Mennell said the investors are currently negotiating a contract with renewaFUEL they hope to close on by the end of the week.
Mennell said the investors would be operating under the renewaFUEL name. The new company would be a Minnesota-based limited liability company.
"We've got a very strong group of investors, many of whom are CEOs of biofuel companies that are backing this particular project," Mennell said. "We secured capital and capital commitments right now in excess of $5 million to support the work we plan to do that's pending close of the renewaFUEL transaction and our investors ratifying the renewaFUEL transition."
Mennell said the investors think they have assembled the right team of biofuel experts to get the plant working properly. A partner of Mennell has similar facilities located in Minnesota and Ohio.
"Our plan is to invest the money that's necessary to make this plant safe, make it operational, make it profitable as soon as possible," Mennell said. "We plan to employ 25 to 30 people at the plant and ideally, we could rehire a number of the people that were previously employed there if they're still available as we get this plant started up and operating."
A team of engineers has spent a considerable amount of time in the plant over the past couple of weeks and they are developing a full scale capital plan and repair plan to get the plant up to grade, Mennell said.
"Right now we think it will take us about four to six months to complete the analysis that we need to do, order the equipment that we need to bring in to get the plant operational, get permits in place and make the repairs to get the plant up and operational in that time frame," Mennell said. "The finished product will either be a cube or more of a traditional pellet."
Commissioner Gerald Corkin asked what initially went wrong with the plant's operation.
Mennell said that among the issues, the biomass burner clogs up with ash and needs to have better cyclonic activity. The core equipment at the plant is sound and the theory behind the plant "is still excellent," he said.
"There are fixes that we've identified that need to take place to make the process operational," Mennell said.
No contracts are in place for sales, but the company is interested in working with the Marquette Board of Light and Power and other entities, Mennell said.
The county board approved assigning leases for hangars No. 666 and 667 and the associated parking parcels to the investor group, which is named RNFL Acquisitions. The lease assignment would be contingent on the purchase deal being closed successfully. The Federal Aviation Administration would also have to approve.
Mennell said a rent abatement for the first six months of next year was being requested "to better allow our company the time to analyze what we need to do to fully fix the operations to get it up to an operating plant; and to take the time and money to invest and really get that plant operational."
"We hope to make products that are environmentally superior." Mennell said.
The county board unanimously approved the requests.
"Marquette County has not put money into the building. They've remodeled the building themselves." said Commissioner Bruce Heikkila. "(Cliffs), it's been pretty apparent that they're not going to do anything with the building, they're trying to sell it. And this seems like a very solid company that's willing to take it over without us putting any money in it.
"They are asking for zero and a six-month waiver of the lease and that's a very small thing to give them to get a company to go back in there," Heikkila said.
Commissioner Bill Nordeen told Mennell, "Cliffs makes iron ore pellets. Just because they wanted to stop doing this doesn't mean it's a bad project and I wish you well."
Cliffs spokesman Dale Hemmila attended the board meeting Tuesday, but did not address the panel.
Commissioner Michael Quayle said he was disappointed that every new company acquisition or start up at K.I. Sawyer seems to come with some expense to the county.
"It's disappointing when we talk about millions of dollars here and yet we have companies coming here looking for $60,000 from us, which doesn't sound like a lot of money, but in some cases, it is a lot of money for us," Quayle said.
John Pepin can be reached at 906-228-2500, ext. 206.