Minnesota loses Iron Range wood mill plant to another state after delays

DULUTH — The company behind a proposed $440 million Iron Range wood product plant will seek a location in a different state on the heels of a Minnesota Court of Appeals setback earlier this week.

The state court reversed a Cohasset, Minn., City Council decision made in March to forgo an in-depth environmental impact statement (EIS) for a wood mill proposed by North Carolina-based Huber Engineered Woods, and ordered it to reconsider the project's effects on wetlands before issuing a new decision. The Legislature had initially exempted Huber from having to complete a lengthy study, typically required for projects of its size.

The Leech Lake Band of Ojibwe filed the appeal, saying the proposed mill, a mile from its reservation border, would impact treaty rights in nearby public forests, potentially harming critical wetlands. The mill would consume about 400,000 cords of wood a year to make oriented strand board used for constructing buildings, mostly from aspen trees.

"Due to delays that jeopardize our ability to meet product demand deadlines, we will pursue development of our sixth mill in another state," Huber President Brian Carlson said in a statement that also thanked public officials, community development groups and constituents who supported the project.

The loss of the proposed plant, expected to create more than 150 jobs for a region also losing a coal-fired power plant in the next several years, is "devastating," Cohasset Mayor Andy MacDonell said in a statement.

"The Huber project was central to our city's strategy to diversify our tax base and create high-quality jobs in the face of the massive losses we will see when the Boswell plant retires," he said.

Minnesota Power is expected to phase out its Boswell Energy Center in Cohasset by 2035 as part of the state's transition toward carbon-free energy. Cohasset city officials say the power plant makes up 55% of its tax base.

"Today's announcement makes one thing crystal clear: Cohasset cannot overcome the retirement of the Boswell plant alone," MacDonell said. "It is now more critical than ever that the governor, the Legislature, and all our regional partners bring every resource they can to the table to support our community through this transition."

Millions in public grants, loans and incentives have been approved for the mill, which had been touted "the biggest development in the forest products industry in 40 years" by the Associated Contract Loggers and Truckers of Minnesota.

Gov. Tim Walz had also championed the project, calling Huber "an innovative and unique leader in the building products industry" when the Iron Range Resources and Rehabilitation Board (IRRRB) approved $15 million for the plant in 2021.

Republican U.S. Rep. Pete Stauber, who represents much of northern Minnesota, said in a statement Thursday that the outcome was "an indictment on Minnesota's anti-jobs approach to development."

Leech Lake officials said in a statement they were committed to working with local governments on economic opportunities, but "in this particular case, we were deeply concerned about the potential impact of the proposed plant on the environment, the attempted shortcuts in the environmental review process and the absence of meaningful tribal consultation at the start of project."

New IRRRB Commissioner Ida Rukavina said she was "extremely disappointed" by Huber's decision.

"Our agency was eagerly looking forward to welcoming Huber to our manufacturing economy, and the positive impacts the new facility could have had on the region's timber and construction trades industries," she said in a statement.

Itasca Economic Development Corp. President Tamara Lowney said the issues with bringing the project to fruition were bigger than the challenges from Leech Lake and a rival mill.

"As you think through a project of this magnitude coming into a state, it's really expected for a state to roll out the red carpet and to be there with anything that company might need to bring that project to the finish line," Lowney said.

Rachel Johnson, president of Area Partnership for Economic Expansion, a nonprofit economic and business development group in northern Minnesota and northwestern Wisconsin, said it didn't seem like there was interest from the governor's office to address early on any issues with the project, such as tribal concerns or those with the permitting process. She hopes lessons can be learned.

"This loss is enormous, and it is a symptom of a bigger problem with our state's permitting process," Johnson said.

A spokeswoman for Walz said the governor created financial incentives, directed his agencies to collaborate closely with stakeholders and worked to accommodate an expedited timeline to land the project.

"He has encouraged all involved to follow the necessary processes and meet timelines," Claire Lancaster said, and "he is deeply disappointed that Huber has chosen not to bring these critical jobs to Minnesota."