- Details
- By Brian Edwards
- Economic Development
The Shakopee Mdewakanton Sioux Community is providing $150 million in debt financing to Minneapolis-based Niron Magnetics to support construction of the company’s first full-scale manufacturing plant in Sartell, Minn., putting the Dakota tribal government on both sides of the company’s capital structure as an investor and lender.
The financing will support construction, equipment and operational readiness at the 287,000-square-foot plant, which will put material-to-magnet production under one roof. The facility will have capacity to produce up to 1,500 tons of magnets annually and is expected to employ as many as 175 people when it begins operations in 2027.
The loan extends a decade-long investment relationship that began when SMSC invested in Niron in 2016, when the company was still at the “angel investment stage,” SMSC Chairman Cole Miller told Tribal Business News.
The connection grew out of work at the University of Minnesota involving tribal member Todd Brooks and Niron co-founder Jian-Ping (JP) Wang’s technology for producing permanent magnets without rare-earth materials. SMSC later invested an additional $5 million in Niron as part of a $33 million 2023 financing round that included investments from GM Ventures, Stellantis Ventures and the University of Minnesota.
Miller said SMSC initially saw environmental potential in the technology before knowing whether it would become a successful financial investment.
“Obviously, that’s one of our traditional Dakota values, taking care of the earth,” Miller said. “And to watch it turn into an actual good business venture as well has been very positively felt in the community.”
A Niron spokesperson said the longstanding relationship and shared values led the company to choose SMSC over other lenders.
“We’re wearing two hats here,” Miller said. “One, we’re an investor … but also now we are taking on the debt for them and helping them build the facility.”
Miller said Niron’s understanding of tribal sovereignty and SMSC’s governance has been important to the relationship. He said the relationship also reflects considerations beyond financial returns, including environmental impacts, job creation and benefits to Minnesota’s economy.
The loan puts $150 million of tribal capital into a privately held Minnesota manufacturer, extending SMSC’s investment activity beyond its own enterprises. Miller said SMSC is “not your traditional lender,” but that long-term relationships with businesses and other partners can create opportunities for transactions such as the Niron loan.
“Tribal governments are not just here to operate casinos,” Miller said. “We are here to play in every market that we can, and it is all for the betterment of our community and our people.”
Niron is also pursuing up to $150 million in federal financing for the Sartell project. The U.S. Department of War’s Office of Strategic Capital issued a conditional commitment Aug. 7 for a 20-year direct loan to finance construction and equipment.
Niron said the two loans are separate. The federal financing remains subject to conditions including completion of due diligence and Niron raising a specified minimum amount of equity before definitive financing documents are executed.
Niron did not disclose the interest rate, maturity or other terms of the SMSC loan. The company also did not disclose the total cost of the Sartell project.
Editor’s note: This story has been updated and expanded with additional reporting and comments from Shakopee Mdewakanton Sioux Community Chairman Cole Miller about the tribe’s relationship with Niron Magnetics, its investment strategy and the $150 million loan.
