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The federal government is financing a large manufacturing plant in southwest Minnesota that will turn corn sugar into chemicals usually made from petroleum.

The Department of Energy on Thursday announced a tentative $213 million loan for Solugen Inc. to construct its 500,000-square-foot facility in Marshall.

At the plant, which Solugen calls a "Bioforge," the company will manufacture organic acids for use in concrete, cleaning, agriculture, energy and other industries the DOE says are hard to cut carbon emissions from.

DOE said the project will trim emissions by 18,000 metric tons of carbon dioxide per year compared to making chemicals from fossil fuels, which is equivalent to emissions from 3,500 U.S. homes.

The agency said Solugen would also help bring industrial production back to the U.S. for chemicals largely produced in other countries, including China.

"We're very excited ... to catalyze many different sectors within the broad umbrella of clean energy," said Chris Creed, chief investment officer for DOE's loan office. "This transaction is going to help reduce greenhouse gas emissions versus the business-as-usual case for the chemicals market for a lot of in-demand manufacturing needs, and that's very cool."

Solugen will get corn sugar from an Archer-Daniels-Midland (ADM) corn-processing facility next to its Bioforge in Marshall. Solugen plans to process that dextrose into chemicals that end up in packaging, food, medicine, fertilizer, water treatments and more.

Solugen executives said the federal loan gives confidence to traditional banks for future projects and to equity investors to continue backing the company.

"The rates are tremendously lower than I think a company like ours could get on the open market," said CEO Gaurab Chakrabarti.

Creed said Solugen must repay the loan with interest, but after the agency scrutinized the company's business plan, it's confident the Marshall project will be profitable.

The Texas company's flagship plant opened in Houston in 2021. The operation in Marshall would be far bigger and is the first of several Solugen hopes to build.

The new plant is expected to create up to 100 jobs during construction and 56 jobs at the facility once it's up and running in 2025, earning praise from the mayor of Marshall and others.

Solugen hasn't disclosed how much it will cost to build the plant, but said the loan will cover more than half. Chief Technology Officer Sean Hunt said Marshall has the "lowest cost, the highest quality and the lowest carbon-intensity corn in the world."

As electric vehicles and other technology rely less on liquid fuel, Hunt said Solugen can help find "new outlets for corn that's not just animal feed or ethanol."

The project has all its permits and has broken ground, Solugen said.

While DOE intends to finance the Bioforge project, Solugen must meet some technical, legal, environmental and financial conditions before the feds fund the loan, the agency said.

Solugen committed to develop and implement a "community benefits plan," DOE said, and has agreed to serve as curriculum advisors for local students and provide training opportunities, internships and more.