business

DULUTH - U.S. Steel on Friday is expected to announce plans for a $300 million expansion of its Keewatin, Minn., taconite plant -- a project that would add a full production line, boost taconite output by a third and require 75 more full-time workers, an official said Thursday.

Gov. Tim Pawlenty, U.S. senators Amy Klobuchar and Norm Coleman, and other dignitaries are scheduled to be in Keewatin City Hall at 2 p.m. Friday for what was called an announcement involving U.S. Steel's KeeTac facilities. The state is not believed to be financing any part of the project.

Details of the announcement were not released, but an official who spoke on condition of anonymity said it would require about 500 construction jobs and boost plant production from under 6 million tons of taconite pellets annually to 9.6 million tons.

"This is huge for the Range," the official said. "It's a chance for new money and new jobs. And it promises to be greener and more energy-efficient than the current production facilities."

The official said that U.S. Steel officials stressed that they would need environmental permits "in a timely manner" in order to complete construction of the line in time to take advantage of current high demand for iron ore.

Another official familiar with the deal confirmed U.S. Steel's investment and said that more details will be forthcoming today when steel and city officials gather with the governor and senators. People are excited about the project, he said.

Rumors of an expansion have swirled on the Iron Range since several U.S. Steel executives made a rare visit there last month for meetings with legislators and labor leaders, who were asked to keep details of their discussions confidential.

The corporation owns and operates KeeTac in Keewatin, just west of Hibbing, and Minntac in Mountain Iron, near Virginia.

Frank Ongaro, executive director of Mining Minnesota, praised news of the expansion, saying "Any growth production of any mining is all positive for Minnesota. Absolutely ... I have heard they will add another line to be able to make more pellets and that is huge. They have more [ore] grinding and milling [capacity] than they do [pellet] furnace capacity. So that is probably what they are doing there. I don't know a lot about this," he said."

Officials have planned smaller upgrades to the plant for years. In 2006, KeeTac officials said they were upgrading the plant's furnace system and increasing annual pellet production by roughly 500,000 tons at a cost of $30 million. That project was not expected to add to the roughly 370 workers in the plant at that time.

This time around is different. Permanent jobs will be gained long after construction workers have left the site for good.

Town residents familiar with the deal said that U.S. Steel's investment will be a shot in the arm to the region, one better known for mine bankruptcies than expansions not too long ago.

U.S. Steel's $300 million investment is the second large-scale investment for the plant since the company bought its assets out of bankruptcy in 2003. Before its purchase by U.S. Steel, the plant operated under the name National Steel Pellet Co.

Boost production

A spokeswoman from U.S. Steel said Sen. Norm Coleman is expected to fly with Gov. Tim Pawlenty to today's news conference.

Mine owners across the Range have been looking to boost production to meet high global demand for iron ore pellets because of rapid development in countries such as India and China.

Cleveland Cliffs is expanding its facilities at Northshore Mining Co. in Silver Bay, and several other projects have been proposed or are being considered. It spent $46 million in the last three years upgrading its furnaces and production lines.

Two months ago, it bought a biofuel brick company and plans to build biofuel-brick plants in Michigan and Minnesota to fuel its operations in Silver Bay and Eveleth.

In November, Essar Global of India bought Minnesota Steel Industries in Nashwauk, Minn., and plans to invest $1.6 billion to create a taconite mine, grinding operations, furnaces and steel bar production plant all on the same property -- the defunct Butler Taconite Mine.

Other investments in the Iron Range include the PolyMet copper, nickel, palladium, platinum and gold mine project slatted for the defunct LTV plant in Hoyt Lakes.

Duluth Mining and Franconia Minerals also are conducting copper-mining explorations in the northeastern part of the state.

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