Iron Range to get 2 ore recovery plants

  • Article by: DEE DEPASS , Star Tribune
  • Updated: November 27, 2012 - 9:24 PM

Magnetation reclaims iron ore from mine waste and will build near Coleraine and Calumet.

Magnetation LLC announced Tuesday that it will build two iron ore recovery plants in northern Minnesota, creating 240 jobs and $120 million in investments on the Iron Range.

The company also said it would build a large iron ore pellet plant in Reynolds, Ind., spending about $350 million to convert an old ethanol plant. It will employ 120 workers by early 2015. Reynolds beat out Superior, Wis., for the facility.

CEO Larry Lehtinen said Indiana had the space and numerous rail lines required to make and carry pellets to AK Steel's plants and furnaces in Ohio and Kentucky.

Indiana "is an ideal site and already has a lot of the railroad lines we need," Lehtinen said, adding that he searched for sites for seven months.

Neither Minnesota nor Wisconsin had comparable rail access for a plant expected to produce 3 million metric tons of iron ore pellets each year, Lehtinen said.

Still, Minnesota was not left empty-handed.

Magnetation, which already reclaims iron ore from mining waste in Keewatin and Taconite, Minn., is building two additional iron reclamation plants in Itasca County. One will be northwest of Coleraine and the other southeast of Calumet.

The two Minnesota factories will each have 120 workers, Lehtinen said.

Some of the Minnesota iron ore concentrate will be transported from Minnesota to the new site in Indiana to be transformed into iron ore pellets.

Market is in flux

Magnetation's expansions come at a curious time. Prices for steel and its iron ore precursor have softened due to the global economic slowdown, especially in China.

Last month, several taconite and steel producers, including AK Steel, U.S. Steel, Cliffs Natural Resources and other firms with either Minnesota plants or suppliers, reported dismal third-quarter earnings due to the challenging pricing environment and a drop in demand.

Cliffs Natural Resources just announced that it will idle two of its four taconite production lines at the NorthShore Mining plant in Silver Bay in January. About 125 workers will be laid off in Silver Bay and the mine in Babbitt.

While the economic slowdown continues in China, India and Europe, several expansion projects march on in Minnesota, noted Tony Sertich, commissioner of the Iron Range Resources and Rehabilitation Board.

Essar Steel Minnesota and Magnetation are two of the best-known projects rising on the Iron Range. "Magnetation is always expanding. They just [did] a joint expansion with [Steel Dynamics]," Sertich said in a recent interview.

Essar is constructing a taconite pelletizing plant in Nashwauk that will open next fall. That plant is one of three planned in the town. If all three are completed, they'll be worth a combined $1.6 billion and create 700 permanent jobs and the first steel plant in the state.

Untroubled by turmoil

As for Magnetation, Lehtinen said he is not troubled by global turmoil in the steel industry. Iron ore concentrate is turned into pellets, which serve as a primary ingredient in making steel.

He said he expects pellet pricing could wobble from the current $118 a ton to perhaps $90 a ton in the next 18 months. But recovery will be quick, he said, noting that China and the United States are still growing, though slowly.

"We don't think [ore prices] will spend much, if any, time below $100 a ton," Lehtinen said. "The consensus is that iron ore will still trade at $90 to $120, maybe $130, a ton, which is still a good price for low-cost producers like us."

Dee DePass • 612-673-7725

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