A team that includes former state legislator Tom Anzelc has received approval from a U.S. Bankruptcy Court to buy two former Magnetation iron ore facilities on the Iron Range for $1.95 million.
The ruling last week gave the group, called Prairie River Minerals (PRM), permission to buy former Plant 1 in Keewatin and the Jessie Load-out facility near Grand Rapids.
Anzelc said Monday he received a call in February from William Shaughnessy and his father, Ed — who used to run Magnetation’s Plant 1 in Keewatin — about cobbling together a team to buy the assets. Anzelc found the plan to be such a “hoot” and “exciting” that he agreed to be the new company’s government-relations person and to deal with state agencies on leasing and permit issues.
Anzelc said PRM’s ultimate goal is to use old stockpiles of Iron Range ore from the 1930s and 1940s. At the time that iron ore was “rejected,” set aside and never fully processed. Today’s technological advances makes processing that ore economically feasible.
Other Prairie River Minerals partners include the South African engineer and metallurgist Johann Grobler; retired U.S. Steel manager Scott Conley, who worked at U.S. Steel’s Minntac and Keetac taconite plants in Mountain Iron and Keewatin; and Jim Swearingen a retired general manager of Minntac.
William Shaughnessy, a Cambria Mortgage consultant, formally created PRM in January 2019. Shaughnessy, who is listed as PRM’s “organizer” on a filing with the Secretary of State Office, declined on Monday to comment on the Magnetation deal.
Magnetation filed for bankruptcy in 2015 following a severe downturn in the steel industry. In 2017, ERP Iron Ore of Virginia, led by health care entrepreneur Tom Clarke, bought the company’s assets out of bankruptcy.
Clarke had big plans for the properties. He not only hoped to get the facilities running again but wanted to eventually combine their operations with the former Essar Steel project in Nashwauk. Another group led by Clarke bought that property out of bankruptcy.
But ERP Iron Ore filed for bankruptcy in May 2018, and Clarke is no longer a partner in the Nashwauk project.
In the ruling late last week, U.S. Bankruptcy Judge William Fisher in St. Paul approved the sale of the Magnetation/ERP Keewatin plant and the Jessie Load-out facility “free and clear of any and all liens, encumbrances and other interests.”
The judge on Wednesday will hold a hearing on a bid by MJM Minerals on Magnetation’s former Plant 2 in Bovey, according to court papers.
The court also will consider bids on Plant 4 in Grand Rapids, the largest and newest facility. Final bid proposals for that site are expected in coming days as interested parties work with Itasca County and select lien holders.
The PRM group is waiting before it submits its bids for the other two plants, but ultimately hopes to secure the assets from those two properties as well, Anzelc said.
PRM envisions using and adding to Magnetation’s processing equipment to create ore from the old lumps and rocks that is 60% to 65% pure iron, Anzelc said. The process used would be similar to one adopted in South Africa that works on natural hematite.
The process is very different from the magnetic separation process Magnetation used to create chunks of concentrated ore. If successful, PRM will convert those old stockpiles into 1 million tons of high-quality lump and sinter fine ore that can be fed into blast furnaces and converted into steel, Anzelc said.
Production should begin in 18 months, creating 90 to 130 jobs.
“This is very exciting and very promising,” Anzelc said. “We have already been partly successful in the bankruptcy process [securing] assets from Magnetation.”
If iron ore processing and rail shipments resume at the former Magnetation/ERP sites, it will join an Iron Range industry reinvigorated after the downturn.
U.S. Steel’s once-idled mines and plants in Keewatin and Mountain Iron are again going strong.
The $1.9 billion Nashwauk project, now being run by new investors under the Mesabi Metallics name, has still not progressed.
PRM hopes to use the rail system that the state put in place for the Nashwauk project, Anzelc said. “Now that we have this wonderful [unused] rail line. We plan on putting it to use.”