Stung by a global pricing slump and liquidity problems, Grand Rapids, Minn.-based Magnetation LLC has filed for Chapter 11 bankruptcy protection in an effort to restructure its debt and continue operating its iron ore concentration business.

As part of the bankruptcy restructuring filed Monday, officials said they successfully reached an agreement with creditors for a note due in 2018. That deal will allow the company to restructure its balance sheet and provide the cash needed to continue operations in the long term. The agreement is with holders of senior secured notes that carry an interest rate of 11 percent.

The bankruptcy filing was one solution to a problem that had boxed Magnetation into a corner. Plagued by plummeting global iron ore prices that are 60 percent lower than a year ago, Magnetation last month idled one of its plants in Keewatin, Minn.

Last week, its key investor and main customer, AK Steel, publicly questioned Magnetation's ability to provide iron ore in the long term, given the pricing paradigm. AK Steel also took the unusual step of writing off its entire $256 million investment in Magnetation in the form of a quarterly impairment charge.

The company announced the bankruptcy on Tuesday, and it brought some relief to Magnetation and Iron Range employees, union members and company officials who hoped that the company's only casualty would be the 49 jobs already affected by the Keewatin shutdown. Industry woes have prompted U.S. Steel to temporarily idle two plants on Minnesota's Iron Range that will cause 1,100 layoffs.

Magnetation has other facilities and hundreds of employees spread across Grand Rapids, Bovey and Coleraine, Minn., as well as Reynolds, Ind. The company concentrates iron-ore waste tailings from old mines into usable iron-ore pellets that then feed AK Steel's blast furnaces in Ohio and Kentucky. Magnetation expanded in Minnesota and Indiana last year and now has the ability to produce more than 3 million metric tons of iron ore.

Magnetation said in a statement released Tuesday that the bankruptcy restructuring will allow it "to continue to pay employee wages and provide health care and other benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services."

The painful move to bankruptcy has given the company some relief during a very turbulent time in the industry, said CEO Larry Lehtinen.

"We are pleased to have reached an agreement with our noteholders on the terms of a balance sheet restructuring through a Chapter 11 reorganization," he said. "The significant decrease in global iron ore prices along with our existing capital structure has created a challenging business environment in the short term. The reorganization process will create a more competitive and successful company. We remain firmly committed to serving our customers and to being a good employer."

News of the bankruptcy spread quickly.

Minnesota Senate Majority Leader Tom Bakk, DFL-Cook, said the problems of the iron and steel industry have prompted many questions about the health of the boom and bust Iron Range "as layoff notice after layoff notice — and now a bankruptcy filing — have been handed down."

"This bankruptcy filing is yet another moment where we must ask ourselves how we can help," he said. "The ­reality is, our iron ore industry is no longer competitive in a global market."

Magnetation's bankruptcy sits against a backdrop of turmoil as iron and steel companies battle with several industry forces causing hardships across the globe.

Oversupply problems not only in the United States, but also in Australia and Brazil, have clipped the prices of iron ore, which is the key ingredient in steel. Separately, demand and construction activity in China has greatly slowed, which has affected the world steel market. China, Korea, Vietnam, Saudi Arabia and other nations have been accused of dumping their excess steel into the United States at below market prices.

Iron Rangers have been watching the market. With the Magnetation and U.S. Steel layoffs and troubles at such companies as Cliffs Natural Resources and Norcor Corp., they are quite worried.

"The mining industry up here has its ups and downs," and this week's surprise bankruptcy filing is part of that, said former Magnetation heavy equipment operator Tom Gentilini, who received his last paycheck April 9 after being laid off from Magnetation's Keewatin plant.

"If all these plants up here laid off and went into a very, very slowdown mode where people are not working, that affects the whole economy here," ­Gentilini said. With the global industry in an uproar, "people here sometimes are thinking of the worst."

Gentilini is trying to stay optimistic. "I am looking for some other stuff and waiting for some options," he said. Until then, he's applying for jobs and living on savings and unemployment benefits.