Brown: With money flowing and change afoot, Minnesota’s iron industry must modernize or die

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NASHWAUK, MINN. – Last week, I gazed up at the largest mining truck in Iron Range history — a 400-ton Komatsu 980E-5. The yellow behemoth occupies some 44,000 cubic feet of space, similar to Nashwauk’s two-story brick city hall a couple miles away. I couldn’t reach the top of the shiny new tires but, in fairness, neither could NBA superstar Giannis Antetokounmpo at full speed.

Mesabi Metallics is months away from finishing a new iron ore mining and processing facility in this northern Minnesota community. After two decades of starts and stops, an Indian investment group called Essar Global will launch the state’s first new taconite mine in more than 50 years next June.

But it is not the newness of the $2.4 billion Mesabi Metallics plant, or its $110 million fleet of electrified heavy equipment, that deserves our attention. Rather, the company’s direct-reduced grade iron pellets portend massive change in an industry that still provides most of the raw material used to make steel in America.

“The vision for the site is to be very diligent from an environmental perspective, support the mission of decarbonizing the steel industry, but also do that in a sustainable way from a competitive perspective,” said Joe Broking, CEO of Mesabi Metallics. “Because if we don’t, if we’re not competitive, we’ll all go away.”

Put another way, without adding direct-reduced iron products, Minnesota’s iron industry will fade sooner than those who depend on these high-paying jobs can bear.

This also means that Mesabi Metallics will supply markets entirely different from those served by existing Iron Range mines. Broking said they’ve already brokered offtake agreements with firms in North America, the Middle East and North Africa. They’ve already sold the first load of pellets slated to ship next summer.

Global money, political and economic volatility and technological advances roiled Minnesota’s iron mining industry this year. In addition to the Lazarus-like revival of the Mesabi Metallics project, the state’s largest iron miners — U.S. Steel and Cleveland-Cliffs — both announced massive foreign investments.

U.S. Steel’s complicated merger with Nippon Steel of Japan came with a promise of $11 billion in facility upgrades across the company’s footprint. About $800 million of that was designated for Minntac and Keewatin Taconite iron ore operations in Minnesota.

U.S. Steel will restart a direct-reduced grade iron ore production line at Keetac to feed a new plant at its Big River Steel facility along the Mississippi River in Arkansas.

Meantime, U.S. Steel’s Minntac is the state’s largest mine, and though it produces blast furnace pellets, upgrades to the Gary and Mon Valley Works indicate steady work for the time being.

Hibtac is running out of ore while some fear Minorca will never reopen. Other Cliffs facilities like United Taconite in Eveleth and Northshore Mining in Babbitt and Silver Bay produce traditional taconite pellets, though Cliffs has produced DR-grade material from the Iron Range to feed its hot-briquetted iron plant in Toledo, Ohio.

Last month, Cliffs announced its own unusual arrangement, a tentative agreement with the South Korean steelmaker POSCO. For at least a 10% stake in Cliffs, POSCO would invest about $700 million into the company, allowing Cliffs to pay off debt incurred during its recent expansion. This would allow POSCO to circumvent U.S. trade restrictions on foreign steel by using Cliffs’ American facilities to produce its products. This is uncharted territory.

With all this money swirling around, it’s tempting to argue that boom times are coming. But trade and economic uncertainty cloud the crystal ball.

For one thing, the U.S. Steel and Cliffs investments are built around unusual U.S. trade policies that have driven up prices. An economic downturn could cause Americans to rethink those policies.

New technology requires better trained, better paid workers, but ultimately far fewer of them. Mesabi Metallics will ship 7 million tons of pellets a year with just 350 full-time workers, the most efficient employee-to-ton ratio on the Range.

This sudden burst of investment in Range mines is badly needed and sorely overdue. But those of us affected by the mining economy, and that includes the entire state, need to do more than cheerleading for these companies. We must plan to grow new industries that could take advantage of the availability of higher-grade iron, including potential manufacturing and service-sector innovations.

The Brazilian poet Carlos Drummond de Andrade grew up on rolling hills that would become an iron mine, one that would supplant Minnesota’s natural ore mines in the 1950s. In his most famous work, “The Biggest Train in the World,” he laments the one-time nature of a mining harvest.

“There goes the biggest train in the world

It snakes, it disappears

And one day, I know it won’t come back."