Construction is accelerating at the long awaited $1.9 billion Essar Steel Minnesota mine near Nashwauk, while Essar now says it's optimistic about producing direct reduced iron products here.
In a tour of the Northern Minnesota site on May 21 with Mitch Brunfelt, Essar's assistant general counsel and director of government and public relations, I took pictures and observed progress at the site of the biggest construction project on the Mesabi Iron Range in a generation. This is currently the largest greenfield construction project on the continent, and it's hard to understate the sheer size, commontion, and labor involved. The site produces a steady drone, easily heard from my home eight miles away.
After years of starts and stops, Essar now says it is finally fully financed and has increased its contractor workforce at the site. About 400 workers were on site the day I visited. Brunfelt said they will soon see 600-800 workers on site each day as summer arrives in force.
Essar has officially amended its construction timeline to reflect the realities of the company's progress. Brunfelt said Essar engineers are now eying production of taconite by late June or July of 2016. This is a revision from earlier projections to be making pellets by the end of this year, a claim that didn't seem plausible to most observers. Based on the amount of work I saw, however, the new completion date seems possible.
I asked about rumors of other mines looking to buy into the Nashwauk project. Brunfelt said Essar, a privately held company, is not looking for partners and plans to operate this taconite plant on its own. They have off-take agreements to send the initial annual capacity of 7 million tons of pellets to Essar's Algoma steel mill in Sault Ste. Marie, Ontario, on the east end of Lake Superior and to Arcelor-Mittal, the world's largest steel company with mills in North America.
One of the most interesting things I learned on this tour was that Essar claims their pellets will be the lowest-cost pellets in North America, which Brunfelt said will protect this new plant's viability in the ongoing consolidation of the global steel market. Brunfelt would not reveal their target for cost-per-ton, but said that efficiencies adopted in a new taconite mine will make their pellets more affordable than any others on the continent. And, the big story, rumors that Essar was abandoning direct reduced iron, or "value-added," are false, Brunfelt said.
"Our firm position is to get this [taconite plant] done first," said Brunfelt. We're optimistic about a value-added product. It's going to take time."
Brunfelt said Essar is already permitted for 1.1 million tons of direct-reduced iron, the site is already designed to add that capacity, and the company's international parent has experience running DRI facilities. One of the initial challenges will be the fact that Essar will need to increase its taconite production capacity to produce the new DRI materials. Brunfelt said that regulators will want to observe normal operations for a couple years to obtain environmental data to determine if the company will receive the OK for additional production. If that happens, Brunfelt said the plant would produce 10-14 million tons of ore annually, some of which would feed into new DRI operations.
Regardless, Essar will be able to produce different kinds of pellets at its new plant right away — ranging from traditional blast furnace pellets common to Range mines, to a "flex" pellet, to the direct reduced grade pellets used in newer electric arc furnaces.
See more May 21 photos of Essar Steel Minnesota's ongoing construction project, along with other observations at my blog.
PHOTO: The aggregate and ball mills at the new Essar Steel Minnesota construction site near Nashwauk on the Mesabi Iron Range as seen on May 21, 2015, Aaron J. Brown.