Empire Mine backers pitch future project to Cliffs

Community members in Marquette, Michigan, pitch for Cleveland-Cliffs to locate at the old Empire Mine rather than in Minnesota. (PHOTO: screenshot from NBC6, Upper Michigan’s Source)

Workers and local leaders in Northern Michigan want Cleveland-Cliffs to locate its next value-added iron plant in the U.P. rather than here on Minnesota’s Mesabi Iron Range. A community group in Marquette began organizing efforts to woo the mining company to its historic home in Michigan.

This brings another twist to the ongoing saga over what the venerated mining company will do next in its future development of value-added iron ore products.

Quick background. Classic blast furnaces use taconite pellets to make steel. But newer style electric arc furnaces, which are rapidly becoming the industry standard, use higher grade iron nuggets. It’s still iron, just processed differently.

While the Mesabi Iron Range boasts the best iron ore in North America, its entire infrastructure remains tied to taconite production, feeding older steel mills. To prepare for the next generation of steelmaking, Minnesota mines must begin making new products.

And they are. Slowly. Cleveland-Cliffs announced almost two years ago the desire to build a direct-reduced iron plant in Minnesota.

But, earlier this year, Cliffs broke ground on an iron plant in Toledo, Ohio. CEO Lourenco Goncalves said that plant could have been in Nashwauk. But a federal bankruptcy court gave the former Essar Steel project to Tom Clarke and other investors. That group now struggles to escape controversy and accusations of shady financial dealings back in the states of Virginia and Indiana.

I haven’t written about the situation at the former Essar site because the situation surrounding Clarke, his companies, and investors is just too complicated for me to write about in depth in my current work flow. Business North and the Duluth News Tribune have reported on the story, which was kicked off by a rather mixed national story by Bloomberg news.

Nevertheless, it looks like something’s going to change sooner than later. Gov. Mark Dayton and state officials will not have much patience if Clarke can’t deliver construction progress this summer. Meantime, Cleveland-Cliffs is actively weighing its next advanced iron ore plant location.

I’ve already written about Cliffs’ land and lease acquisitions in Itasca County. The story keeps piling on drama, even invoking Chewbacca from Star Wars at one point.

Does Empire really stand a chance of winning the bid for Cleveland-Cliffs’ next big project? That’s hard to say. The ore is better in Minnesota. However, Michigan sits closer to the nation’s steelmaking and manufacturing base.

Either way, this story provides another twist in the depressing tale of many failed attempts to revive the former Butler Taconite property in Itasca County.

That story will come to a head this summer. If Cleveland-Cliffs has its way, the company will control the situation in Nashwauk by Labor Day. Or else they may well look to Michigan next.

It wouldn’t surprise me if the Michigan story is being floated as an option, something to jar loose the sticky situation here in Minnesota. The clock is ticking. Steel and iron ore markets are hot now. If the market drops before this is sorted out, all momentum would be lost.

Again.


Comments

  1. Jutta Schultz says:

    If Cliffs had not interfered in the process, the mine would be active…but he(Goncalves) thinks that he is the only one who can run a mine around here…I call that a Monopoly and I don’t like it.

  2. John Calene says:

    @Jutta Schutz – I do not agree. The fundamental issue causing delay is that Clarke did not have the funding to back his bid, and has a long and established history of not fully meeting his obligations. Cliffs did not “interfere”. Clarke missed a deadline, and Cliffs, with a need for quality ore for future growth, stepped in and bought/leased property fair and square. Moreover – if Clarke had not made a fraudulent bid to begin with, it is Cliffs which would have invested its money in Nashwauk, instead of in Toledo, where work is well underway now.

    • Mike D. says:

      Dead on assessment Schultz….. TC made a bid that he did not have the financing to support, and he well may never have. Whereas Cliffs has been an employer in Minnesota for a very long time, You’re also correct in saying there would be construction of the first HBI Plant in the Great Lakes area happening right now, on the Iron Range, and by an American company, with American financing.

  3. Joe musich says:

    Ah ! The old divide and conquer.

  4. Mike D. says:

    Dead on assessment Schultz….. TC made a bid that he did not have the financing to support, and he well may never have. Whereas Cliffs has been an employer in Minnesota for a very long time, You’re also correct in saying there would be construction of the first HBI Plant in the Great Lakes area happening right now, on the Iron Range, and by an American company, with American financing.

  5. Just a minor correction in AB’s third paragraph: EAF’s use iron & steel scrap as feedstock, and only some use ore-based metallic iron products like DRI/HBI or pig iron as a supplement to scrap (in particular, those making high-end steel products like flat-roll for automotive, and special quality bar and wire). No one is making or using “iron nuggets”. “Iron nugget” technology as attempted by SDI at Hoyt Lakes, MN failed miserably, and is unlikely to ever be reactivated or attempted by others (Kobe no longer promotes it). It has come and gone, so don’t dwell on the past. A similar pig iron product with a totally different proven technology has been around commercially for some time, called “granulated iron” and is used in EAF’s in several locations in Scandinavia but volumes are low in comparison to pig iron globally. Pig iron in block bar and pyramid shapes still rules the day for the most traded and highest quality iron supplement to scrap in the EAF. DRI/HBI contains gangue oxides, and therefore has lower iron content than pig iron, and sells at a discount to pig iron.

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