What next for long-suffering Nashwauk mine project?

Construction at Essar Steel’s taconite plant near Nashwauk as seen on Oct. 8, 2015. (Aaron J. Brown)

I drive past the former Butler Taconite mine site near Nashwauk, Minnesota, nearly every day. As such, I have ample time to join my neighbors, local leaders and international iron ore traders in wondering what might happen with the long-stalled construction of a new mine there.

All this comes more than three decades after Butler closed and dismantled the old plant. This historic blow in the economic contraction of the Mesabi Iron Range remains unresolved, a symbol of the automation and consolidation of our region’s dominant industry.

As I’ve explained before, this “new” project — call it Essar; call it Mesabi Metallics, call it Shirley — is much more than just a mine. Rather, it was originally pitched as a generational investment in new value-added iron ore production on the Mesabi Iron Range.

In 2001 I was a young journalist. Back then I watched Power Point presentations by big jammers suggesting that Nashwauk ore would be rolled into steel and perhaps even crafted into pickup trucks right here in the 2-1-8!

No longer would we be a mere mining colony. We would become a hub of industry! The idea was widely shared, widely believed and, if it were a baby, would be old enough to vote by now.

But that talk cooled quickly after investors showed up. Like most mining speculation, promises and projections far outstripped reality.

But *something* happened. Starting in 2007, Essar Steel Minnesota spent a large but hard-to-quantify amount of money building iron ore processing plant structures on the site. The company didn’t finish, but from 2012 to 2015 they erected enormous steel buildings and filled them with actual mining equipment.

Then Essar Steel Minnesota went bankrupt. Four years have passed and still this dream factory rusts in the snow.

Now old Essar investors, working with Nubai Global Investments, hold the former Essar site. How? Cleveland-Cliffs wanted the site for a new hot-briquetted iron project. But a health care executive-turned-mining magnate named Tom Clarke breezed in and won the bankruptcy bid. Then his efforts flamed out in a blazing dumpster fire of missed deadlines and disappearing investors.

Amid the chaos Cleveland-Cliffs bought up critical mine lands around the site, a handcuffing maneuver that now imperils what’s left of the Nubai Investments project.

As I see it, three outcomes are most likely:

  • A taconite plant run by Nubai Global Investments — Mesabi Metallics or whatever the resulting company ends up calling itself.
  • A taconite plant run by the world’s largest steelmaker, ArcelorMittal, or a company set up to serve them.
  • A hot-briquetted iron (HBI) plant run by Cleveland-Cliffs.

I think recent momentum would favor the Cliffs proposal. CEO Lourenco Goncalves has put timely political pressure on state officials. He’s touting his options in other states, namely his announced HBI plant in Toledo, Ohio or the Empire Mine in Northern Michigan. But his company specializes in raw materials: things you feed into mills of all kinds. Increasingly, that’s what this the Nashwauk project is really all about.

If the state really does debar Essar Steel and its investors, the most plausible miner will be Cliffs. It would take a serious amount of money to change that. While ArcelorMittal has enough money, it would be pretty surprising to see them build their own plant in Nashwauk.

Surprising, but also not implausible.

ArcelorMittal is set to take over management of the Hibbing Taconite property it co-owns with U.S. Steel and Cliffs this year. Hibbing Tac has some expensive decisions to make over the next few years.

If production continues at its current high pace, the Hibbing mine would have to jump Highway 169 near Chisholm to access more ore. Or it could press deeper into Hibbing, a move with historical precedent but prohibitively expensive in modern dollars. Hibbing Tac could also press west, but would eventually hit U.S. Steel property and the Keewatin Taconite plant.

Within a decade Hibbing Taconite will need a new ore source. Nashwauk could feed their plant, or a new plant could completely replace Hibbing Taconite someday. In any event, nearly every player in the Nashwauk drama dreams of selling ore to ArcelorMittal.

That means this global giant, mostly mum on the Nashwauk project so far, will have a tremendous say in how the story turns out. In addition, ArcelorMittal nears a takeover of Essar Global. That suggests that all those former Essar investors that Mesabi Metallics claims could either go in with A-M or back out entirely.

But there’s more!

The current management at Mesabi Metallics isn’t going quietly. Essar officials flew into Hibbing on a private Boeing 737 with their own potential HBI investor to tour the Nashwauk project. The only time you see planes that big in Hibbing is when someone is looking for votes. I suspect this is much the same situation.

Point is, that’s a good dose of theater. They might have been assessing the project for development, or maybe they were just seeing what the thing might still be worth. Or they could have been buying time for yet more investors to come in.

Maybe, just maybe, they were divvying up money from a coffee can buried somewhere on the property. I’d believe anything and nothing.

So, this ends up sounding like more of the same. Squabbles over the mineral leases. Promises and innuendo. But we also see signs that the current situation won’t be tenable for long; something should break loose this year.

Either Mesabi Metallics builds this summer, or Cliffs (or, less likely, some third party) move onto the property. Or nothing. A plain of tousled dirt slowly gives way to weeds.

We’re used to that on the western Mesabi.

But some of the best remaining iron ore on the whole Range may be found between Nashwauk and Calumet. That tells us that it’s likely not IF those ores are mined, but when. And when it does happen, it will be swift and efficient — probably at the expense of a less productive mine elsewhere in the region.

Iron Range history: so much strife as red dust escapes our closed fists.


Comments

  1. Makes one long for the good ole days of the Merritt brothers, and governors like Andy McGill and Knute Nelson, who supported business and job growth….and let miners mine. 

  2. If DRI is to come to the Range it is most likely at the Esssar or whatever it’s called today site. Cliffs is fooling itself that they can make DRI quality concentrate at Empire or Northshore economically. The ore at the Nashwauk site is the only ore in quantity in Minnesota that can readily be upgraded to the <2% silica concentrate needed for gas based DRI. When Butler ran the plant was purposely de tuned to make blast furnace grade pellets.

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