Nashwauk is just one push pin on a big map for global steel company

It’s been said before, but Essar Global’s ongoing purchase plans of the Minnesota Steel project — a proposed iron mining and steel-making operations near Nashwauk — sends the Mesabi Iron Range deep into the complicated global steel market. For two decades, Iron Rangers have come to view the prospective mine and steel mill on the old Butler Tac site as a good “jobs” project, one that would make steel in the same place where ore is mined. Reading these world headlines about Essar’s activities in North America shows me that we don’t yet fully understand the long term goals of this company in our area, other than they need our ore — just as all the other steel companies have needed our ore since the 1890s.

Close observers of this story knew that after Essar bought Minnesota Steel, they bought Algoma Steel in Michigan, a facility that processes iron ore much the same way the proposed Nashwauk steel plant was supposed to do itself. Now, Essar is vying for Esmark Steel, a Chicago-based steel company with customers throughout the continent. So Essar now holds ore interests, steel plants and a distribution system — just like Rockefeller and Carnegie did back in the old days.

First, this business story from the Hindu Times of India:

Essar Steel consolidates presence in N. America

Mumbai, May 2 — US-based Esmark, which the Essar Group is set to acquire with an enterprise value of $1.1 billion, is part of a well-planned strategy of the Indian steel maker to consolidate its presence in the controlled and well-protected North American steel market that is estimated to be over $100 million tonnes (mt).

Esmark will be Essar’s third acquisition in the North American and Canadian markets — it had acquired Algoma Steel for $1.6 billion and Minnesota Steel for an undisclosed amount in April last year.

With this acquisition, Essar will have a production capacity of 7 mt in the North American and Canadian market — 4 mt from Algoma and 3 mt from Esmark. Significantly, this is higher than that its current production capacity in India, which is at 4.6 mt.Market presence

Although Essar Steel has been exporting to the North American markets for some years now, it became clear to the company that to consolidate its presence in that market, it had to be physically present there. This was because the US steel market, which is one of the world’s largest, is known for its protective nature.

Then, today, we learn that the Steelworkers union may battle the Esmark sale over contract issues. This May 3 story shows some of the seeds of discontent. We also learn that Esmark controls steel facilities throughout the Rust Belt. Essar could conceivably hold a piece of all of the major mining and steel-making regions in the United States if these deals go through. That’s not necessarily bad, but it would be foolish of us Iron Rangers to assume we are Essar’s top priority. As future negotiations with this company play out, we need to make sure that our interests — steady jobs, fair payment of taconite taxes to fund our schools and communities, and good business and environmental practices — are represented at the table.

As far as whether Minnesota Steel ever makes steel or not, well, it would appear that the answer depends far more on the American economy than the continued growth of India and China. Essar is trying to break into the Indonesian steel market, which would provide a much more economical way to feed the steel demand in huge, growing Asian nations. (Just look at how convoluted the Indian steel market is right now; all of this now affects people sitting at the Wauk-In cafe in Nashwauk). If the U.S. needs steel, an efficient direct-reduced steel plant in Nashwauk will be very successful. If the U.S. economy falters more then it may be many years before demand gives Essar the reason it needs to continue onto the final phase of Minnesota Steel: the phase that includes actual steel production. Until then, it may just be another mine with far fewer jobs than we had originally hoped for.

Welcome to the new world order. Find yourself a Hindu translator and get ready for an interesting decade in northern Minnesota.

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