This is the third and, for now, final installment of the randomly occasional “Taking Requests” segment, in which I blog about Range issues on the minds of MinnesotaBrown readers. Today’s topic, at the prompting of a couple e-mails I’ve received, is the Minnesota Steel project near Nashwauk.
For the past decade, the biggest of all the “proposed” economic development projects on the Iron Range has been the Nashwauk steel plant. It’s gone through a few name changes and the details have shifted somewhat, but the idea has always been pretty consistent. Let’s take the ore from the Iron Range and turn it directly into steel right here, saving transportation and processing costs and making American steel more competitive in the global marketplace. For a region that has depended on reliable blue collar jobs like mining and manufacturing, the prospect of union steel mill jobs has been a tantalizing possibility.
This is not a new idea. Some in my family remember the idea of turning the old Butler Taconite site near Nashwauk into a direct-reduced mine and steel mill shortly after they closed the Butler plant in the early 1980s (’83, I think, but my Iron Range Almanac of Plant Closures is in the other room). Today the Minnesota Steel plant is closer to reality than ever. It has its permits. It has an owner, India’s Essar Global, that is experienced in steel making and international finance. It enjoys widespread political and and public support, more so than any other big proposed economic development project on the Iron Range. It also would provide more jobs than any other project and, to me, makes the most logical sense. Why not make the steel here when the ore product is already all heated up and ready to go.
GOOD NEWS (for Minnesota Steel proponents)
- Minnesota Steel secured its permits. In addition to being necessary this also puts the mine/steel plant first in line for construction, ahead of other projects. The untold story in all this development on the Range is that at some point the federal EPA is going to say “no mas” because of our proximity to the protected Voyageurs and the Boundary Waters parks. Provide it’s built in the next year or two, the steel project will avoid this barrier.
- There are, according to a state official, eight engineers from Essar working in Hibbing on pre-construction preparations for the first phase of construction at Nashwauk. These are Essar regulars, not contracted engineers, which to me implies seriousness.
- Despite the bad economy, steel prices are still high and the fundamental motivation for building a direct-reduced steel mill on the Range remains intact.
BAD NEWS (for Minnesota Steel proponents)
- Lots of talk, no shovels. Which means that for all the progress over the past two years there are still the same number of steel plants on the Iron Range as in 1983: zero
- The reason for no groundbreaking is a delay in Essar’s financing, caused in part by global trouble in the banking sector. That global trouble isn’t going away any time soon, so the worry is that this delay could last longer than we’re being told.
- The longer the Minnesota Steel construction is delayed, the greater the risk that the current favorable steel market will enter it’s cyclical downward trend and add further financial barriers to the plant’s success.
- Howard Hilshorst, the northern Minnesota mining executive brought in to steer the project, is no longer with the company. I still don’t know why. Some fear that without a strong local voice inside the room with the Essar executives Iron Range interests might not be represented as well. I still don’t think Hilshorst’s departure is a signal of devastation for the project because there are engineers working on the Range and there remain Iron Rangers doing political work on this; but that’s still not the same as an executive with Iron Range ties.
- Essar also recently bought a low grade steel mill in northern Michigan that functions much like the steel mill proposed for Nashwauk is supposed to. The company itends to begin its northern Minnesota operations by shipping concentrate to Michigan much the way all other Iron Range ore products are shipped east. This begs the unanswered question, “will they follow though in building the Iron Range steel mill if the Michigan option works?” I’ve heard that Essar has signed papers on steel-making equipment intended for Nashwauk, but we won’t know what the company really plans to do until they start construction. A company representative has told the media that the phased introduction of steel-making was always part of the plan, but that’s a fairly predictable response.
Now there are some in the environmental community who would rather the whole thing go away, but this project — unlike Excelsior Energy or even the mineral mines on the east Range — enjoys wide support. Despite my environmental concerns and my outspoken position against public boondoggles, I still think the steel mill is a good thing for the Iron Range. As the cereal commercials say, it could be part of “this balanced breakfast” so long as we remember to include some metaphorical fruit, orange juice and granola in our economic mix.
We’ll see what happens in coming months. If we don’t have financial close and groundbreaking by this summer this project can be considered far less certain than we Iron Rangers have been hoping. The fundamental truth remains: Minnesota Steel isn’t real until shovels start digging.
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