A mine or a mill? Both? Let’s make sure

I’ve been holding onto this for a couple days trying to find time to write about it. Check out this June 27 story from the Sault Star (Sault Ste. Marie, Ontario) about Essar’s Algoma steel facility. The Algoma CEO explains Essar’s long range strategy in North America, including its plans for Essar Minnesota in Nashwauk.

Also important to the company’s long-term vision is the massive Essar Steel Minnesota development.

Essar Steel Holdings plans to invest $1.65 billion into the two-phase project, first to get an iron ore mine, shuttered for more than 20 years, operational and producing ironmaking pellets by 2011.

The second-and-final phase would be slab production by 2013-2014.

Groundbreaking on the project was last fall but little beyond site-clearing and engineering has been completed as Essar attempts to nail down financing in difficult financial markets.

Of particular interest to the Sault mill will be the iron-ore pellets.

“Once operational we expect Essar Minnesota to become our primary iron-ore supplier,” he said.

Essar Algoma could also tap into its sister mill’s multi-tonne slabs, which would only need to be reheated prior to being rolled into finished product, but the Sault is not the new mill’s primary slab market.

What I read between the lines, however, is that while the company seems to be hungry to access Iron Range ore reserves there remains a large gap between their motivation to get the taconite and their motivation to build a direct-reduced iron facility in northern Minnesota. This is partially evident in the company’s dealings with Itasca County over a controversial land sale deal. Truthfully, until there is a massive upswing in the steel market like what we saw two years ago I don’t know how any CEO green lights a steel plant at Nashwauk.

The point is that the people and leaders of the Iron Range need to proceed with caution and think like CEOs. We are the chief executive officers of our land and our society. Like a good CEO we must never relent in the defense of our interests and the value of our people and cherished institutions. I’m not saying there won’t be a steel mill at Essar’s facility, just that there are now questions and that a backup plan — economically speaking — is not only a good option but a necessity.

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