Essar cites progress, with a twist in Range steel mill hopes

The Duluth News Tribune reported on the construction status of Essar Steel Minnesota’s new taconite plant in Nashwauk, very near the former location of the old Butler Tac plant. Butler’s closing was perhaps the biggest symbol of the Iron Range’s 1980s collapse. The prospect of reopening a mine there and maybe even making steel on the western Mesabi some day has been the region’s most symbolic hope, sometimes to the detriment of economic diversification and planning.

The John Myers report in Monday’s DNT indicates that India-based Essar is more optimistic than ever about completing their taconite plant in time for production next year, feeding pellets to its eastern Lake Superior steel mill near Sault Ste. Marie. However, Myers writes that the company continues to be vague about its plans to complete the second-phase steel mill at Nashwauk, the ever-elusive goal of producing steel at the mouth of a Mesabi Iron Range mine. Essar’s CEO says maybe 2015, but in truth the whole idea of a steel mill would require an increase in domestic steel demand.

Allow me to translate that. There will be no steel mill at Nashwauk unless there is a sustained increase in steel prices from their current historic highs. This is possible, but not guaranteed. This is the first public admission of this economic reality I’ve seen.

Nevertheless, we might be mining hard rock taconite on the west Range next winter and that could have huge economic implications in the short term, so long as the disruption to the local market doesn’t cause another mine to close. Essar’s current plans would put them in contention to compete with Hibbing Taconite for the title of second-largest Range taconite producer, well ahead of four other established mines but behind the mighty MinnTac.

Hold on tight. The next few years on the Range will be interesting.

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