COLUMN: A magnetic pull to the future

This is my Sunday column for the April 22, 2012 edition of the Hibbing Daily Tribune. I’ve included some photos I took during my visit to Magnetation that did not appear in the newspaper.

A magnetic pull to the future
By Aaron J. Brown

Along the shore of the Lind-Greenway Pit a rusted steam shovel stands sentry over a landscape marked by decades of mining and the quiet that comes after mines close. This antique now serves a useful landmark for workers and writers alike, as a rebirth of iron mining and processing walks the western footprints of the giant Mesabi.

Matt Lehtinen, President of Magnetation, recently took me on a tour of the Grand Rapids, Minn.-based company’s Itasca County properties. Magnetation has generated headlines and hundreds of Iron Range jobs over the four years since it broke ground on its first scram mining plant near Keewatin. The scram mining operation collects overburden left behind from 1910 until the ‘60s, when the richest natural ores were exhausted and replaced by the lower-grade taconite used in today’s steelmaking.

Lehtinen said the steam shovel was an apt metaphor for his company’s goals: to reclaim value from material abandoned as waste. And the amount of activity on these tired old mine sites now owned or leased by Magnetation is eye-opening.

Those familiar with traditional taconite mining can probably picture the massive 240-ton haul trucks toting jagged rock between giant processing plants and mine pits bigger than most towns. Magnetation’s operations hearken photos I’ve seen of old mine days: diesel excavators scrape ore right off the ground to load smaller trucks – about 40 tons each – which then zip down tree lined dirt paths into smaller processing plants. The biggest difference is the sophisticated technology inside, still sporting fresh, brightly-colored industrial paint, and the fact that few, if any, of the workers speak Finnish, Croatian, Slovenian or Italian with the same authority as their ancestors.

The company now operates two ore recovering and processing sites in Keewatin and near Taconite. It’s also opened a railroad load-out near the old Jessie Mine in Grand Rapids which feeds an steel plant in Mexico. Additional mining is also planned there. In addition, they are currently expanding a new extraction site with Steel Dynamics near Chisholm.

And while the company is profiting from its scram mining operations with the high demand for iron ore, it’s also girding for changes in the marketplace. Lehtinen, scion of a mining family, said industry experts predict a decline in iron ore prices around the year 2015. Key to Magentation’s efforts to survive this is a new processing plant that will produce iron pellets similar to the ones produced at taconite plants, although derived from a different process.

Lehtinen showed me the site near the Jessie Load-Out where the plant might be located, but they are also considering sites in Superior, Wisconsin and Indiana where he said permitting environments are more favorable. So far, Magnetation has capitalized quickly on relatively easy permitting for scram mining. Building a plant or reopening old mines – another long term goal – would require the more detailed permitting process that has slowed down other projects, such as the nonferrous mines on the east Range.

One big difference here is the fact that Magnetation seeks only to mine where there has already been mining and will not expose sulfides. A recent bill by Rep. Tom Anzelc (DFL-Balsam) would help them acquire permits, Lehtinen said, but he also said redundancies in the process must be removed. The issue is time. A delay in getting the pellet plant into operation could threaten their business plan if ore prices dip, Lehtinen believes. Nevertheless, the company purchased the potential plant site along with more than 1,000 acres of land in Itasca County, the ore is close, and Minnesota officials desperately want to keep the plant here. Itasca County seems the logical place for Magnetation to locate its plant.

Add to the equation Lehtinen’s hopes to mine mid-grade ore just below the ground near the Lind-Greenway pit where that old shovel coughed its last gasp, and you can see the implications. One plan would even dewater the infamous Canisteo Pit for mining, long a contentious issue for water-logged homeowners in Bovey.

Magnetation has encountered growing pains as well. Dust blowing off Plant 1 caked Keewatin, to the point that one summer one could not own a white dog within city limits (a pink dog, yes, but not a white one). Red stains on the highways first reminded people of the bustling mining economy of the early ‘50s, before reminding them also that such work was inherently dirty. Lehtinen took great effort to point out the many dust control and cleaning techniques now employed to avoid that happening in the future. Hay bales are spread everywhere and workers rinse the tires of every truck that leaves the property. They’re the process of rebuilding and paving many of their high traffic roads on site.

Like other promised developments, the company has also enjoyed significant IRRRB financial support in getting off the ground. This is the agency that manages the Iron Range’s unique mining tax source that services in place of many local property taxes. Thus, Magnetation’s flirtation with other states for its pellet plant has angered many, and locating elsewhere would cause a ruckus.

While Magnetation relies on its modern technology to stay profitable, the core of its current efforts are more like red ore mining than anything seen since my grandfathers were my age. The shovels, trucks, trains and concentrators are running, and will as long as the company achieves vertical integration with its pellet plant.

“We’re not interested in a big flash in the pan,” said Lehtinen. “We’re interested in a sustainable business plan through the up and down cycles of this industry.”

If that proves true, one of the biggest new companies on the Range in the 21st century might not be one of the lofty proposals that now live in schematic drawings circulated in economic development circles, but a local company that built itself on the bones of what was already here.

Aaron J. Brown is a writer and community college instructor from the Iron Range. He writes the blog MinnesotaBrown.com and hosts the Great Northern Radio Show on public stations like 91.7 KAXE.

CORRECTION: An earlier version of this piece contained errors. Matt Lehtinen is President of Magnetation, not CEO. The Mexican steelmaker that buys Magnetation concentrate is Altos Hornos de Mexico, not AK Steel. AK Steel is the potential customer of the future Magnetation pellet plant.