Magnetation secures $325 million for Mesabi Range, Indiana expansions

Though it’s an area that prides itself on its public works, the Iron Range tends to do better economically when private equity moves around. That’s why Magnetation’s announcement yesterday of a $325 million investment in their new concentration plant by Coleraine and pellet plant in Indiana is potentially the sleeper story of the year on the western Mesabi.

Essar Steel is also moving around some private funds by Nashwauk. Point is, two large new facilities that didn’t exist a couple years ago will soon exist and employ several hundred people between the two. We’ve discussed these things in the abstract for a long time, but the logistical end-game will be very helpful to the communities here.

Here is the press release from Magnetation:

GRAND RAPIDS, MN, May 21, 2013 – Magnetation LLC (Magnetation) announced today that it has successfully completed a $325 million senior secured notes offering and has entered into a $50 million senior secured credit facility. The proceeds from the notes offering will be used for capital expenditures to construct a new concentrate reclamation plant northwest of Coleraine, Minnesota and a new manufacturing plant in Reynolds, Indiana to produce high-quality iron ore pellets, a critical steelmaking raw material. Production from the pellet plant will supply AK Steel’s blast furnaces located in Ohio and Kentucky.

In addition, Magnetation announced today that it has received a $50 million contribution from AK Steel as part of AK steel’s remaining $150 million commitment to Magnetation LLC. Thus far, AK Steel has invested approximately $200 million of a planned $300 million. AK Steel will contribute the final $100 million during 2014 or as needed to support the construction of the new pellet plant.

“We are excited to announce that our expansion projects are now fully funded,” said Larry Lehtinen, CEO of Magnetation. “With this financing secured, we anticipate producing high quality fluxed pellets during the fourth quarter of 2014. Upon startup of the pellet plant and Plant 4, Magnetation will become a 4 million tonne per year iron ore producer employing about 500 people, providing high quality iron oxide pellets to AK Steel, low residual iron ore concentrate to AHMSA of Mexico and high grade iron oxides to various specialty market customers. We couldn’t be more pleased with the progress made by all of our team members and stakeholders.”

Between the lines we can now read that AK Steel will remain a very big player in Magnetation’s future, to the degree that the two companies have locked their destinies together to some extent.


  1. Though it’s an area that “prides itself on its public works??”, tends to do better economically when “private equity moves around??”

    Essar Steel is also “moving around some private funds??”

    We’ve discussed these things in the abstract for a long time, but the “logistical end-game??” will be very helpful to the communities here.

    What the heck you talking about Aaron?

    I grew up on the Range and never, NEVER heard words like “prides itself on public works”, “moving around private funds”, nor “logistical end game”.

    To the majority of us, it’s simply companies spending money, investing in capital equipment which they believe will produce a profit to themselves and their shareholders. Fortunately, they’ll also hire people to run and maintain the equipment. Nothing more, nothing less.

    What’s with these goofy words/statements you’re using???

  2. to many big wurds aron

  3. Spoken like a Ranger worth his salt Raamus…thanks!

    You start using big city speak and before you know it, you’re acting worldly…but have never left Kelly Lake, let alone Cherry.

    Don’t get met wrong. I know many big city folk who love, and are envious of us Rangers because of who we are. But conversely, it’s also blatantly obvious, and sad, when we try to be someone we aren’t.

    Back to the point..WTF is Aaron talking about?

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