Essar plans for Iron Range pellets in 2017

Iron Range newsThis month another flurry of activity kicked up on the site of Essar Steel Minnesota’s new taconite plant near Nashwauk, Minnesota. But questions remain as to how quickly Essar plans to integrate the Nashwauk plant into its North American steel operations.

This long-awaited, heavily state-subsidized, “might-make-steel-someday-but-probably-not” project has been a major curiosity for residents of the western Mesabi Iron Range, where support has run high for a new taconite mine on the site of Butler Taconite, a casualty of the 1980s American steel downturn. On one hand, large concrete structures have been visible on Essar’s property from miles away for several months. On the other, scattered starts and stops to labor on site have perplexed area contractors and officials.

Essar says the issue has been financing. India-based Essar has sought capital from around the globe to finance the project and hasn’t been able to put the right kind of package together yet, officials say. But a recent influx of money has allowed more serious construction to resume, and the company says it will be done and ready to make taconite by 2015, according to this WDIO story.

But this item from SteelGuru.com approaches the issue from the point-of-view of the steel plant that would receive Essar’s Nashwauk pellets. Essar Steel Algoma recently signed a deal to buy pellets from Cliffs Natural Resources. Asked about that, Essar’s Algoma spokesperson said their contract to receive pellets from Nashwauk doesn’t kick in until 2017.

I don’t doubt Essar would¬†like to be producing pellets in 2015, but they’ve clearly prepared for a situation in which they don’t do so until 2017, 10 full years after purchasing the project from Minnesota Steel Industries, and some 20 years after the idea of putting an integrated mine and steel-making facility on the western Range was advanced. Meantime, their first loan payments will come due and provisions giving them tax breaks for value added iron products will expire without any proof that this is anything other than a traditional taconite plant.

UPDATE: An Essar official has reminded me that Essar Algoma is only one future recipient of Nashwauk pellets; Essar Minnesota also has a contract with Arcelor Mittal that would be in line ahead of Algoma. This would suggest they are invested in the idea of starting production in 2015. That said, I’ve watched this thing practically out my window for a few years now and will need to see more activity to believe that possible.

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