The Essar Steel project in Nashwauk has progressed since this photo taken last year, but is now at a standstill as the company irons out its half-billion dollar financing woes. PHOTO: Hammerlund Construction
It’s been a big week of economic news on the western Mesabi Iron Range. Late last week, Magnetation LLC, announced it was producing taconite pellets at its Indiana processing plant using iron ore concentrate recovered from Itasca County pits.
“This first production marks another significant milestone in Magnetation’s history,” said Larry Lehtinen, CEO of Magnetation. “The accelerated timeline and safe execution on this project is a testament to the hard work of our partners, stakeholders, and the entire Magnetation team. We look forward to shipping our first train of pellets to our partner and customer AK Steel.”
The pellet plant is designed to produce three million metric tonnes of high quality fluxed iron ore pellets to feed partner AK Steel’s blast furnaces in Middletown, Ohio and Ashland, Kentucky. The plant currently has 117 employees.
In addition, the company is in the process of constructing a new iron ore concentrate plant, Plant Four, near Grand Rapids,Minnesota, to supply additional concentrate to the Reynolds pellet facility. The two million tonne per year plant is scheduled to begin operating in the first quarter of 2015 and will employ approximately 120 people when fully operational.
Garnering far fewer headlines than PolyMet, Twin Metals or Essar Steel, Magnetation has been the silent mining success story on the western Mesabi, growing a workforce of nearly 500 in just the past four years. Just as I was about to write about Magnetation’s quick eclipsing of the much more expensive Essar Steel project in Nashwauk, this announcement came, as reported by Business North:
Essar Steel Minnesota (ESML) has secured the financing needed to complete construction of its open-pit iron ore mine, crushing, concentrating and pelletizing facilities in Nashwauk, the company announced Wednesday.
“With this financing in place, ESML will now aggressively ramp up procurement activities and construction activities at the project site. In the next 30 to 60 days, construction activities at the ESML site will focus on completion of foundational and concrete work before winter freeze-up,” Essar said.
The company has struggled to finance the facility, which will have an annual pellet production capacity of 7 million tons. Last year, construction work halted because contractors were not being paid, but it resumed this summer and will continue when winter arrives. The focus will be on erecting structural steel, installing sheeting on buildings and installing machinery and equipment.
Essar said it intends to produce pellets in the second half of 2015. It has already invested approximately $1 billion in the project, which will have a total cost of $1.8 billion.
Big questions remain. Where did Essar get the financing? What did they agree to in order to free up the funds that had been so difficult to obtain before? Do we know for certain that Essar isn’t packaging the project for sale or partnership? Coming days and weeks will reveal the answers.
Meantime, it bears mentioning that these two projects will generate more than twice the jobs PolyMet says it will create in Hoyt Lakes; some important context for the constant bickering over the issue of mining and the future of the region.
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