Financial Times explores Essar project

The temporary welcome sign for the Essar Minnesota construction site near Nashwauk, Minnesota, as seen on Thursday, May 21, 2015. The agglomerator building and stack can be seen in the distance. (PHOTO: Aaron J. Brown)

The temporary welcome sign for the Essar Minnesota construction site near Nashwauk, Minnesota, as seen on Thursday, May 21, 2015. The agglomerator building and stack can be seen in the distance. (PHOTO: Aaron J. Brown)

The new Essar mine project near Nashwauk has attracted the attention of the Financial Times of London. This summer, Financial Times reporter Aaron Stanley visited the Essar construction site and interviewed both local and international sources on the conditions facing this long-awaited new iron mine on the Mesabi Iron Range.

You can read the Aaron Stanley story at the Financial Times.

In essence, the story winds its way through the global challenges in iron ore supply and demand, low iron ore prices and the unique situation facing Essar here in Northern Minnesota.

I visited the Essar site shortly before Stanley did, filing this report and writing this column for the Hibbing Daily Tribune.

I found this excerpt from the Financial Times story fascinating. First, Essar remains optimistic about its entry into this perilous marketplace.

“For us, the market is regional,” said Madhu Vuppuluri, chief executive of Essar Steel. “Due to the infrastructure revival that is likely to take place here in North America, the US and Canadian steel industry will remain robust moving forward.”

In 2013, the American Society of Civil Engineers estimated that $3.6tn in investment was needed by 2020 to return US infrastructure to its optimal state.

That $3.6 trillion investment lines up with the crisis facing the American steel industry and Iron Range mines in particular. The whole enterprise requires massive upgrades to facilities to accommodate new direct-reduced iron technology and more efficient, versatile steel mills.

And yes, this is another time where one may deploy that overwrought saying that “the Chinese symbol for crisis is the same as the one for opportunity.”

The question is where is that $3.6 trillion going to come from? Whomever or whatever puts up that money will end up with a tremendous amount of control over the industry. In the old days, you’d say U.S. Steel would swoop in and lead the charge, but USS not in the same financial or market position it was in the good old days.

Once again, the iron industry is approaching another contraction and reorganization. It won’t bring the end of mining here on the Iron Range, but it will bring change. This change will make Range mines more efficient, mining jobs more complex and technical, and employ fewer total people. If you want evidence, see the last time this happened. Or the time before that. Or the time before that.

Comments

  1. oldtriumphguy says

    Unfortunately, we’re more likely to spend money on infrastructure in the middle east than here at home.

  2. With the current environment involving mining who would feel comfortable banking on politicians getting together and passing an infrastructure bill? I hope Essar does well but with the war on mining, logging and oil/gas by the liberals and their Green groups I can’t see it happening. Where do the liberals think that all the steel they want for infrastructure comes from, the moon? They do everything they can to shut down steel plants but want trillions spent on infrastructure projects. Hard to understand!

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