Magnetation to shut down operations

Magnetation is a scram mining and value added iron ore mining and processing company based in Northern Minnesota. (PHOTO: Magnetation)

Magnetation is a scram mining and value added iron ore mining and processing company based in Northern Minnesota. (PHOTO: Magnetation)

A U.S. bankruptcy court ruling today released AK Steel from its contract with Magnetation, effectively ending the Grand Rapids-based mining company. Efforts by Magnetation officials to find a buyer for the project before this outcome were unsuccessful. Business North reported this week that Magnetation’s chief prospective buyer walked away from the project.

The company will now proceed with closing Plant Four near Grand Rapids — its last still in operation — and its Reynolds, Indiana, processing plant. More than 500 workers will ultimately be affected by the closure of Magnetation. Plants 1-3 had already closed over the past several months amid a collapse in commodities markets.

Magnetation management will continue seeking a buyer in hopes the plant could reopen at some point under new ownership. However, once production stops it would take a specific opportunity to attract new customers to a cold plant.

Though the iron ore and steel crisis of last year has mostly abated, this is another clear sign that the industry remains vulnerable, especially along the periphery. Magnetation was a specialty company, an innovator of new technology that expanded quickly and got caught in the exact wrong market conditions.

While Cliffs-owned properties United Taconite in Eveleth and Northshore Mining in Babbitt and Silver Bay reopened this summer, U.S. Steel’s Keewatin Taconite remains closed. Mesabi Nugget near Hoyt Lakes shut down last year and has little chance of reopening soon.

The business is contracting. The mining companies that feed the remaining customers will survive, but every time the music stops another chair is removed. Added to the mix is the fact that newer steelmakers want a product that most Iron Range mines can’t make yet — direct-reduced iron. Upgrading Mesabi Range mines will take billions of dollars.

It could happen. But one quickly sees that market conditions aren’t good enough … not yet. And we’re not sure when the tables will turn.


  1. Janet Hodnik says

    Is the business really contracting or is China flooding the market?

    • Iron ore from Minnesota is on a long term spiral down. Minnesota pellets can only be used in blast furnaces to make iron. There are only about 18 of these furnaces left operating in the USA compared to over 35 fifteen years ago. These are the biggest and best, by and large, but the numbers tell the tale. The number operating also goes down one or two furnaces every few years. No one has built any new ones in the USA since the early 80’s.

      In 1976 about 10% of the steel made in the USA was recycled from scrap. That number is now pushing 70%. The total amount is still about the same. This, more than imports, has severely hurt the iron mining industry.

      • Every downturn in the business we loose one or two taconite plants. In the 1980’s, it was Butler Taconite and Republic in Michigan, along with several small plants in New York, Pennsylvania, Wyoming, California, and Canada. In 2001 it was LTV Steel Mining. This time it was Empire in Michigan, Magnetation, and, maybe, Keetac. Essar was also stillborn, but that wasn’t really a loss since it never ran.

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