KEEWATIN—The potential economic impact of a new taconite pellet plant and future plans for a green steel initiative proposed by Mesabi Metallics were the topic of a town hall meeting held on Monday at the Keewatin City Hall.
Mesabi Metallics CEO Larry Sutherland and Greg Heyblom, a leader of the group Build Mesabi, Build Itasca Committee, led the presentation that included information on progress on a direct reduction pellet plant being constructed by Mesabi Metallics on the former Butler mine property near Nashwauk, and the company’s need for public support of future plans for a green hot rolled steel plant on the Range.
The benefit to local school districts, Itasca County, and the State of Minnesota, along with job creation, and a potential to expand the steel industry on the Range were part of the discussion.
Sutherland explained that Build Mesabi, Build Itasca is a team of citizens that are passionate about this project that help us present the project and weigh in on their thoughts about it.
“The passion that drives me with Mesabi Metallics is the fact that it’s going to be such a major impact for Itasca County, for our schools and our cities, and the state of Minnesota,” Heyblom, a Nashwauk City Councilor said.
“In 2008 I was there when they had the golden shovels with essar, been involved with the city of Nashwauk since 2008,” Heyblom told the audience. “What is the major difference right now—there is a genuine interest in the communities and Itasca County by Mesabi Metallics. Their engagement is a lot more than it was.”
Once a month Ravi Ruia, Co-owner of Mesabi Metallics comes in and visits the site in Nashwauk, visits with local leaders, and gives an update on the project, Heyblom noted.
Mesabi Metallics is in the process of building a 7-million tons per annum taconite mining and pelletization project in Nashwauk.
A presentation at the event on Monday included photos of the ongoing progress, including construction of the Critical Path Concentrator, and other components key to the pellet making process.
Right now Mesabi Metallics has $575 million worth of steel and equipment that’s ready to be installed at the site, and is being housed onsite and at warehouses in Canada and the U.S., according to Sutherland.
The equipment undergoes routine inspections and rotation of the bearings, he noted.
Sutherland on Monday said the project is over 50% complete with an investment of $1.7 million with about another $800 million to go.
This past construction season Essar spent $30 million on construction of the concentrator at the pellet plant, according to Sutherland.
We have $575 million worth of steel and equipment being ready to installed 35 warehouses mostly onsite, but some in Canada and Brainerd, he noted.
Mesabi Metallics recently submitted a permit to mine amendment pre-application, which Sutherland said gives the state an opportunity to look at its business plan, and determine if it’s going to require a broader environmental review or a minor review.
As of Monday, Sutherland said there was no timeline for completion, and that Essar is aligning the construction schedule to the reissuance.
“I feel in a couple of months, we should have more guidance with working with the agencies,” Sutherland said. “As we sit here today, I’m not sure of that time spread.”
Sutherland said the goal is to be completed in 2026, depending on the permitting process.
Once the plant is up and running, Sutherland estimates it will create an estimated 450 to 500 union steel worker jobs. That’s in addition to trade unions providing maintenance work at the plant, he noted.
The tax impact of the completed plant consists of an estimated $12 million in royalty payments, $16 million taconite production tax, and close to $11 million per year in occupational tax, for an estimated total $40 million year direct potential impact on Itasca County, State of Minnesota and school districts in Itasca County, according to Sutherland.
Heyblom also mentioned potential for revenue from Minnesota School Trust Lands in the project area, which would benefit all school districts in the state and the University of Minnesota.
Sutherland addressed concerns about competing with other mines in the area. He noted that the U.S. imported about 22 million tons of steel, adding there’s room in its markets including Canadian producers.
Green Steel Initiative
Mesabi has approximately nine to 10 years of its own real estate and leases to mine, and has its eyes on additional Minnesota DNR leases to bring into the footprint in the Butler Corridor, according to Sutherland.
The total cost of the green hot band steel would add an additional $4 billion to $2.5 billion cost of the pelletizing plant.
There is a potential for 2,000 steel worker union jobs if Essar expands to hot band green steel. That’s not including construction jobs or trade jobs to do maintenance once the plant is operational.
The environmental benefits of the green steel initiative come from reducing the carbon produced in the steel making process.
Sutherland said the traditional method of making steel through a blast furnace, using coking coal to fire the pellets, produces roughly 2 tons of carbon per ton of liquid steel. The green steel initiative uses hydrogen to power the blast furnace, and drives the amount of carbon down to .3 tons per ton of liquid steel, he noted.
“So that’s our intent here is to have true green steel and drive that carbon out,” he noted.
Sutherland credited the late Minnesota State Senator David Tomassoni and former Minnesota State Senator Tom Bakk, who is now a consultant for Essar, along with other legislators for Essar obtaining the permits necessary to go to cast steel and liquid steel.
Green steel could lead to other manufacturing spin-off industry if Essar moves forward with producing hot band steel right on the Range, noted Sutherland.
“I think there’s a whole revolution that could happen because of us going through liquid steel and hot band right here on the Iron Range.
Looking forward
Sutherland addressed concerns people have raised to him about Essar’s past financial problems.
“It wasn’t good, bankruptcy is never good,” Sutherland told the audience on Monday, then adding major contractors on the project that have since been “made whole.”
He noted at one time there were seven major steel companies that owned and operated taconite facilities (none of them are the current owners), and the only one left is U.S. Steel. He went on to list a number of mining companies that went bankrupt, consolidated or sold their assets, or went bankrupt and went out of business.
“These are the companies that are no longer here,” he said. “We’re not the first ones, Essar is not the first company that ever went bankrupt on the Iron Range.”
“If people want to hold that against us, hold it, but I suggest that we move forward with this facility, like we’re planning to do,” Sutherland said. “It’s about jobs.”’
Essar about a year and half ago paid down $26 billion in debt, and is basically debt free right now, Sutherland noted. He said the company sold off some of its interests to pay off its debt.
The need for support
People attending the meeting on Monday were urged to contact elected officials at the state level to support the Essar project.
