Northeastern Minnesota iron ore pellet production on the increase

11 December 2017

Iron ore pellet production at northeastern Minnesota taconite facilities took a step forward in 2017.

Pellet production at the six plants is forecast to reach 36.6 million tons in 2017, according to the Minnesota Department of Revenue Minerals Tax Office.

It’s the highest annual total since 2014 and a dramatic improvement from 2009 when a minuscule 17 million tons were produced during a nationwide steel and taconite industry downturn.

“It’s a cautionary tale of optimism,” said Kelsey Johnson, president of the Iron Mining Association of Minnesota. “It’s slowly coming around, but there are still pressures much bigger than northeastern Minnesota.”

Iron ore pellets produced at northeastern Minnesota mines are the primary ingredient used to make steel. Steel made from Minnesota iron ore is turned into automobiles, trucks, bridges, appliances, pipe, buildings, and other steel products consumed across the nation.

The 36.6 million tons is roughly 7.6 million tons above the 29 million tons of iron ore produced in 2016. The 2016 total included about 1.1 million tons of iron units from the former Magnetation facilities.

Two plants idled during portions of 2016, U.S. Steel’s Keetac plant in Keewatin and Cleveland-Cliffs’ United Taconite in Forbes and Eveleth, both made comebacks in 2017.

Production of 4.4 million tons at Keetac and 4.3 million tons at United Taconite account for the boost in industry production compared to 2016.

“It’s a good sign, but not a great sign,” said Johnson of the increase. “Some folks are still struggling and there are still mining facilities waiting to come back up.”

The Magnetation plants on the western Iron Range, now owned by ERP Iron Ore, along with Mining Resources in Chisholm, and Mesabi Nugget near Hoyt Lakes, remain idle.

ERP Iron Ore plans to restart Magnetation’s iron unit recovery operations and also plans to produce 7 million tons of pellets per year at the former Essar Steel Minnesota project near Nashwauk.

An increase in DR-grade pellet production at Cleveland-Cliffs’ Northshore Mining Co. in Silver Bay and Babbitt and the production of a higher-grade pellet called the Mustang pellet at United Taconite, are two promising additions to the industry, said Johnson.

“It’s a very exciting transition,” said Johnson of the projects. “I think 2018 could bring about some very amazing opportunities and we need to go out of our way to support the innovations occurring across the Range and those operations that are idle to have a voice and come online again someday.”

The production increase has corresponded to a boost in iron ore shipments from docks in Duluth and Superior, said Adele Yorde, Duluth Seaway Port Authority public relations director.

Through October, 15.6 million tons had been shipped from the Twin Ports compared to a total of 14.7 million tons in 2016. Shipping continues to mid-January when the Soo Locks close.

“We end up seeing those shifts in production in terms of tons,” said Yorde. “It’s a huge climb, but we still have a ways to go to get back to where we were when were shipping 18.5 million tons before 2009.”

Shipments for the year from Two Harbors were over 1.9 million tons through October, according to the Cleveland-based Lake Carriers’ Association. A little more than 1.7 million tons was shipped from Two Harbors for all of 2016.

The 2018 forecast for iron ore pellet production is also solid.

Production is forecast to reach 36.8 million tons, according to the Minerals Tax Office.

However, the industry still faces several issues.

Action by the Trump administration on a Section 232 investigation which examines the impact of steel imports on national security, hasn’t advanced.

U.S. Secretary of Commerce Wilbur Ross, a former steel industry executive, has said a Section 232 report would be delayed until federal tax reform was resolved.

“We’re pushing hard to get that (Section 232) done,” said Johnson. “It would finalize work that the Obama administration did. We’re surprised that the Trump administration, in its ‘Make America Great Again,’ has put it on the back burner.”

Sulfate rules for water discharged by taconite plants, municipal wastewater plants, and other sources, remains in debate.

And earlier this year, analysts said world iron ore prices would fall in fourth quarter of the year. However, a big dip in prices never materialized. Prices this week stood at about $69 per ton.

Analysts now predict a price decline in early 2018, said Johnson.

2017 northeastern Minnesota iron ore pellet production

• ArcelorMittal Minorca — 2.550 million tons
• Hibbing Taconite — 7.2 million tons
• Keetac — 4.4 million tons
• Minntac Mine — 13.250 million tons
• Northshore Mining Co. — 4.9 million tons
• United Taconite — 4.3 million tons
• TOTAL — 36.6 million tons

Source: Duluth News Tribune