Cliffs tests new pellet process on Iron Range

Cliffs Natural Resources officials said Wednesday the company has been testing new, direct-reduced iron taconite pellets at two of its Minnesota plants — Northshore Mining in Silver Bay and United Taconite in Forbes near Eveleth.

The move to a much purer form of iron pellet would open a new market for the company’s taconite iron ore pellets, which now must go to larger blast furnaces to be made into iron and steel. And whatever plant lands the new technology could see a larger work force and more stable future.

More steel companies are using the direct-reduced process of steelmaking since the price of natural gas, used in the furnaces, has dropped in recent years.

Cliffs CEO Joe Carrabba said Wednesday during a media briefing that the company has been making test batches of taconite pellets that could be made into direct-reduced iron in electric arc furnaces.

Carrabba first announced the idea in June, saying the company was looking at spending about $200 million to upgrade one of its taconite operations to produce direct-reduced iron pellets for electric arc furnaces.

“We’re pretty enthusiastic that two of our facilities through tests runs and trials … have the ability to make DRI pellets,” Carrabba said Wednesday.

The company said the key was reducing the silica level of the pellet. It wasn’t yet clear at which of the two Minnesota plants the final DRI pellet improvements might be made.

Other companies also are trying to beef up the iron content of Minnesota ore to make it more valuable and increase markets and production options.

Essar Steel on Monday said it would supply DRI-ready taconite pellets from its new plant going up in Nashwauk, including selling some to ArcelorMittal mills in the U.S.

Mesabi Nugget is producing direct-reduced iron nuggets at its plant near Hoyt Lakes from iron ore concentrate recovered by Magnetation LLC from old waste ore dumps.

“This is an industry that continues to evolve in new technologies,” said Craig Pagel, president of the Minnesota Iron Mining Association. “Nobody is stagnant out there.”

Raw taconite ore is only about 30 percent iron when mined; through processing, it is concentrated to about 65 percent iron content, about the same as natural ore in Minnesota. Iron nuggets are up to 97 percent iron.

Carrabba said an uptick in auto sales and in construction have the company fairly bullish on 2013, when they expect a slight improvement in sales of its U.S. taconite.

Cliffs spent much of the media event talking about its huge expansion at its Bloom Lake iron ore mine in Canada. That project is on hold but is expected to move forward next year. The company said it still expects to be processing 14 million tons by 2015, and Carrabba called Bloom Lake “the future of our company.”

Cliffs also co-owns and manages Hibbing Taconite and owns and operates the Empire/Tilden operation in Michigan’s Upper Peninsula. The company confirmed that the Empire operation will permanently close in 2014 as previously announced.

Cliffs had a much tougher year in 2012 compared with 2011, due in large part to the drop in the global price of iron ore. Full-year revenue of $5.9 billion decreased $691 million, or 11 percent, from the previous year. The lower revenue was driven by a 23 percent decrease in year-over-year global or seaborne iron ore pricing. For the full year, Cliffs recorded a net loss attributable to Cliffs’ common shareholders of $899 million, or $6.32 per diluted share, compared with net profit of $1.6 billion, or $11.48 per diluted share, in 2011.

Cliffs’ global iron ore sales increased 5 percent to 42 million tons and the company’s board approved a quarterly cash dividend of 15 cents per common share.

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