A year-old company said it plans to build a demonstration plant near Coleraine showcasing its ability to produce lump and sinter ores from piles of hematite left behind decades ago by former mines.

Prairie River Minerals' new CEO Larry Sutherland, who recently retired as the general manager of U.S. Steel’s Minnesota Ore Operations, said the company wants to start construction on the multimillion-dollar plant at one of the former Magnetation/ERP Iron Ore properties, near the Jessie Load-Out facility, by the end of the month.

Prairie River bought the Jessie Load-Out facility and Plant 1 for $1.95 million in federal bankruptcy court last year after ERP Iron Ore went bankrupt. Magnetation, which also went bankrupt, owned the properties before that. Prairie River formed in January 2019.

Sutherland said his hope is that by the end of August, Prairie River will start producing several hundred thousand tons of lump and sinter ores per year as a “trial product“ for interested customers, taken by rail from Coleraine to ports and then shipped to steel companies.

Sutherland would not say who those interested customers are, but if they like what Prairie River makes, it would likely expand the plant. The demonstration plant would initially employ about 24 people.

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Unlike the other mines and processing facilities on the Iron Range, it would not be producing iron ore pellets from mined taconite. Like pellets, lump ores — rough chunks of iron ore — can be added directly into a blast furnace, while sinter fines — iron ground down into a powder — must first be sintered in combination with other materials at high temperatures before it can be added to a blast furnace and turned into steel.

“The ore (is) there, it’s already been removed from the ground, it’s piled there, so we’ll beneficiate that into the high-grade lump and sinter ores,” Sutherland said.

Prairie River intends on using a liquid to separate different materials within the rock by density, a process called “Ultra-High Dense Medium Separation.” Its developer, Johann Grobler of South Africa, is the project’s technical director.

But that will all likely require permits, a topic Sutherland declined to discuss in a recent interview with the News Tribune, acknowledging only that those were “in the works.”

What about permitting?

The company’s timeline to build and operate the plant may be a bit optimistic.

On Thursday, Joe Henderson, director of the Minnesota Department of Natural Resources’ division of lands and minerals, said Prairie River has not formally sent the DNR a project description for its demonstration plant, but acknowledged the DNR and company held a phone call Wednesday.

In that call, Prairie River said it would send both the DNR and Minnesota Pollution Control Agency a proposal and project description soon. A meeting between the agency and company is expected to follow.

“At this time, we do not have a project description for a Prairie River Minerals operation with or without a ‘demonstration plant,’” Henderson said in an email to the News Tribune. “Without a project description, it is difficult to determine the specific type of environmental review or permitting such a project would require.”

Henderson said the type of mining the company intends on carrying out — processing old mine waste into marketable ore — could meet the state’s legal definition of “scram mining,” which doesn’t require an environmental review.

“Scram mining is exempt from environmental review; however, there are other triggers such as water use that could require the project to conduct some level of environmental review,” Henderson said.

But, Henderson said, the plant could require a number of other permits: permit to mine, water appropriation, public waters work, wetland conservation act, air permit, state disposal system, stormwater and construction stormwater.

“Again, the details of the project would be needed in order to determine the type, if any, of environmental review required, and which permits would be needed,” Henderson said.

Asked if Prairie River Minerals would be allowed to even start construction without any permits in hand, Henderson said: “I would suppose that it depends on what they are constructing.”

Sutherland stressed the process would be “environmentally clean” with “not a lot of waste materials produced or water discharged.”

A more reliable company?

The last two companies to own the property left in bankruptcy.

Under Magnetation, plants 1, 2 and 4 and the Jessie Load-out facility employed more than 500 people at its peak in 2014, but closed shortly after and filed for Chapter 11 bankruptcy in 2015 as iron ore prices plummeted.

Magnetation was then sold to Tom Clarke, an entrepreneur from the state of Virginia, in 2016. Clarke pulled it out from bankruptcy as ERP Iron Ore before it also filed for bankruptcy in July 2018.

Asked what he would tell people who were skeptical about a new mining company, Sutherland focused on the new process Prairie River would take.

“Well, this is a different process … none of the other forms of companies you’re alluding to processed these hematite ores,” Sutherland said. “So it’s a different process and different ore characteristics and structure that we’re processing.”

Itasca County Commissioner Burl Ives said he had some reservations about Prairie River at first, but feels good about it now, especially with the hiring of Sutherland.

“With some of their latest moves right now, now I don’t have that feeling in my gut,” Ives said. “I think they’re going to have a go at it.”

Itasca County Commissioner Ben DeNucci said he also feels good about Prairie River.

“These are local folks that are in it for the right reasons. They live here, they’re from here,” DeNucci said. “They are expending a lot of time and energy and money in bettering this local area.”

“There’s a lot of reasons for the outcomes that happened in the past,” DeNucci said. “Certainly, there’s past histories with starts and stops, but at the same time, if we want to encourage business and startups, we need to have a certain level of support and optimism and positivity.”