DULUTH — The former Magnetation majority owner and CEO has entered into a purchase agreement to buy back a property that once housed part of his iron mining operation that rose quickly but fell into bankruptcy.
Larry Lehtinen, now the CEO of MagIron, is set to buy Magnetation's former Plant 4 near Coleraine for $20 million — $4.5 million in upfront cash and $15.5 million in production-based royalty payments to contractors with mechanic liens in the property's most-recent bankruptcy case, according to a news release Friday. The sale is expected to close before May 19. A federal judge had approved the sale in December , the News Tribune previously reported.
Recently-formed MagIron and London-based investment firm Audley Capital Partners LLP are planning to use the facility to make direct-reduction grade iron ore concentrate for the electric arc furnace market, the release said.
The release said the it could start commercial production in late 2023. The plant would employ 130 people and produce 3 million tons of iron ore concentrate per year.
Lehtinen told the News Tribune that the process will be "basically the same" as Magnetation's "but we're adding to it."
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As the name suggests, Magnetation developed a process using magnetic forces to pull iron ore from the waste material left behind at decades-old mining sites.
MagIron will use a similar technique but produce a concentrate with 2% silica content.
"We're adding various improvements to the plant to make an even higher-grade product to serve the (electric arc furnace) market," Lehtinen said.
The sale would include almost 2,500 acres around Plant 4 and an option to buy the Jessie Loadout facility from Prairie River Minerals. The company would also enter into a long-term lease with Itasca Coutny for 1,700 acres of land nearby.
Although the release said MagIron was "engaged" with interested commodities traders eyeing off-take agreements and steel mills looking for supply sources, Lehtinen would not name those companies.
With much of the equipment already in place at Plant 4, MagIron still needs to raise $100 million to update the plant.
Magnetation opened its first plant in 2009. It grew rapidly in the early 2010s, peaking in 2014 with four plants spread throughout the western Iron Range and employment of more than 500. It also had a pellet plant in Reynolds, Indiana, which was later auctioned off to Altos Hornos de Mexico, a Mexico-based steel manufacturer.
But its demise was even quicker. In 2015, amid low iron ore prices, Magnetation closed and went into bankruptcy.
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ERP Iron Ore bought the operation out of bankruptcy in 2017, only to file for bankruptcy itself the following year, which put plants 1, 2 and 4 and the Jessie Loadout facility for sale again through federal bankruptcy court.
