Iron ore concentrate from Minnesota will go to make pig iron in Lorain, Ohio under a deal reached between fledgling ERP Iron Ore and Republic Steel.
Under the agreement ERP will produce concentrated ore at its recently acquired Magnetation operations outside Grand Rapids, move it by rail to its Reynolds, Ind. plant to be baked into pellets and then ship those pellets to Ohio to be made into pig iron.
The two companies will be joint owners of the new pig-iron plant to be built on the site of a now-shuttered Republic blast furnace mill.
That pig iron - about 1 million tons annually - will go to electric-arc furnace steel mills, the first time Minnesota Iron Range ore will regularly go to supply the electric-arc steel market as a highly pure supplement to scrap metal, the main feedstock for electric mills.
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Because those electric arc mills now control 60 percent of the domestic steel industry, the move to supply them is considered critical for the future of Minnesota's Iron Range. Until now nearly all Minnesota ore has gone to traditional blast-furnace mills that are seeing a smaller slice of the nation's steel business.
Those electric-arc mills use between 15 and 25 percent pure ore to mix with scrap, and there currently is no major producer of pig iron in the U.S. - nearly all of it comes from eastern Europe and Brazil.
"We are excited to announce this new venture and look forward to utilizing our assets in Lorain, Ohio to bring back production of pig iron," said Jaime Vigil, Republic CEO, in a statement announcing the agreement.
It's expected that Republic will reopen an idled electric-arc steel mill adjacent to the pig-iron plant in Lorain, good news for that city's sluggish manufacturing base. Additional production could be sold to nearby mills.
"This is also good news for Minnesota iron ore. This is the future of steelmaking in the U.S.,'' Mike Luther, ERP Iron Ore spokesman, told the News Tribune. "The best part is that we aren't replacing anything made in the U.S. We're replacing imported pig iron with a U.S. product that starts in Minnesota."
Luther said ERP is "ramping up" hiring to reopen the former Magnetation Plant 4 just outside Grand Rapids and hopes to have 140 employees on board and the plant operating by October, sending concentrate to Indiana. They hope to be producing pig iron in Lorain by this time next year.
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ERP acquired the assets of bankrupt Magnetation in January. ERP said Magnetation had lost it only large customer, AK Steel, and that ERP found itself with an iron ore seller that had no buyers.
"We had to scramble and think outside the box and it turned out to be a perfect relationship with Republic. Without this deal we wouldn't have a customer for Indiana pellets or for Nashwauk concentrate," Luther said.
The pig-iron deal, first unveiled last week, won't impact ERP Iron Ore's plans to build a similar iron plant in Nashwauk as part of its revived efforts the former Essar Steel Minnesota site, Luther said. ERP vowed in its bankruptcy agreement in June to build a direct-reduced iron plant in Nashwauk - likely making hot-briquette iron destined for electric-arc steel mills - even as it finishes construction of the estimated $2.6 billion taconite mine and processing center that Essar walked away from last year.
"Lorain in no way competes with making iron in Minnesota, with Nashwauk. They are siblings," Luther said.
Luther said ERP is legally bound to finance, build and operate the Nashwauk iron plant alongside the new taconite plant. If the company fails to meet benchmarks on progress of the iron plant, it will lose critical state permits needed for the Nashwauk facility.
Newly formed ERP Iron ore - ERP stands for Earth Restoration Project - is owned and operated by Roanoke billionaire Tom Clarke. It's his first venture into iron ore after moving into the coal mining industry over the past few years. With the combined Magnetation operations and what had been Essar Steel Minnesota operations, ERP has the potential to produce nearly 11 million tons of iron ore in Minnesota annually, quickly becoming a major player in the North American iron ore market.
In addition to ERP's proposed iron producing operations for Minnesota ore, Cliffs Natural Resources announced last month that it will build an hot-briquette iron plant in Toledo, Ohio, using taconite pellets from Minnesota - likely from Cliffs' Northshore Mining in Silver Bay/Babbitt. That iron also is destined for electric-arc steel mills.
