Judge clears sale of former Magnetation Plant 4 to Prairie River Minerals
A young scram-mining company bought two properties last year and has been approved to buy a third: Plant 4 outside Coleraine.
A federal bankruptcy judge has authorized the sale of another former Magnetation/ERP Iron Ore property to Prairie River Minerals, the scram-mining company hoping to process hematite left behind by former mines into marketable lump and sinter ores for the steel industry.
Judge William J. Fischer signed an order Wednesday approving the company's purchase of Plant 4 for $4.5 million. A a bankruptcy trustee also approved the sale last month.
The sale of Plant 4 "constitutes the highest and best offer for those assets, and will provide a greater recovery for the debtor’s estate than would be provided by any other available alternative," Fischer wrote.
The sale will close 30 days after court approval or after the due diligence period, whichever is less, Fischer said.
It's unclear what Prairie River Minerals plans for the Plant 4 property; the company declined to comment Friday.
Last year, the company bought two former Magnetation and ERP Iron Ore properties — Plant 1 near Keewatin and the Jessie Loadout Facility between Coleraine and Grand Rapids. The company intends on building a demonstration plant at the former Jessie Loadout Facility where it will process 500,000 metric tons of hematite left by old mining companies into 150,000 metric tons of iron lump and sinter feedstock over an expected 3-9 months. The company then intends on sending the lump and sinter to steel mills for evaluation.
CEO Larry Sutherland told the News Tribune in April that the demonstration plant would start off with about 24 employees. If the steel companies like what they see come out of the demonstration plant, then the plant could expand.
On Thursday, the Minnesota Pollution Control Agency released a draft water-quality permit for the demonstration plant that , if fully approved, would allow it to process that initial 500,000 metric tons of hematite into lump and sinter ores. If the company wishes to produce more than that or ramp up into a full-scale operation, it would need to apply for a major permit modification from the MPCA.
Unlike the other mines and processing facilities on the Iron Range, Prairie River Minerals would not be producing iron ore pellets from mined taconite. Instead, it would be processing waste left over by past mines into lump and sinter ores.
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.
Prairie River Minerals intends on using a liquid to separate different materials within the rock by density, a process called “Ultra-High Dense Medium Separation.”
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 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.
The bankruptcy court last year approved the sale of Plant 2 for $1.7 million to MJM Minerals, which expressed interest in then reselling it to an operator, the Trustee said.
Earlier this year, the MPCA fined now-shuttered ERP Iron Ore less than $5,000 for air-quality violations at Plant 4.