Construction slows at Essar Steel project
NASHWAUK -- Essar Steel officials have decided to temporarily slow construction of the company's taconite pellet facility in Nashwauk. The $1.7 billion plant will be Minnesota's first new iron-ore mining and taconite plant operation in 35 years w...
NASHWAUK -- Essar Steel officials have decided to temporarily slow construction of the company's taconite pellet facility in Nashwauk.
The $1.7 billion plant will be Minnesota's first new iron-ore mining and taconite plant operation in 35 years when it opens, but it's been an uneven process. A groundbreaking ceremony was held at the site in 2008, but construction didn't begin in earnest until last year. Construction is now about 50 percent complete, and company officials say they hope to begin mining by the end of this year or early next year.
Workers on the site said they were told their Friday shifts would be their last for a while. They didn't know when they'd be back to resume work.
"I was just told that we were going to be laid off for a couple weeks, for a short time frame," said Clay Witkofsky, a superintendent at Hammerlund Construction. "They unfortunately had to lay a lot of hardworking guys off."
An Essar Steel spokesman said a significant downturn in the current iron ore and steel market is a factor for shutting work down.
Essar Steel Minnesota President and CEO Madhu Vupplurri said Essar is realigning the construction activity to line up with the timing of the supply of equipment. He said he expects construction to resume full speed soon, with no change in the overall project construction schedule.
Essar has permits and financing in hand to build a 7 million ton-per-year taconite operation that would rival Hibbing Taconite as the state's second-largest, behind only Minntac in Mountain Iron. The Essar operation will employ about 300 people. The total cost of the project is expected to hit $1.7 billion, one of Minnesota's most expensive construction projects ever.
Taconite will run out on either BNSF or CN rail lines and then on to Essar's Algoma steel mill in Canada, to other U.S. mills through the spot market or even as far as Essar steel mills in India, company officials say.
The company also has plans to use its Nashwauk taconite to make direct-reduced iron to feed the first-ever electric arc steel mill at the site to produce slab steel -- a long-held dream of Iron Range leaders who for more than a century have seen iron ore shipped out and made into finished products elsewhere.
It would be the first such facility -- with mine, processing and mill at the same location -- in the U.S. But no decision on the steel mill has been made yet, company officials say. That decision will be made by Essar Steel Minnesota's parent company based on the strength of U.S. steel demand, which has lagged as the nation battles out of a recession.
The steel mill portion of the project would add another $1 billion to the cost of the project and another 100 employees.
Essar Steel Minnesota is a subsidiary of Mumbai, India-based steel giant Essar Group, a $20 billion firm with about 70,000 employees worldwide.
Nashwauk Mayor William Hendricks said he's confident the project will be completed eventually.
"I'm not afraid of this one bit," Hendricks said. "This is kind of the normal -- every time the economy does something, it dictates to the people what to do."