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US Steel to build $150 million DR-grade pellet plant at one of its Iron Range mines

The company expects to break ground at Keetac or Minntac this fall.

Iron ore taconite pellets stock photo
Iron ore pellets.
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DULUTH — U.S. Steel will build a $150 million direct-reduced-grade pellet plant at one of its existing Iron Range facilities to help feed its electric arc furnaces.

The Pittsburgh-based iron ore mining and steelmaking company on Tuesday said it plans to break ground in the fall at either Keetac or Minntac, its iron ore mining and pellet production facilities in Keewatin and Mountain Iron.

DR-grade pellets serve as feedstock when making direct-reduced iron or hot-briquetted iron, which in turn supply electric arc furnaces making steel.

U.S. Steel said the pellets could be sold to a third-party DRI or HBI producer "or use them to feed a potential future DRI."

“We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow, making us increasingly self-sufficient," David Burritt, president and CEO, said in the news release.
Whether it's built at Keetac or Minntac, the company would still be able to produce traditional blast-furnace-grade pellets, the company said.

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In the same release, the company said it signed a non-binding letter of intent to sell two of its blast furnaces at Granite City Works in Illinois to SunCoke Energy, Inc. SunCoke would then build a 2-million-ton granulated-pig-iron production facility there and supply all of its pig iron to U.S. Steel for a decade. Pig iron is also used to supply electric arc furnaces.

U.S. Steel's facilities in Minnesota would supply pellets to make the pig iron.

"U. S. Steel intends to supply the needed iron ore to be used to produce the pig iron. Because the iron ore would come from U. S. Steel’s own mines, the Company would realize a significant cost advantage. This pig iron could be used by EAFs and is expected to supply U. S. Steel’s growing fleet of EAFs," the company said in the news release.

Minnesota's other iron ore mining and steelmaking company, Cleveland-Cliffs, opened a DR-grade pellet plant at its Northshore Mining facility in Silver Bay in 2019 to supply its new HBI plant in Toledo, Ohio.

It has since moved production of DR-grade pellets to its Minorca mine in Virginia because of a royalty fee dispute at Northshore. Cliffs also bought a scrap metal company and scrap metal can feed electric arc furnaces, lessening the need for pellets.

In a statement Tuesday afternoon, Gov. Tim Walz, a Democrat, celebrated U.S. Steel's announcement.

“This is good news for the Iron Range. Minnesota’s steel industry exemplifies who we are as a state – it is baked into our culture and history,” Walz said. “I’m proud to support this major investment in a nation-leading sector of our economy, and I look forward to working with our local and federal partners to continue innovating, diversifying, and expanding Northern Minnesota’s economy.”

This story was updated at 4:01 p.m. June 28, 2022, with a statement from Gov. Tim Walz. It was originally posted at 12:27 p.m. June 28.

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