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Minnesota Steel is on track to build the first complex in North
America to include iron mining, ore processing and steelmaking on
a single site.
Minnesota Steel’s vertically integrated steel mill, scheduled to
be built near Nashwauk on northern Minnesota’s famed Mesabi iron
range, will supply the domestic market with up to 2.5 million
metric tons a year of low cost, high quality steel—helping to close a domestic
supply gap of 26 million metric tons.
When the facility begins operations in 2010, it will be the realization
of a dream—a dream that has endured market fluctuations, false
starts and skepticism.
Undeterred by challenges, the company has worked diligently to
ensure that the project fundamentals are sound and can meet the
expectations of investors, regulators and the local community.
Because of that hard work, Minnesota Steel today is uniquely
positioned to launch this project. Its resources, technology and
market forces have converged to create a window of opportunity to
build North America’s first vertically integrated steel mill
complex.
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• The Resources •
The iron ranges of Minnesota have supplied iron ore to steel mills
for more than a century.
For the last 50 years, the iron has been supplied as taconite
pellets—marble-sized balls created by finely grinding the ore,
pulling out the iron with magnets and forming the iron into
pellets. Pellets are shipped via rail and/or water primarily to
Midwestern blast furnaces where they are melted, creating a waste
byproduct called slag and liquid iron, which is refined further
into steel. It takes a minimum of two weeks—and frequently much
longer—for Minnesota iron ore to be turned into pig iron in a
blast furnace before being processed further into steel.
Minnesota Steel will be producing steel on the Iron Range from
iron ore mined onsite, transforming raw ore into low cost, high
quality steel in about 48 hours.
The company has secured the rights to mine perhaps the only iron
ore body in North America capable of supporting a low cost,
vertically integrated mine site steel mill. This unique deposit
contains very coarse grains of iron and silica, a waste material
that ends up in slag in the blast furnaces.
Large grain size is key because these coarse grains are easily—and
economically—separated, so the resulting pellets contain very
little silica. At 1.5-1.6% silica, Minnesota Steel’s pellets
compare very favorably to the Iron Range average of about 5%
silica. Pellets will be processed onsite into direct reduced iron
(DRI), an interim step in the company’s steelmaking process.
A low silica content is necessary because Minnesota Steel will
transform DRI into steel in an electric arc furnace (EAF), a
low cost steelmaking method that cannot remove large amounts
silica.
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• The
Technology •
Minnesota Steel’s vertically integrated steel mill complex will
take advantage of modern, commercially proven technology to
produce low cost, high quality steel.
Mining
the ore body, which supported the Butler taconite operation until
1985 when one of the plant’s owners declared bankruptcy and closed
the plant, will make use of state-of-the-art mine planning and
operations, taking advantage of mining practices and technology
developed over generations on the Mesabi iron range and worldwide.
Transforming raw ore into pellets will take place in an
ultra-modern, high-tech processing facility that will build upon
vast technological improvements in ore processing over the last 50
years. Minnesota Steel’s technology is the most cost effective,
environmentally sensitive, integrated way to produce high quality
steel commercially available in the world today.
Iron ore pellets will feed the DRI facility, which will be fueled by
clean burning natural gas. Still-hot DRI will, in turn, feed the
EAF. Steel will be turned into slabs that meet customers' specifications. Powered by the region’s extensive gas
and electric utility network, the steelmaking facilities will use
the latest technology to produce high quality steel with
properties sought by end-use customers.
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• The
Future of Steel •
The last two decades have seen major changes in the domestic
steelmaking industry. Low cost mini-mills employing EAFs captured
an increasing share of the market. Meanwhile, blast furnaces—the
taconite pellet’s only customer—have experienced a steady decline.
Many blast furnaces were taken out of commission permanently due
to their age and high operating cost, helping to create a 26
million metric ton supply gap.
More recently, the massive industrialization of China and planning
for the industrialization of India have spurred intense global
demand for steel—market trends that are anticipated to continue
for the foreseeable future. Yet, no new steel mills have been
built in the USA for more than 10 years.
Minnesota Steel will enter the domestic steel market from a unique
and advantageous position as the lowest-cost producer of high
quality steel products in the USA, competitive with international
producers but focused on the domestic market.
Onsite, vertical integration enables the company to keep costs
low. As a fully integrated producer with control of its raw
material, Minnesota Steel can better control inputs and processing
costs. Having all processing onsite reduces energy consumption by 30% by
avoiding the need to reheat cooled products for successive
processing and saves on transportation. Fewer handling steps
reduce product breakage and improve yield. Inventory will be
controlled, further reducing costs.
Customers will be served rapidly and efficiently thanks to the
proximity to several modes of transportation—including two rail
lines, lake freighters and trucks—in the industrialized Midwest.
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• The
Advantages •
After overcoming significant challenges, Minnesota Steel’s
vertically integrated steel mill now can anticipate significant
advantages over conventional iron ore mining and blast furnace
operations, as well as mini-mill EAF facilities.
~ Cost
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Coarse-grained ore
makes recovering iron cheaper than in other pellet plant
operations.
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Iron ore pellets will be turned into DRI, which will be fed hot
into the steelmaking furnace—saving energy and increasing
productivity.
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Less
handling means less damage to pellets and DRI, which will
improve yield.
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Financial resources won’t be tied up in excess inventory.
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Transportation will involve shipping a final product—not an iron
ore pellet with up to 30% waste that requires significant
further processing.
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With
these advantages, Minnesota Steel will be the lowest-cost steel
producer in the USA and potentially in North America
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Environmental benefits
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Energy savings in processing and transportation will result in significantly fewer air emissions compared to traditional iron ore
mining and steelmaking.
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DRI will be produced with
clean burning natural gas.
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The electric arc furnace offers significant environmental
improvements over blast furnaces, which require coke—the making of
which generates significant air emissions and waste.
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Because no external scrap will be used in making steel, there
will be no generation of waste often associated with contaminants
found in scrap.
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Economics
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Minnesota Steel will have a variety of customers, including
manufacturers and other steelmakers. Taconite pellets are limited
to a single customer—blast furnaces, which have been declining as
a percent of the domestic market.
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With access to rail, ship and trucking, Minnesota Steel can
offer rapid product delivery to meet today’s just-in-time
inventory requirements— much quicker and at significantly lower
cost than foreign producers attempting to serve North American
markets.
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As the
low cost producer, Minnesota Steel will be
sustainable over the long term—positioned to weather the
inevitable cycles in the steel markets that higher cost producers
cannot.
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• Looking
Forward
•
After more than two years and the investment of millions of dollars by Minnesota Steel, environmental review and permitting were completed in September 2007, with the issuance of the final permits required for the project. Construction
is anticipated in early 2008. An estimated 2,000 skilled workers will
build the facility.
The company will begin operations in 2010.
Minnesota Steel expects to employ 700 workers, many of whom
already are experienced in iron mining. The spin-off jobs from the
facility will be an estimated 2,100.
An estimated $18 million annually will flow directly from the
project to state and local governments in the form of royalties
and production and income taxes.
The project will cost an estimated $1.6 billion—a major financial
undertaking.
Success will hinge on two factors: The mill’s ability to produce
high quality steel at very low cost, and Minnesota Steel’s
commitment to a rigorous review of all elements of the proposal to
ensure the fundamental underpinnings necessary for success are in
place.
Discussions with various energy providers are underway,
as are conversations with contractors that will supply
additional expertise the complex project will require. Local
governments are working to ensure the project’s infrastructure
needs are supported.
Everything is in place to bring steelmaking to Minnesota’s iron
range—the country’s largest producer of iron ore.
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