Magnetation, once an Iron Range success story, on the brink of closure

Magnetation, an innovative Iron Range company that mined leftover mine tailings waste and transformed it into a valuable iron ore concentrate, may be forced to close in a month unless it is rescued by outside investors.

The Grand Rapids-based company said last week in a filing with the U.S. Department of Labor that it may implement a shutdown of its Plant 4 on Sept. 30, less than two years after the facility opened.

About 160 employees work there.

The company also said it may close its iron ore pellet plant in Reynolds, Ind. Concentrate from Plant 4 is currently shipped to the Indiana plant, where it's made into pellets that feed blast furnaces to make steel.

Magnetation has already closed three smaller plants on the Iron Range since February 2015, as the company struggled to cope with a crash in iron ore prices.

In May 2015, the company filed for Chapter 11 Bankruptcy protection.

Now, a federal judge has approved a bankruptcy settlement that paves the way for Magnetation to wind down operations, provided it doesn't receive an influx of cash that could avert a shutdown.

A hearing on the settlement is scheduled for Sept. 27 in Minneapolis.

"Now that this agreement is in place our sole focus is to continue to safely produce and ship high quality pellets until the operations potentially shutdown, and work closely with several interested parties that are currently evaluating an investment into Magnetation to avoid a shutdown of our plants," Magnetation President Matt Lehtinen said in a statement.

Magnetation opened its first plant in 2008 after patenting a method to extract valuable iron ore from old mine tailings. It rapidly expanded as iron ore prices soared, opening three additional plants in quick succession, in addition to a pellet plant in Indiana. At its peak it employed more than 500 people.

State Rep. Tom Anzelc, DFL-Balsam Township, said he was not ready to give up on what had been one of the Iron Range's largest success stories.

"They're struggling as are all of the iron ore mines with low commodity prices," he said. "But I'm not ready to throw in the towel."

Still, he added that he receives calls every day from local contractors still owed millions of dollars by Magnetation and Essar Steel, which also filed for bankruptcy. Essar's half-finished taconite mine and pellet plant is located just a few miles from Magnetation's Plant 4.

"I'm very concerned about these contractors," Anzelc said, adding he fears some may not survive. "I don't have a solution. The best solution would be an upsurge in prices and a restart to the mines."