Northern Minn. iron ore mining company invests in steel industry’s future

In 1956, the giant Northshore Mining plant on the shores of Lake Superior was the first facility built in North America to make pellets out of taconite, a low-grade iron ore. It used a process developed at the University of Minnesota after the supply of high-grade natural ore in the state was nearly mined out.

Now, more than a half-century later, Northshore is at the forefront of another sea change in the industry, as steelmaking shifts to a newer kind of production mill that requires a new kind of iron ore feedstock.

The Cleveland-Cliffs mining company spent more than $100 million upgrading its huge plant in Silver Bay — installing 8 miles of new piping and 45 miles of new electrical wiring — to produce a purer form of iron ore pellets with low silica content. Those pellets, in turn, can be used to make “direct reduced iron” — or DRI — which is used to make steel in a newer kind of mill.

The company said it’s the first U.S.-based iron ore processing facility to produce this new kind of pellet.

Traditional taconite pellets from Minnesota's Iron Range are used to make steel in giant blast furnaces around the Great Lakes. But the last blast furnace to be built in the U.S. opened in 1980.

Now, nearly 70 percent of all American steel is made in electric arc furnaces, also known as mini mills, which use DRI in the steelmaking process.

And Northshore Mining is now positioned to serve this growing segment of the industry.

"These DR-grade pellets will ensure that here in northern Minnesota we will have this [plant] going for at least another 100 years,” Cliffs CEO Lourenco Goncalves said Tuesday at a ribbon-cutting ceremony for the upgraded plant.

Northshore Mining is now capable of producing up to 3.5 million tons of the specialized pellets every year, in addition to about 2 million tons of traditional pellets that will continue to serve the blast-furnace market.

Most of the DRI pellets will be shipped to a new $830 million iron plant Cliffs plans to open in Toledo, Ohio, next year, where they will be turned into hot-briquetted iron, a compacted form of DRI used in electric arc furnaces.

The Northshore plant produced its first batch of new pellets on June 20, after 13 months of construction. Now, a towering pile of some 200,000 tons of pellets sits outside the plant, waiting to be loaded onto huge freighters and shipped across the Great Lakes.

The investment in the aging plant has created a buzz among the mine’s more than 500 employees, said general manager Paul Carlson.

“Being able to create a new base of customers for Northshore is huge,” Carlson said.” And the excitement that the workforce has due to that extra job security is just amazing.”

The investment signals a remarkable turnaround for Cliffs and the state’s iron ore industry, which employs more than 4,000 people in northern Minnesota.

In 2015 and 2016, Northshore and several other mines in the state were shuttered amid a major downturn in the steel industry, caused by a surge in imported steel, including steel that was illegally dumped, or sold at below the cost of production.

Now, mines are back and running at full capacity, and Northshore is positioned to serve the evolving steel industry, 8th District Republican Rep. Pete Stauber said at the event in Silver Bay.

“Today is an unbelievably important day for northeastern Minnesota,” he said, “for the men and women who want to live, work, recreate and raise a family in northeastern Minnesota with good-paying jobs.”