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Minnesota Taconite Production Doubles In 2010

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(credit: Jupiter Images)

(credit: Jupiter Images)

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VIRGINIA, Minn. (AP) — It was a good year for taconite mining on northern Minnesota’s Iron Range.

Production levels in 2010 were just below those during the peak year of 2008 and more than double those recorded in the recession year of 2009, the Mesabi Daily News reported. The newspaper also said a new era in iron mining is becoming more established on the Range, with new plants such as Magnetation and Mesabi Nugget using new technologies to produce iron for steel, and construction well under way at the new Essar Steel Minnesota operation.

Minnesota Department of Revenue engineering specialist Bob Wagstrom said 2011 should see production levels around the same as those for 2006 through 2008, when it ranged around 38 million to 39 million tons.

“It’s good to see that back up again,” Wagtrom said for a story published this weekend.

Wagstrom projected 2010 production at 34.3 million tons, compared with 17.1 million tons in 2009, with higher output from each taconite plant on the Range. The state measures production in “dry” tons for tax purposes, discounting for any moisture weight, while tonnage figures from the plants can be higher.

Taconite is lower-grade ore, at 20-25 percent iron, which is crushed, concentrated and processed into pellets of 60-65 percent iron that are shipped to blast furnaces around Chicago and Cleveland. Plants in 2010 paid a production tax of $2.36 per ton, in lieu of any property taxes.

Tax revenues from the new-era iron producers will begin accruing in the near future, Wagstrom said. They include Mesabi Nugget, which uses a unique process to produce 95-percent-iron nuggets, and Magnetation, which reclaims iron ore from older-era iron tailings stockpiles.

At one point in spring and summer 2009, none of the six taconite plants on the Range was in production.

“2010 was much improved,” said Craig Pagel, president of the Iron Mining Association of America of Minnesota. “As the recession ended, and steel demand increased, it was good to see all the taconite mines up and running.”

New investments led to a resurgence at Keewatin Taconite, which produced an estimated 4.8 million tons, compared with just 75,000 tons in in 2009. Magnetation also stepped up its output, and Mesabi Nugget went through its first almost-full year of production. Essar Steel Minnesota started construction. And business was good for vendors and suppliers to the industry.

Once new construction is finished, “it will double the effect iron mining is having on the economy of northeastern Minnesota” to $6 billion annually, Pagel said.

The Range’s established taconite companies — which are mostly operated by Cliffs Natural Resources Inc. or U.S. Steel Corp. — don’t usually discuss prospects for their plants but the new producers are eager to share their stories, the Mesabi Daily News said.

“We consider 2010 a huge pivotal year for the company,” said Matt Lehtinen, Magnetation’s vice president of marketing and business development. Either it was going to expand or close up, he said.

A $4 million loan from the Iron Range Resources agency late in the year and a business deal with a Mexican steel producer both helped.

“It puts the company on solid ground as far as being fully capitalized,” Lehtinen said.

Essar Steel Minnesota project manager Steve Rutherford said work on its mammoth $1.6 billion operation is progressing, with more than 100 construction workers putting foundations in place. By 2012, about 1,000 to 1,200 construction workers will be on the site. Pellet production could begin by the fourth quarter of 2012. Essar had 31 Minnesota employees by the end of the year and plans to grow to 75 in 2011.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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