New plant, revived United Taconite bring good news to Iron Range

The recall of laidoff workers at the United Taconite plant and the start of construction on a $65 million iron-ore pellet plant in Forbes, Minn., is bringing much needed good news to Minnesota's Iron Range.

Gov. Mark Dayton, Rep. Rick Nolan, D-Minn., company officials and scores of recently recalled workers were on hand Thursday to celebrate the groundbreaking for the United Taconite Mustang Pellet Project.

The construction project, located next door to United Taconite's (UTAC) 51-year-old taconite plant, was first announced by United's parent firm, Cliffs Natural Resources, in March. Construction is expected to take about eight months and employ 90 to 120 workers at various stages.

"It's an exciting day. It's a fabulous day," Dayton told the crowd. "We are going to have a resurgence of jobs and economic opportunity up here on the Range. We are very excited about what lies ahead."

Once completed, the Mustang plant will produce a higher grade of iron ore pellets than currently made in Minnesota, officials said.

The custom "superflux" pellets are promised to Cliffs' longtime customer ArcelorMittal and will replace supplies Cliffs had made at its recently closed Empire Mine in Michigan. About 12 Michigan workers will relocate to Minnesota to work at UTAC's facilities here.

Cliffs CEO Lourenco Goncalves said he expects to begin producing the new pellets by March 2017. To get there, $25 million will be spent on the project this year and $40 million next year, he told the crowd assembled for Thurday's groundbreaking. "It is a big investment."

Under a 10-year-supply agreement, Cliffs will remain the sole pellet supplier for ArcelorMittal's Indiana Harbor West and Cleveland Works steelmaking facilities. It also maintains Cliffs' current pellet supply levels to ArcelorMittal's Indiana Harbor East facility.

The contract and the new construction project on the Iron Range proved welcome news for residents and state officials weary after roughly 2,000 workers were laid off at several Minnesota taconite plants over the past two years. In addition, Grand Rapids-based Magnetation LLC and Essar Steel Minnesota operation in Nashwauk filed for bankruptcy, leaving unpaid scores of contractors who worked on the half-built $1.8 billion plant.

Many of the plant idlings stem from a struggling U.S. iron and steel industry that was clobbered by the collapse of global iron ore prices and by a rash of illegally dumped steel imports from China, Korea, England, Australia, Brazil and other nations.

Cliffs idled its UTAC operations in Forbes and Eveleth, Minn., and laid off 420 employees in August 2015.

In December 2015, Cliffs idled its Northshore Mining operations in Silver Bay and Babbitt, laying off about 520 workers. Cliffs' Hibbing Taconite plant has remained open.

Goncalves said Thursday that industry conditions have improved since the U.S. and international trade community instituted new trade tariffs designed to halt underpriced steel imports. Two new customer contracts also dramatically improved the fortunes of Cliffs, which has been immersed in restructuring for more than two years.

Cliffs reopened its Northshore plant in June, the same month it began recalling some workers to UTAC's plant. UTAC officially reopens later this month.

Goncalves told the crowd Thursday that he knew "we would be back. We knew what we needed to do to bring you guys back," he said addressing previously laid off UTAC workers.

Dayton praised Goncalves Thursday for his role in leading UTAC's re-emergence. Dayton said UTAC did just what it promised to do — keep production in Minnesota going. He then threw a not-so-subtle dig at Essar Steel Minnesota, which he complained did not keep its promises or deadlines, prompting the state to cancel Essar's mineral lease rights last month. Essar filed for bankruptcy on the same day and is contesting the lease rights in court.

Going forward, Dayton told Goncalves, "We are going to get the leases out of other people's hands and into your hands over there with the Essar site and get that [project] going."

Dee DePass • 612-673-7725