Construction begins on $150M U.S. Steel taconite pellet plant in Keewatin

KEEWATIN, Minn. — U.S. Steel dedicated a $150 million plant addition here Wednesday, one of the largest Minnesota taconite projects in recent history.

With the new investment, U.S. Steel's Keewatin Taconite, or Keetac, plant will produce pellets with a higher iron content than the traditional pellet. Construction started recently and is expected to be done next year. Full production of the new pellet is expected in 2024.

U.S. Steel "has doubled down on innovation and doubled down on this state," Gov. Tim Walz told a gathering of executives, politicians and others at Keewatin Taconite on Wednesday.

With the new facility, U.S. Steel should be better prepared to survive the steel industry's continuing transformation away from traditional blast furnaces.

Pittsburgh-based U.S. Steel has been profitable, and "we want to share that and invest in our future," CEO David Burritt said at Wednesday's event.

Representatives from the United Steelworkers were notably absent from the ceremonies Wednesday. While the union that represents Keetac's workers is all for the new project, the Steelworkers remain at odds with U.S. Steel over a new contract.

The national contract between the union and U.S. Steel expired Sept. 1. The union has already settled with Cleveland-Cliffs, U.S. Steel's main rival on the Iron Range. Steelworkers picketed Wednesday in Keewatin on the road into the plant.

Keetac is being retooled to make "direct-reduced" (DR) grade taconite pellets, which are a key feedstock for producing iron used in electric arc furnaces.

Electric arc mills have traditionally used scrap metal but are increasingly utilizing direct-reduced iron or pig iron made from direct-reduced taconite pellets.

Taconite plants on the Iron Range — including U.S. Steel's existing one, Minntac, in Mountain Iron — primarily produce iron ore pellets that are used in traditional blast furnaces. Electric arc furnaces are the primary source of U.S. steel production, and their share of the market will only grow.

U.S. Steel now has two electric arc steel plants in addition to its traditional integrated steel mills. Electric arc steelmaking emits far less carbon dioxide than the traditional blast furnace method.

U.S. Steel's new DR facility would be the second such operation in northeastern Minnesota. In 2019, Cleveland-Cliffs invested $100 million in upgrades to its Silver Bay taconite production plant to produce DR-grade pellets.

However, Cliffs idled its Silver Bay taconite operations this spring. Cliffs is the largest taconite mine operator in Minnesota; U.S. Steel is the second-largest.