Long-stalled $2.6 billion Iron Range taconite plant gets dusted off

DULUTH – A long-stalled and half-built taconite mine and pellet plant in Nashwauk, Minn., is inching forward again as a reissued air permit for the $2.6 billion project goes out for public review.

The Minnesota Pollution Control Agency is asking for comments on the draft permit for the Mesabi Metallics project that would produce up to 7 million tons of taconite pellets per year.

The permit was first issued in 2007, and construction began in 2009. Since then the proposed mine has gone through bankruptcy, changed hands several times and missed multiple state construction deadlines and payments, putting its mineral leases at risk.

The project, long known as Essar Steel, is about two years from completion once financing becomes available, according to the draft permit. MPCA officials said the permit could be issued by the end of the year. It expired in 2012 and needed a few minor updates.

"Any time we are dealing with a reissuance or changes on the company ownership side of things the project can change a little bit, and that's part of the reason for the permit reissuance as well," said Jeff Udd, Duluth region manager with the MPCA. "There's a lot of positive environmental benefits in the permit as well."

As part of the reissued air permit, which the EPA will also review, the MPCA is requiring the company to "re-evaluate the design and best available control technology" for the plant. Proposed production levels have not changed.

The public can comment on the draft permit through Sept. 14.

It would be the second plant on the Iron Range to produce direct-reduced iron pellets for modern electric arc furnaces used in steelmaking — critical as the industry moves toward these "mini-mills" and away from blast furnaces. Cleveland-Cliffs' recently upgraded Northshore Mining started producing the valuable DRI pellets last year.

No other MPCA permits are required for the project to move ahead; whether it can continue once the air permit is reissued remains to be seen. The Minnesota Department of Natural Resources had previously issued all permits needed to build and operate the mine.

"If Mesabi were to move forward but want or need to make any modifications to its plans, it's certainly possible it would be necessary to have amendments," said DNR Deputy Commissioner Barb Naramore. "We don't have requests from them at this point."

Mesabi Metallics could not be reached for comment Monday.

The state has the right to rescind the company's mineral leases at any time this year after Mesabi failed to meet a December 2019 construction deadline.

"The state has been really consistent all the way along — what we want is a credible operator who can bring a value-added facility online and into operation," Naramore said. "And that continues to be our focus in all conversations we're having."