Steel Products Prices North America

Essar Taconite Production Anticipated for Mid 2016

June 1, 2015

Construction of Essar Steel’s Minnesota taconite operation is accelerating now that the project is fully financed.

The $1.9 billion project near Nashwauk involves the construction of a taconite plant with a total annual production capacity of 7.0 million tons of iron ore pellets. The pellets will be initially sent to Essar Steel Algoma and to ArcelorMittal. A ten year agreement made with ArcelorMittal that was to begin in 2014 was put on hold because of construction delays. ArcelorMittal currently is supplied by Cliffs Natural Resources with a contract that will expire in 2016.

The timeline for completion of the taconite facility has been adjusted from late 2015 to mid 2016. Essar claims the pellets produced will be the lowest cost pellets in North America due to efficiencies in production.

The site has been approved for and has the flexibility to produce fluxed pellets, standard pellets and direct reduction grade pellets.

According to Mitch Brunfelt, Essar’s assistant general counsel and director of government and public relations, production of direct reduced iron is likely in the future, depending on market conditions. Brunfelt said the current focus is on getting the taconite plant done first but the company is “optimistic” about a value-added product.

Essar has permits for 1.8 million tons of DRI but increased taconite production would be necessary to produce the DRI product. Normal operations will be observed by regulators for a few years to obtain environmental data before permission is given to increase production. If permitted, production would increase to 10-15 million tons of ore annually with a portion going to DRI operations.

The Nashwauk operation is located on 19,000 acres in the western portion of the Mesabi Range. Of that acreage, 4,360 acres are mineral lease land. The site is serviced by Burlington Northern Santa Fe Railway (BSNF) and Canadian National Railway (CN).