Labor availability will not be an issue in this region, which Elmore describes as economically depressed, adding that his company has already held discussions with the local community college to develop training programs.
   "This will be a long- range job for people.

John Elmore is president and CEO of Minnesota Steel.

A lot of people who have left the area would like to move back. We're quite optimistic on the labor force. People in this area are familiar with mining and the work shift mentality, which is important to us."
   Minnesota Steel officials say the steel plant will be North America's first "mine mouth" facility. Mining will take place in the previously mined Butler Taconite orebody near Nashwauk. Taconite will be turned into low silica pellets, which will be fed into a direct reduced iron (DRI) facility. Hot DRI will be fed into an electric arc furnace to be turned into steel. If all goes well, this production will begin in 2009, Elmore says.
   Primary customers for Minnesota Steel's steel slabs will be integrated steel mills, which will use them for raw materials. Plans call for access to two rail lines, which will be used to ship steel slabs to the Port of Duluth- Superior.
   "There are now 7 million tons of steel slabs imported into the U.S. annually, primarily from Mexico, Brazil and Russia," Elmore says. "With the Port of Duluth- Superior within 80 miles (129 km.), we have the capability of shipping into our major markets since 75 percent of the integrated mills are in the Great Lakes region. That gives us a competitive advantage."
   While the investment is huge, Minnesota Steel will not be a large mill. Elmore says his company will be filling a niche market and will supply less than five percent of the world's steel slab production.
   "It's a niche not currently being filled by anybody in the U.S. or Canada and we are looking at capitalizing on it. We own the ore and no one else owns their ore – they have to buy it from others."
   Elmore says Minnesota Steel will produce high- quality slabs which can be used in any application ranging from automotives to appliances to tubular products used by oil companies. When fully operational, phase one of the project will produce 1.5 million metric tons annually.
   Elmore, a steel industry veteran, says Minnesota Steel has strong fundamentals and committed owners who have been in the iron ore business for more than 110 years and have deep roots in the region. The Butler mine also has enough iron ore to last at least 100 years, he says.
   "That gave me a lot of comfort when I decided to take this job," Elmore says. "Looking at it from a Minnesota perspective, manufacturing steel slabs makes all the sense in the world. We're strategically located to make a semi- finished product and then ship it to our customers in the Great Lakes region. With all the capital invested in the steel industry around the Great Lakes, these companies can't pick up and move. They need raw materials and that's currently coming from other countries. From a logistics point of view and from a delivered product basis, there's no question in my mind that we will be the low- cost producer. A steel mill on a mine site is very logical, and the reason it hasn't been done elsewhere is energy. Northern Minnesota has a very strong electric grid and we have a good natural gas pipeline from Canada. You won't see these things tied together anywhere else in the world. It's a unique opportunity.
   "The project is so big it will have a tremendous impact on the whole state of Minnesota and the region," he continues. "That's why the state has been supportive and the local community has been supportive. That's nice to have."