SILVER BAY, Minn. – With its modest employment projection pegged at 25 workers, a small steel plant that's taking shape in Silver Bay, Minn., hardly seems a likely candidate to significantly alter the face of an industry.
        That just could be the case, though, for the Mesabi Nugget Project. Located inside a converted 25,600-sq.-ft. (2,378-sq.-m.) warehouse, the finished plant may ultimately make the manufacturing of iron nuggets for steel production a far more profitable, environmentally friendly business. Moreover, the now-small Silver Bay project could ultimately mean thousands of new jobs in Minnesota's Iron Range.

LESS BOOM OR BUST: "The strength of this project is that it opens new markets and will make Minnesota iron ore less vulnerable to the traditional blast-furnace market," said Minnesota DTED Commissioner Rebecca Yanisch (pictured).

        "The strength of this project is that it opens new markets – electric-arc furnaces that mix some pure iron with the recycled steel – and will make Minnesota iron ore less vulnerable to the traditional blast-furnace market," said Rebecca Yanisch, commissioner of the Minnesota Department of Trade and Economic Development (DTED at www.dted.state.mn.us).

Technology Significantly Alters
Production Process

At the heart of the Mesabi Nugget Project's strength is ITmk3 - a proprietary technology developed by Tokyo-based Kobe Steel (www.kobelco.co.jp/index_e_wi.htm).
        Kobe Steel has tested ITmk3 (pronounced "I-T Mark Three") only once before, two years ago in a 3,000-ton-a-year (2,722-metric-ton-a-year) Japanese pilot plant. By comparison, the Mesabi Nugget Project will be more than eight times as large.
        The US$26-million plant has also picked a prime location: Minnesota's mines produce more than half of U.S. taconite - a natural mineral containing less than 30 percent iron that's the primary ore used in U.S. blast furnaces. U.S. steel manufacturing by the 1940s had largely depleted domestic supplies of iron-rich ores (which contain more than 50 percent iron), bringing lower-grade taconite to the fore.

A FRIENDLIER SPIN FOR MOTHER NATURE: Using rotary hearths like the one pictured above, the Mesabi Nugget Project's ITmk3 technology will produce carbon-dioxide emission levels 20 percent lower than using blast furnaces. Photo: Maumee Research & Engineering

        ITmk3, which uses rotary-hearth furnaces heated to 2,372 to 2,642 degrees, significantly alters the production equation. The process will rapidly convert Iron Range taconite, which has about 65 percent iron, directly into iron nuggets that are 97 percent iron - quality equal to blast-furnace pig iron.
        "The Mesabi Nugget Project provides an attractive, lower-cost alternative for processing iron ore in northeastern Minnesota," Yanisch said.

Higher Product Value,
Environmental Friendliness,
Lower Transportation Costs

In addition to lowering costs, the rotary-hearth process yields a far higher-value product. Iron nuggets made with the ITmk3 technology will sell for about $150 a ton. Raw taconite pellets from the Iron Range now sell for about $35 a ton - five times less.
        The ITmk3-produced iron nuggets will also weigh less, with oxygen and silicates already removed. Accordingly, iron nuggets' shipping costs will be about a third less than for taconite pellets, said officials with Mesabi Nugget LLC, the Silver Bay-based company that's coordinating the project.
        Lower emissions are also part of the pilot plant's promise. Rotary hearths generate carbon-dioxide emissions 20 percent lower than blast furnaces, according to North Carolina-based Midrex Technologies Inc. (www.midrex.com), the Kobe Steel subsidiary that developed the ITmk3 process in conjunction with its corporate parent.
        "Through the hard work, collaboration and support of many people, we will be able to develop a more energy-efficient, environmentally friendly way to make iron," said U.S. Rep. James Oberstar (DFL), part of the Minnesota congressional delegation that's backed the project.

Feds, State Chip in Funding

Minnesota legislators' lobbying was one factor that prompted the U.S. Department of Energy (DOE) to provide part of the Mesabi Nugget Project's funding. Using a federal program to promote emerging iron-making technologies, the DOE late last month provided $2 million for the plant's first-year operating costs, pledging another $3 million for the second year.
        "This program will bring jobs to the Iron Range, and it is a step towards modernizing the iron-making industry in Minnesota," said U.S. Sen. Mark Dayton (DFL). "I am pleased to see DOE come through with this funding."
        The Mesabi Nugget Project's ample potential has also spurred considerable state support. Minnesota's taconite-mining sector now employs only some 3,000 workers, roughly a fifth of the industry's late-1970s peak employment levels.
        The state's Iron Range Resources and Rehabilitation Agency (IRRRA) is providing $8 million in loans, which can be converted to IRRRA ownership shares in Mesabi Nugget LLC. Another $8-million loan is coming from the Minnesota Minerals 21st Century Fund, which is administered by the DTED.

$150-Million Plant Could Follow by 2004

The plant, which will produce some 25,000 tons (22,680 metric tons) of nuggets a year, will go online in early 2003, Mesabi Nugget officials said.
        The track record that the pilot operation racks up will largely determine the project's job-generating punch. If the plant is successful, the project will move into its third and fourth phases, building a new $150-million plant at the Silver Bay site. That facility, which would employ 100 workers and produce 500,000 tons (453,600 metric tons) of nuggets a year, would go online in late 2004, project officials said.
        "If we are successful in proving the ITmk3 technology at the pilot demonstration scale and are able to put together a package to build the commercial plant, we could ultimately build four additional 500,000-ton-a-year iron nugget modules," said IRRRA Commissioner John Swift. "The total number of jobs could increase five-fold to 500 directly associated with the production of iron nuggets, along with another 1,000 spin-off jobs."

Steel Dynamics among Other Backers

A panoply of private-sector partners considerably enhances the Mesabi Nugget Project's capacity to move into full-blown production.
        In addition to the aforementioned firms, companies investing in the project include: Cleveland-Cliffs Inc. (which is hosting the plant at its Northshore Mining Company operation, providing both the onetime warehouse and the taconite input); Minnesota consulting company Ferrometrics Inc.; and Steel Dynamics. (The latter firm's $315-million plant in Columbia City, Ind., was the focus of the November 2002 Site Selection cover story, "mini mill, Major Project.")
        Given the collective clout of the project's backers, the pilot plant could in time have an impact that's felt well beyond its Silver Bay site.
        "If Mesabi Nugget proves successful," Swift added, "we could see other Minnesota plants move to diversify their product line by building additional iron-nugget plants on the Mesabi Range."