Essar ramps up Nashwauk construction

The temporary welcome sign for the Essar construction site near Nashwauk, Minnesota, as seen on Thursday, May 21, 2015. The balling plant and stack can be seen in the distance. (Aaron J. Brown)

Construction is accelerating at the long awaited $1.9 billion Essar iron mine near Nashwauk, while Essar now says it’s optimistic about producing direct reduced iron products here. In a tour of the site on May 21 with Mitch Brunfelt, Essar’s assistant general counsel and director of government and public relations, I took pictures and observed progress at the site of the biggest construction project on the Iron Range in a generation.

After years of starts and stops, Essar now says it is finally fully financed and has increased its contractor workforce at the site. About 400 workers were on site the day I visited. Brunfelt said they will soon see 600-800 workers on site each day as summer arrives in force.

Essar has officially amended its construction timeline to reflect the realities of the company’s progress. Brunfelt said Essar engineers are now eying production of taconite by late June or July of 2016. This is a revision from earlier projections to be making pellets by the end of this year, a claim that didn’t seem plausible to most observers. Based on the amount of work I saw, however, the new completion date seems possible.

I asked about rumors of other mines looking to buy into the Nashwauk project. Brunfelt said Essar, a privately held company, is not looking for partners and plans to operate this taconite plant on its own. They have off-take agreements to send the initial annual capacity of 7 million tons of pellets to Essar’s Algoma steel mill in Sault Ste. Marie, Ontario, on the east end of Lake Superior and to Arcelor-Mittal, the world’s largest steel company with mills in North America.

One of the most interesting things I learned on this tour was that Essar claims their pellets will be the lowest-cost pellets in North America, which Brunfelt said will protect this new plant’s viability in the ongoing consolidation of the global steel market. Brunfelt would not reveal their target for cost-per-ton, but said that efficiencies adopted in a new taconite mine will make their pellets more affordable than any others on the continent.

And, the big story, rumors that Essar was abandoning direct reduced iron, or “value-added,” are false, Brunfelt said.

“Our firm position is to get this [taconite plant] done first,” said Brunfelt. We’re optimistic about a value-added product. It’s going to take time.”

Brunfelt said Essar is already permitted for 1.8 million tons of direct-reduced iron, the site is already designed to add that capacity, and the company’s international parent has experience running DRI facilities. One of the initial challenges will be the fact that Essar will need to increase its taconite production capacity to produce the new DRI materials. Brunfelt said that regulators will want to observe normal operations for a couple years to obtain environmental data to determine if the company will receive the OK for additional production. If that happens, Brunfelt said the plant would produce 10-14 million tons of ore annually, some of which would feed into new DRI operations.

Regardless, Essar will be able to produce different kinds of pellets at its new plant right away — ranging from traditional blast furnace pellets common to Range mines, to a “flux” pellet, to the direct reduced grade pellets used in newer electric arc furnaces.

A tour of construction at Essar Steel Minnesota

We began the tour at the south entrance near the ore body and crusher site behind Snowball Lake and then proceeded along the actual route of the taconite production process until we reached the north entrance near Nashwauk.

Below, “small” 60-ton haul trucks like this one operated by Hammerlund Construction ran constantly on Thursday, May 21, 2015. The trucks were hauling taconite from a recent blast site to fill the storage bins in the area of what will be the Fine Ore and Coarse Ore Storage building.  Those bins need to be filled in order to create a platform for a crane that will have to be placed there to assist in erecting/constructing the building over that area. The 240-ton haul trucks used in full production will dwarf this one.

(Aaron J. Brown)

Here is the primary crusher plant under construction at Essar Minnesota’s Nashwauk project as seen from the edge of the mining field. Company officials say that the plant’s close proximity to the ore body, less than a mile in some places, will save significant transportation costs in its operations.

(Aaron J. Brown)

Below, behold a sight you’ll never see again: the crusher at Essar Minnesota in its original state. This large crusher will crush most of the rock used to process ore into taconite pellets at the Nashwauk plant. Another secondary crusher plant is on site as well. It takes a lot of very big machinery to turn giant, extremely hard taconite boulders into the fine powder needed to make pellets.

(Aaron J. Brown)

Ironworkers install beams on the secondary crusher plant.

(Aaron J. Brown)

A massive crane moves steel beams to build the concentrator plant at Essar’s Nashwauk plant on May 21, 2015. In addition to 400 workers on site that day, about 50 Essar employees are working out of trailers like those seen in the foreground. Approximately 50 more permanent employees are based at company engineering headquarters in Hibbing. About 350 permanent workers will be needed to operate the taconite plant. The company cites a UMD study estimating 630 ancillary jobs caused by the new plant.

(Aaron J. Brown)

For perspective, this massive ore storage building shown below is built on top of footings like the ones shown here and filled in with actual taconite rock (the grey material you see piled around in this photo). They use taconite since it is an area where taconite will be stored before being hauled for further processing. On a side note, Brunfelt said that Essar’s mine and plant site are being built in a closed water system, reusing storm water to avoid runoff.

(Aaron J. Brown)

These giant mills will turn smaller taconite rocks from the crusher into a fine powder used to make pellets. The larger mills here are aggregate mills, which use large rocks to pulverize smaller ones. The smaller mills are ball miles, which do the same thing to obliterate remaining rocks with heavy steel balls. Essar will have three mill lines, fewer than other Range mines, but still capable of processing 7 million tons of taconite per year because of the large size of these new mills.

(Aaron J. Brown)

Below, these curved plates will be used to cover elements of the concentrator mills. The vast, whisper quiet Essar warehouse resembles a super-charged home improvement store. One worker on the job since 2012 said when he first got there the warehouse was “like someone dumped out an erector set.” Bit by bit, each piece finds its place.

(Aaron J. Brown)

Below you see workers pouring huge amounts of concrete to serve as the basin for the area where train cars will dump materials necessary to produce taconite pellets at Essar’s Nashwauk plant.

(Aaron J. Brown)

The final balling plant and cooling stack is where iron concentrate becomes taconite pellets and where environmental controls take place. Brunfelt said Essar expects to produce just 5 percent of the emissions it is permitted to generate thanks to the ability to install newer, more efficient technology at the start.

(Aaron J. Brown)

Construction at the balling plant:

(Aaron J. Brown)

(Aaron J. Brown)

(Aaron J. Brown)

Other interesting facts I learned from the tour:

• The tailings basin for Essar is actually located south of Highway 169, so they’ll be installing a pipeline over the road west of Pengilly similar to the one people drive underneath now at U.S. Steel’s Keewatin Taconite plant.
• Essar is, at present, the largest greenfield construction project in North America. It’s hard to overstate the sheer “bigness” of everything going on there right now. It’s a $1.9 billion project with $1.3 billion currently “in use.”
• Brunfelt said Essar’s projected annual payroll will be more than $25 million, with a wage and benefit package on par with that of other area mining companies. The company does not currently have an agreement with the United Steelworkers union, but the construction labor on site is entirely union. For me, one of the biggest questions left is whether the Steelworkers will be successful in organizing a union at Essar.
• The company is very quick to remind that it will not displace any Iron Range mines when it goes online. The mines it displaces would be the Empire Mine in Michigan, which is hovering near closure anyway, and two Canadian mines owned by Arcelor-Mittal.

Finally, below is the view of the place where the original Essar groundbreaking took place more than seven years ago. The dirt in the foreground represents “actual” ground level, the rest has been dug out. Here you see Hammerlund crushing rock for use in construction, a process that, for now, takes place all day long, every work day.

(Aaron J. Brown)

My conclusion is that we can finally put to rest the question of whether Essar will finish its taconite plant near Nashwauk. It certainly will. It’s intriguing to hear that the company still plans to produce value-added iron at the site as they had originally promised. Many things need to happen, however, before that hope becomes a reality. I am significantly less skeptical about the prospect, however, than before I toured the site on May 21.

NOTE: This post has been slightly modified to reflect clarifications to technical descriptions.