Nashwauk is just one push pin on a big map for global steel company

It's been said before, but Essar Global's ongoing purchase plans of the Minnesota Steel project -- a proposed iron mining and steel-making operations near Nashwauk -- sends the Mesabi Iron Range deep into the complicated global steel market. For two decades, Iron Rangers have come to view the prospective mine and steel mill on the old Butler Tac site as a good "jobs" project, one that would make steel in the same place where ore is mined. Reading these world headlines about Essar's activities in North America shows me that we don't yet fully understand the long term goals of this company in our area, other than they need our ore -- just as all the other steel companies have needed our ore since the 1890s.

Close observers of this story knew that after Essar bought Minnesota Steel, they bought Algoma Steel in Michigan, a facility that processes iron ore much the same way the proposed Nashwauk steel plant was supposed to do itself. Now, Essar is vying for Esmark Steel, a Chicago-based steel company with customers throughout the continent. So Essar now holds ore interests, steel plants and a distribution system -- just like Rockefeller and Carnegie did back in the old days.

First, this business story from the Hindu Times of India:

Essar Steel consolidates presence in N. America

Mumbai, May 2 -- US-based Esmark, which the Essar Group is set to acquire with an enterprise value of $1.1 billion, is part of a well-planned strategy of the Indian steel maker to consolidate its presence in the controlled and well-protected North American steel market that is estimated to be over $100 million tonnes (mt).

Esmark will be Essar’s third acquisition in the North American and Canadian markets — it had acquired Algoma Steel for $1.6 billion and Minnesota Steel for an undisclosed amount in April last year.

With this acquisition, Essar will have a production capacity of 7 mt in the North American and Canadian market — 4 mt from Algoma and 3 mt from Esmark. Significantly, this is higher than that its current production capacity in India, which is at 4.6 mt.Market presence

Although Essar Steel has been exporting to the North American markets for some years now, it became clear to the company that to consolidate its presence in that market, it had to be physically present there. This was because the US steel market, which is one of the world’s largest, is known for its protective nature.

Then, today, we learn that the Steelworkers union may battle the Esmark sale over contract issues. This May 3 story shows some of the seeds of discontent. We also learn that Esmark controls steel facilities throughout the Rust Belt. Essar could conceivably hold a piece of all of the major mining and steel-making regions in the United States if these deals go through. That's not necessarily bad, but it would be foolish of us Iron Rangers to assume we are Essar's top priority. As future negotiations with this company play out, we need to make sure that our interests -- steady jobs, fair payment of taconite taxes to fund our schools and communities, and good business and environmental practices -- are represented at the table.

As far as whether Minnesota Steel ever makes steel or not, well, it would appear that the answer depends far more on the American economy than the continued growth of India and China. Essar is trying to break into the Indonesian steel market, which would provide a much more economical way to feed the steel demand in huge, growing Asian nations. (Just look at how convoluted the Indian steel market is right now; all of this now affects people sitting at the Wauk-In cafe in Nashwauk). If the U.S. needs steel, an efficient direct-reduced steel plant in Nashwauk will be very successful. If the U.S. economy falters more then it may be many years before demand gives Essar the reason it needs to continue onto the final phase of Minnesota Steel: the phase that includes actual steel production. Until then, it may just be another mine with far fewer jobs than we had originally hoped for.

Welcome to the new world order. Find yourself a Hindu translator and get ready for an interesting decade in northern Minnesota.

Taking Requests: Minnesota Steel, sure thing or just a myth?

This is the third and, for now, final installment of the randomly occasional "Taking Requests" segment, in which I blog about Range issues on the minds of MinnesotaBrown readers. Today's topic, at the prompting of a couple e-mails I've received, is the Minnesota Steel project near Nashwauk.

For the past decade, the biggest of all the "proposed" economic development projects on the Iron Range has been the Nashwauk steel plant. It's gone through a few name changes and the details have shifted somewhat, but the idea has always been pretty consistent. Let's take the ore from the Iron Range and turn it directly into steel right here, saving transportation and processing costs and making American steel more competitive in the global marketplace. For a region that has depended on reliable blue collar jobs like mining and manufacturing, the prospect of union steel mill jobs has been a tantalizing possibility.

This is not a new idea. Some in my family remember the idea of turning the old Butler Taconite site near Nashwauk into a direct-reduced mine and steel mill shortly after they closed the Butler plant in the early 1980s ('83, I think, but my Iron Range Almanac of Plant Closures is in the other room). Today the Minnesota Steel plant is closer to reality than ever. It has its permits. It has an owner, India's Essar Global, that is experienced in steel making and international finance. It enjoys widespread political and and public support, more so than any other big proposed economic development project on the Iron Range. It also would provide more jobs than any other project and, to me, makes the most logical sense. Why not make the steel here when the ore product is already all heated up and ready to go.

GOOD NEWS (for Minnesota Steel proponents)

• Minnesota Steel secured its permits. In addition to being necessary this also puts the mine/steel plant first in line for construction, ahead of other projects. The untold story in all this development on the Range is that at some point the federal EPA is going to say "no mas" because of our proximity to the protected Voyageurs and the Boundary Waters parks. Provide it's built in the next year or two, the steel project will avoid this barrier.


• There are, according to a state official, eight engineers from Essar working in Hibbing on pre-construction preparations for the first phase of construction at Nashwauk. These are Essar regulars, not contracted engineers, which to me implies seriousness.


• Despite the bad economy, steel prices are still high and the fundamental motivation for building a direct-reduced steel mill on the Range remains intact.

BAD NEWS (for Minnesota Steel proponents)

• Lots of talk, no shovels. Which means that for all the progress over the past two years there are still the same number of steel plants on the Iron Range as in 1983: zero


• The reason for no groundbreaking is a delay in Essar's financing, caused in part by global trouble in the banking sector. That global trouble isn't going away any time soon, so the worry is that this delay could last longer than we're being told.


• The longer the Minnesota Steel construction is delayed, the greater the risk that the current favorable steel market will enter it's cyclical downward trend and add further financial barriers to the plant's success.


• Howard Hilshorst, the northern Minnesota mining executive brought in to steer the project, is no longer with the company. I still don't know why. Some fear that without a strong local voice inside the room with the Essar executives Iron Range interests might not be represented as well. I still don't think Hilshorst's departure is a signal of devastation for the project because there are engineers working on the Range and there remain Iron Rangers doing political work on this; but that's still not the same as an executive with Iron Range ties.


• Essar also recently bought a low grade steel mill in northern Michigan that functions much like the steel mill proposed for Nashwauk is supposed to. The company itends to begin its northern Minnesota operations by shipping concentrate to Michigan much the way all other Iron Range ore products are shipped east. This begs the unanswered question, "will they follow though in building the Iron Range steel mill if the Michigan option works?" I've heard that Essar has signed papers on steel-making equipment intended for Nashwauk, but we won't know what the company really plans to do until they start construction. A company representative has told the media that the phased introduction of steel-making was always part of the plan, but that's a fairly predictable response.

Now there are some in the environmental community who would rather the whole thing go away, but this project -- unlike Excelsior Energy or even the mineral mines on the east Range -- enjoys wide support. Despite my environmental concerns and my outspoken position against public boondoggles, I still think the steel mill is a good thing for the Iron Range. As the cereal commercials say, it could be part of "this balanced breakfast" so long as we remember to include some metaphorical fruit, orange juice and granola in our economic mix.

We'll see what happens in coming months. If we don't have financial close and groundbreaking by this summer this project can be considered far less certain than we Iron Rangers have been hoping. The fundamental truth remains: Minnesota Steel isn't real until shovels start digging.

Minnesota Steel groundbreaking delayed

Financial close on Essar's Minnesota Steel plant has been delayed until May or even June, according to reports I'm hearing. I have confirmed this in Range political circles. The worldwide financial market is bad, so Essar is having trouble locking in on "financial close" for what would be the first iron to steel facility on the Mesabi Iron Range in northern Minnesota. The worldwide steel demand is holding steady so officials remain hopeful that this delay is only a formality. The danger is that the longer construction is delayed the greater the risk of the steel market slowing and further jeopardizing the financing. Wayne Nelson of Business North said something similar on 91.7 KAXE April 14. A report of a similar nature ran on WDIO last night.

On a more positive front, I have received word that several Essar engineers are working on the Iron Range right now on massive amounts of pre-construction planning. I hear they are Essar regulars, not locals that have been subcontracted. While not as good as a groundbreaking that is the next best possible news. Again, shovels in the ground are the only true indicator of a project go-ahead.

This project would be the biggest job creation project on the Iron Range in more than a decade and would solidify the region's place in the global steel market into the foreseeable future. The project isn't beloved by all, but it is by most, and the idea makes much more sense than several other economic development ideas currently out there.

Nashwauk steel plant still 'go for launch'

Business North is reporting that a groundbreaking announcement on Essar Global's Minnesota Steel iron mine and steel plant near Nashwauk is expected this month. So far, so good. Essar has a lot of "irons" in the fire, however, and I won't pop open a bottle of anything expensive until I see really big shovels in the ground. As you see in the story, this major international corporation has a lot of different ways to get the steel it needs for its Chinese and Indian markets.

Minnesota bonding bill: "Deal or No Deal?"

The Minnesota House and Senate conference committee released its bonding bill list today and there's some good news for northern Minnesota.

Among other smaller projects across the Iron Range, Itasca County would receive $28 million for infrastructure for Essar's proposed Minnesota Steel plant near Nashwauk. That's not nearly the amount required to build the pipeline, roads and railways needed, but it's something and probably keeps the project going after Iron Range Resources makes up the difference.

(By the way, the position of this blog is "Minnesota Steel good, Mesaba Energy Project bad." You know that's an honestly held position because one part of it or the other angers 95 percent of my readers).

It's aggravating that the governor has insisted that IRR use its funds from one-time mineral taxes to build basic infrastructure, but at least it didn't take us half a decade to get anything at all. (I'm talking about you, DECC expansion in Duluth).

The bill rolls in at $925 billion. Gov. Tim Pawlenty says he wants it to stay at $825. He has the option of line item vetoing projects on the list or he can veto the whole bill and make the legislature do the trimming. I think it's more likely he'll veto the whole thing or just sign it. He's can try to blame the DFL for everything by vetoing it. He can also show bipartisan election year appeal by signing it. Based on how things have progressed in the session so far, I'd prepare for the prior. The Minnesota Republican strategy so far has been "no deals, take it to the election." In truth that's not a bad plan for them since they're safely entrenched in most of the seats that are up this year. But boy, a deal made this year would sure go a long way to helping smooth things over in the state.

So, T-Paw. What will it be. Deal? Or no deal?

(Let's hope this one doesn't end with a sad family looking at a briefcase full of $100 and a long plane ride back to Appalachia).

Range Wars in tomorrow's DFL county unit conventions

County unit conventions are taking place all over Minnesota in the DFL and Republican parties. The only matter of statewide significance is who the Democrats will endorse in the U.S. Senate race to oppose Norm Coleman, Al Franken or Jack Nelson-Pallmeyer. Both have agreed to abide by the party's endorsement. One of the most important regions in that statewide race is on my native Iron Range, where a treasure-trove of DFL delegates will be allocated tomorrow at the Senate District 5 and Itasca County DFL conventions, respectively. Though the actual human population of these units is far lower than many metro-area units, SD 05 carries something like 26 delegates (It might have changed from when I lived over on that side) and Itasca, my current home unit, carries 12 because of the Iron Range's reliable, almost unbelievable DFL voting record. (We're talking 65 percent DFL in a bad year, 85 percent in a good year).

I am the DFL Precinct Chair in Balsam Township and will be a county delegate at tomorrow Itasca DFL convention in Nashwauk. I was a former board of directors member in SD05 back when I lived in Hibbing. I will make this prediction. If Al Franken does well in tomorrow's conventions, we're looking at a first ballot endorsement. Itasca County has a huge Jack Nelson-Pallmeyer following because of the strength of the Progressive Caucus there. I expect my convention to split roughly down the middle. But if Franken pulls out a majority at SD05 in nearby Hibbing, with its delegate count exceeding that of three suburban cities, I see no way that Nelson-Pallmeyer breaks the requisite 40 percent at the state convention to forestall a first ballot Franken endorsement. Mike Ciresi was going to get a dozen delegates in SD05 and maybe one or two out of Itasca. He's out now. His folks will determine how tomorrow's results turns out. Franken has held such an advantage in pledged delegates so far that Nelson-Pallmeyer needs to carry huge numbers.

I'll report in tomorrow evening with news of the Itasca and SD05 conventions. Franken and Nelson-Pallmeyer will both be there, shuttling between the working class Range towns of Nashwauk and Hibbing. It may come down to who's blue work shirt looks less new. (Less new being preferable).

Session battles cast eerie light

Gov. Tim Pawlenty (R-Minn.) lashed out harshly after the legislature overrode his veto of the transportation bill. Today, the Senate is expected to oust Lt. Gov. Carol Molnau from her dual role as Transportation Secretary by denying her long-delayed confirmation. The Senate's bonding bill does not match the governor's (the House's bonding bill is expected soon).

It's not being said yet, but I wonder if this contentious environment, coupled with Pawlenty's possible national ambitions and the DFL legislature's hopes to win a veto-proof majority in the House next fall, could lead to a complete meltdown with no bonding bill and little else of note.

That's important because there are two vital Iron Range projects counting on bonding money -- the Essar Minnesota Steel plant near Nashwauk, which is permitted and waiting for the infrastructure money, and the dewatering of the Canisteo Pit, a flood risk located above Bovey.

The larger impasse might threaten these two generally agreed-upon items during this session.

Bonding bill nothing to snooze over

The chatter I keep hearing from folks who attend lots of under-reported public meetings is that the $67 million bonding request to fund infrastructure for the Minnesota Steel plant near Nashwauk is vital to the project's viability. In quiet rail authority and city meetings, company representatives and city officials communicating with them say that the costs of things like rails, pipelines and access roads keep going up and that Essar Global, the company that bought the Minnesota Steel project, is relying on that infrastructure to get started quickly.

Now, I have no doubt that the bonding bill will include money for the steel plant infrastructure (unless the bonding bill flames out entirely). The question is how much and where is it coming from? Gov. Tim Pawlenty would prefer that most of the money come from a one-time Iron Range Resources fund built up from mining taxes. Rangers would prefer that money come from the bonding bill because of the unique nature of the project and its long-term benefit for the whole state (not all that mining money stays on the Range, folks). If this argument can't be resolved then we could see major delays on this important project. The morale hit on the Iron Range would be great. This is the one "potential" project for which almost everyone holds the most genuine hope.

I put "potential" in quotes because we have had the good news that U.S. Steel will expand production at Keewatin Taconite, creating about 75 permenant jobs and a brief contstruction boom later this year. It's interesting to me that the KeeTac project happened so quickly it was never discussed as a "potential" project, just as one that happened. What does that tell us about our Iron Range habit of throwing all our money and hopes at proposals rather than economic realities? After all, the steel plant is only at the top of the list because the price of steel is currently very high. Ah, but that's a story for another day.

An important day for Iron Range mining projects

There's a lot going on today that could impact many of the precious mineral mining and value-added iron mining projects currently in development on the Iron Range.

First, this morning lawmakers are meeting with representatives of India-based Essar Global, the company that bought the Minnesota Steel project which aims to build a taconite mine and low-grade steel factory near Nashwauk. Essar officials are also meeting with local officials and others associated with the project today. Even if these meetings yield no "new" news, most Iron Rangers in the known hope these talks yield some specific timetables and direction from the company as to how the first Iron Range steel mill will become a reality.

Then this afternoon there is is a multi-committee legislative hearing in St. Paul about the environmental risks of several of the proposed mining projects on the East Range. Local representatives are pretty upset that these hearings are being held at all and I expect some theatrics. This Minnesota Public Radio story gives you a pretty good idea of the situation. I don't think these hearings will stop any of the projects, but the testimony will raise many points that will come up during the state and federal permitting process. In that regard it's not terrible to deal with them up front. The largest determiner of whether these projects go will be whether or not the companies involved can make money mining minerals. The same has been true through all of mining history. Oh, how little it seems we have learned.

Personally, I like how most mining news still comes out on Fridays. It's like their holy day or something.

Pawlenty releases 2008 bonding bill

Gov. Tim Pawlenty released his proposal for the 2008 bonding bill in the Minnesota State Legislature. (See MPR's coverage). This is the plan he would like to see pass, though he will be working with a DFL House and Senate that will have different priorities for borrowing and spending.

Two encouraging things for northern Minnesota: 1) He includes $30 infrastructure for the proposed Essar Global/Minnesota Steel mill near Nashwauk, and 2) there is money for Duluth's DECC expansion. I don't normally get involved in Duluth's DECC issues, but they've been trying so long I kind of feel like they should get some sympathy. Ru-dy! Ru-dy!

Itasca County and the DFL Iron Range delegation want more than twice as much money as Pawlenty proposes for the steel mill infrastructure, so there will be some bartering on that issue. I need to see exactly how the money is going to be applied to roads, rails and sewers before I say who has the more accurate proposal. The fact that there is any money at all from this governor is encouraging.

Meantime, lots of haggling will occur over the transportation funding for bridge and road repairs and mass transit in the metro area. That's an area that could absorb most of the bonding bill if legislators vote on regional lines.

Stay tuned ...

Local politics over power plant

This is a few days old, but look at this excerpt from the Hibbing Daily Tribune's Nov. 23 coverage of a recent Nashwauk Public Utilities Commission meeting (Nashwauk is a small town on the Western Mesabi, for those new to the Range).

In other matters, the PUC:
• Approved sending a letter to Excelsior Energy indicating interest in owning or participating in part of the Mesaba Energy Project. The PUC took similar action earlier this month with the Big Stone II project in South Dakota.

I'm sure Nashwauk's citizens would love to know that their city officials are willing to double or triple their citizens' power bills to provide political cover for their lobbyist/consultant pals trying to sell this beleaguered boondoggle of a project. Ultimately, this action will create little change in the demise of the Mesaba Energy Project (following in the footsteps of other coal gas plants that have been cancelled in just the past few months), but the letter again offers PR benefits for "Excelsior." Prepare for more of this political spin as the project enjoys a flurry of positive soundbites with Tuesday night's environmental hearing in Taconite. Energy from this Mesaba plant will cost twice as much as other sources, the plant doesn't include the carbon capture they talk about, and all the risk is absorbed by taxpayers while all the profits will go to a small collection of lobbyists.

Bad deal. Give it a rest, Nashwauk PUC.

Game on!

Gov. Tim Pawlenty announced Wednesday that state support for Essar Global's Minnesota Steel plant near Nashwauk is back on after the company assured him it wouldn't violate U.S. sanctions against Iran.

The whole ordeal became a rather fast and scary lesson in international trade and politics. Fortunately, it has worked out in the favor of the Iron Range.

Today's Duluth News-Tribune has a comprehensive story. My state Rep. and quasi-neighbor Tom Anzelc said it best, in the future let's hope that due diligence precedes press conferences. There's no reason Pawlenty couldn't have confirmed details with Essar before he declared his potential withdrawal of state support.

Pawlenty got in a good line, though, saying that he needed to clear this matter up before the governor's hunting opener this weekend near Hibbing (in the heart of the Iron Range) or else "the hunter would become the hunted." He must have been hearing some of the same things I heard around the Range before yesterday's good news.

Update: After stinging report, gov seeks facts

Gov. Tim Pawlenty has officially asked the U.S. State Dept. for clarification about Essar Global's involvement in Iranian oil. It's a good thing he did this before he called a press conference blasting state support for Essar's Nashwauk steelmaking project as Minnesota possibly funding terrorism.

Oh, wait. D'oh!

Pawlenty asks State Department for clarification on company's Iran ties
Duluth News Tribune - 10/29/2007

Gov. Tim Pawlenty said today he remains “hopeful” that he will be able to support plans to build a $1.2 billion steel slab plant near Nashwauk. But first, he said he needs assurances from its primary investor, Essar Global Ltd., that the company will abide by sanctions aimed at punishing Iran for its terrorist activities.

Pawlenty believes the Indian company’s involvement in a proposed Iranian refinery project could constitute financial support for what the U.S. government has labeled a terrorist state. He’s also concerned about Essar’s other business dealings in Iran, including a potential investment in a joint-venture steel mill, the pending acquisition of exploration rights in the Azadegan oil fields and the purchase of oil and liquefied natural gas from the company.

On Monday, Pawlenty sent a letter to Secretary of State Condoleezza Rice and David Mulford, the U.S. ambassador to India, asking for their help in determining whether Essar’s activities in Iran run afoul of U.S. law.

“I seek the assistance of your department in determining if Essar’s activities in Iran are a potential violation of the Iran Country Sanctions Act or are otherwise a cause for concern. If they are not, I will gladly support their efforts in Minnesota,” the governor wrote.

If the company gets a clean bill of health from federal authorities and pledges to honor trade sanctions imposed against Iran, Pawlenty said he will back Itasca County’s request for about $62 million in state funding to install some of the infra-structure needed to support a steel plant.

“The Minnesota Steel project is one that I have supported, and I want it to go forward,” Pawlenty said. “No one was more heartbroken than me when I learned of this potential problem related to Essar’s involvement in Iran. I still hope this issue can be cleared up and the project will be able to move forward.”

The governor is particularly perturbed by a Reuters news service report that Essar plans to help begin building an $8 bil-lion to $10 billion oil refinery in southern Iran next year. Iran currently has no large-scale oil refining capabilities, and the Reuters report indicated Essar planned to partner with its government to build a facility.

Steel plant Iran away; we need to Iget it back

The shakeup over Gov. Pawlenty's new found opposition of the Essar Minnesota Steel mining/steelmaking plant near Nashwauk continues. Local and state officials are uniting behind a cohesive message (for once): that the Iron Range wants to enter the global marketplace and that snap decisions and loaded rhetoric like Pawlenty's Sunday diatribe harm the Range economy and future.

Let's give this thing a moment, find the facts, and THEN make bold decisions.

Here's the morning roundup. Read these:
"Pawlenty sent message on terrorism" by Jane Brissett (Forum Communication via Duluth News-Tribune)
"Anger, amazement at plant decision" by Bill Hanna (Mesabi Daily News)

Also, read this.
"Pawlenty may join Steger on Arctic trek" (AP)
I'm hoping Pawlenty decides to move to the Arctic when he learns there are no taxes when you camp on a floating sheet of melting polar ice.

Aarrrrrrgh!

Remember yesterday? The Iron Range seemed to be closing the deal on the Essar Global Minnesota Steel project near Nashwauk, the all-in-one iron ore to steel plant that has been in the works for a decade and a half. Yeah, that was cool. Until Gov. Tim "Lucy" Pawlenty pulled the football out from under our Charlie Brown butts yesterday afternoon. (Read the Duluth News-Tribune story).

Turns out Essar Global has a deal in the works for an oil refinery in southern Iran.* Pawlenty, in an effort to appear vice-presidential, is now saying that not a dime of state money will go to support any project affiliated with any company doing business with Iran. It's not clear to me whether this is statute (part of U.S. sanctions on Iran) or just political posturing by Pawlenty. Well, it IS political posturing, but I don't know if it's legit or not.

I do know this. India, its government and private industries have had relations with Iran for a long time and finding those ties to Iran is easy. Even me, not an expert on global business dealings, found plenty of Indo-Iranian ties in a quick sweep of business news sites. (Check out this piece). The surprise is Pawlenty's sudden reversal and inflexible negotiation stance on Essar's Nashwauk steel plant. Iron Range lawmakers found out about the Minnesota Steel "sanctions" only moments before the governor's press conference. Most local officials found out in the media. This is another piece of the governor's consistent, seemingly pathological record of attempting to disrupt the Iron Range's political and economic culture (a culture that does not support the "me first" model of conservative government). He wants our mining tax revenue, but he won't support efforts to modernize the Range unless they come from his administration. Tim Pawlenty is about as helpful to the Iron Range as Iran is to the political structure of the Middle East. Go ahead, Tim. Hold your press conferences. Get your kudos on Fox News.

Oh, and by the way. Screw Iran, too. I'm not taking their side.

In summary: We live in a global economy that will never stop being global. The fastest growing nations in the world are India and China; they are also the most populous. These nations are working with the screwballs in Iran because Iran has what they need: oil. There's your problem. Kicking the Range and our best chance to modernize our steel industry will do nothing to solve your problem. Kill the steel project and Essar will still open the Iranian refinery. Who wins? Iran. Whooppee! Thanks, conservative movement. Your inconsistently applied doctrine of global power is finding new and better ways to stick it to the Iron Range.

* This is not the same as Iraq. A refinery in southern Iraq would have been rewarded with boxes and boxes of unmarked American currency. Iran has been named a terrorist state. Normally, we'd invade Iran to "spread democracy," but we're f-ing busy, alright. We'll do it later. (In case you missed the headline: Aaaarrrgghhh!)

Steel plant, mining study make statewide news

A couple of items discussed this week made Saturday appearances in non-Range papers.

The Minneapolis Star-Tribune has a story today ("Iron Range steel mill fires up region's hopes") about the Essar Global Minnesota Steel plant in Nashwauk. This is the first major positive news about something on the Range to hit the Star Tribune in a long time.

Also, the Duluth News-Tribune has this story ("State won't participate in Cliffs' study") following up on the one they ran yesterday. The mining company Cleveland-Cliffs is trying to do their own study about health risks in Range mines when many have insisted that one united academically-sound study should be completed by the University of Minnesota. The fact that the state is specifically opting out of the Cliffs study contradicts the company's claims that they were working with state officials all along.

Essar buys Minnesota Steel: Project is for real

The headline may seem redundant to a business section editor, but on the Iron Range we are so used to getting burned on big economic projects that we don't start popping bottle tops until the ink is dry. (Or is it that we don't STOP popping bottle tops until the ink is dry; maybe both).

On Monday, Essar Steel of India officially bought Minnesota Steel, the longtime proposed iron ore to steel project near Nashwauk (and relatively near my home in Itasca County). Full financial close will come in a few months. This means, more than ever, that we'll be making steel on the Iron Range in the next few years and that there will be a local employment and housing boom starting next year. A taste of Lee Bloomquist's story from the Duluth News-Tribune is below, though I encourage you to read the whole article.

Indian firm buys Minnesota Steel; will build steel plant
Lee Bloomquist
Duluth News Tribune - 10/23/2007

NASHWAUK — A financial manager in Grand Rapids offered what’s become an often-heard comment about a $1.6 billion steel mill proposed on Minnesota’s Iron Range.

“He was sitting next to me and he said: ‘I didn’t realize that this was going to be such a big project,’ ” said Peter McDermott, president of the Itasca Economic Development Corp. “It’s like a lot of other people. They don’t believe
it until they see it.”

On Monday, the largest industrial project in the history of the Iron Range gave residents one more reason to believe, taking one of its final steps toward completion. Essar Global Limited, a steelmaker based in India, bought Minnesota Steel Industries and its steelmaking facility proposed near Nashwauk.

The project holds potential to transform the region by adding good-paying jobs, creating spinoff businesses, attracting new families to the region and boosting school enrollments.

“I think this is pretty exciting, myself,” said Peter Kakela, a Michigan State University professor who studies the iron ore industry. “We’ve been importing about 10 million tons of steel slabs per year over the last 10 years. It would be great to have a domestic source.”

“I don’t know if people understand what the magnitude of this is,” Marvin Vuicich, president of American Bank in Hibbing, said of the project. “It’s going to have an absolutely huge impact. It’s going to create a huge housing need in several Iron Range cities, increase property values, rental rates and create a huge need for workers. Maybe it’s going to be a way to keep more young people on the Range.”

Minnesota Steel officials would not comment on the sale price. However, the transaction means construction of the mammoth project probably will begin early in 2008.

“Essar Steel is a global conglomerate and is now going to take the project to successful fruition,” said Steve Hicks, Minnesota Steel vice chairman. “Yes, they will be able to construct the project.”

Full financial closure for the steel plant, in which Essar would secure $1.6 billion for construction, is expected by January.

Implicatons of a new era for Range mining industry

On Tuesday, the Iron Range Resources board held a special meeting to approve a new structure for a loan to the Minnesota Steel project as it enters the final stages of its purchase by India-based Essar Steel. (Today's Mesabi Daily News details the deal). This is seen as the final hurdle in the private financing, which when complete would allow construction on the fully funded and permitted iron mining and steel production facility in Nashwauk.

This project is important for many reasons, both real and symbolic. It hasn't generated as much controversy as the proposed power plant near the town of Taconite, but I have Iron Range friends who strongly support and oppose the steel plant, too.

First, this will be the first time our iron products on the Mesabi Range are turned into steel right here. We've always shipped iron ore and taconite East to be processed into steel by parent companies. Best case, this means the steel industry has become as efficient as possible and that these jobs will be more secure than others like them. Worst case, we find out that making steel here is too expensive to compete on the world marketplace. I hope for the first possibility.

Second, this facility will be built over the footprint of the former Butler Taconite plant, which was the first taconite plant to close during the Range depression of the 1980s -- a dark economic time from which the region has never fully recovered. In a way, this project could symbolize our survival of the near deadly blow we took back then.

And third, this project represents the preservation and modernization of our mining economy for several decades into the future. We are committing to another generation of mining in northern Minnesota. This is good for the economy, in the short term at least, but carries other possibly negative consequences. A report by a University of Montana geography professor indicates that the mining industry on the Range isn't as vital to our economic health as it once was and that our natural beauty and quality of life is more important to our future than sustained mining jobs. I encourage you to read the report. On par with the environmental implications, perhaps even more important, is the risk of once again becoming complacent during strong economic times and failing to prepare for a future that will rely on service industries and telecommuting -- both of which require strong communities, better infrastructure and quality public schools in particular.

Fundamentally, we're not ready to abandon mining as the central driver of our local economy. I do, however, believe we need to do more to prepare for a post-mining economy. Minnesota Steel, Mesabi Nugget and technological advances in traditional taconite mining will buy us 20-50 years of average to above-average economic conditions, with some probable down years. If we waste that time and the resulting financial resources we will not get a second (or in our case third or fourth) chance. As an Iron Ranger, I've come to terms with the damage we've done to the landscape of this region. After all, we can't turn the mine dumps and pits into the forests they once were. But I also believe we must not needlessly or carelessly damage the natural beauty we have left. It's time for a responsible balance. That's why we should support projects that use abandoned industrial space and protect natural areas that future generations can enjoy when mining truly is exhausted on the Iron Range.

Into the future we go. Let's go with our eyes open and our imagination working.