MagIron Gets a New Lease on Life

Written by David Schollaert

A previously shuttered iron ore concentrate facility on the Mesabi Iron Range might be coming back to life under the newly-formed MagIron LLC.

The Plant 4 concentrator near Grand Rapids, Minn., formerly owned by Magnetation and once rescued from bankruptcy by ERP Iron Ore – which subsequently filed for bankruptcy itself – has been acquired by former Magnetation CEO Larry Lehtinen.

The plant was originally built by Magnetation, a joint venture between the former and AK Steel (now owned by Cleveland-Cliffs). It filed for bankruptcy in 2015 following a steel industry downturn. ERP Iron Ore acquired the facility but went bankrupt in 2018. The facility has been idle since.

Magnetation LLC opened in 2008 using an innovative process to recover high-quality iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins. At its peak, the company employed more than 500 workers. A crash in iron ore prices led to a Chapter 11 filing under the US Bankruptcy Code in May 2015.

The company initially idled its Minnesota iron ore concentrate plants in Keewatin, Bovey and Chisholm between 2015 and early 2016. The remaining Grand Rapids, Minn., location (Plant 4) and a pellet plant in Reynolds, Ind., were finally shuttered in the fourth quarter of 2016.

Under a settlement agreement, AK Steel paid $32 million to end its pellet agreement with Magnetation. The remaining assets were sold to pay creditors.

Despite its troubled history, Plant 4 is getting another lease on life thanks to a strong domestic steel market, historically high prices, and growing demand for virgin metallics from electric-arc furnace (EAF) producers.

MagIron for its part recently acquired Magnetation’s concentrator in a $20 million asset purchase agreement last December. That followed the approval of the sale of other Plant 4 assets by a federal bankruptcy judge.

The acquisition includes 2,483 acres of land surrounding the plant and an inventory of new spare parts and plant equipment. A long-term lease with Itasca County for 1,700 acres of land near Plant 4 is also expected to close later this month, according to MagIron.

The newly-formed company is in discussions with leading commodity traders for off-take agreements and with steel mills interested in using the concentrate as feed, the company said.

An investment of more than $100 million is planned. The restart is expected to create more than 130 jobs. Production is forecast to be 3 million tons per year of iron ore concentrate.

The facility is not expected to begin producing commercial iron units until late 2023, according to a MagIron news release.

By David Schollaert,

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