Minnesota Ore Operations iron ore feeds new U.S. Steel facilities

Iron ore pellets from U.S. Steel’s Minntac Mine in Mountain Iron and Keetac in Keewatin is now supplying the company’s new pig iron plant at its Gary Works in Gary, Ind.

Pig iron made at Gary Works Pig Iron Caster No. 1 is in turn feeding U.S. Steel’s Big River Steel Works electric arc furnace mini mill in Osceola, Ark.

The pig iron plant will produce up to 500,000 tons of pig iron per year, providing up to 50 percent of Big River Steel’s ore-based metallics needs, according to U.S. Steel.

Keetac iron ore will beginning next year feed a new approximate $150 million DR-grade pellet plant under construction at Keetac.

The iron products produced at Minntac Mine and Keetac are keys in helping the company meet its metallics strategy, company officials say.

“U.S. Steel has been and continues to be the low-cost producer of iron ore in northern Minnesota,” David Burritt, U.S. Steel president and chief executive officer said in the company’s year-end 2022 and fourth quarter earnings call. “Low cost iron ore has historically been a competitive advantage and a key component of the supply chain for our integrated blast furnace operations. That value remains today. This advantage will grow our value creation potential as we continue to execute our differentiated metallics strategy in our transforming footprint with state-of-the art mini mill steelmaking.”

Producing its own pig iron and DR-grade pellets is a big step for U.S. Steel.

In recent years, the need to have strong supply chains, access to raw materials and internal production capabilities, has become more important than ever, Burritt said.

That’s where the production of its own pig iron and DR-grade pellets is key, he said.

“That is why U.S. Steel is creating value for our stockholders by investing in internally sourced pig iron at Gary Works and expanding our capabilities by producing higher grade pellets at our Keetac operations,” Burritt said.

Production at the pig iron plant began in December.

The roughly $60 million pig iron plant was completed ahead of schedule and on budget, Burritt said.

Keetac’s DR-grade pellet facility has potential to feed a future direct reduced iron or hot briquetted iron facility, according to U.S. Steel.

U.S. Steel in October held a celebration for the DR-grade pellet plant at Keetac.

The first DR-grade pellets are expected to be produced in 2024.

Production of DR-grade pellets is a first for U.S. Steel.

Northeastern Minnesota iron ore mines will be a major player as modern steelmaking evolves, Kristen Vake, Iron Mining Association of Minnesota executive director said.

“It’s an exciting time for this industry,” Vake said. “Our iron mines are playing a key role in the future of steelmaking, and that impact is only going to grow with the Keetac DR pellets which will supply the DRI market.”

Although DR-grade pellet production gives U.S. Steel and Keetac a higher iron, higher-value product, Keetac will also be able to continue producing blast furnace grade iron ore pellets.

Meanwhile, U.S. Steel had a strong 2022.

U.S. Steel in 2022 recorded its second best financial performance in the company’s 122-year history, according to company officials.

The company reported full-year 2022 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $4.2 billion and $1.8 billion of free cash flow.

Full-year net earnings were $2.52 billion.

That compares to 2021 fully-year net earnings of $4.17 billion.

While a mild recession could be ahead in the latter half of 2023, lower inflation trends, improved supply chains, reduced federal interest rate hikes, and projected increases in steel and iron ore prices, bode well for the company, Burritt said.

A solid year is expected in 2024 as federal infrastructure and computer chips legislation takes effect, Burritt said.

“The tailwinds seem to be growing,” Burritt said.

The company has restarted the idled No. 3 blast furnace at its Mon Valley Works in Pennsylvania, however the No. 8 blast furnace at Gary Works remains idle, Jessica Grazinao, U.S. Steel senior vice president and chief financial officer said during the year-end, fourth-quarter earnings call.

Burritt says U.S. Steel is optimistic heading into 2023.

“I’m bullish on America, I’m bullish on the U.S. steel industry and I’m bullish on U.S Steel,” Burritt said.

As it has been for roughly 140 years, iron mining is critical to the nation’s future, Vake said.

Automobile, construction and energy industries will depend on iron mining to supply the raw material needed to manufacture the products required for everyday life.

“Iron mining has been so important for our past and our present,” Vake said. “Looking to the future, we are going to be a big part of the energy transition.”