It's a brand new type of pellet for United States Steel Corp.
And a big step into the future for Minnesota's Iron Range.
United States Steel Corp. announced Tuesday it will build an approximately $150 million DR-grade pellet system at one of its two Minnesota Ore Operations taconite plants.
“This is one of the biggest things that's happened in northern Minnesota since the 70's,” John Arbogast, United Steelworkers (USW) District 11 staff representative said. “It's great news that we are moving into the next century of mining.”
DR-grade pellet-making brings U.S. Steel and its Iron Range taconite operations into the production of a new product line.
It also provides more domestically-sourced feed for an ever-growing segment of steelmaking.
U.S. Steel plans to break ground on the system this fall.
The company isn't saying whether the system will be built at Keetac or Minntac Mine.
Together, the two facilities comprise U.S. Steel Minnesota Ore Operations.
However, either way, steelworkers say it will solidify the future for workers, families, and the region.
“I think it's a step in the right direction,” Jake Friend, USW Local 2660 president at Keetac said. “It should help with sustainability with the way the steel industry is going.”
Steve Bonach, USW Local 1938 president at Minntac Mine, said the announcement means increased stability for workers wherever the system is located.
“It's good stuff,” Bonach said. “Either way it goes is going to be good for versatility and it's going to give us a little more leverage. One way or another, either of us can take it on.”
Sen. David Tomassoni of Chisholm, applauded U.S. Steel for its decision.
“This appears to be the direction the industry is going and it's good that U.S. Steel is building on the Range,” Tomassoni said. “Long-term construction jobs and job security for the current employees. It's great that U.S. Steel has decided to build the plant on the Range and utilize our infrastructure and expertise.”
For U.S. Steel, it's the company's first foray into the production of a value-added iron product on Minnesota's Iron Range above and beyond the production of traditional iron ore pellets.
Traditional “acid” or “flux” iron ore pellets contain about 62 percent iron.
DR-grade pellets are a higher-grade pellet with an iron content of 67 percent or more.
While traditional iron ore pellets feed blast furnaces, DR-grade pellets feed direct-reduced iron (DRI) and hot-briquetted iron (HBI) facilities.
DRI and HBI facilities feed electric arc furnaces.
Electric arc furnaces currently produce about 78 percent of the steel made in America.
The system will allow either Keetac or Minntac to produce DR-grade pellets and also maintain production of blast furnace grade pellets, U.S. Steel said.
“Our conviction remains that steel mined, melted and made in America is vital to our national and economic security,” David B. Burritt, U.S. Steel president and chief executive officer said in a news release. “We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow, making us increasingly self-sufficient. It's another way that we're supporting domestic manufacturing, simplifying complex global supply chains, addressing the sustainability demands of our customers, and ultimately creating profitable steel solutions for people and the plant.”
Rep. Julie Sandstede of Hibbing said the announcement moves northeastern Minnesota's taconite industry into being a supplier of modern steelmaking.
“It's moving us in the right direction as far as the future of mining,” Sandstede said. “Traditional taconite pellets are going to be a thing of the past soon, I think. The location (of the DR-grade system) will be interesting.”
Rep. Dave Lislegard of Aurora said the investment will help keep the region's iron ore industry viable.
“This is extremely exciting news for northeast Minnesota,” Lislegard said. “The commitment and investments are critical in keeping our mining industry viable as it continues its transition to DR-grade pellet production. It is imperative that the relevant agencies work expeditiously and in collaboration with U.S. Steel to get all necessary permits completed. I could not be more pleased with this development, especially for our local communities who are relying on these new opportunities to prosper.”
Production of DR-grade pellets involves removing additional silica (waste) from iron ore concentrate, usually through increased flotation of the concentrate.
What it likely means is upgrades in the concentrator at either Keetac or Minntac.
Timelines and construction of the DR-grade system are subject to state and local support and receipt of regulatory permitting, U.S. Steel said.
When complete, U.S. Steel would have the option to sell the pellets to third-party DRI and HBI producers or use the pellets to feed a potential DRI or HBI facility of its own, U.S. Steel said.
Arbogast said the announcement underlines how important northeastern Minnesota's iron ore is to the nation and in moving toward a more carbon-free future.
“It shows that Minnesota ore is a valuable asset in that they're willing to spend more than $100 million here,” Arbogast said. “As steelworkers and the country more toward a more carbon-free future with electric arc furnaces and pig iron, this is going to ensure a new level of stability. It's going to secure our members jobs going into the future.”
In a separate announcement, U.S. Steel said it has signed a non-binding letter of intent with SunCoke Energy, Inc., under which SunCoke would acquire the two blast furnaces at U.S. Steel's Granite City Works in Granite City, Ill.
SunCoke would build a two million ton-per-year pig iron production facility at the site.
SunCoke would supply U.S. Steel with access to 100 percent of the pig iron production for the next ten years.
U.S. Steel says it will supply iron ore from its own mines to feed the pig iron plant.
SunCoke would lead efforts to build the pig iron plant and re-purpose the blast furnaces, according to U.S. Steel.
Keetac has for years been a major supplier of iron ore pellets to Granite City.
U.S. Steel is moving rapidly into the production of pig iron and electric arc steelmaking.
The Pittsburgh-based iron and steelmaker recently announced a $60 million investment to construct a 500,000 ton-per-year pig iron caster at its Gary Works in Gary, Ind.
Iron ore from its Minnesota mines will feed the caster.
A $3 billion expansion at U.S. Steel's Big River Steel works, an electric arc furnace mini mill in Osceloa, Ark., is also underway.