Steel Dynamics Announces Indefinite Idle of Minnesota Operations
05/27/2015 - Steel Dynamics, Inc. announced plans to idle its Minnesota ironmaking operations located in Chisholm and Hoyt Lakes, MN, effective immediately.
These operations are comprised of a jointly-owned iron concentrate production facility (Mining Resources) and a jointly-owned iron nugget production facility (Mesabi Nugget). Management and the company's board of directors have elected to idle the operations for an initial twenty-four month period given the continued significant decline in pig iron pricing, which has resulted in the cost of iron nugget production being meaningfully higher than product selling values.
"With this action, we are actively responding to the unprecedented decline in iron ore pricing, which recently led to an extreme decrease in pricing for pig iron, our end product," stated Mark D. Millett, Chief Executive Officer. "Current global currency dynamics and world iron ore supply / demand factors support lower pig iron prices. We currently do not see strong drivers that would suggest a reversal of this trend for some time. Our Minnesota operations were intended to serve as a hedge to high pig iron and scrap prices. While this lower raw material cost environment certainly advantages our steel operations, it has resulted in an uneconomic situation for our iron nugget operations.
"We deeply regret the need to take this action, as the men and women in Minnesota have made great strides in production capability and cost savings relative to this pioneering effort. I commend their dedication, hard work, and strong commitment to the company and area communities."
In total, approximately 200 positions will be reduced in Minnesota. However, the company is taking numerous steps to provide opportunities for employment at other Steel Dynamics locations and subsidiaries where available. A small group of individuals will be retained in Minnesota to maintain the site and facilities.
"With this action, we are actively responding to the unprecedented decline in iron ore pricing, which recently led to an extreme decrease in pricing for pig iron, our end product," stated Mark D. Millett, Chief Executive Officer. "Current global currency dynamics and world iron ore supply / demand factors support lower pig iron prices. We currently do not see strong drivers that would suggest a reversal of this trend for some time. Our Minnesota operations were intended to serve as a hedge to high pig iron and scrap prices. While this lower raw material cost environment certainly advantages our steel operations, it has resulted in an uneconomic situation for our iron nugget operations.
"We deeply regret the need to take this action, as the men and women in Minnesota have made great strides in production capability and cost savings relative to this pioneering effort. I commend their dedication, hard work, and strong commitment to the company and area communities."
In total, approximately 200 positions will be reduced in Minnesota. However, the company is taking numerous steps to provide opportunities for employment at other Steel Dynamics locations and subsidiaries where available. A small group of individuals will be retained in Minnesota to maintain the site and facilities.
Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $8.8 billion in 2014, over 7,700 employees, and manufacturing facilities primarily located throughout the United States (including six steel mills, eight steel coating facilities, two iron production facilities, over 90 metals recycling locations and six steel fabrication plants).
