Steel Dynamics Completes Purchase of Minnesota Iron Mine
12/04/2007 - Steel Dynamics completes its purchase of a shuttered Hoyt Lakes, Minn., taconite mine from Cleveland Cliffs where it will invest $165 million so it can mine and concentrate iron ore for its Mesabi Nugget venture with Kobe Steel.
Steel Dynamics, Inc. has completed its purchase of approximately 6000 acres of land at Hoyt Lakes, Minn., from Cleveland Cliffs, Inc. The purchase also included mineral rights for this property, as well as mineral rights on additional land that is contiguous to the purchased parcel.
Located on the Mesabi Iron Range, the Hoyt Lakes property includes a taconite mine that was previously operated by the former LTV Corp. and was later purchased by Cleveland Cliffs.
Steel Dynamics plans to re-open the mine and conduct surface mining of the iron deposits, and will also construct and operate a facility to concentrate the iron ore. According to SDI, operations could begin in late 2009 or early 2010, assuming the timely issuance of permits.
Total costs for the venture are estimated at $165 million. The company expects to hold approximately $65 million in equity and will be the sole owner of the mining and concentrating company, which will be known as Mesabi Mining, LLC.
Steel Dynamics has also formed a new corporation with Kobe Steel, Ltd. that will construct and operate an iron nugget manufacturing plant on the site. Permits have been issued for the new corporation—Mesabi Nugget Delaware, LLC—and construction is now underway.
The nugget project is supported by both Iron Range Resources and the Minnesota Department of Employment and Economic Development, and the State of Minnesota has agreed to provide $26.5 million in non-recourse. With an expected annual capacity of 500,000 tonnes, the plant is to begin iron nugget production in mid-2009.
Steel Dynamics anticipates that all of the iron mined from the site will be concentrated on site and delivered to the nugget plant or to future additional plants on the site. Substantially all of the output from the announced nugget plant is expected to be consumed in SDI's minimills, primarily in Indiana. The company believes that this new business will be capable of providing to its steel mills, at a favorable cost, a domestic source of iron units that are of equal or higher quality than purchased pig iron. In time, additional nugget production facilities could be constructed at the site.
