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Steel Dynamics Moves Forward on Minnesota Iron-Making Venture
09/21/2007 - Steel Dynamics moves forward with the Mesabi Nugget iron-making project at Hoyt Lakes, with the State of Minnesota helping to support project financing.
Steel Dynamics, Inc. is moving forward with the Mesabi Nugget iron-making project at Hoyt Lakes, Minn., with the State of Minnesota helping to support project financing.
Subject to completion of final project financing arrangements, Steel Dynamics plans to invest $85 million in equity in the venture and to hold an 81% equity interest, while Kobe Steel plans to invest $20 million in equity for a minority equity stake of 19%.
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Steel Dynamics’ board of directors has also approved development of an existing iron mine on the Mesabi Iron Range and construction of a facility for concentrating iron ore.
The company intends to purchase or lease land on the Mesabi Iron Range that is expected to provide a long-term supply of iron ore, and will eventually process the iron ore and use it as raw material feedstock for the nugget plant.
Total cost of this venture is estimated to be $165 million. SDI says operations could begin in late 2009 or early 2010, assuming the timely issuance of permits.
The company expects to fund approximately $65 million in equity related to this project and will be the sole owner.
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The state has approved $26.5 million in non-recourse financing for the project. State economic development agencies Iron Range Resources (IRR) and the Minnesota Department of Employment and Economic Development (DEED) had previously announced their support for the project.
The Mesabi Nugget plant will be the world's first commercial iron-making facility to use the ITmk3(R) process, an iron-nugget production technology pioneered by and licensed to the venture by Kobe Steel.
Although preliminary construction activity has begun at the $235-million, 500,000-tonnes-per-year Hoyt Lakes site, full construction is not expected to commence until later this year, following completion of financing and satisfactory resolution of permitting issues.
Steel Dynamics anticipates that substantially all of the iron output from the planned nugget plant will be consumed internally by SDI's mini-mills. The company believes that this new business will be capable, at a favorable cost, of providing to its steel mills a domestic source of iron units that are of equal or higher quality than purchased pig iron. In time, the company could construct additional nugget production facilities at the site.
Steel Dynamics’ board of directors has also approved an additional initiative—development of an existing iron mine on the Mesabi Iron Range and construction of a facility for concentrating iron ore. The company intends to purchase or lease land on the Mesabi Iron Range that is expected to provide a long-term supply of iron ore, and eventually process the iron ore and use it as raw material feedstock for the nugget plant. The total cost of this venture is estimated to be $165 million. Operations could begin in late 2009 or early 2010, assuming the timely issuance of permits. The company expects to fund approximately $65 million in equity related to this project and will be the sole owner.
