11/27/2012

PHOTO: Larry Lehtinen

After more than a year of weighing the pros and cons of multiple sites, Grand Rapids-based Magnetation LLC announced today that it would build its iron ore pellet plant in Reynolds, Ind.

According to a company statement, Magnetation will break ground on the new pellet plant in the first quarter of next year. The plant is expected to be operational in late 2014 or early 2015 and will employ 100 to 120 persons. The plant will have an annual capacity of 3 million metric tons. Company executives said the Indiana site’s location near major infrastructure was key in its decision.

“With convenient access to major railways and highways, Reynolds is an outstanding location for the company’s new pellet plant,” said Larry Lehtinen, CEO of Magnetation. “We thank our local and state officials in Indiana for their ongoing support of our company, and we look forward to joining the Reynolds community in the very near future.”

Magnetation is a scram mining operation which extracts iron ore concentrates from previously mined tailings basins and iron ore stockpiles. The company currently has operations in Keewatin and Taconite on the Western Mesabi Iron Range. Magnetation also plans additional operations in Coleraine and Calumet. The $300-$350 million Indiana pellet plant will produce iron ore pellets for use by Ohio-based AK Steel Corp, a minority (49.9 percent) owner of Magnetation, LLC.

Today’s announcement ends ongoing speculation that the plant would be sited in this region. Late last year, the company said it was considering sites in Ohio, North Dakota as well as Minnesota’s Iron Range, near mining operations. The company refined its siting prospects to Minnesota, Superior, Wis. and Indiana, then later announced Minnesota was no longer in the running.

In Wisconsin, local officials had welcomed the news, making 135 acres of land in Superior’s Parkland Industrial Park available for development. Superior Mayor Bruce Hagen, however, said Indiana proved to be a strong competitor.

"They provide some very liberal tax breaks and aren't quite as stringent on regulatory issues," he said, although he credited the Wisconsin Department of Natural Resources for assisting Superior's development team.

While the selection of the Indiana site may have disappointed some in this region, bright spots remain. Company executives estimate the additional iron ore capacity needed on Minnesota’s Iron Range will require $120 million in investment. The company currently employs about 215 FTEs.

Hagen said Parkland Industrial Park gained excellent exposure during the discussions, which could help the city attract a future development.

Magnetation held a purchase option on the Parkland site during negotiations, so the industrial park could not be marketed to other potential occupants. With its decision finalized, local officials again are free to market the property, said Michelle Hostetler, executive director of the Development Association of Superior and Douglas County.

"We'll be working nationally to bring in a company that's a good fit for the site," she said.

• Cooper selected to succeed Hagen at Riverwood - 5/23/2013
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• Ground broken for new Superior SuperOne store - 5/21/2013
• Magnetation secures expansion financing - 5/21/2013