A local company, led by a group of familiar Iron Range names, has successfully secured a portion of the assets of ERP Iron Ore with the hope of reviving scram mining operations.
Scram mining previously was conducted on the West Range by Magnetation, a company experiencing rapid growth from 2008 to 2015. The firm got its start extracting ore from existing waste piles and tailings basins.
By early 2015, the company employed more than 400 people among four operations. Not long after, plummeting iron ore prices left the mining firm insolvent. When Magnetation declared bankruptcy, its assets included Plant 1 near Keewatin, Plant 2 in Taconite, the Jesse Load Out Facility and the newly built Plant 4, just north of Grand Rapids. There also was a pellet production plant, located in Reynolds, Ind.
Following bankruptcy, Magnetation’s assets were acquired by ERP Iron Ore, led by Tom Clarke, in late 2016. Clarke made money in the healthcare industry, then just before purchasing Magnetation’s assets, led some recently-purchased coal mining operations into bankruptcy.
Still, Clarke’s purchase of Magnetation was welcomed by local officials. The prospect of the return of hundreds of jobs was one factor. In addition, numerous local contractors were still owed millions from the construction of Plant 4.
Despite some reported success in the healthcare industry, Clarke fared less well in mining. By the end of 2018, ERP’s assets were under Chapter 7 protection and once again ready for the auction block.
Several firms were interested in ERP’s assets during the second round of bankruptcy auction bidding.
Four firms submitted bids to the Minnesota Bankruptcy Court – each with a different vision of what should become of the multi-million-dollar mining equipment and assets of the once-thriving company that reclaimed iron ore from tailings.
According to court documents dated June 6, the following is a breakdown of the bids submitted for court consideration early last month:
• Prairie River Minerals, LLC is a locally-based company led by former state Rep. Tom Anzelc, Ed Shaughnessy, Johann Grobler, Jim Swearingen and Scott Conley. The company successfully bid $1.95 million for Plant 1, near Keewatin, and the Jesse Load Out Facility. Prairie River intends to use a process known as ultra-dense media separation to extract hematite from old mining stockpiles.
• MJM Minerals submitted a successful bid of $1.7 million for Plant 2, located near Bovey/Taconite. Although little information was available about the company’s plan as of press time, it is believed MJM intends to scrap the plant.
• Bison Minerals, LLC in Coleraine also plans to use established technology from South African firms to mine the tailings basins along the West Range. Bison submitted two alternative bids for Magnetation’s assets – a $4 million bid for Plants 1, 2 and the Jesse Load Out and a $21 million bid which includes Plant 4 near Grand Rapids. The bid for all Magnetation’s assets included an initial payment of $5 million with the $16 million balance to be paid off in a period of 48 months or less. Bison is led by former South African mining executive Hank Venter. Bison was disqualified from the bidding process due to the court’s determination of inadequate proof of financial resources.
Although an unsuccessful bidder, Bison filed an objection to the disqualification, said spokesperson Mike Andrews, claiming the company did meet the court’s requirements as of June 7 when initial bids were due. “We have future possibilities,” said Andrews on June 10. “We did file an objection because we were qualified under previous rules as of last Friday.”
• Buckeye Minerals, LLC is a newly formed company legally organized in Delaware in May. Buckeye offered $7 million for Plants 1, 2 and 4 as well as the Jesse Load Out facility.
On June 10, the court accepted Prairie River’s bid for Plant 1 and the Jesse Load Out facility. MJM Mineral’s bid for Plant 2 was also accepted on that date, however, the court later postponed a final order on the sale until June 26 due to objections which had been filed. The stayed hearing had not taken place as of press time. The acceptance of Prairie River’s bid was ordered by the Minnesota Bankruptcy Court in documents filed on June 20.
Left out of the bidding process was the Reynolds pellet plant. Soon after the initial bankruptcy auction sale, the pellet plant was discovered to have numerous problems. It was sold to Altos Hornos de Mexico through Federal Bankruptcy Court in Minnesota. Local news reports from March 2019 suggest the plant was being dismantled and shipped to Mexico.
Meanwhile, the assets of Plant 4 near Grand Rapids remain in limbo. The court left its sale out of the initial auction proceedings and, as of press time, it was unknown if a sale would be revisited in the near future. Those with knowledge of the issue say it could prove more problematic due to multiple mechanics liens on the facility.
Prairie River Minerals has been somewhat publicity shy when it comes to revealing its plans to the press. However, spokesperson Anzelc did say the company already has begun the permitting process for a scram mining operation – a process that only takes a few months.
Meanwhile, Prairie River Minerals is working to finalize off-take agreements and financing. The company has not yet disclosed how much ore would be processed annually or how many people would potentially be employed once operations begin.