Cliffs celebrates $100 million Northshore reinvestment

This new equipment “scavenges” or captures additional iron units to be reprocessed in the concentrator to maximize iron recovery and productivity when DR-Grade pellets are being produced. At lower right, Lourenco Goncalves said Cliffs wants to invest more in Minnesota.

Minnesota’s Iron Range received a life-extending boost last month when Cleveland-Cliffs began producing DR-grade pellets at its Northshore Mining plant. 

The company, which invested $100 million to mass produce the upgraded product, celebrated that achievement Tuesday at its Silver Bay plant on Lake Superior.

To the naked eye, DR-grade pellets look like taconite, but it’s more valuable. The pellets create a new market for iron ore processors. It can be sold to companies that convert it to hot-briquetted iron, then feed it into electric arc furnaces that produce steel. Although most domestic steel once was made in blast furnaces, where taconite is the feedstock, 68 percent of today’s domestic steel is manufactured in electric arc furnaces, which consume scrap steel but need the higher-grade virgin iron to raise steel quality to a higher level.

“DR-grade pellets will add at least 100 more years of mining in Northeast Minnesota,” Cliffs President, CEO and Board Chair Lourenco Goncalves told guests at the company’s ribbon cutting and celebration.

With the upgrade, Northshore Steel is capable of producing both traditional taconite and DR-grade pellets using magnetite ore mined in Babbitt. Last year, it produced 5.6 million gross tons of taconite in Silver Bay. Moving forward, about 3.5 million tons of the total will be DR-grade.

“This will be the only plant in the United States to produce low-silica, high-grade DR pellets,” said State Rep. Bob Ecklund, DFL-International Falls. 

It’s not the first time Northshore Mining has been a pioneer in the industry. When it opened in 1956, it was the first taconite processing plant in the country. 

The investment is part of a larger Cliffs plan that will move the overall investment past $1 billion. It is constructing a plant in Toledo, Ohio, that will use DR pellets to produce hot briquetted iron (HBI). That facility is set for completion next year, and Cliffs already has HBI customers.

Originally, Cliffs had hoped to build its HBI plant near Nashwauk, Goncalves said. To make the plan work, it needed cooperation from the state of Minnesota and Federal Bankruptcy Court, which was seeking a party to restructure the bankrupt Essar Steel Minnesota development. 

“We needed everyone to push in the same direction,” Goncalves explained during his presentation. But that didn’t happen. 

“I was surprised when Gov. Dayton pulled the rug from under me,” he said. Meanwhile, the bankruptcy court didn’t select Cliffs’ restructuring bid and instead awarded it to another entity that quickly became insolvent and declared bankruptcy.

Goncalves didn’t dwell on that dispute Tuesday but suggested Cliffs remains interested in Minnesota.

“Minnesota is a natural site for an HBI plant,” he said, noting that Cliffs already controls half of the minerals near Nashwauk, site of Essar’s partially completed processing facility.

He received support from U.S. Rep. Pete Stauber, R-Hermantown. 

“This is our way of life” in rural Northeastern Minnesota, Stauber said. “We want to make American steel using American workers.”

Goncalves noted that Cleveland-Cliffs and other U.S.-based iron and steel firms have rebounded since federal officials have placed tariffs on imports, particularly imports from China. Heavy industry in China, he explained, has undercut American competitors by selling at lower prices. That’s because, unlike Cliffs, they pollute heavily, Goncalves said, which reduces their costs. 

“We have the most environmentally compliant steel industry in the world because we use 100 percent pellets,” he said, as opposed to dusty fines used in many other countries.