SILVER BAY, Minn. (Office of Gov. Tim Pawlenty) -- Governor Tim Pawlenty came to the shores of Lake Superior today, to sign into law a bill that will facilitate the environmental permitting of a production scale iron nugget demonstration plant in Minnesota.

"This is an historic day for the iron mining industry of Minnesota," Governor Pawlenty said. "Hopefully, by this action we have laid a solid foundation for the growth of a whole new generation of iron ore concentrates to be developed here on the Iron Range. This represents a classic example of the good that can transpire from effective public-private partnerships like the one represented here in Silver Bay."

The Mesabi Nugget LLC pilot demonstration and research plant in Silver Bay served as the backdrop for signing legislation that would permit a fast track permitting process for a production scale iron nugget pilot plant to be located at the former LTV taconite processing site, now known as Cliffs-Erie, in Hoyt Lakes.

"Iron nuggets" is a term used to describe a form of pig iron that is produced using a rotary hearth process. The technology to produce this new form of iron was first proven feasible at MNCís pilot plant in Silver Bay. MNC member companies include Ferrometrics, the value-added iron products development company owned by MNC president, Larry Lehtinen; as well as subsidiaries of Cleveland-Cliffs, Inc., the owner of Northshore Mining Company; Kobe Steel, the owner of the ITmk3 iron nugget technology; and, Steel Dynamics, Inc., an Indiana electric arc furnace steelmaker.

The Silver Bay pilot plant was developed, in part, with $16 million in state loans from Iron Range Resources and the Department of Employment and Economic Development with the expectation that the first full-scale production facility would also be built in the state.

In March, one of the projectís partners, Steel Dynamics, announced that the high price of scrap iron was forcing it to proceed immediately with construction of a commercial scale facility. They stated that, because of environmental permitting timelines, it was SDIís intent to build the first plant in Indiana rather than Minnesota.

A surge in the demand for iron units, fueled by rapid industrial growth in China, has driven pig iron prices up rapidly from an average of $140 to $150 per ton one year ago to its current price of approximately $300 per ton.

"With Governor Pawlentyís leadership, we determined we would take whatever reasonable steps were required to keep the project focused here," Iron Range Resources Commissioner Sandy Layman stated, "That included seeking passage of this piece of special legislation."

The bill, which passed by wide margins in both the House and Senate, would suspend some state environmental review requirements by allowing Mesabi Nugget to modify and use existing air and water pollution permits for the closed LTV facility. Such a move puts environmental permitting of the project on a timeline comparable with that in Indiana, without compromising environmental quality.

Iron nuggets are less costly to ship out of the region because they are 96 percent iron, compared to taconite pellets that contain only 65 percent iron. Production of iron nuggets also will open up an entire new market for Iron Range ore, because nuggets are compatible with the electric arc furnaces operated by steel industry mini-mills. Taconite pellets, as they are presently constituted, are only compatible with the decreasing number of blast furnaces operated by the nationís integrated steel producers.

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