5 minute read
2020 was a great year for iron ore mining
AMERICAS
2020 was a great year for iron ore mining
2020 was topsy-turvy for the Minnesota iron mining industry.
The industry was hard hit by plant idlings, employee furloughs and a slowdown in demand. Mega consolidations and acquisitions are, at the same time, promising to lead the iron and steel industries to a new future. About 20 years ago, significant market restructuring occurred. This year, however, even further restructuring took place. Leading the way was Cleveland-Cliffs, Inc.
Two big consolidations were completed by Cliffs, which moved the 173-year-old firm into steelmaking for the first time. expanded into electric arc furnace steel making and agreed to option interest.
In the spring, after the industry hit the skids, domestic steel prices and global iron ore prices skyrocketed to the highest levels in years by the end of 2020. “It was a remarkable year in a lot of different respects,” said Kelsey Johnson, Iron Mining Association of Minnesota president. “The Iron Range facilities are all integrated into steelmaking facilities. It's not like they're trying to sell iron ore on the open market anymore.”
More positive news from the industry is that, relative to 2019, steel shipments into the United States are down. According to the American Iron and Steel Institute, total and completed steel imports for the year are estimated to be around 22.4 million tons. Compared to 2019, that's a 19.8% cut.
“Even though we had really crazy economic conditions, imports are still down 22%,” Johnson said. “All of that Section 232 (steel tariffs) work is still playing out in our favor.”
The following are top iron ore mining stories that emanated from northeastern Minnesota in the past year.
PLANT IDLINGS
The unpredictable nature of the domestic iron ore and steel sectors has once again hit home. Three of the six iron ore plants in northeastern Minnesota went idle in the midst of the national and global economic downturn.
In the spring, Hibbing Taconite Co., Northshore Mining Co. and Keetac were all quiet. The idlings have resulted in around 1,700 employees being furloughed. In late summer, Hibbing Taconite and the Northshore Mining Co. resumed operations.
CLEVELAND-CLIFFS PIONEER ALLIANCE
Cleveland-Cliffs, Inc., bought AK Steel Holding for $1.1 billion in its first mega transaction of the year.
Two integrated blast furnace steel mills, two electric arc furnaces, a new hot-briquetted iron plant and other installations are included in the contract.
For the automotive industry, steel facilities manufacture value-added steel and specialty components. Cliffs also relocated to the Port of Toledo to complete its hot-briquetted iron factory. Northshore Mining Co.'s DR-grade pellets will feed the factory.
CLEVELAND-CLIFFS COMPLETES SECOND STEEL DEAL
On December 9, Cleveland-Cliffs concluded a $1.4 billion deal in its second big acquisition to buy a large part of ArcelorMittal USA and its subsidiaries.
The purchase implies that Cleveland-Cliffs has full or part ownership in four iron ore facilities in northeastern Minnesota, Hibbing Taconite, Minorca Mine, Northshore Mining Co. and United Taconite. The deal makes Cliffs the United States' largest flat-rolled steel producer and the largest producer of iron ore pellets in the world. As the only two integrated steelmakers left in the United States, it also leaves Cleveland-Cliffs and United States Steel.
KEETAC RESUMES
Production of iron ore pellets resumed Dec. 8 at Keetac after being down for nine months. The re-start brought back to work some 380 steel employees.
AMERICAS
Some Keetac steel workers went on to work at other northeastern Minnesota iron ore plants during idling, or accepted other jobs. Previously, from 2015 to 2017, Keetac was idle for 22 months.
US STEEL STARTS MONETIZING IRON ORE ASSET
U.S. Steel Corp. cut a deal to sell Stelco, Inc. a 25 percent stake in Minntac Mine (Steel Company of Canada). Stelco was expected to pay the U.S. $100 million of steel in five installments of $20 million due by Dec. 31, 2020.
Stelco had paid U.S. salary as of Sept. 30, 2020 $60 million in steel, according to the U.S. Report for Steel 10-Q. In order to acquire the 25 percent stake, Stelco has until Jan. 31, 2027 to pay another $500 million.
North America's largest iron ore plant is the Minntac Mine. The Minntac Mine is wholly owned by the United States. Steel since October 1967, when it started operations.
PELLET PRODUCTION DECLINES
For a portion of the year, with three plants idle, overall iron ore pellet production took a hit. At the end of the year, production was expected to fall below 30 million tons.
The six plants have an annual capacity of some 40 million tons of pellets of iron ore. Not hitting the 30 million-ton mark means that iron ore producers are not eligible for a 25.1 cent-per-ton Taconite Export Tax refund under the state law.
MESABI METALLICS
The state of Minnesota Executive Council gave Mesabi Metallics additional time to move toward completion of its iron ore project near Nashwauk, amid opposition from several Iron Range legislators. lics until May 1, 2021, to meet several benchmarks. For nearly two decades, the uncompleted mining and processing facility has been in progress.
IRON ORE INDUSTRY IS ENVIRONMENTALLY FRIENDLY
The iron ore facilities in Northeastern Minnesota run on 50% renewable energy.
In December, Minnesota Power, which supplies the plants with energy, reported that all its customers are now receiving 50% of their electricity from renewable sources. The biggest customer is Minnesota Power's Iron Ore Plants. interest in Big River Steel, United States Steel exercised an option. Big River Steel in Osceola, Ark., is the newest minimill in America. Steel from recycled scrap is made by the mill. US. U.S. Steel already owned the mill's 49.9% stake.
To receive the remaining 50.1%, the U.S. $774 million will be paid by Steel. The acquisition, together with the start-up at its Fairfield Works in Alabama of an electric arc furnace (EAF), moves the U.S. Steel into the growing segment of steelmaking EAF.
According to the American Iron and Steel Institute, EAF steelmaking accounts for around two-thirds of all the steel currently produced in the United States.
