The search for competitive iron alternatives in the currently high-priced raw materials market has sparked a new company with a veteran industry executive at its helm to step up to the plate.
The company, Magnetation Inc., Nashwauk, Minn., hopes to produce additional raw material for the North American steel industry by late summer using mineral leftovers from years of iron ore mining in northern Minnesota. It has developed a patent-pending mineral processing technology capable of recovering iron ore concentrate from such materials as hematite—classified as non-magnetic, though actually very weakly magnetic—that are left in lean ore stockpiles and natural ore tailing basins scattered across Minnesota's Mesabi Iron Range.
Larry Lehtinen, chairman of Magnetation, has 30 years' experience with established and entrepreneurial ventures in the iron ore industry. He opted to create the new enterprise for partially personal and partially professional reasons. "The main reason is a man can only golf so much," he quipped. "I am a mining engineer by training and I did work similar to this in my early career so I have a soft spot in my heart for this kind of technology."
Lehtinen has extensive experience with iron mining and iron-related technology. He served as a vice president at Inland Steel Mining Co., Cleveland-Cliffs Inc. and Steel Dynamics Inc. (SDI). He left SDI in 2000 to form two entrepreneurial ventures Ferrometrics Inc., a consulting firm, and Mesabi Nugget LLC, which demonstrated iron nugget-making technology. He sold Mesabi Nugget to SDI in 2007 and remains a consultant on that project, in which SDI and Japan's Kobe Steel Ltd. are cooperating to make nuggets for SDI to use in its steelmaking operations.
Magnetation intends to produce material that extends the life of the Minnesota iron range and offers steelmakers a competitive iron alternative amid rapidly rising raw material costs (the benchmark price of iron ore fines, for example, rose 65 percent this year compared with 2007).
The Magnetation product, which Lehtinen said is similar to fines both chemically and metallurgically in that it contains 65-percent iron, will be priced in accordance with the benchmark eastern Canadian ore concentrate price. The Magnetation concentrate can be sold as feed for sinter plants at steel mills, for rotary hearth furnace-based direct-reduced iron (DRI) plants and for other iron-making technologies.
The value of the Magnetation product comes when steelmakers or DRI producers purchase it instead of international ore. "We're competing against sinter coming from Brazil," Lehtinen said. "There's at least a $75 (per tonne) freight cost coming from Brazil. We can get it there cheaper."
North American steel industry demand could easily absorb Magnetation's 1-million-tonne addition to the raw materials marketplace, Lehtinen said. Magnetation also will consider international sales, but high freight costs could prohibit that from occurring.
In addition to turning former ore waste into a valuable steelmaking product, Magnetation's technology will allow the company to process as-yet-unmined lower-grade material previously believed to be unprofitable.
The venture also is ecologically conscious, Lehtinen said. Once Magnetation processes waste iron into usable ore concentrate, the company will turn the exploited land into ecologically functioning wetland. "Our work reshapes useless land into environmentally functioning land that had been covered with stockpiles that existing taconite miners cannot use," he said. "This technology proves it's recoverability."
Magnetation thus will not only make money selling its concentrate, but it can sell credits for wetland creation to other companies involved in land-use projects. "There are a number of new projects going on in upper Minnesota," he said, pointing to Polymet Mining Corp.'s recovery project at an old LTV Corp. site, Minnesota Steel's embryonic ore and steelmaking facility and the two separate nugget plants being developed by SDI and Cleveland-Cliffs. "It looks like a technology with an environmentally positive spin to it. It fits really well with green technologies."
Lehtinen said production will start shortly, although he didn't provide a specific estimate.
The company represents a long-term venture in a cyclical industry, he added. "You never know how long it (the industry) stays up, but with our low-cost structure, offering low-cost iron units, we'll be around. We have enough to run at 1 million tonnes (annually) for 50 years."