A quiet revolution is sweeping through the global iron ore markets, kicked off in early 2012 when Essar Steel Minnesota LLC announced that its Nashwauk, Minn., taconite property on the Mesabi Range, about 100 miles west of Lake Superior, contained far more ore-bearing rock than it had previously believed.
Taconite is a low-grade iron ore that makes up the main feedstock for the blast furnaces operated by the U.S. integrated steel industry. Taconite rock is extracted from open-pit mines, crushed to the consistency of talcum powder in mammoth ball and grinding mills, rolled into marble-sized pellets and heated to 2,500 degrees Fahrenheit. Once hardened, the pellets are shipped down the Great Lakes aboard bulk ore carriers to the steel mills.
The measured, indicated and inferred resources of nearly 2 billion (tonnes) at Essar Steel Minnesotas iron ore project exceeded our expectations, said Madhu Vuppuluri, president and chief executive officer of Hibbing, Minn.-based Essar Steel Minnesota, a subsidiary of Indias Essar Steel Group, noting that some 95 percent of total measured and indicated resources are made up of mineral reserves.
Essar Steel Minnesota has received the federal and state permits required to build facilities at Nashwauk and produce 4.1 million tonnes of taconite pellets each year, Vuppuluri said. The first phase of construction of the iron ore minecrushing facilities, concentrator and pellet plantgot under way in October 2010 and is expected to be up and running late this year or early next year.
Much of the first-phase production from the Nashwauk pellet facility is destined for Essar Steel Algoma Inc., an integrated steel mill complex in Sault Ste. Marie, Ontario. Essar Steel Algoma, which was purchased by Essar Global Ltd. in 2007, is the third-largest steel producer in Canada, producing about 2.8 million tonnes of steel annually. With the 4 million tonnes of pellets expected to go online in Minnesota, Essar will essentially be able to supply all of its resource needs at the Algoma mill, since about 1.4 tonnes of pellets go into each tonne of finished steel. The additional pellet capacity of nearly 3 million tonnes would be enough to feed an expansion at Algoma or to allow Essar to sell pellets on the spot market, either in North America or overseas.