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U.S. Steel will spend about $150 million to upgrade one of its two Minnesota mines to produce a new kind of iron ore feedstock — pellets needed to supply the kind of mills that now dominate the nation’s steel industry, the company announced Tuesday. 

Pittsburgh-based U.S. Steel will make specialty “DR-grade” pellets which in turn are used to make direct reduced iron (DRI) or hot briquetted iron (HBI). That purer form of iron is used to feed smaller steel mills known as electric arc furnaces. 

Such “mini mills" now produce more than 70 percent of the steel in the U.S. But most of Minnesota's iron ore is still currently sent to giant blast furnaces around the Great Lakes. The last blast furnace built in the U.S. opened in 1980. 

U.S. Steel plans to begin work on the project this fall, either at Minntac, the state's largest iron ore mine and pellet plant in Mountain Iron, or at Keetac, a smaller facility in Keewatin.

When complete, the company said it could sell the new pellets, a new product line for U.S. Steel, to a third-party DRI or HBI producer, or use them to feed a potential future facility of its own. 

“The investment and expected timeline are subject to state and local support and receipt of regulatory permitting,” the company said in a statement. 

The announcement is one of the biggest developments in Minnesota’s iron ore industry in the past four decades, according to John Arbogast, staff representative for the United Steelworkers who’s based on the Iron Range. 

"It makes Minnesota ore even more viable going into the future as steel-making in this country is moving towards electric arc furnaces,” Arbogast said. “So this makes Minnesota ore more sustainable into the future. We're ecstatic to say the least."

This isn’t the first such investment in Minnesota. Three years ago the Cleveland-Cliffs mining company spent more than $100 million to upgrade its Northshore Mining facility in Silver Bay, Minn., to produce DR-grade pellets. 

Most of those pellets were shipped to Cliffs’ new $830 million hot briquetted iron plant in Toledo, Ohio. 

"These DR-grade pellets will ensure that here in northern Minnesota we will have this [plant] going for at least another 100 years,” Cliffs CEO Lourenco Goncalves said at the time. 

But on May 1, Cliffs temporarily closed Northshore amid a royalties dispute and has since shifted its DR-pellet production to the Minorca Mine in Virginia, Minn. 

More than 400 workers have been laid off. The shut-down is expected to last at least until the fall. 

Still, Gov. Tim Walz praised the announcement from U.S. Steel, saying it’s expected to create a significant number of full-time and construction jobs.

“This is good news for the Iron Range,” Walz said. “Minnesota’s steel industry exemplifies who we are as a state. It is baked into our culture and history.”

U.S. Steel also announced it has agreed to sell two of its blast furnaces at Granite City Works in Illinois to SunCoke Energy, Inc.

SunCoke would then build a new pig iron production facility at the site, which would get its needed iron ore from U.S. Steel’s Minnesota mines. Pig iron is also used to supply electric arc furnaces. 

“Our conviction remains that steel mined, melted and made in America is vital to our national and economic security,” said U.S. Steel CEO David Burritt. “We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow.”

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Dan Kraker

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U.S. Steel will spend about $150 million to upgrade one of its two Minnesota mines to produce a new kind of iron ore feedstock — pellets needed to supply the kind of mills that now dominate the nation’s steel industry. 

U.S. Steel to invest $150 million at Minnesota mine

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