Metals Projects Abound Former Minnesota Iron Ore Mine Site

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Since purchasing the former LTV taconite mine, concentrator, and other facilities from now defunct LTV Steel in 2001, Cliffs Erie LLC, a subsidiary of Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio), has entertained numerous project proposals for the site. Today, two projects have emerged as being the most likely to succeed. One is a $100 million iron nugget plant, and the other is a $250 million underground copper/nickel mine, which would use portions of the closed LTV operations, including a rebuild of the concentrator.

Mesabi Nugget LLC (Silver Bay, Minnesota), of which Cleveland-Cliffs is a partner, had been looking at constructing a commercial scale plant utilizing Kobe Steel's ITmk3 technology, at Cleveland-Cliff's Silver Bay site. Mesabi Nugget built a $16 million pilot plant in Silver Bay, which was shut down last year after testing was complete. Mesabi Nugget is now focusing its Minnesota efforts on permitting a commercial scale plant at the Hoyt Lakes site. Air permit approval is expected some time this summer.

At Silver Bay, Cleveland-Cliffs is concentrating on bring the idled pellet line 5 back into operation, at a cost of $30 million. That project should be up and operating by the third quarter of 2005. Cleveland-Cliffs experienced record iron pellet production and sales in 2004, due to a strong domestic steel industry.

Last year, Polymet Mining Corporation (Vancouver, British Columbia) signed an option to purchase the concentrator portion of the Cliffs Erie Hoyt Lakes plant (formerly LTV) and 6,000 acres of land. It is proposing to open the $250 million Northmet polymetallic ore mine, which is located eight miles to the east of the concentrator. Due to permitting issues, that project probably wouldn't begin construction until 2007, at the earliest.

Prior to the Polymet proposal, Teck Cominco and Cleveland-Cliffs had studied a $600 million copper/nickel mine, known as the Mesaba project, at a 2,344-acre site not far from the Polymet project. The Mesaba project would have required a conversion of the Hoyt Lakes iron ore concentrator to nickel/copper flotation, as well as the addition of a new CESL hydrometallurgical process plant. That project has since been shelved.

Cleveland-Cliffs has been trying to find a use for the Hoyt Lakes concentrator and other equipment ever since it purchased the site from the now defunct LTV Steel in 2001. See February 19, 2002 news article for details - Cleveland-Cliffs Heads Ambitious Effort to Develop Minnesota Iron Range Projects

Nearby, there is the $600 million (first phase) Mesaba Energy project being developed by Excelsior Energy Incorporated (Minnetonka, Minnesota). Excelsior has received DOE and state grant funding and hopes to begin construction of an IGCC power plant in 2006 on the site of the former LTV taconite mine near Hoyt Lakes.

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