U.S. Iron Ore Miners in the Midst of Capital Spending Boom

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). America’s small number of iron ore mines, all located in Michigan and Minnesota, are experiencing somewhat of a resurgence in capital project spending, as domestic and international demand for steel manufacturing raw materials remains strong. Most iron ore mining companies are looking at ways to optimize or expand capacity, as record earnings come in. The largest North American producer of iron pellets, Cleveland-Cliffs, Incorporated (Cleveland, Ohio), announced in July that first half of 2005 earnings were up 200%, which established a new company record.

Click on the image at right to view the Iron Range Iron Ore Mine Map.

Both U.S. Steel and Cleveland-Cliffs are planning major expansions. For example, Cleveland-Cliffs, Incorporated (Cleveland, Ohio) is planning to restart an 800,000tons per year taconite pelletizing line in 2006. United Taconite, a joint venture of Cleveland-Cliffs and the Chinese Laiwu Steel Group, recently invested $23 million to rebuild its long-idled No. 1 line in Forbes to expand production. The joint venture is planning to reline a second furnace that it fired up in late 2003, in order to reopen a plant formerly operated by bankrupt EVTAC Mining.

Mittal Steel USA is proceeding with plans to add a new open pit mining area at its Minorca taconite ore mine in Virginia, Minnesota. The existing open pit mine is nearing the end of its productive life and the company needs to open the new mine to enable continuation of taconite (iron ore) production for another 20 years. No new surface facilities or modifications to the existing mill/concentrator will be associated with the new mine. However, the company will spend significant capital in upgrading and replacing mining equipment. Ore will be trucked a short distance from the new open pit mine to the existing mill/concentrator plant in Virginia, Minnesota. The Minorca mine produced about three million tons of taconite pellets in 2004.

Rising fuel expenses are causing the mining industry to look for ways to conserve diesel fuel for mining fleets and also find alternatives to natural gas-fired equipment. A typical mine can use 10,000 gallons per day of diesel to fuel its mining fleet of haul trucks, bulldozers, and hydraulic shovels. This adds up to millions of dollars in added operation expenses. Many companies are implementing fuel conservation and switching projects where they can. One such project at U.S. Steel’s Keewatin Taconite mine involves converting a palletizing line from natural gas and fuel oil to coal and petroleum coke, in addition to expanding capacity from 5.5 million tons per year to 6 million tons per year. The $11 million alternate fuels project is scheduled for completion by the summer of 2006.

In addition to the capital spending at existing mines, there are four other projects on the books to restart former producing mines, such as Palladon Iron Corporation’s plans for a new mine in Utah.

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