Iron Range officials upset with Magnetation threat

Iron Range officials are upset with threats by Magnetation Inc. to build a $300 million iron ore pellet plant in another state to get around Minnesota's tough mercury pollution rules.

Magnetation is considering sites in Superior, Wis., Indiana and Illinois as an alternative to northern Minnesota's Itasca County for a plant that would employ about 150 people, the Duluth News Tribune reported Wednesday.

Rep. Tom Rukavina and St. Louis County Commissioner Keith Nelson are criticizing the company because Minnesota gave Magnetation a $1 million state grant in 2008 to help it get started. The company also got government loans that it has already repaid ahead of schedule.

"To me, it's embarrassing that a guy who got $1 million of free taxpayer money from Minnesota would even consider going to another state," Rukavina said.

Magnetation CEO Larry Lehtinen told the newspaper that the company needs to get a pellet plant operating somewhere by early 2015, and that will require having permits in hand this fall so that construction can begin by year's end. Wisconsin, Indiana and Illinois can meet that timeline, he said, but Minnesota regulators haven't made that promise.

Magnetation uses a proprietary technology to recover iron from tailings at old Iron Range mining sites and process it into concentrate. The proposed plant would turn that concentrate into high-grade pellets suitable for the blast furnace steel mills of its partner, AK Steel Corp.

"We would love to build this plant in Itasca County; that's our first choice, that's where our operations are," Lehtinen said. "But the way we are reading Minnesota's rules on mercury, there's no room for any new sources. We don't have any way to offset our mercury. ... It's essentially a cap-and-trade system without any trade."

The plant will install so-called best available mercury control technologies no matter where it is built to meet federal requirements, Lehtinen said. But Minnesota has additional mercury reduction efforts in place beyond most other states.

Lehtinen also said the plant almost certainly couldn't meet the state's limit on sulfate discharges into lakes or rivers where wild rice grows. While the state has suspended enforcement of that limit until new studies on the effects of sulfates on wild rice are completed, Lehtinen said there are too many unknowns to move forward until the issue is settled.

"We've assured him we can find a solution that will make this work," said Ann Foss, manager of the Minnesota Pollution Control Agency's industrial division. "But they haven't even submitted a (permit) application yet. We can't respond to something we haven't seen. ... Larry's a bright guy; we have a lot of bright people around here. If he wants, we can make this work."

Rukavina said it's "just plain greedy" for Lehtinen to threaten to take the jobs elsewhere after everything Minnesota has done to help Magnetation get going. In response, he said, he'd consider trying to raise the state's tax on iron ore-concentrate shipped out of state before it's turned into pellets.

Magnetation already has 150 employees at recovery and concentrating operations on the Iron Range and is planning up to 100 more.

"Regardless of where the pellet plant goes, we will still have a major and growing presence on the Iron Range," Matt Lehtinen said. "We need that plant running as soon as possible to protect the jobs we already have on the Iron Range."

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Information from: Duluth News Tribune

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