~ $235 million iron nugget facility planned at the former LTV Steel site ~

Eveleth, Minn. – Governor Tim Pawlenty today formally approved $16.5 million in Iron Range Resources (IRR) financing for construction of the Mesabi Nugget plant near the cities of Aurora and Hoyt Lakes, Minnesota. Mesabi Nugget will also receive a $10 million loan from the Minnesota Minerals 21st Century Fund administered by the Minnesota Department of Employment and Economic Development.

The Mesabi Nugget project, a joint venture of Steel Dynamics of Indiana and Kobe Steel of Japan, involves the construction of a $235 million iron nugget manufacturing facility at the former LTV Steel Mining Company site on Minnesota’s Iron Range. The plant is projected to produce 500,000 tons of iron nuggets per year and directly employ 50 people.

“This public-private investment means jobs for the Iron Range and the potential of expanded markets for Minnesota iron ore,” Governor Pawlenty said. “We are creating jobs and capturing other economic benefits by converting our natural resources into a value-added product, which an expanding world steel market demands and a modern, industrialized society needs.”

The IRR Board approved the $16.5 million loan for the project earlier this month. The financing agreement requires the Governor’s approval before it becomes effective.

Steel Dynamics also announced today that it is moving forward with the project and, subject to completion of final financing arrangements, the company intends to invest $85 million in equity in the venture and to hold an 81% equity interest, while Kobe Steel plans to invest $20 million in equity for a minority equity stake of 19%. Earlier this year, Mesabi Nugget entered into a deal to buy more than 4,000 acres at the former LTV site.

The Mesabi Nugget project will use Kobe Steel’s patented ITmk3® process to convert iron ore concentrate and other raw materials into iron nuggets, all at the mine site instead of a steel plant.

While taconite pellets are about 65 percent iron, the nuggets produced at the new plant will be almost pure iron. While taconite pellets can only be used by integrated steelmakers who make pellets into iron in a blast furnace and then convert it into steel in a basic oxygen furnace, the ITmk3® technology will allow Minnesota iron ore to be used by electric arc furnace steelmakers, the largest and growing portion of the steel industry.

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