NASHWAUK, MN, (Northland's NewsCenter)---Magnetation, a company that produces iron concentrate from previously mined ore on the Iron Range, has formed a partnership with AK Steel, a high quality steel producer.
It's a partnership that's expected to not only increase iron–ore production but provide jobs for hundreds.
By 2016, AK Steel will invest nearly $300 million into Magnetation to boost production levels at Magnetation's two plant sites.
"Partnering up with a company like AK Steel really shows more viability and a long term growth opportunities for northern Minnesota," Commissioner Tony Sertich of the Iron Range Resources and Rehabilitation Board said. "So we will see a better economy, more jobs and a significant investment not just from Magnetation, but from AK steel as well."
The investment will help boost production at the plant's to 3.5 million tons of concentrate a year by 2016.
One-hundred fifty million dollars will be invested into Magnetation's Plant Two near taconite; a facility that's expected to be up and running by next spring.
"Their need for iron ore, combined with our need for capital and financial resources really makes this a perfect match for Magnetation Inc, and AK Steel," Matt Lehtinen, Vice President of Magnetation said.
Magnetation borrowed more than $5 million from the Iron Range Resources and Rehabilitation Agency during its start–up. Its a sum that, once paid back, will allow other businesses to grow and expand.
"They had a longer time line, but I think the time line will be accelerated for payback with this joint venture with AK Steel," Sertich said.
On top of production taxes, Magnetation also made royalty commitments to the state of Minnesota.
For each ton of iron ore it produces, Magnetation will pay approximately $2.50 to the state.
"When we are operating at 3.5 million tons per year, that's a more than $8 million cash flow to the state of Minnesota every year," Lehtinen said.
If the merged company chooses to locate a new pellet plant in the Northland Lehtinen says more than 400 jobs would be created.
By 2016 the company expects to have 10 Rev3 separators–Magnetation's patented technology, throughout the Iron Range.
Posted to the web: Jennifer Walch