EVELETH, Minnesota –Iron Range Resources and Rehabilitation Board (IRRRB) Commissioner Tony Sertich today announced that Magnetation, Inc. has made its final payment on four loans totaling $5.5 million that it had received from the IRRRB and the Minnesota Department of Employment and Economic Development (DEED) in 2008 and 2009. The DEED portion of the financing was $1 million. The loans, three of which were due for repayment at the end of 2013 with the fourth due by July 2014, were instrumental to the startup of Magnetation in 2008.
“We are pleased with Magnetation’s success and the excellent job creation and significant economic impact the company has already had in northeastern Minnesota,” said Sertich. “In addition, the company’s economic outlook is phenomenal.”
“DEED’s portion of the loan came from the 21st Century Minerals Fund, which was created to improve the global competitiveness of the Minnesota minerals industry,” said DEED Commissioner Mark Phillips. “Magnetation’s success underscores the importance of making funding available to promising companies that are expanding and creating jobs on the Iron Range.”
Magnetation, Inc., through its affiliates—Magnetation LLC, a joint venture with a subsidiary of AK Steel Corporation, and Mining Resources, LLC, a joint venture with a subsidiary of Steel Dynamics, Inc.—produces iron ore concentrate for iron nugget and pellet making from natural ore tailings left behind from previous mining operations. Magnetation LLC operates one Magnetation Process™ plant near Keewatin and is building another one near Taconite. Mining Resources, LLC is building a third Magnetation Process™ plant near Chisholm. Magnetation LLC has also begun permitting of a fourth Magnetation Process™ plant northwest of Coleraine, MN.
Magnetation LLC’s Keewatin plant recently completed an expansion that more than doubled the facility’s production capacity to about 400,000 metric tonnes of concentrate a year. The second Magnetation Process™ plant near Taconite is slated to open in May 2012 and is expected to be able to produce approximately 800,000 metric tonnes of concentrate per year. The third Magnetation Process™ plant, owned by Mining Resources, LLC near Chisholm, is anticipated to have an annual capacity of one million metric tonnes of concentrate and is expected to begin production in July 2012. The fourth Magnetation Process™ plant, by Magnetation LLC near Coleraine will have estimated annual capacity of two million metric tonnes of concentrate and is expected to begin production in 2014.
Currently, Magnetation LLC and Magnetation, Inc. have 140 employees, surpassing initial expectations to employ 25 by this time. The companies expect to employ 200 by the spring of 2012 and over 300 people when all three Magnetation LLC plants are operational. In addition, employment in the region could increase by another 100, if the Magnetation LLC eventually adds a $300 million pellet plant that is under consideration.
Magnetation’s economic impact is impressive. The majority of construction and operational expenses are received by local contractors and vendors, with an estimated local fixed-asset investment related to the four Magnetation Process™ plants of over $225 million.
In addition to production taxes and mineral royalties paid to the State of Minnesota, Magnetation pays a special Magnetation Process Royalty to the IRRRB and DEED as additional consideration for their initial funding of Magnetation. For each metric tonne of concentrate the company produces, up to the first ten million metric tonnes, Magnetation pays $2.50 to the State of Minnesota with this money split between IRRRB and DEED. Beyond the first ten million tonnes of concentrate produced, the Magnetation Process Royalty is $2.00 per metric tonne. Magnetation LLC and Magnetation, Inc. expect to produce over 3.0 million annual tonnes of concentrate by 2015, which would generate more than $15 million per year in State Process Royalties and Production Taxes.
IRRRB is a state economic development agency headquartered in northeastern Minnesota whose mission is to invest in business, community and workforce development for the betterment of northeastern Minnesota.