SILVER BAY — In August, Cleveland-Cliffs hosted a ribbon cutting event celebrating the completion of a $100 million expansion at Northshore Mining in Silver Bay. This expansion has allowed the plant to now produce more DR-grade pellets.

The $100 million investment included upgrades to the concentrator building, a new scavenger building, new conveyor system, a limestone tank and a steam generating plant to support large-scale commercial production of DR-grade pellets.

It makes Cliffs the only U.S.-based iron ore facility to produce low-silica DR-grade pellets, which will be used to feed the hot-briquetted iron (HBI) plant in Toledo, Ohio. The Toledo site is expected to begin production in 2020, where pellets will be made into bricks.

With the addition of Northshore’s ability to produce DR-grade pellets for the HBI plant, the company has diversified its offerings from simply blast furnace pellets. That new market was more realized earlier this month when the company topped out its 457-foot tower at the Toledo site, a key milestone said Lourenco Goncalves, chairman, president and CEO of Cliffs.

“When you drive through Toledo, you will not be able to miss the majestic structure,” he said during an Oct. 23 earnings call with investors. “We’re well on track to bring Cleveland-Cliffs into the next generation of steelmaking in the first half of next year … We plan in advance and we prove that to be the case time and time again.”

Planning ahead

During his official speech at the Aug. 6 ribbon rutting Goncalves said, among other remarks, “After the second World War, when we no longer had direct ore here in Minnesota, Cleveland-Cliffs introduced pelletizing as a way to utilize taconite and keep a good thing going. And we are still going, as of today. But the industry evolved. Now it is not just blast furnaces and blast furnace grade pellets to feed blast furnaces.”

He explained that EAFs are the fastest growing iron processused in America. EAFs do not use the pellets Cleveland-Cliffs had been producing for blast furnaces. If the company did nothing about this, Goncalves recognized that he would be OK but that future generations of Minnesotans and miners would not. The industry would not have a future in the region.

This is also why Goncalves and Cliffs have pursued the former Essar Steel Minnesota site in Nashwauk, with hopes of opening the first DRI facility in Minnesota.

Cliffs a step closer to HBI

Surrounded by area politicians and company members, Lourenco Goncalves, chairman president and CEO of Cleveland-Cliffs, cuts the ribbon to officially open Northshore Mining's new $100 million DR-grade pellet plant project on Aug. 6 in Silver Bay.

“These DR-grade pellets will ensure that here in northern Minnesota we will have this thing going here for at least another 100 years,” he said.

Former U.S. Congressman Rick Nolan also praised the project during the August event. Nolan retired from Congress after his term expired in January and has long been an ally to Cliffs and Goncalves.

Speaking to reporters, Nolan said “I think the biggest takeaway, here, today, is not just that Cleveland-Cliffs has honored every promise that they’ve ever made, during my term in service, but they literally put all the miners back to work and made massive investments to provide more jobs, for more people in mining for 100 years into the future. I mean, that is an enormous and important step for mining, our national economy, our national security, our communities, our way of life- that is a big story.”

The Northshore and Toledo projects are also becoming more well-known throughout the mining community.

“This appears to be a good project to expand the available market opportunities for Northshore pellets,” Dr. Joseph Poveromo, president of Raw Materials & Ironmaking Global Consulting said over email. “This and the building of the HBI plant in Toledo have been good moves by Cliffs.”

Cliffs a step closer to HBI

The rise of EAFs

Cleveland-Cliffs was founded in 1847 and is the oldest independent iron ore mining company in the United States, supplying iron ore pellets to the North American steel industry from locations in Minnesota and Michigan.

Based in Cleveland, the company expects to be the only HBI producer in the Great Lakes region as early as mid-2020 out of the plant in Toledo. Upgrades to Northshore will enhance that goal.

Ground was broken on the project in Silver Bay in March 2018. At peak construction, 150 people were employed including management, craft and labor concluding nearly 300,000 hours of work. Lakehead Constructors, based in Superior, Wis. and operating in the Arrowhead region and Iron Range, was the primary contractor for the project.

Highlights of the upgrades are new conveyors, concentrator upgrades, new scavenger building, slurry tanks and thickeners, limestone slurry tank and gas-fire steam boilers, and electrical and instrumentation upgrades.

In Toledo, an $830 million investment will be commissioned in mid-2020 for Cliffs’ HBI plant. Construction is underway, and the DR-grade pellets made at the Silver Bay facility will be feedstock for this Toledo plant.

Goncalves told investors on the Oct. 23 earnings call that DR-grade customers initially requested shorter contracts, but are coming around to longer-term deals.

“We are happy either way,” he said. “Whatever works for our clients, works for Cleveland-Cliffs. This is exactly where we intended to be.”

As customers come around to extended contracts, DR-grade pellet consumption is increasing globally, according to a presentation by Poveromo.

Goncalves and Cliffs are also seeing that trend, which prompted the investment in the Toledo plant. The company originally eyed Minnesota for the HBI facility, but the land and leases in Nashwauk were not available after bankruptcy.

“We made the move and we are happy with the move,” Goncalves said.

But the CEO said EAFs are unlikely to completely box out the high-quality blast furnaces in operation. Not only does the EAF trend take time to materialize, but blast furnaces like those operated by ArcelorMittal and AK Steel — both clients of Cliffs — are “resilient and competitive” in the marketplace.

“You will see some EAFs replace blast furnaces, but not our clients,” he said. “We work with them to make their blast furnaces better. That’s how it works. The trend will continue, but not something we are going to expedite.”

Pellet difference

DR-grade pellets can be used in both DRI/EAF and blast furnace/basic oxygen furnace ironmaking/steelmaking, whereas the traditional BF-grade pellets can only be used in BFs.

The low-silica DR-grade pellets at Northshore are 67.3 percent iron and 2 percent silica, according to Cliffs, and are more pure than standard iron ore pellets, and are tailor-made for HBI/DRI production.

Blast furnace pellets produced by the company are also custom made to blend with specific blast furnaces. The Mustang Pellet Project at United Taconite created custom pellets for ArcelorMittal, with both companies collaborating to fine tune the final pellet made at the Forbes plant. Many blast furnace pellets sold in the market are produced to work across numerous blast furnaces.

There’s also a chemical difference in the process of making the pellets, going beyond the basic furnace differences. As Poveromo explained in a presentation, the DR process includes a chemical change, removing the oxygen from the ore. The remaining chemicals are concentrated, because of the oxygen removal. This later affects the EAF melting vessel.

Cliffs a step closer to HBI

Taconite slurry is mixed in the new $100 million DR-grade pellet plant.

The BF process uses slag to modify the hot metal product to meet requirements for the final steelmaking process.

“DR grade pellets differ from BF pellets most importantly in the requirement to minimize the acidic gangue content as such acidic gangue needs to be removed in EAF slag phase,” Poveromo said. “DR pellet reducibility needs to be high as high metallization needs to be achieved in the DRI process since reduction of unreduced iron oxide also is difficult in the EAF.”

Jerry Burnes contributed to this report.


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