Magnetation criticized for scouting sites beyond Iron Range

• Larry Lehtinen

Larry Lehtinen, CEO of Magnetation LLC.

Talk about it

Iron Range officials this week expressed frustration with Magnetation Inc. over the company’s threats to build an iron ore pelletizing plant in another state. But company officials say Minnesota’s tough pollution rules are forcing them to look elsewhere.

State Rep. Tom Rukavina and St. Louis County Commissioner Keith Nelson say they are upset that the company is considering building the $300 million plant somewhere other than the Iron Range, especially after Minnesota invested heavily in helping Magnetation get started.

Magnetation is considering sites in Superior, Indiana and Illinois in addition to Itasca County for the plant that will employ about 150 people.

“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, referring to a $1 million grant Magnetation’s CEO Larry Lehtinen received in 2008 from the Minnesota Minerals 21st Century Fund administered by the Minnesota Department of Employment and Economic Development.

Magnetation also received state and Iron Range Resources Rehabilitation Board loans to get started, although those have been repaid, some well ahead of schedule.

“For him to threaten the state after what we’ve done to get him going, that’s just plain greedy," Rukavina added.

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.

“I can’t stop international or interstate trade,” Rukavina said. “But nothing says we can’t tax the natural resources that someone is taking out of our state to create jobs in another state.”

Nelson, the County Board chairman, also called out Nashwauk-based Magnetation during a board workshop on mining issues Monday in Virginia.

“I’m not pleased at (the possibility of) seeing those jobs go somewhere else,’’ Nelson said.

Such a move could threaten Magnetation’s good relationship with state and county government agencies that will help the company gain access to old Iron Range mining sites where it recovers the raw ore it processes, he said.

Slow permit process

But company officials say they are responding to Minnesota rules that appear to ban any new sources of mercury emissions without reducing mercury somewhere else.

For the company’s iron-ore concentrate processing efforts to continue on the Iron Range, Lehtinen said, Magnetation needs a pellet plant operating somewhere by early 2015.

That means they need permits in hand this fall to start construction by year’s end. Wisconsin, Indiana and Illinois say they can meet that timeline, Lehtinen added. Minnesota regulators so far haven’t made that promise.

“We would love to build this plant in Itasca County; that’s our first choice, that’s where our operations are,’’ Lehtinen told the News Tribune on Tuesday. “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, a federal requirement, Lehtinen said. But Minnesota has additional mercury reduction efforts in place beyond most other states.

The state’s debate over sulfate limits also is an issue, Lehtinen said. The plant almost certainly couldn’t meet the state’s former 10 parts-per-million limit on sulfate in lakes or rivers below discharge sites. Sulfate is known to damage wild rice at high levels.

While state lawmakers last year banned regulators from enforcing the sulfate limit until new wild rice studies are conducted, Lehtinen said there are too many unknowns to move forward until the sulfate issue is settled.

Lehtinen is meeting with top Minnesota Pollution Control Agency and Department of Natural Resources regulators today.

“We’ve assured him we can find a solution that will make this work,’’ said Ann Foss, manager of the PCA’s industrial division. “But they haven’t even submitted a (permit) application yet. We can’t respond to something we haven’t seen. Hopefully, we can get a better sense of what they want at this meeting and go forward from there. Larry’s a bright guy; we have a lot of bright people around here. If he wants, we can make this work.”

Out-of-state sites

The News Tribune reported in October that Magnetation was planning to build a $300 million plant to process its high-grade iron ore concentrate into taconite-like pellets that can be used in steel mills owned by its new partner, Oho-based AK Steel. Matt Lehtinen, Magnetation’s president, said at the time that locations in Ohio and Indiana were being considered along with a site in Itasca County, between Grand Rapids and Coleraine, which would be close to the company’s ore recovery operations. Last week Matt Lehtinen told the Superior Telegram that the company is also looking at the Parkland Industrial Park in Superior.

He said Magnetation will pick two finalists sometime soon and then begin the application process for state permits — especially air and water emissions permits — for each location. A final decision on one site would be made later.

Magnetation officials are in a hurry to build the plant and get pellets to AK Steel’s blast furnaces in Middletown, Ohio, and Ashland, Ky., and it’s clear they are looking for a fast-tracked permit process, said state Rep. Tom Anzelc, DFL-Balsam Township, who represents the Itasca County site.

“Unfortunately Mr. Lehtinen is not pleased with the pace at which the Minnesota PCA and DNR are moving,’’ Anzelc said. “He claims he can have the permits in hand from Wisconsin by September. I highly doubt that. … But that’s what we’re up against.”

Iron Range lawmakers will meet with state regulators on Feb. 8 to get an update on the permitting process.

“The only leverage we really have is the production tax and royalties,’’ Anzelc added. “But I really don’t want to go down that route. Magnetation has been a great addition to the western Mesabi Iron Range and we want that to continue and expand.”

The scoldings are an about-face from the praise elected officials have heaped on Magnetation for creating dozens of jobs in recent years using the company’s proprietary technology that can pull valuable iron ore out of waste tailing dumps left behind decades ago by now closed mining operations. The company is creating a valuable product, and jobs, using a waste resource that requires no new mining.

Magnetation already has 150 employees at recovering and concentrating operations on the Iron Range and is planning up to 100 more. The company has concentrate plants in Keewatin and Taconite. Another Magnetation effort near Chisholm supplies Mesabi Nugget with the concentrate it needs to make iron nuggets. And two additional waste ore recovery plants, in Coleraine and Calumet, are planned.

“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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