Essar Steel places big bet on US iron ore – by Aaron Stanley (Financial Times – August 18, 2015)

Hibbing, Minnesota – On an abandoned iron ore deposit just outside of Hibbing, Minnesota — the boyhood home of Bob Dylan — India’s Essar Steel is ramping up construction on a $1.9bn mining and processing facility.

On planned completion in the second quarter of 2016 it hopes to produce 7m tonnes annually of high-grade iron ore pellets for 70-80 years.

After being delayed several times by financing problems during the recession, the project — one of the largest greenfield construction projects in North America by capital expenditure — will be the first new facility in 40 years on Minnesota’s Mesabi Iron Range. The 150km stretch of the richest iron ore deposits in North America has powered the Great Lakes steel mills and US industrialisation for more than a century.

But the massive construction project comes as other US iron and steel companies cut production in the face of low global iron ore prices and cheap steel imports.

Essar, a $39bn conglomerate whose Canadian steelmaking operation recently emerged from bankruptcy protection, is placing a large bet on a new boom in US manufacturing that will create more demand for high-grade, domestically produced steel.

“For us, the market is regional,” said Madhu Vuppuluri, chief executive of Essar Steel. “Due to the infrastructure revival that is likely to take place here in North America, the US and Canadian steel industry will remain robust moving forward.”

In 2013, the American Society of Civil Engineers estimated that $3.6tn in investment was needed by 2020 to return US infrastructure to its optimal state.

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