Construction begins on $150 million U.S. Steel taconite pellet plant in Keewatin

KEEWATIN — US Steel on Wednesday broke ground on a $150 million plant addition, one of Minnesota’s largest taconite projects in recent history.

With this new investment, US Steel’s Keewatin taconite plant will produce pellets with higher iron content than traditional pellets. Construction has started recently and is expected to be completed next year. Full production of the new pellet is expected in 2024.

US Steel “doubled down on innovation and doubled down on this state,” Gov. Tim Walz said Wednesday at a meeting of executives, politicians and others in Keewatin Taconite.

With the new facility, US Steel should be better prepared to survive the steel industry’s continued transformation away from traditional blast furnaces.

Pittsburgh-based US Steel has been profitable and “we want to share that and invest in our future,” CEO David Burritt said at Wednesday’s event.

Representatives of the United Steelworkers of America were notably absent from Wednesday’s ceremonies. While the union that represents Keetac workers is all in favor of the new project, the Steelworkers remain at odds with US Steel over a new contract.

The national contract between the union and US Steel expired on September 1. The union has already reached an agreement with Cleveland-Cliffs, US Steel’s main rival on the Iron Range. Steelworkers picketed on Wednesday in Keewatin on the road leading to the plant.

Keewatin Taconite, or Keetac, is being revamped to manufacture “Direct Reduced” – or DR – grade taconite pellets, which are an essential raw material for the production of iron used in electric arc furnaces.

Electric arc rolling mills have traditionally used scrap, but increasingly use direct-reduced iron or pig iron made from direct-reduced taconite pellets.

Taconite plants on the Iron Range – including US Steel’s existing one, Minntac, at Mountain Iron – primarily produce iron ore pellets that are used in traditional blast furnaces. Electric arc furnaces are the main source of steel production in the United States, and their market share will only increase.

US Steel now has two electric arc steel mills in addition to its traditional integrated steel mills. Electric arc steelmaking emits far less carbon dioxide than the traditional blast furnace method.

US Steel’s new DR facility would be the second such operation in northeast Minnesota. In 2019, Cleveland Cliffs invested $100 million to upgrade its Silver Bay taconite production facility to produce DR-grade pellets.

However, Cliffs idled its Silver Bay taconite operations this spring. Cliffs is Minnesota’s largest taconite mine operator; US Steel is the second largest.