Steel Dynamics and Kobe Steel to build iron plant in Minnesota

Steel Dynamics, Inc. (SDI) announced that its board of directors has approved the company’s participation with Kobe Steel to construct and operate a $235 million iron-making facility in the Hoyt Lakes region of Minnesota.

The project is contingent on successfully arranging financing of the project, including discussions regarding economic development assistance with the state of Minnesota, completion of a long-term supply agreement that would assure the supply of iron concentrate needed for iron-nugget production, securing certain land options, and other unresolved issues.

In November 2006, SDI announced that negotiations with four other partners in Mesabi Nugget, LLC, had broken down due to complexities involved in the multi-party arrangement. Kobe Steel and Steel Dynamics have now formed a new legal entity to develop the project.

The new arrangement calls for Steel Dynamics to hold a majority stake in the project and to be responsible for the construction and operation of the facility. Kobe will provide a technology license, engineering services, proprietary equipment and technical support to the project. The initial production module is designed to have an annual production capacity of 500,000 tons of iron nuggets.

Steel Dynamics anticipates that substantially all of the nugget output of the first module will be consumed in SDI’s mini-mills, providing the company with a constant supply of high-quality iron units. Melt tests using nuggets produced by a pilot plant have demonstrated that iron nuggets melt more efficiently in electric-arc furnaces than traditional pig iron.