A foundry blamed for polluting its south Minneapolis neighborhood for years will close its furnace and cease its iron casting work within the next year, after reaching a settlement with the U.S. Environmental Protection Agency.

The EPA announced on Tuesday that Smith Foundry has decided to instead focus on metal finishing, and that it would pay an $80,000 penalty. The foundry has operated at 1855 E. 28th St. since 1923. About 50 workers melt down metal to cast iron components in silica sand molds.

"Shutting down the furnace and casting operations is a win for this community, which has been historically disenfranchised and overburdened by pollution," EPA Regional Administrator Debra Shore said in a statement. "East Phillips residents deserve to breathe clean air and to live in a healthy, thriving community."

In a release, Smith Foundry said the changes would "significantly alter" its operations, but said it would continue its engineering and design work, as well as metal finishing for iron components that have been cast elsewhere. The finishing would involve using metal grinders, Bruce Gordon, a spokesman for the company, said in a follow-up email.

"This strategic initiative is aligned with our values as a company and we believe it will position Smith Foundry for sustained success and growth," Adolfo Quiroga, president of Smith Foundry, said in a statement. Smith is owned by the Canadian firm Zynik Capital, which bought it in 2022.

For years, neighbors reported bad odors and pollution from Smith and the asphalt plant next to it, Bituminous Roadways. But it wasn't until a surprise inspection in May 2023 that EPA officials found issues with air filters, broken equipment, poor record keeping and fine black dust that built up all over the interior of Smith and sometimes escaped through doors and windows.

When the inspection was revealed later last year, first in a story by Sahan Journal, it sparked a wave of outrage in the East Phillips community, with many saying their health concerns had been ignored by city and state officials for years. Many people in particular aimed their ire at the Minnesota Pollution Control Agency, which had not updated Smith's air emissions permit since 1992.

Karen Clark, a former state legislator and board member of the East Phillips Neighborhood Institute, said the settlement was a move in the "right direction," but was still cautious.

With the news that metal finishing and other operations at the plant would continue, Clark said, "We need to know more about what that means. If they're going to leave some of it going, what pollution comes from that?"

Smith has until June 3, 2025, to close all of its furnace, metal pouring and cooling operations. It will have to immediately close two pouring and cooling lines, according to the EPA release, and limit how much metal is poured on the remaining lines until they are closed. The company's furnace has attracted particular concern because its emissions are not directly funneled to pollution control equipment, unlike other parts of the plant.

Gordon confirmed that there will be workforce reductions at the plant as a part of the change, but said "we are working to ensure that as many employees as possible are retained."

As the business is converted, the foundry will also likely stop using the fine black silica sand that forms molds and is shaken off of completed components. The sand presents a breathing hazard to workers inside, because inhaling it can cause the damaging lung condition known as silicosis. State workplace inspectors found this spring that Smith had failed to protect its workers from breathing this dust and from breathing carbon monoxide.

A coalition of community groups has repeatedly demanded that Smith be shut down entirely. The company countered that it was working to be a good neighbor — and wanted time to show it could improve. On Tuesday, a news release from those community groups hailed the settlement but urged that the company should not wait a year to shut down its casting operations.

"Today we celebrate community power and what we can accomplish when we come together with a common goal," said Jolene Jones, founder of the group Little Earth Protectors. Little Earth is a subsidized housing community in the center of East Phillips, where most residents are Indigenous.

The EPA's original notice of violation to the foundry indicated that it had released more fine particulates, or soot, than was allowed. The pollutant causes breathing and heart problems. Subsequent testing showed the foundry had improved its efforts to control soot, but was also releasing lead into the air. A joint statement from the EPA and the MPCA described the amounts of lead as "low."

Since then, the MPCA negotiated with Bituminous Roadways to shut down by the end of 2025, and the agency announced in March that the asphalt mixer had already closed permanently. The agency has also been working to update Smith's air emissions permit in accordance with newer, stricter state pollution standards, but it's not immediately clear how the EPA settlement will affect that process.

MPCA Commissioner Katrina Kessler said in a statement Tuesday that the state agency would continue to monitor emissions at Smith and meet with the community. "This settlement is an important step toward protecting the health and well-being of residents in the East Phillips community," she said.

The company will now have to submit a new application for an air pollution permit. It was in the midst of updating its old permit with the MPCA, which said in an email on Tuesday that Smith withdrew that permit application last month, as settlement negotiations were coming to a close.

The agency also said it would solicit information from residents "to develop an air permit that protects the community."