As U.S. Steel opens new Iron Range taconite facility, its potential foreign sale looms

KEEWATIN, Minn. — U.S. Steel's new higher-grade taconite pellet debuted this month, a bright spot for Iron Rangers worried about the storied American company's potential sale to Japan's Nippon Steel.

The first shipment of pellets, more than 18,000 long tons, left the Keetac mine May 7. This week, production was in high gear as Pittsburgh-based U.S. Steel celebrated its new $150 million plant in Minnesota that made those pellets possible. The plant's 85-foot-tall mill is among the largest of its kind in the world, and the project added more than 30 new full-time jobs. U.S. Steel employs nearly 2,000 workers in all of its Minnesota operations.

Keetac, the smaller of the company's two mining and processing operations on the Iron Range, has felt the brunt of the cyclical steel industry, with numerous shutdowns, said Mike Bakk, U.S. Steel's director of operational readiness for its Minnesota operations. The new plant points to stability, he said, and "speaks to U.S. Steel's thoughts on the future and where we are going with steelmaking."

The new pellet facility is a "smart investment" in the people and potential of the Iron Range, said Gov. Tim Walz in a news release after attending an opening celebration with other state and local leaders Thursday. "We're creating jobs, lowering emissions and ensuring Minnesota's iron ore industry remains strong for generations."

The new "direct-reduced iron" pellet serves electric furnaces that are less environmentally harmful than traditional blast furnaces. They make higher quality steel and need high-quality iron to supplement scrap metal. The new plant makes a more heavily filtered iron-rich pellet, which Cleveland-Cliffs, the largest mining company on the Iron Range, is already making. Both can still make blast furnace pellets.

U.S. Steel also owns the Minntac mine and has a stake in the Hibbing Taconite mine. Cliffs owns part of Hibbtac as well as United Taconite, Minorca Mine and Northshore Mining.

John Arbogast represents all six Minnesota taconite operations for the United Steelworkers union and said it was sad to talk about a potential sale while celebrating "the most exciting thing that's happened on the Range since the late '70s."

U.S. Steel's nearly $15 billion sale to Nippon Steel is on the rocks with the federal government. President Joe Biden in April pledged to block the deal in an appeal to the USW, which has fought for rival Cleveland-Cliffs to buy the company instead. Former President Donald Trump has also said he would stop the acquisition if elected this fall.

In a letter to union workers May 17, USW rejected U.S. Steel CEO David Burritt's efforts to "win the hearts and minds of USW members" and laid out an array of concerns about Nippon's plans and priorities. The union argued that Nippon will prioritize Japanese operations at the expense of American jobs when it comes to trade disputes.

The latest in an unusually bitter and public war of words about the deal saw the U.S. Steel board accuse Cliffs on Tuesday of "sowing misinformation" and working to unwind the transaction. Nippon hopes to close the deal by the end of the year.

Cliffs CEO Lourenco Goncalves responded by saying U.S. Steel is trying to blame his company for its "terrible decision-making" with an "un-closeable deal." Cliffs asserts USW has de-facto veto power.

U.S. Steel has supported generations of workers with good-paying jobs, Arbogast said, "and this decision could put all this at risk." Concerns include lost retiree benefits, plant closures and operations moving overseas. While USW has plenty of support and influence on the Iron Range, its position on U.S. Steel is not universal.

State Rep. Spencer Igo, a Republican from Wabana Township who represents Keewatin in the Legislature, said Nippon has promised to keep the U.S. Steel name and honor collective bargaining agreements. He also argued that economic diversity is good, especially if the alternative is a Cliffs monopoly on the Range.

"Whenever we have one company running ore operations or running any sort of industry in the United States, that's not a good thing for the working class. That's not a good thing for communities," Igo said. "We need to make sure that we have a vibrant, diverse economic market so that if there are downturns and upturns, the market can work that with multiple different companies thriving inside of it."

But Virginia Mayor Larry Cuffe Jr. wonders what happens when bargaining agreements expire. Plenty of Rangers oppose the acquisition, he said, because of the "fear of the unknown."

"For me, it's about keeping everything as local as possible," he said. "I would just prefer the steel to remain in the hands of the U.S. Steel company."

Iron Range Resources and Rehabilitation Commissioner Ida Rukavina sees the new plant as a sign of U.S. Steel's commitment to remaining viable on the Iron Range, where the majority of the country's iron ore supply lies.

Iron ore is still "a valuable resource used domestically at a time when there are a lot of people concerned about foreign ore being the future source," she said. "We still have a significant impact across the whole nation."