New steel plant: Viable venture or political smoke and mirrors?
There was big news in the steel industry this week, with the White House announcement that Mesabi Metallics was going to build the country’s largest steel plant ever somewhere in southeastern Iowa, using taconite shipped there from its mine and processing facility, still under construction near Nashwauk.
The timing couldn’t have been better politically for the White House, which is increasingly worried about a mid-term wipeout for the GOP next month. And Iowa, of all places, is one of those states that looks poised to flip key seats to the Democrats, if recent polling can be believed. At the same time, Trump could take yet another shot at his least favorite governor, and the GOP candidates, like Eighth District congressman Pete Stauber and state Rep. Spencer Igo teed up shots of their own about how Minnesota lost this fabulous new steel mill, a longtime dream for the Iron Range.
If it strikes you as perhaps a bit too politically perfect, you’re at least paying attention. That is certainly the concern for Aaron Brown, the Star Tribune columnist and Iron Range college instructor who has been following the Mesabi Metallics saga for nearly 20 years now. I spoke to him in the wake of the announcement and he shared my skepticism about whether this is a viable venture or just more political smoke and mirrors from a White House that revels in sideshow.
As Brown noted in his Monday Strib column, written just ahead of Monday’s announcement, Mesabi Metallics, as recently as two weeks ago, was focused on building a DRI plant near Paducah, Ky. Turns out they had already filed for permits and begun initial hiring. And, meanwhile, they were struggling to finance the completion of their processing plant in Nashwauk.
Then, seemingly out of the blue, the Trump-controlled Export-Import Bank parachutes in last month with a $770 million direct loan to Mesabi Metallics, which rose from the ashes of the Essar Steel bankruptcy. That funding should enable the company to complete its Minnesota pellet plant, which is currently behind schedule. Two weeks later, the White House announces the company is going to build a gigantic Iowa steel plant, funded by another $10 billion in federal money. Essar officials compliantly nod along. Who wouldn’t if their $770 million loan was on the line.
It has all the hallmarks of the Foxconn deal, or the Alibaba deal, or the Lordstown Motors deal, all touted by President Trump at the time as the biggest deals of the century, all evidence that America’s golden age is upon us. And they all fizzled because while the proposals all offered short-term political wins for Trump and his allies, they didn’t make economic sense.
The questions surrounding the latest announcement make those “deals” appear almost plausible. Left out of the announcement was an actual location for the plant, other than that it will supposedly be built in Lee County, the southeastern-most county in Iowa. According to reporting out of Iowa, county officials there had no notice of the project, had no permit applications before them, and had no idea where the plant would even be located. The plant would require massive financial incentives, which have yet to be explained to the Iowa Legislature, much less approved. Meanwhile, Trump falsely claimed that construction was already underway.
Further, there was no explanation of how the taconite pellets produced by Mesabi Metallics would be shipped to the new mill. Historically, Iron Range ore has been shipped by short, dedicated rail lines to loading facilities on Lake Superior for shipping by ore carrier.
Some suggested the pellets would be shipped by BNSF rail, which is the most plausible option. Others suggested the pellets would be railed to some point on the Mississippi for loading onto barges. None of these options has ever been attempted before with taconite and the logistics are daunting. The rail option would entail shipping multiple very heavy pellet trains a day anywhere from 600-700 miles (depending on the route) through some of the most heavily trafficked rail infrastructure in the country, with frequent interchanges required. The logistical complexity and expense would be enormous, which is one reason it’s never been attempted before. Barging along the Mississippi is even crazier and neglects to consider the enormous cost of building the loading facilities that would be required, not to mention the fact that the river gets low at times and may not accommodate barges burdened by the immense weight of taconite pellets.
There’s also some math at issue here. We don’t know how much ore Mesabi Metallics controls because it’s a privately held company. But the company’s CEO Joe Broking has indicated a mine life of 23 years at a production rate of seven million tons a year, which would suggest viable reserves of about 160 million tons. Seven million tons of annual production wouldn’t supply even the first phase of an Iowa steel plant of the scale the White House is talking about.
Mesabi Metallics recently indicated it hopes to expand its production capacity to 18 million tons a year. That would certainly supply the Iowa plant, for about nine years until the reserves ran out. There are other reserves in the area that the company could potentially obtain, but there are at least three companies vying for that ore and it’s currently tied up in litigation. Who knows how long it will take to unwind that mess, and which company might eventually control those reserves.
In other words, to call this week’s announcement speculative is probably giving it too much credit. Yet, as Trump has shown time and again, his touted deals don’t have to come through in the end. As I’ve written before, this isn’t so much a presidential administration as it is a reality TV show. Trump makes his big announcements of his incredible deals and expects that few will ever follow up or notice that the developments never materialize or your check is always in the mail.
If one needed further evidence of the political nature of this week’s announcement, it came almost immediately following the announcement with the requisite political slam by Republicans over state policies that supposedly prompted Mesabi Metallics to suddenly look to Iowa, rather than build a steel mill next to its Nashwauk mine, which was Essar’s original plan before it went bankrupt.
Stauber put the blame on Gov. Walz, which struck me as astonishing political spin, given that it was the DFL governor’s support that made the Mesabi Metallics Nashwauk plant possible.
This “deal,” such as it is, was clearly hatched in the White House in the past few weeks. I think back to the days of John Blatnik or Jim Oberstar and cannot imagine a Democratic president announcing a deal to build a steel plant under these circumstances somewhere other than in Minnesota’s Eighth District. Blatnik or Oberstar would have brought that bacon home to the Range— guaranteed. If I thought this week’s announcement was real, I’d point out that the real failure here is on Stauber’s part. I doubt state officials knew anything about it.
My bottom line take? This announcement was cooked up at the last couple weeks to try to salvage the GOP’s sagging political fortunes in Iowa. As for actual construction of a new steel mill… expect that to arrive along with your DOGE check, your tariff check, or your VOTE REPUBLICAN check. In other words, don’t hold your breath.
