Mesabi Metallics to build a $15B lower-carbon steel mill in Iowa

The company behind America’s first new iron ore mine in 50 years has unveiled plans for a massive, $15 billion steel plant in southeast Iowa, bringing the firm closer to realizing its ambitious vision for low-carbon steelmaking.

Mesabi Metallics, which is owned by India’s Essar Group, announced the project on Monday at the White House alongside President Donald Trump, senior cabinet members, and a handful of top Republican officials from Iowa.

Trump touted the steel plant at a moment when Republicans face difficult midterm prospects. The president cited the promise of high-paying jobs for Iowa, a state that could help the GOP maintain control of the U.S. Senate in November. He also credited his administration’s 50% tariffs on imported steel for driving investment in a facility that, if built as planned, would be among the world’s largest.

Mesabi didn’t specify why it chose Iowa for the proposed facility, which is slated to receive iron-ore pellets from the company’s vast new operation in Minnesota’s Iron Range and ultimately churn out around 10 million tons of steel a year. Iowa’s Republican Gov. Kim Reynolds said on Monday that ​“tough negotiations took place” between the state and Mesabi, but didn’t elaborate further.

Mesabi’s Iowa mill ​“will be one of the most efficient and environmentally friendly facilities in the world,” the company said in a press release. The mill will use natural gas to turn pellets into direct reduced iron, or DRI, that will then be fed into an electric arc furnace, or EAF, likely powered by Iowa’s wind-dominated grid.

The facility could be made far cleaner if the company replaced that gas with green hydrogen — made from renewable energy and water — during the ironmaking process, though Mesabi didn’t mention plans to use the fuel, which is currently expensive and in short supply.

Along with the $15 billion earmarked for the steel mill, Mesabi is investing nearly $3 billion to complete its iron ore mine in northern Minnesota. The company has long envisioned creating a network that begins on the Iron Range and ends with shiny steel coils for producing U.S. cars, ships, appliances, and energy infrastructure.

“With the new steel complex in Iowa, we will complete the fully integrated American supply chain, from mine to mill,” Rewant Ruia, chair of Mesabi, said from the Oval Office. 

He added that the new facility ​“will use the latest technology, and will compete head-to-head with any steel plant in the world on size, quality, and on cost.” 

In a stark departure from more than a century of vertically integrated steelmaking in the United States, Mesabi’s new complex will not use coal-fired furnaces.

The older steel mills operated by America’s legacy steelmakers, U.S. Steel and Cleveland-Cliffs, still rely on blast furnaces to melt and purify iron ore. The lavalike mixture is then fed into basic oxygen furnaces that remove most of the remaining impurities to produce crude steel. The process is a significant source of global greenhouse gas emissions and toxic air pollution.

Mesabi’s plan represents ​“an important, and predictable, investment in the future of iron and steelmaking in the U.S.,” said Hilary Lewis, steel director at the decarbonization-advocacy group Industrious Labs. It’s a sign for other ​“outdated, polluting” steel mills to clean up their act, she added.

“The writing is on the wall for the few coal-based furnaces left in the U.S.: Modernize, or lose out,” Lewis said by email. ​“This is a wake-up call for industry decision makers, elected leaders, and communities across the Midwest — if they want to keep the steel industry that helped build our buildings, bridges, cars and the modern middle class, they need to invest in cleaner, modern iron and steel technology today.”

But Ohio-based Cleveland-Cliffs remains committed to the older technology in at least one of its mills. Last month, it said it would use a $500 million federal loan to extend the life of the blast furnace at its Middletown complex by 15 to 20 years. It was a sharp turnaround for Cliffs, which only two years earlier said it would use the loan to replace the Middletown blast furnace with a direct reduction plant like the one Mesabi is planning in Iowa — and the one Cliffs already owns and operates in Toledo, Ohio.

The Toledo facility remains the only DRI complex in the Great Lakes region, which has for decades leaked steelmaking capacity to Gulf Coast markets with easier access to cheaper imported ores. In Louisiana, the Korean industrial giant Hyundai recently broke ground on a nearly $6 billion steel mill that will also use the DRI-to-EAF pathway.

The White House said Mesabi’s Iowa mill will begin production in 2030, and Trump said its steel would be cost-competitive in a global market increasingly dominated by lower-cost Asian producers.

But important questions remain. Most traditional, integrated steel mills are on or near the Great Lakes and can receive ore by water, a more efficient pathway than rail. Though Mesabi’s Iowa mill will be located on or near the Mississippi River, the locks on the ship canal between the Mississippi and Great Lakes watersheds are generally too small for hulking ore carriers to traverse.

The mill may instead take delivery by rail direct from northern Minnesota, like U.S. Steel’s Granite City Works near St. Louis. At the White House, Ruia referenced ​“American ore carried on American railroads” when outlining his mine-to-mill vision.

Earlier this month, Mesabi CEO Joe Broking suggested the company may yet add DRI capacity closer to its Iron Range mine. Broking, who was also in attendance at the White House, teased the idea of Minnesota DRI at a little-noticed county board meeting on Sept. 15, according to a report by KAXE/KBXE. He told Itasca County commissioners that Mesabi was prepared to spend $5 billion on an expansion that would more than double the mine’s annual production capacity and build a DRI plant nearby.

Elizabeth Boatman, the Minnesota-based industrial decarbonization lead for consultancy 5 Lakes Energy, told Canary Media in February that the prospect of lower shipping costs strengthens the case for a DRI-based steel mill in northern Minnesota, possibly at the long-cleared site of an integrated mill U.S. Steel ran last century in Duluth.

“One of the push points to moving [purified] iron production here is that around one-third of the pellet is not iron. Why would you want to pay for fuel and time to ship non-iron when you could just ship the iron itself?” Boatman said.

Broking said the expansion hinged on state environmental permitting reforms and on the outcome of a dispute between Mesabi and Cliffs over mineral leases for 2,600 acres near Mesabi’s mine. Mesabi once controlled those leases, but the state of Minnesota revoked them earlier this decade after Mesabi ran into financial trouble. It later handed them over to Cliffs.

As for the Iowa plant, the message from Mesabi leaders and Trump administration officials on Monday was unambiguous: It’s happening, even if details remain sparse.

“I think this deal’s done,” Commerce Secretary Howard Lutnick told reporters. ​“They’ve already worked it all out. That’s why we’re all together with the president. The president doesn’t bring people together unless it’s a done deal.”