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Cleveland-Cliffs believes it can cut overall emissions of pollutants while simultaneously increasing its pellet output, thanks in large part to renewable fuels it plans to produce on the Iron Range.
The company predicts its project will curb emissions of greenhouse gases, mercury, other problem gases and particulates from its facility. Cleveland-Cliffs filed a permit amendment for the project Friday with the Minnesota Pollution Control Agency. Construction is expected to begin if and when the company gets the state's go-ahead.
Chris Nelson, manager of the Minnesota Pollution Control Agency's mining sector division, said his office received Cleveland-Cliffs' filing Monday. If the company is seeking only an amendment to its air permit, and the project is uncontroversial, Nelson said the review could take as few as six months to complete.
According to the company, its initiative would:
r Reduce sulfur dioxide, nitrogen oxides and particulate matter emissions per ton of pellets produced by 37 percent.
r Reduce greenhouse gas emissions per ton of pellets produced by up to 30 percent.
r Reduce mercury emissions per ton of pellets produced by 14 percent.
r Capture more than 99 percent of particulate emissions from Line 1 following the replacement of existing control equipment with a new wet scrubber.
Nelson said MPCA staff will need to review Cleveland-Cliff's proposal to determine whether these claims are credible.
The project includes spending around $35 million to install new emission control equipment and modifying the plant to burn cleaner fuels. UTAC currently burns a combination of fuels including natural gas, fuel oil, petroleum coke and Eastern coal. What Cleveland-Cliffs has dubbed its "Green Production Project" would open the way for enhanced fuel blending and the use of lower-emitting fuels, resulting in substantially less use of petroleum coke and natural gas in favor of low-sulfur Western coal and biomass.
The proposed upgrades also would allow UTAC to use Renewafuel, a proprietary carbon-neutral biofuel that produces substantially lower greenhouse gas, sulfur dioxide, and mercury than fossil fuels. Cleveland-Cliffs recently became a 70 percent owner in Renewafuel and hopes to use the biofuel in its mining operations.
Eventually, Renewafuel could supply up to half of UTAC's energy needs, according to Cleveland-Cliffs.
Renewafuel's initial development efforts have been based in Battle Creek, Mich., but Maureen Talarico, Cleveland-Cliffs' district manager of public affairs, expects plans for a new Iron Range processing plant to be announced soon.
Such a plant would bring additional employment and investment to the region, but Talarico said: "We don't have any exact numbers yet. It's not going to mean hundreds of jobs, like a mining operation."
Renewafuel has demonstrated it can produce a densified cube fuel from a number of renewable materials, including wood, sawdust, corn stover, straw, paper, grasses, grain and seed hulls.
If the biofuel is used successfully at UTAC, Talarico said it could lead to its adoption by other taconite producers, particularly as companies work to reduce their emissions of greenhouse gases.
Charles Bradford, a New York-based steel industry analyst, said stricter federal emission standards could force big changes in domestic steel production, posing a particular challenge for operators of blast furnace operations -- the primary consumers of taconite pellets.
He said Cleveland-Cliffs is right to concentrate on improving its own emissions as well as developing new products, such as higher-grade steel nuggets that can feed electric arc furnaces generating about one-third of the greenhouse gases of conventional blast furnaces.
"If I were in the iron ore business right now, I'd be most concerned about the effects of pending cap and trade policies on the steel industry," Bradford said.
"The Green Production Project is a win-win proposition for the environment and for operations at UTAC," said Dana Byrne, Cleveland-Cliffs' vice president of public and environmental affairs, in a news release. "When all improvements are in place, UTAC expects to have the lowest combined emissions per ton of taconite produced of any facility operating in Minnesota and will have the added potential to reduce emissions further in the future."
In addition to the environmental improvements, UTAC will upgrade its concentrator and pellet plant equipment to allow for an increase in production of 700,000 tons per year, bringing its total annual output to 6 million tons.
UTAC employs 557 employees in Forbes and Eveleth. The subsidiary has an annual payroll, including benefits, of about $50 million.
Cleveland-Cliffs has been on a spending spree of late. It recently invested about $40 million at Northshore Mining Co. to restart a furnace that had been idle for more than 25 years, boosting production there by about 800,000 tons. Early last week, the company shared news that it had agreed to buy out Laiwu Steel's 30 percent ownership interest in United Taconite, as part of a deal that involved $100 million in cash, more than 1.5 million in Cleveland-Cliffs common shares, plus a promise to deliver 1.2 million tons of iron ore pellets over the next five quarters at no cost. Then, on Wednesday, Cleveland-Cliffs announced its biggest deal yet, the acquisition of coal giant Alpha Natural Resource Inc. for about $10 billion in cash and stock.
Talarico said taconite producers, such as Cleveland-Cliffs, are responding to market conditions.
"Demand for pellets is through the roof right now, and when demand is so strong, everyone looks at how they can get the most out of what they have," she said.
Cleveland-Cliffs is not alone in that respect. Earlier this year, U.S. Steel Corp., announced plans to invest more than $300 million in Keetac, adding 3.6 million tons of production to the Keewatin taconite plant's capacity.
PETER PASSI covers business and development. He can be reached weekdays at (218) 279-5526 or by e-mail at ppassi@duluthnews.com.
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