Magnetation LLC announced it may temporarily idle its Plant 2 facility in Bovey, Minn. A WARN notice has been issued to employees of the facility. If the production curtailment is followed through, the closure will take place on or after January 31, 2016.
“While any operating curtailment is unfortunate, we must balance our current production with our customers’ needs to sustain our business in these challenging markets. In response to this market uncertainty, we must acknowledge that there is a potential for curtailments and layoffs. As a result, we are communicating the proper notifications to our employees and the community” said Larry Lehtinen, CEO of Magnetation.
The company said it was unsure how long the plant may be closed.. Approximately 163 employees could be laid off. Some employees will be offered work opportunities in other areas of Magnetation, said management in a press release.
“The problem is that AK doesn’t need as many pellets as we want to sell them,” Lehtinen said Wednesday. “We just don’t know how long this is going to last into 2016.”
It will be the third closure of the company’s four plants this year. Keewatin and Chisholm were closed earlier and Plant 4 will be the only facility operating if the closure of plant 2 is finalized.
Low prices and oversupply hit the Iron Range hard in the past year. Demand from steel plants is down due to high import levels of cheaper foreign made steel. Other plants that have closed in the region include U.S. Steel’s Keetac plant in Keewatin, the Mesabi Nugget iron nugget plant in Hoyt Lakes and Cliffs Natural Resources United Taconite in Forbes and Eveleth. In an announcement earlier this week, Cliffs announced it will close its Northshore Mining operations by Dec. 1.
“There is just a glut of iron ore in the world,” said Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Resources in a report by the Star Tribune. “It’s the first time in my memory where the U.S. economy is relatively healthy and that the steel and iron industry is in this bad a shape. Usually, we ride with the economy. That is the sad point about this.”
Magnetation LLC is a joint venture between Magnetation, Inc. (50.1% owner) and AK Steel Corporation (49.9% owner). The company recovers high-quality iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins. Magnetation LLC owns three iron ore concentrate plants located in Keewatin, MN, Bovey, MN and Grand Rapids, MN, and an iron ore pellet plant in Reynolds, IN.
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