Iron Ore Operation Magnetation Has Buyer

“After 19 months under bankruptcy protection, we are pleased to have reached this important milestone supported by a wide coalition of the stakeholders in this case. This outcome provides the potential for a restart at some point in the future of the state-of-the-art Magnetation assets as a going concern, which has been our goal and would provide the best possible value the estate and its stakeholders,” said Magnetation CEO Larry Lehtinen.

In court documents filed last week, the company said it had received several bids but “have not received a higher or better offer than that presented by ERP.”

The deal includes a $22.7 million payment to bondholders as well as repaying $30 million owed to contractors and vendors. The vendors and contractors will get a partial payment when the company begins operation and then receive the rest over time.

This will be Clarke’s first “foray into iron ore” having owned coal operations in Alabama and West Virginia. The deal would give ERP three Magnetation iron ore pelletizing plants in Minnesota as well as Magnetation’s railroad loading facility in Grand Rapids and its pelletizing plant in Reynolds, Ind.

“What a fantastic environmental sustainability story, to be able to make this high-grade product out of what had been a waste stream,” Clarke said of Magnetation’s technology. “There are piles of waste ore all around the world. We already know this can make a high grade product that makes great steel.”

ERP plants to restart the some of the operations and sell its products to mills in Europe. Eventually, said Clarke, they would find domestic customers as well.

The preliminary agreement between Magnetation and ERP was signed on Dec. 6 and a court hearing will review the proposed sale on Dec. 15.