Steel Products Prices North America
Iron Ore Operation Magnetation Has Buyer
Written by Sandy Williams
December 10, 2016
Bankrupt iron ore producer Magnetation LLC has a buyer. Tom Clarke owner of ERP Iron Ore has made an offer for the iron ore operation that closed its last plant in October 2016.
Magnetation was a joint venture of Magnetation Inc. and AK Steel. The company recovered waste tailing for conversion into iron ore pellets which were used by AK Steel’s Ohio mills. Magnetation began closing plants in early 2015 and filed for bankruptcy in May last year.
“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.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Products Prices North America
Thin demand keeps plate prices hovering at lowest levels since February
Participants in the domestic plate market say spot prices appear to have hit the floor, and they continue to linger there. They say demand for steel remains thin, with plate products no exception.
SMU Price Ranges: HR crawls back to $800/ton
SMU’s HR price stands at $800/st on average, up $5/st from last week. The modest gain came as the low end of our range firmed, and despite the high end of our range declining slightly.
SMU successfully completes IOSCO review
SMU has successfully completed an external review of all our prices. The review has concluded that they algin with principles set by the International Organization of Securities Commissions (IOSCO).
Domestic plate prices could heat up despite so-so demand, market sources say
Some sources also speculated that plate could see further price increases thanks to modest but steady demand, lower imports, mill maintenance outages, and end markets less immediately affected by tariff-related disruptions.
SMU Price Ranges: HR holds, galv slips amid competing market narratives
SMU’s sheet and plate prices see-sawed this week as hot-rolled (HR) coil prices held their ground while prices for galvanized product slipped.