PALMER, Mich. (AP) — An Ohio company that runs two iron ore mines in Michigan's Upper Peninsula said Thursday it would build a plant there to supply raw materials for the type of mill that makes most U.S.-generated steel.
The new facility will extend by at least 15 years the life of Empire Mine, where operations had been likely to end after 2010, Cleveland-Cliffs Inc. executives said.
It will produce about 500,000 tons of iron ore nuggets a year for ''mini mills,'' which use recycled scrap as a key ingredient in steel.
Previously, the company's mines in Michigan, Minnesota and Canada have made only iron pellets for traditional ''integrated'' mills, which manufacture steel from iron ore and coke.
Integrated mills now generate about 45 percent of domestic steel, while mini mills — which emerged on the scene in the past few decades — account for more than half.
''This project furthers one of Cliffs' key strategic objectives to sustain its leadership position in metallics-related processes and should open a very promising and growing new market for our company,'' Joseph A. Carrabba, president and CEO, said in a statement.
The plant will be a joint venture with the Japanese company Kobe Steel Ltd., which patented the technology for producing the nuggets, which consist of more than 96 percent iron.
The pellets now produced at Empire Mine contain about 65 percent iron.
Cliffs hasn't yet lined up buyers for the iron nuggets. The Empire Mine won't start churning them out until 2010, said Don Gallagher, president for North American iron ore.
''We're confident that with the demand and market size, we'll have no problem setting up sales arrangements for this product,'' he said.
The company still needs to obtain air and water permits from the Michigan Department of Environmental Quality.
Construction of the new plant will create 300 to 500 short-term jobs, Gallagher said.
The Empire Mine, in the Marquette County village of Palmer, currently employs about 600. It's uncertain how many of those will remain under the new operation, Gallagher said.
At worst, the mine could downsize to about 100 employees in 2010-11, ''but we're more optimistic than that,'' he said. The work force could be considerably higher, particularly if the new process succeeds and additional facilities are needed, he said.
The other Cleveland-Cliffs mine in the Upper Peninsula is the Tilden Mine near Ishpeming.
Gov. Jennifer Granholm and U.S. Rep. Bart Stupak (D-Mich.) attended a Cliffs news conference at the Empire Mine.
Stupak said the new operation would boost the area economy and help the domestic industry compete with foreign steelmakers.
''The new technology will enable us to continue the mining tradition we've had since the 1840s'' in the Upper Peninsula, he said in a phone interview.