Magnetation files for bankruptcy protection
Another example of how bad things are for the global iron ore sector came when Magnetation LLC filed for Chapter 11 bankruptcy reorganization on April 5. The move is one company officials say will allow it to weather a sharp downturn in global steel prices -- but one that also adds to concerns about what's in store for Minnesota's reeling mining industry, Twincities.com reported.
"We expect to hold steady. We don't anticipate any layoffs going forward," Magnetation chief executive officer Larry Lehtinen told the Forum News Service. "We expect to continue operations, serving our customers on an uninterrupted basis, and our operations and our employees will be steady as she goes. ...
"The bankruptcy process is what it is. Naturally, nobody wants to go through this, but we find ourselves in a position where it is the best path forward for the company and its stakeholders, and that's why we're proceeding as we are."
Magnetation, founded in 2006, uses an innovative and proprietary technology to recover valuable iron ore out of old mine waste piles left behind from iron ore mining efforts decades ago. It sells that iron ore concentrate to steelmakers.
The company currently employs 335 people in Minnesota.
While Magnetation perfected its technology, rising global iron ore prices made the idea profitable. Prices rose from about $50 per ton a decade ago to as high as $190 per ton in 2011. Those prices have dropped back to about $50 per ton, which may be less than it costs some Minnesota operations to produce the material.
In February the company announced -- in response to a growing global oversupply of iron ore and steel, and falling prices -- that it would idle its Plant 1 in Keewatin, displacing about 50 workers.
Lehtinen said Tuesday that all but about a dozen of those employees found jobs in other parts of Magnetation.
In bankruptcy court filings Tuesday, Magnetation declared estimated assets of between $100 million and $500 million, and estimated liabilities of between $500 million and $1 billion.
The bankruptcy filing comes on the heels of Cliffs Natural Resources cutting several dozen salaried positions at its iron ore mines in Minnesota and Michigan. In the past few months, Minnesota iron mines have announced layoffs totaling well over 1,000 workers.
Magnetation in December received $13 million in public loans to cover cost overruns at its new Plant 4 in Bovey -- a $6.5 million bridge loan from the Iron Range Resources and Rehabilitation Board to help cover the cost, along with another $6.5 million from the Minnesota Department of Employment and Economic Development.