Just west along Route 169 from the Hull-Rust-Mahoning mine, near the town of Keewatin (pop. 1,164), a vast domed structure dominates a tailings basin left by the defunct Mesabi Chief mine. The dome can't be seen from the highway, and few Rangers (and even fewer mining corporations) know it's there. Inside sits equipment that could prove to be as significant to the region as the 1950s-era discovery of a way to extract iron from low-grade taconite rock. The earlier technique arrived in the nick of time for the Range, for its hematite - known locally as "natural" ore - was almost depleted. Similarly, the dome at Keewatin is home to a revolutionary process, dubbed "magnetation," that can extract valuable iron from the tailings - just when the Range is in need of new sources of ore.
"Our process," says Rod Hunt, 83, who, along with mining veteran Al Fritz, 78, co-founded upstart Magnetation Inc., "is the equivalent of the fabled philosopher's stone of yore. We can't turn base metal into gold, but we can process the millions of tons of natural-ore tailings and extract the iron that got missed the first time around."
Magnetation's first challenge was to show that its patent-pending technology could indeed extract the "lost" iron. This it has done emphatically - since Feb. 23 its plant has been shipping concentrate rich enough for blast furnaces to turn it into pig iron, the raw material for steel.Now it must compete price-wise with the world's mining giants. Magnetation will never match them on volume: Brazilian mining behemoth Vale (VALE), the world's largest iron ore producer, ships about 250 million metric tons annually, compared with Magnetation's tiny initial target of 300,000 metric tons. But Lehtinen is certain that Magnetation can compete on price. Although he won't discuss costs, Lehtinen insists that Magnetation is already the lowest-cost producer in the U.S. and can match Vale, as well as mining giants BHP Billiton (BHP) and Rio Tinto (RTP), all of which must ship their ore long distances to their main customers.
"Our raw material is all around us," Lehtinen explains. "It's easy and cheap to extract, and it has already been crushed." Indeed, the main input is the water needed to convert the tailings into a mudlike slurry that can be fed through the magnetation process, where, as the name suggests, giant magnets separate the weakly magnetic hematite from the nonferrous elements of the tailings - mainly silica. And thanks to Shaughnessy's 150-acre tailings basin, getting started was relatively easy.