Edward Lotterman
Contention over the now-nixed purchase of U.S. Steel by Nippon Steel this past week has put the troubled and changing steel industry front and center.
This is a complicated issue that involves a lot of explanation. We’ll lay the groundwork this week, and come back next week with the economic changes that are at stake.
This all matters for Minnesota because of the Iron Range’s long dominant role in our nation’s steel industry. Moreover, the output end of the industry has had similar importance to the state, first at Duluth and later in Cottage Grove, only six miles from our Capitol building.
“The Range” has gone through large gyrations in my lifetime. Employment dropped dramatically in employment, but output much less. Now it may verge on revival driven by fundamentally new technology.
U.S. Steel had a traditional integrated mill at Duluth from 1916 to 1983. It produced a million tons annually until phasing down in the 1970s. Some 4,000 people worked there at its height and associated plants produced Portland cement, wire, nails and so forth.
As that plant was waning, North Star Steel’s new-technology electric-arc-furnace “mini-mill” in Cottage Grove began producing half a million tons a year of finished rolled steel products from steel scrap. Later owned by Gerdau, a Brazil-based multinational, it underwent a $50 million upgrade as late as 2016. However, it has been idled since 2020 on low demand. Employment fell from over 300 to under 80.
The ups and downs of steelmaking in our state reflect worldwide perturbations. The global steel industry has been through a blizzard of mergers, bankruptcies, takeovers and reorganizations. Rusting abandoned blast furnaces, rolling mills and related facilities abound not just in our nation but across Europe and parts of Asia.
But steel remains elemental to a myriad of uses, from industrial to consumer. So what’s going on?
We’ll start this week with some data, history and technology on iron and steel. Knowing this will help us understand the issues of today.
Our country produced 239 million tons of iron and steel in 1973 compared to about 78 million tons per year now.
Iron is a fundamental chemical element, with symbol Fe on the periodic table. Steel is a manufactured alloy of iron mixed with other elements, always carbon, and perhaps chromium, nickel, vanadium, manganese and others. As such it can be customized and marketed for different uses: Steel for steamships can be a different alloy mix than steel for washing machines.
Steel is stronger than iron, tougher and more resistant to abrasion and rust.
Steel began to replace iron in railroad tracks in the 1860s because it lasted much longer. Even though the composition of both was overwhelmingly iron, the addition of 34 pounds of carbon to a 39-foot rail would give 10 times longer service. This not only saved money on new rails but also the labor for repeated replacements. This swap alone, magnified across all its uses, exemplifies how technology can boost GDP, producing more value to society with the same resources. It’s elemental to our evolution: Inventing steel made humans richer to the same degree as inventing the wheel or the harvesting of fire.
Now a bit of technology. One way of making things from iron or steel is to melt it at intense heat and pour the molten metal into molds made in packed sand in a pattern of the desired product. This process is called “casting” and is done in a “foundry.”
Cast iron products are strong, albeit brittle, and resistant to rusting and abrasion. Being rigid, it is excellent for engine blocks, manifolds and heads and gears. Millions of tons go into manhole covers, drain grates and sewer and water pipes. The massive counterweights on cranes and backhoes are cast iron, as are components of farm and other machinery. About 12 million tons of iron a year goes to foundries annually rather than made into steel.
Steel also can be cast. It also can be heated to temperatures below melting but where it becomes malleable enough so it can be shaped by hammering, pressing or rolling. Hammering is done in a forge, an extension of the traditional blacksmith shop that produced “wrought iron.” Steel forgings range from knives and connecting rods for car engines to artillery shells, ship engine crankshafts and massive bases for steel bridges. Rolling mills produce H-beams, square and round bars, concrete reinforcing rods, thick and thin plates as well as strip steel for vehicle bodies or computer cases.
All of these processes start with mineral ores containing iron. Early ones were rare fragments of meteors. “Bog iron,” nodules from iron-rich groundwater in wetlands, became medieval British swords and armor.
But starting 3,500 years ago among Hittites, in what is now Turkey, most iron comes from mines of ores composed of iron oxides. Most are close to the surface and mined in open pits. There have been underground mines, including the deep Soudan Mine at Tower, Minn., in St. Louis County. It operated into the 1960s and was owned by U.S. Steel at the end.
Nearby, the Mesabi Range contained enormous tonnages of iron-rich ore near the surface. This usually did not require drilling and blasting. Its iron content was about 64% and it was a “direct shipping ore.” A steam shovel loaded a train car in the mine. That car could take the ore all the way to a steel mill blast furnace, or dump into steamships to mills along the Great Lakes.
Once ore is in a mill, two different things must happen, processes often confused by the general public and the media.
First, elemental iron has to be separated from all other materials in the ore.
Secondly, final impurities must be burned out of the nearly pure iron. Carbon and other and alloying materials must be added and the steel kept hot until desired characteristics are reached.
The first of these two steps was smelting iron ore in a blast furnace using coke as a fuel and limestone as a flux to bond with impurities. (Coke is to coal as charcoal is to wood.) These furnaces have a continuous process with iron and slag tapped off every few hours and new materials added continuously. One furnace in Germany produced 75 million tons of iron over 21 years of continuous production without ever stopping.
It is a time-honored method but also dangerous and dirty. The $450 million dollar plant being built in Nashwauk by Mesabi Metallics is an attempt to convert the still-bountiful low-grade taconite ores directly to material that can be fed into a steelmaking furnace, completely skipping the step of feeding taconite pellets into a dramatic, dangerous and dirty blast furnace.
That brings us to the second challenge — transforming pure iron into steel. This requires a furnace able to keep iron molten for a long period, not only so that alloying materials like carbon can be added, but also to develop particular grain characteristics in the final product.
This has gone from “crucibles,” or vats of steel over a fire centuries ago, to 1800s British Bessemer converters that dramatically blew air through molten iron. Then came the German Siemens open hearths that dominated steel making for a century. They were the center of the now-rusting Bethlehem mill in Bethlehem Pa., and the massive U.S. Steel plant in Pittsburgh that is up for sale now. Electric arc furnaces that melted scrap came along in the 1950s and then came the now common “basic oxygen process” ones that are updated Bessemer converters.
So we are in a phase of technological renewal that will leave most remaining old-style facilities behind and useless. The adjustments will be wrenching, perhaps more abroad than in our nation, but with effects certainly echoing back here. That must be left for next week.
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St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.
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