The pellet plant is designed to produce three million metric tonnes of high quality fluxed iron ore pellets to feed AK Steel’s blast furnaces in Middletown and Ashland, Ky., according to Magnetation.
Iron ore is a key raw material for making steel.
AK Steel made a pair of multimillion acquisitions in coal and iron ore interests in October 2011 to hedge against the up and down market prices of raw materials.
At the same time AK Steel announced its 2011 investment to buy a coal company, the steelmaker also said it formed a joint venture with Minnesota company Magnetation Inc. to produce iron ore concentrate.
Plans are for AK Steel’s coal and iron ore supply chains to be 50 percent vertically integrated by 2015 — so AK Steel will buy half its steelmaking materials and produce the other half itself.
Once fully operational, the iron ore pellets will meet about half of AK Steel’s needs for the material. That lowers costs to purchase iron ore at more volatile prices from third party suppliers.
In addition, the joint venture Magnetation LLC is in the process of building a new iron ore concentrate plant to supply the pellet plant, Plant Four, near Grand Rapids, Minn. The two million tonne-per-year concentrate plant is scheduled to begin operating in the first quarter of next year.
The Fortune 500 steelmaker AK Steel is headquartered in West Chester Twp. Between operations in West Chester and the Middletown Works steel plant, AK Steel employs approximately 2,400 full-time workers in Butler County, making it the county’s third-largest employer.
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