Magnetic Merger

The U.S. steel industry gets most of its iron ore from the vast ranges of northern Minnesota, where the rich, rust-like dust can be shoveled up from the ground. But by 1970, or sooner, the open-pit ranges of Minnesota will be scraped bare.

Beneath the Minnesota ground, however, there is a low-grade ore called taconite, which has never been developed--for lack of a cheap, practical way to extract it. Several years ago, researchers at the University of Minnesota perfected a method of crushing the rock, extracting the ore by magnets and compressing it into pellets containing 60% iron (v. 50% for the open-pit ores).

Last week, convinced that big-scale mining of taconite was feasible, Republic Steel Corp. and Armco Steel Corp. joined hands and began to dig in. On a 50-50 basis, they bought out Reserve Mining Co., which owns leaseholds on 17,000 acres of taconite. Republic and Armco agreed to build a $60 million ore-processing plant near Beaver Bay, on Lake Superior's North Shore, and a 47-mile railroad to the taconite mines. The immediate production goal: 2,500,000 tons of taconite ore a year. Ultimately, the two companies plan to spend $100 million more to boost production to 10 million tons a year, equivalent to 10% of all current U.S. iron-ore consumption.

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