The board of US-based steelmaker Steel Dynamics has reversed course and approved the company's participation in a $235-million iron-making project in Minnesota little more than three months after pulling out of the venture.

Participation in the project, located in the Hoyt Lakes region and known as the Mesabi Nugget venture, is contingent on financing and completion of long-term supply agreements to ensure iron concentrate supplies needed for iron-nugget production, the company said in a statement Thursday.

SDI announced in November 2006 that negotiations with four other partners in Mesabi Nugget had broken down due to complexities involved in the multi-party arrangement. Kobe Steel and Steel Dynamics have now formed a new legal entity to develop the project.

The new arrangement calls for Steel Dynamics to hold a majority stake in the project and to be responsible for the construction and operation of the facility. Kobe will provide a technology license, engineering services, proprietary equipment and technical support to the project. The initial production module is designed to have an a production capacity of 500,000 mt/year of iron nuggets. Additional production modules may be built following successful operation of the first module. No time frame for construction and startup was divulged.

Steel Dynamics indicated that it expects to consume most of the initial output from the venture.

Melt tests using nuggets produced by a pilot plant have demonstrated that iron nuggets melt more efficiently in electric-arc furnaces than traditional pig iron, SDI said.