Silver Bay was founded in 1954, built by Reserve Mining Company for employees of its taconite processing plant and originally known as the Beaver Bay Housing Project. The city was officially incorporated in 1956, when its growth began with the addition of an elementary school.
1956 was a banner year for Silver Bay. The last of 6 pelletizing machines was fired up in February, and the first shipment of pellets went out on the C. L. Austin in April. Campton Elementary School was dedicated on March 11 thereby eliminating the overcrowding in the small two-room school in Beaver Bay. The $350 million Reserve plant was officially dedicated on September 3 and was renamed the E. W. Davis Works. On October 16, Silver Bay voted to incorporate with a mayor-council form of government.
In 1958, William Kelley High School, named for Reserve’s first president, was opened eliminating the long 28-mile bus ride to Two Harbors. That same year, Reserve announced that it was selling its shopping centers in Babbitt and Silver Bay to J. W. Galbraith. Silver Bay’s Rocky Taconite shopping center was once heralded in the Duluth News Tribune as “expected to be the largest on the North Shore north of Duluth.”
The 1960′s brought a second wave of Silver Bay MN real estate growth when in April 1960, Reserve announced it was expanding its production from 6 million to 10 million tons per year. This expansion was a three-year $100 million project which created almost 400 new jobs. More houses, city buildings, stores, and Mary MacDonald Elementary School were built. Rocky Taconite came to symbolize Silver Bay as the “Taconite Capital of the World” when it was dedicated in 1964.
Within two years of the completion of the Mile Post 7 project, the demand for steel declined. Mills, mines, and plants were closing and thousands of people were losing their jobs. Reserve cut its production and workforce and finally closed on July 31, 1986. Over its 30 years of operations, Reserve shipped almost 219,024,410 tons of pellets.