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Iron mining 2002
by Bob Kelleher, Minnesota Public Radio
December 30, 2002

This year may have been the beginning of a turn around for Minnesota's struggling mining industry. The state's six taconite mines produced more iron pellets than the year before. But, the parent companies of two taconite companies have filed for bankruptcy protection; a third struggles to stay open; and the state's largest mine was sold to an investment group. The only certainty in mining is uncertainty.

Duluth, Minn. — By the numbers, the slump in Minnesota iron production has hit bottom. In 2001, Minnesota's iron mines sold 31.5 million tons of taconite pellets. Production that year had dropped about a third from the year before. This year's production is estimated at about 35 million tons, a modest improvement.

Iron mining has benefited from a recovery in the nation's steel industry, according to the Minnesota Iron Mining Association' Frank Ongaro. Part of that, he says, comes from tariffs placed this year on dozens on imported steel products.

"The tariffs help the steel makers," Ongaro says. "The weaker dollar helps the steel makers. It helps all domestic manufacturers for that matter."

"That, and some other things," he says, "have caused the price of steel to go up. And, if it's good for our customer, it's good for us."

However, increased production does not necessarily mean increased employment. Minnesota's taconite companies are learning to do more with less, including fewer workers.

Ongaro says there were some 4,400 employees at the start of the year.

"We did continue to see some struggles," he says. "Some ups and downs plant by plant." Ongaro says year-end employment is probably down a bit from January, "but, for the most part, the total number of employment in the mines, and plants, has held pretty steady."

That's still 1,400 workers fewer than two years ago, when LTV Steel closed its Hoyt Lakes mine and taconite plant.

Economic recovery is not likely to recover those jobs. According to Scott Moore, with the Minnesota Department of Economic Security, the long term trend in mining employment is not encouraging.

"We've lost about 72 percent of our mining employment, from 1980 to current" says Moore. "And that drop has continued here since 1999. As you know," he adds, "there's a lot of concern about where mining's going to be going to in the future."

The future is anybody's guess. Parent companies of two taconite producers are operating under bankruptcy protection. National Steel Corporation owns Keewatin's National Steel Pellet Company. Bethlehem Steel owns a majority share of Hibbing Taconite. Both facilities have been considered for sale, but are now stuck in the legal morass of bankruptcy. Eveleth's EvTac mine is struggling to stay open.

And Minnesota's biggest producer, U.S. Steel's Minntac mine at Mountain Iron, is being sold to a New York based investment group.

That's actually encouraging, according to the Mining Association's Frank Ongaro.

"There is a willingness to invest in iron mining in Minnesota," according to Ongaro. "What it does mean is it puts more pressure on all the facilities to have a quality product that someone wants to buy at a competitive cost and price of that product."

Meanwhile, there's encouraging news on two new mining ventures. Construction began this fall on an iron nugget plant at Cleveland Cliffs Incorporated's Northshore Mining in Silver Bay. Nuggets could provide iron to mini-mills, which are unable to use conventional taconite pellets.

And Canadian minerals company Tech Cominco expects to mine up to 50,000 tons of Minnesota rock this year to test its new method to extract copper, nickel, cobalt and platinum group metals. They've developed a high-pressure process to isolate metals without using dangerous chemical solvents.

Company spokesman Dave Godlewski says it's an exciting concept that could revolutionize mineral mining.

"It's also quite exciting for the state," he says. "It brings diversification; it brings the ability to use existing resources to diversify what has been a fairly single minded culture on the Iron Range."

The rock will be mined this summer and crushed in the Hoyt Lakes taconite plant left idled by LTV Steel. Still, Godlewski cautions, a commercially productive mineral operation on Minnesota's Iron Range, is, at best, several years away.

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