The AP reports on yesterday’s news that Cliffs Natural Resources would be idling taconite production lines and temporarily laying off workers amid a slowdown in the steel industry. About 125 workers at Northshore Mining in Silver Bay, Minnesota, and more than 500 workers in northern Michigan will be affected at the start of the new year.
The report includes the following statement, which is something to watch if you live on Minnesota’s Iron Range:
The layoffs at Cliffs could be the first wave of production cuts on Minnesota’s Iron Range, said Don Fosnacht, director of the Center for Applied Research and Technology Development, which is part of the Natural Resources Research Institute at the University of Minnesota Duluth.
The global economic slump, coupled with growing worldwide capacity in the steel industry, has depressed prices for iron ore, Fosnacht said. And the fears of automatic federal tax increases and spending cuts should Congress fail to reach a budget deal by year’s end are holding back the domestic steel industry.
“All that together indicates there’s a real potential for a slowdown in iron ore until we get the steel industry back and going,” he said.
One factor that could spur a recovery in global demand and thus benefit the Iron Range is China’s new plan for stepping up spending on its public infrastructure, Fosnacht said. Another is the rebuilding effort after Superstorm Sandy, which he said eventually will mean a pickup in the construction industry in the Northeast and higher demand for new home appliances made of steel.
Iron Range mining insiders believe the long range picture is rosier than it appears here:
“I’m cautiously optimistic that the economy will continue to recover and world trends for iron ore will continue to rise. … I don’t believe a short-term market indicator is a long-term trend,” [Minnesota Iron Mining Association president Craig] Pagel said.