Big meeting Monday between Cliffs CEO, Range lawmakers

Iron Range newsOn Monday, Iron Range lawmakers will meet with the new CEO of Cliffs Natural Resources in St. Paul. The meeting has the potential to be hugely influential in several political matters facing Northern Minnesota, particularly the Essar Steel project on the western Mesabi.

CEO Lourenco Goncalves was installed by the board of directors that prevailed in a hedge fund’s corporate takeover of Cliffs last year. The new management called for cost-cutting and renewed focus on profitable ventures, which at the time included high-priced taconite from Cliffs mines in Minnesota and Michigan.

The price of taconite, however, has been falling, along with Cliffs’ stock price. Goncalves, for his part, has been described as “feisty” in recent months in his resolve to turn around the sinking company’s fortunes.

In particular, Goncalves is strongly displeased with Iron Range lawmakers for putting public funds into Essar Steel Minnesota’s project near Nashwauk, and Magnetation’s scram mining operations on the western Mesabi.

In an article about Monday’s Cliffs/Range meeting in Sunday’s Mesabi Daily News, a Cliffs corporate statement shows the tone (emphasis mine):

“The upcoming meeting will allow for Cliffs’ chairman, president and CEO, Lourenco Goncalves, to explain the company’s strategy centered on our core iron ore mining and processing operations in Minnesota and Michigan.

“Mr. Goncalves will discuss current iron ore and steel market conditions, Cliffs’ commitment to maintaining our position as the low-cost iron ore pellets supplier of choice for North American steel producers, and by extension the company’s important role as a major employer on the Iron Range.

Specifically, Cliffs is concerned by the extension of public dollars to help subsidize new, unneeded iron ore pellets capacity that may displace existing Iron Range jobs. Cliffs is committed to an ongoing dialogue with elected officials regarding the realities of current market conditions and the disruptive impact of public subsidies that will contribute to an oversupply in the North American pellets market.”

Essar responded with its own explanation of how their project is not a threat to Cliffs. Regardless, it would appear Cliffs believes that layoffs and closures might be on the table if things don’t improve, or at least are part of their negotiating tactics.

That’s certainly interesting, but the Essar project alone won’t be the only factor here. Cliffs is operating in a tightening steel and mining industry worldwide. They need Highway 53 to be re-routed in the next year for their United Taconite plant to stay viable. Hibbing Taconite needs to jump some highways in the not-so-distant future. More and more steelmakers are going to electric arc furnaces, which use different iron products than traditional taconite pellets. Expensive investments will be needed, and global competition is fiercer than ever.

This is a company at the end of its rope, and a Range delegation that is distractible, disagreeable, and in the process of losing its statewide political influence.

Oh, to be a fly on the wall! This meeting might well shape Iron Range politics and economics for years to come. Naturally, it’s not open to the public.

Nevertheless, this is a rough equivalent of what I predict the meeting will be like (just imagine more Howard Beales at the table):

Of course, that’s the famous Ned Beatty monologue from the prophetic 1974 movie “Network.” Beatty won a Best Supporting Actor Oscar for that speech alone.

Comments

  1. Thanks for this, AB. So what happens if the mines go away? Does that mean the north goes from electing guys like Collin Peterson and Rick Nolan to electing Stuart Mills III? (See also: WI-01, which was Les Aspin’s CD and elected Democrats until the union jobs went away and the white-flighting FIBs (Effing Illinois Bastards) started coming into the area.)

    • Well, first of all, the mines aren’t going away, though certain companies might. The cold, hard economic fact is that fewer people are needed to mine the ore than before, which is the root of how our natural resources economy that “boomed” our communities into existence is now failing us in the 21st century. Good jobs remain, just not enough to fill the schools or support the locally-owned grocery stores. I think a wide variety of issues are affected by who we elect, but the economic viability of mining is the same no matter who gets elected. Further, the 8th CD is way, way bigger than the Iron Range. The Range may indeed become more conservative as years tick by — maybe. What matters more is that we are in danger of slipping into irrelevance.

  2. Tammy Sedberglund says:

    This Bill Hanna seems like a paranoid reactionary , paywalling the link like that . Referral hits are free and translate into commanding higher ad rates .

  3. Of course this meeting is not open to the public, sunshine on this process would scatter the cockroaches to their hiding places. It affects so many folks up here yet so few are involved in the process.

Speak Your Mind

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.