Shining steel in the summer of change

The primary crusher plant under construction at Essar Minnesota's Nashwauk project as seen from the edge of the mining field. Company officials say that the plant's close proximity to the ore body will add tremendous efficiency to its operations. (Aaron J. Brown)

The crusher plant under construction at Essar Minnesota’s Nashwauk project as seen from the edge of the mining field. Company officials say that the plant’s close proximity to the ore body will add tremendous efficiency to its operations. (Aaron J. Brown)

Aaron J. Brown

Aaron J. Brown is an Iron Range blogger, author, radio producer and columnist for the Hibbing Daily Tribune.

On a map the thin red line of the Mesabi iron Range seems to cradle the vast green forests and dark blue lakes of Northern Minnesota. Mesabi, an industrial frontier these last 125 years, has always been where nature meets human progress — for better and worse.

So it continues this ever-warming summer of 2015. This year another bust in iron mining’s familiar economic cycle envelops the region. Two weeks ago, Indiana-based Steel Dynamics announced the indefinite idling of its Minnesota properties, including Mesabi Nugget in Hoyt Lakes and Mining Resources near Chisholm. About 200 people will lose their jobs. Steel Dynamics indicates it will be at least two years before the properties could possibly reopen.

As most of you know, U.S. Steel’s MinnTac and Keewatin Taconite are both planning major layoffs this year, up to 1,000 jobs by year’s end, while Cliffs has cut 100 salaried positions at its three Iron Range mines. Magnetation is in Chapter 11 bankruptcy, having idled its Keewatin Plant 1 indefinitely as well. All of these actions are affecting contractors and vendors across the Iron Range in ways often unseen by most.

So just imagine the paradox of the fact that the Iron Range is currently host to the largest greenfield construction project in North America: Essar Steel Minnesota. Yes, that’s right, an iron mining project. How is that possible?

Late last month I toured the Essar Steel Minnesota site near Nashwauk, observing the remarkable progress that’s taken place just recently after years of troubling starts and stops. Essar says it is finally fully financed and has increased its contractor workforce at the site. About 400 workers were there the day I visited. By this week, 600-800 workers a day were slated to be on the ground.

Essar spokesman Mitch Brunfelt said Essar engineers are now eying production of taconite by late June or July of 2016. One of the most interesting things I learned on this tour was that Essar claims their pellets will be the lowest-cost pellets in North America, which Brunfelt said will protect this new plant’s viability in the ongoing consolidation of the global steel market. Brunfelt would not reveal their target for cost-per-ton, but said that efficiencies adopted in a new taconite mine will make their pellets more affordable than any others on the continent.

Essar is also still planning to gradually introduce its second phase, higher-grade iron production, Brunfelt said.

Regardless, Essar will be able to produce different kinds of pellets at its new plant right away — ranging from traditional blast furnace pellets common to Range mines, to a “flux” pellet, to the direct reduced grade pellets used in newer electric arc furnaces. That is the difference.

Today’s iron mining and steel are subject to increasingly fragmented, niche markets pressured by global trends. In other words, global prices swing up and down — in the case of 2015: way down. The world still needs steel; it just needs highly specific kinds of steel suited for unique products. Unique steel needs unique ore. Unique ore requires all manner of new processing near the mine site.

The Iron Range was built on the notion that our ore was so good and so plentiful you could just shovel it into the furnaces like really heavy pixie dust and do whatever you wanted. Now, it’s more expensive to mine Minnesota ore and there are mines all over the world producing similar quality and much, much more quantity.

This is the tricky business the Iron Range is in, and those who feel our lot is wholly tied to mining had better realize that it will take as much high thinking to keep the existing industry afloat as it will to diversify our economy. Sure, the good prices might come back in a couple years, but there will be fewer mines and fewer jobs left in our region to capture that economic wealth.

The line between success and failure — in mining or anything else — is thinner than ever. This is no time to wait for the status quo to return; it won’t. As new and existing mining companies look to cut costs and develop new products, let us also remember that we all play a role in developing new ideas and strategies to support our communities and our families.

Aaron J. Brown is an author and college instructor from northern Minnesota’s Iron Range. He writes the blog MinnesotaBrown.com and hosts the Great Northern Radio Show on Northern Community Radio. This piece first appeared in the Sunday, June 7, 2015 edition of the Hibbing Daily Tribune.

Comments

  1. oldtriumphguy says:

    Aaron, two sentences in today’s Bloomberg Business news provide a simple explanation of the current woes of the taconite industry on the Range: “Top global miners including Vale, Rio Tinto and BHP Billiton Ltd. have been lifting output of iron ore to capture market share from smaller, higher-cost rivals. The strategy has coincided with the contraction in Chinese steel demand, resulting in a supply glut that’s depressed prices.”

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