Is this the 1980s again on the Iron Range?

Three laborers stand atop the last shipment of iron ore from Butler Taconite, which closed 30 years ago. By old tradition, workers place a broom in the final shipment of ore from a mine. A tree is placed in the first load of ore from a new mine. (Iron Range Research Center archives).

Laborers stand atop the last shipment of iron ore from Butler Taconite, which closed 30 years ago in 1985. By tradition, workers place a broom in the final shipment from a mine and a tree in the first load. (Iron Range Research Center archives).

I grew up in the 1980s on a junkyard just a few miles south of Eveleth Taconite. Growing up on a junkyard is probably the best way to understand the things humans build, sell, use and discard.

So let’s consider a new car. I’ve only ever bought one brand new car fresh off the lot. It was a Ford Focus. I drove that car for a few years until we moved into the woods and had children. The car no longer suited our needs, so I traded it in. Now, I don’t know what happened to that car, but I know I’ve bought used cars with similar miles, including both our current vehicles — an SUV for the rough roads, and a van for the kid-hauling. We’ve run these vehicles for eight years, and probably will run them years longer. They’re not new. They sometimes need fixing. I wish I had better cars, but basically they work.

I know that the day will come when we need to make a change. I’ll trade in the van for a newer one with less maintenance cost. Now, I know from family history that even then, more use can be drawn from that old van. I know lots of people who drive third-hand vans. If you know how to fix things on your own, you can extend the life of vehicles like this years longer. I know, because I drove vehicles like this when I was a teenager.

I once drove a car that ended up having different colored doors and hood, that had no air conditioning and limited heat. It blew a head gasket and I abandoned it to my tinkering grandfather who — get this — fixed it again and gave it to my sister. She drove it to Grand Marais where she lived as a recluse until the car again died on her.

As legend has it, she sold it to some other guy, who allegedly got it running again.

Eventually, a car like this ends up in the junkyard, where people like my family would crush it and sell it for steel.

Here’s what I’m getting at. This will go down as a historic year on the Iron Range.

Last week we saw major shutdown announcements at Iron Range mines, including Northshore Mining and United Taconite. They’ll be down through March 2016. Keewatin Taconite remains shut down indefinitely. Mesabi Nugget has closed, probably for years to come. Magnetation is down to one remaining plant. Essar Steel’s new mine is stalled again. Hibbing Taconite approaches a major crossroads as it needs to expand its mining field or close. The state’s largest mine at Minntac is operating, but spent time partially shut down last spring and summer. “Little” Minorca Mine in Virginia has continued operating normally throughout what has otherwise been an unusually bad year for mining on the Iron Range.

We’ve seen ups and downs before, but since the big booms of iron mining in the early 20th Century, every time we come back up we enter a period of reduced value for the “car” that is mining in Northern Minnesota. It runs. For someone (us) it matters a lot. But it’s not like it was.

See, for years now, we on the Range have thought like an old car, not like the people who buy, sell and use the car. We see the value that was, not the actual value or the wildly shifting outside world.

When it comes to talking about mining downturns on the Iron Range people enter familiar patterns of thinking.

“It looks bad.”

This means that people we all know will be laid off. Mines could change hands. Retirees could lose pensions. Small businesses will suffer. Families might leave. Schools could close, consolidate or suffer deep cuts.

Another thing you hear is, “It’s going to be like the 1980s again.”

The 1980s were a seminal time in post-WWII history on the Iron Range. It was the decade where the promise of taconite reached its limit and the iron mining industry shed three-fouths of its jobs. Downtowns began to die. Population began to fall. The demographics of the region skewed sharply older much faster than the rest of the state. It is under these conditions that I and an entire generation of Iron Rangers grew up assuming we’d have to leave. Many of us did.

But as soon as you start talking about the ’80s, someone says “Ah, I don’t buy all this doomsday stuff. It’s been like this before. We’ll come out fine.”

junkyard-wreckerTrue. Mines have been up and down throughout the history of the Mesabi. In context, since the advent of taconite, we’ve seen mines close temporarily many times, only to return after weeks or months. Only two have closed permenantly: Nashwauk’s Butler Taconite and Hoyt Lakes’ LTV Steel. Even in those cases, Essar Steel today seeks to reopen the mine near Butler, and PolyMet wants to mine different minerals at LTV.

But one thing has changed tremendously since the 1980s: mining employment and plant efficiency. Automation, new technology and more efficient labor usage have meant far fewer mining jobs per ton of ore than any point in Iron Range history. The number gets smaller still.

So, let’s look at this claim: Is this the 1980s again on the Iron Range?

Like the ’80s, foreign steel imports are ruining domestic markets for Range pellets. There is political will by some to attack the imports with trade law, but such efforts face a quiet countervailing force from manufacturers who like the cheap steel. Further, the imports are actually just a symptom of the pricing conditions, which are related to global oversupply.

Like the ’80s, Iron Range mines need to reduce costs. Our cost of iron ore production is in the high $40- to low $50-per-ton range — at or above the current price of iron ore on international markets. New mines in Australia are in the $20-per-ton range, insulated from the historically low prices.

Like the ’80s, we are confronted with the possibility that at least one mine will close permanently. There are different theories about which one it will be, but several of these taconite plants are nearing the natural end of their lifespan. Mining people like to say that “we’ll be mining for centuries,” and no one can tell them they’re wrong. Nevertheless, these facilities are old and several are reaching a point where only major financial investments would bring them up to modern standards.

The Hull Rust Mine pit, Hibbing, Minnesota; Summer 1998

The Hull Rust Mine pit, Hibbing, Minnesota; Summer 1998

Like the ’80s, low prices are expected to last a long time — through 2016 and likely longer. There are several market analysts who say that taconite will never again reach $100 a ton and probably will hover at current rates more often than not.

All of that adds up to a sense that this period we’re entering could well be like the 1980s on the Iron Range. But let’s look at the factors that are unlike the 1980s.

Unlike the ’80s, a much smaller portion of the people who live on the Iron Range work in mining. To some extent, the worst damage was already done.

Unlike the ’80s, plant efficiency is much, much better. Mines can be started and stopped faster, responding quickly to market pressures.

Unlike the ’80s, international trade isn’t new — it’s old. It can’t be stopped without dramatically rethinking our entire national policy on economics. Cheaper, purer ore in South America and Australia will be a factor for the rest of the century.

Unlike the ’80s, the biggest demand for building materials will be in Asia, again favoring Australian ore.

Unlike the ’80s, the very technology taconite was developed to feed — blast furnaces — is going out of style. Newer furnaces can’t use our pellets. Only U.S. Steel is wedded to the blast furnace; all others are actively converting to electric arc furnaces.

If you add up these differences, you could argue that the times ahead for the Iron Range could be worse than the 1980s. We could see a reduction to 3-4 mines, each working a different section of the Mesabi. Mining and supporting industries might see a 30-50 percent reduction in workforce. The main reason they’d all be running is to fill the presumably smaller demands of domestic steelmakers and specialty orders.

And yes, I’m aware that, here, many would cite the possibility of PolyMet and nonferrous mining in general as a possible relief to the problems we face. While I don’t oppose the concept of nonferrous mining, I continue to argue that, in practicality, PolyMet near Hoyt Lakes and Twin Metals near Ely do not promise enough economic activity to make up what we have lost and continue to lose from traditional iron mining, certainly not to the extent that would restore population and younger demographics to 1970s levels.

New nonferrous mines would essentially provide jobs to some of the people displaced from other mines. Not bad, but not enough to grow on. We’d still have struggling downtowns, small schools fighting to keep up, and difficulty attracting professionals to a place with a highly specialized, inflexible economy.

Further, the chance of PolyMet starting up amid current commodities markets is slim. Sure, they could go, but probably not for years. I do not believe for a second that they will “save” us, the way that the developers and especially their affiliated boosters would like us to believe. This isn’t some ideological position. I wish the path out of our woes was as simple as opening some new mines on the eastern Range. They aren’t.

These are difficult times, perhaps fearful times for many. But such times in history also prove to be an opportunity for those who look forward, not back. There are exciting things happening on the Cuyuna Range by Crosby-Ironton, and Duluth is rapidly diversifying away from its previous dependence on mining, shipping and steel.

If you like mining, we could push hard for value-added products mined here in Northern Minnesota. The more value the better. Iron pellets. Pig iron. Steel. Custom steel products made just a few miles from the ore body. The same could be said for any other kind of mineral mined. Why stop at just ore? This would require great investment. It would require an entrepreneurial spirit that the region has lacked.

If the cycles of mining — the ups and downs, booms and busts — leave you wanting, we have an opportunity to expand our economy for a new future. I’ve outlined several possibilities in previous posts, but the operative truth is that we have young people, new leaders, and good ideas. We just have to open our minds and extend our hands to help them.

Investing now in livable communities and widely distributed high speed internet infrastructure would make this region attractive to the kind of people who make jobs with ideas — including several who moved away after the 1980s.

Big changes are coming. The mining industry will enter the next stage of its life cycle: not yet the scrap yard, but less glitz and glamour than before. Yet, the Iron Range isn’t doomed.

There is no end. No, never. Only what comes next.

Comments

  1. There is one variable that appears the same. You mentioned leadership, and it appears they are mentally wedded to extraction industry despite its ever shrinking possibilities. The timber industry is in the same, if not worse, condition as mining. But, having been part of the regional process, there was a near blindness to the realities of today with an obsession about maintaining the large industrial timber holdings with the question “How do we manage the forests without logging?” I’m not that brilliant, but I had to bring two items into the discussion. Russia has 11 time zones of forest, and everyone was buying tablets for reading. Pulp would never, ever, be the same. The leadership, however, was all men near retirement. The women (being greater readers) and younger people had tablets, but none of the older men understood my meaning. The pulp plants were closing, changing or shrinking for good. Even they were seemingly obsessed with non-ferrous mining. When the UMD economist asked for our input into the future model, only that was mentioned. I went to him afterwards, avoiding the noise of the session. Again, I am not that brilliant, but I asked him to add scenarios with goals such as developing a small furniture manufacturing sector…not big, but over the ten years of the plan a goal of 150 jobs in manufacturing. He thanked and said he had been repeating for years about diversification, but he had never been heard. I asked for one scenario where there were three project goals, all small, each one creating 50 to 150 jobs, and redeveloping some of our lost agriculture, as Carlton county is doing. The potential was amazing. Why are we buying Ikea furniture, when we could have our own softwood furniture industry? Was my only question. I think the leadership is connected political cronies and older, wedded to projects they can skim the cream from. I am no spring chicken, but when the people standing at the head of the table are retirement age boomers with over a decade on me, it is a nursing home of ideas. They also are people who never left the village. There is a wealth of younger, educated talent waiting to try new things and sometimes return, but mother of god, when you have old gouges such as Fed or Steve Peterson running around as your development advisors, you’re not going anywhere.

    • “Russia has 11 time zones of forest, and everyone was buying tablets for reading. Pulp would never, ever, be the same. The leadership, however, was all men near retirement. The women (being greater readers) and younger people had tablets, but none of the older men understood my meaning. ”

      And with houses and condos and living space in general shrinking, space-hogging paper books are primed to go the way of the land line soon. The one thing keeping them alive, besides a rapidly-shrinking core of older, tablet-phobic readers, is that ebook prices are artificially high – though that may change in the near future.

      The business world isn’t a refuge for the pulpers, either: The cost of printing and the need for workers to do their jobs anywhere and everywhere has led to the rise of digital signatures and brought the paperless office one step closer.

      Sooner or later, the money and jobs to be had from keeping the forests intact will exceed that from cutting them down. And I’m not just talking about tourism, either. In a healthy forest, many different plants and animals thrive, many of which can have value for humans. (The drug Taxol, for instance, comes from tree bark.)

  2. Stacy Mahoney says:

    I only have one thing to say. The Iron Range needs to stop depending on the mining companies and let more businesses and industry into the area. We need more manufacturing jobs, production jobs, and so on and just let the iron ore industry die. One of the main reasons why I say this is because the Mining Industry killed my father. He died of lung cancer (mesothelioma) in 2005 after working for Eveleth Taconite for over 30 years. He was exposed to asbestos in the iron ore and the mining companies wouldn’t do anything to fix it. So as far as I am concerned keep the mines closed and bring in other types of jobs for people to do. I guarantee people will live longer if nothing else.

  3. Stacy, sorry to hear that about your father. I think everyone would love to see good paying jobs up here mining related or not. The big question is why can’t the Range attract new businesses? It isn’t because we mine taconite up here. You can mine and create new businesses if you had leadership that understood how businesses get started, what they need to succeed and how to entice them to come up to the Range. The current group of misfits that have run the Range the past 25 yrs need to be voted out and folks that understand business and how to get them up here voted in. It would also help if Rangers got past the mind set of “big business bad, workers good”. You need employers to have employees!!!

    • The business interests are the ones keeping the fossils in place. Even though taconite is used by only one American company, US Steel, they aren’t interested in investing in new and better ways to package iron ore for the steel companies that are dumping their blast furnaces.

      All switching to pave-the-earth Republicans like Stuart Mills III would do is let the rip-and-run crowd in and do an even worse version of the cutover disaster that northern Minnesota faced a century ago.

      • Independant says:

        I know things are bad for the steel industry but I didn’t hear about AK Steel and ArcelorMittal not using great lakes taconite any more!

  4. Independant says:

    Existing mining operations, future mining operations and future business diversification are not and should never be considered mutually exclusive. This mentality seems to only create an us vs. them mentality in people that will continue in perpetuity and takes away from the message. I for one am a huge advocate for any diversification to the economy while at the same time supporting existing and future mining operation on the Iron Range. I moved away from the Iron Range after finishing college due to a lack of job opportunities and it took me over a decade to get the opportunity to move my family back. Now as an Iron Range business owner I can tell you that a movement for diversification only sabotages itself if it has or is perceived as having an anti-mining bias (as adding different business at the expense of mining is replacement not diversification). As someone who has employees and their families to worry about as well as my own I want an all of the above approach to be in our economic future.

    • From a practical standpoint I completely agree, Indy. Diversification and modernization of our mining industry are not mutually exclusive. In fact, I think there is real near term opportunity in figuring out how to diversify our mining industry, better integrating it with other forms of economic activity.

      All that being said, some people just aren’t into mining. Some people just don’t like mining. They shouldn’t have to. If somebody wants to start a bike store and doesn’t dig on mining, but has their own customer base and creates five jobs in the process — that should be just as good as the small business that creates five jobs and hangs a “We Support Mining” sign in their window. I am continually astounded by the sensitivity of the mining industry. Such a big, burly industry that requires constant reassurances and lip service or it has a fit. Just my opinion, having spent some time with both sides of the issue. Don’t get me wrong, mining opponents have their insufferable whining, too, but the mining industry has such power and still acts like it’s the youngest kid who doesn’t get a full pork chop at dinner.

  5. Aaron, one difference, you don’t see us anti-bike folks picketing the bike shop. What has always pissed me off is the anti-mining crew from the Twin Cities organizing against mining. I hear from some bleeding heart liberal from Edina how mining will ruin not only his life but his kids and grandchildren’s life. He drives up the North Shore once a year and he is now an expert on mining. Mining is under attack, when you are under attack you either fight or take flight, the Rangers I know (my dad and his brothers that quit working in the mine to enlist and fight in WWII) and have grown up with were never much for running!! Of course we will fight for mining and using our natural resources up here to create jobs, including logging . It is not sensitivity that causes many of us to fight back the liberals who don’t believe you should mine, log, drill for oil or gas, fish or farm (the products from each we all use every day) it is reaction to the attack on these industries that causes us to fight.

    • Many opponents to nonferrous mining view the environmental risk of these projects as a danger to their business and their way of life, too. It’s no different than how mines feel about foreign steel. This isn’t a fight. This is normal human disagreement about what to do in the deindustrialization of an industrial region. It’s not the bike shops or the brewers causing the deindustrialization. It’s our entire global trade system. I think the reason mining boosters are so sensitive is that they do not want to admit this. It’s easier to hate environmentalists, because they “aren’t as tough.” But in the deep dark night, every serious mining executive knows they are in a sloop sailing against the Kraken.

  6. When the world stops using oil, gas, copper, nickel, steel, lumber and all the other products derived from our natural resources, I will listen to the liberal environmentalists, until then they just appear to be hypocrites to me. Greenies use these products as much as anybody else and as history has shown these products will rebound from this global slump. As I stated, no one is protesting the bike shop or chaining themselves to the front door to stop folks from buying bikes. If Polymet gets it’s permits, you will seen loonies tying themselves to trees and machinery to stop it. How is copper mining, done safely, hurting other businesses up here? Why in some folks mind can’t diversification and mining co-exist? At some point in time folks may not use steel, copper, nickel and lumber and your utopia of no mining or logging will exist, that time is not today. You might be right about the future not having these products but today and for the foreseeable time ahead folks are using them. Why wouldn’t we employ Rangers and benefit from it?

  7. Not all who question mining are from the cities. There is a far greater percentage up here than you care to acknowledge, and polls show that. Your characterizations are precisely the problem and have been for decades. It is the all or nothing or “no limits” viewpoint, such as in your name calling diatribe. This has as much to do with the Range’s problem as anything, namely the closemindedness. A bunch of angry, hateful people with bumperstickers condemning people for actually liking the natural world is really attractive. There are oodles of people just itching to live next to backward, racist ignorant people. Its really appealing. Besides, it is fairly obvious that rangers don’t like mines except as income…they choose to live everywhere but adjacent to the mines. Since when is placing limits, not wanting water pollution, or finding plans that say a project needing water treatment forever laughable immoral or irrational? Or finding the endless subsidies, the already mangled, unreclaimed landscape and impacted water quality as wrong? Or sick of subsidizing the heath care and pensions for workers of companies that declared bankruptcy to escape obligations? Or being sick of the pollution impacting them miles downnstream? If you wish to go there, it can be argued the entire range, even when working, is a giant welfare scam operating on public subsidy. Maybe, just maybe, when the Range is no longer run by spiteful thieves resisting every idea developed after the 19th century, the city’s might look better than a meth junkie’s backyard.

  8. Paul, happy to see you are above name calling. When lefty’s have no arguments to lean on they name call. I can live easily with someone who doesn’t want mining, just don’t force your views on me. There are oodles and oodles of folks up here that are for responsible mining and believe it helps the area and are not hateful spiteful folks like you appear to be. Voicing a different opinion than you doesn’t make one a racist, it just means someone doesn’t agree with you. How much subsidizing are you doing to the area? How much pollution are you dealing with up here? I live here and enjoy the outdoors, fresh air and beauty daily. Must have missed all those polluted old open pit mines you live next to.

  9. See your own post. And, as we can see, your ideas have brought the range a booming economy. As we speak, gold is falling from the sky. The towns are filled with young families and children.

    In an alternate Universe, perhaps.

  10. Independant says:

    Paul by calling local Iron Rangers who support mining as “backward ignorant racists” you certainly do not sound like you live near my Iron Range friends or neighbors. My neighbors and I live in the shadows of old lean ore piles and immediately downstream of the proposed Polymet project. We gladly live adjacent to mine sites and enjoy where we live. If future mining projects are allowed to move forward under Minnesota’s solid and strict environmental standards and we can also diversify our local economy I would be thrilled.

    • Value-added products (such as those done with 3D printing) would be a great way to keep local extraction industries going. Especially for large big-ticket items that cost a lot to ship by barge from China and take several weeks to get here.

      Look at what Iowa’s doing: They’ve got a thriving wind-turbine industry because they can respond on a dime to customer needs throughout the lower 48; they don’t have to wait six weeks (or months) for a “cheap” part to arrive from China.

      • Independant says:

        I agree, think how fast they could turn around those Iowa wind turbines if we could direct ship them the thousand of pounds of copper wire it takes for each one right here from copper mined in northeastern Minnesota and then made into copper wire with our own value added copper wire plant!

    • Minnesota’s “strict environmental standards” are propaganda, not facts. All 6 taconite mines are operating under variances or expired permits. Contact the MPCA and ask to get on their monthly mining report list. When I first started getting the reports, I didn’t want to believe that this is how our agencies really work. We are now facing a legacy of degraded waters, loss of wild rice stands, mercury-contaminated fish, and babies born with high levels of mercury in their blood.
      State legislation passed last year would exempt PolyMet from waste water treatment regulations (the taconite plants are already exempted), and seeks to weaken sulfate standards. Other legislation allows the mass destruction of wetlands from mining in northeast Minnesota, by facilitating mitigation in other parts of the state.
      While water pollution is basically invisible, I can never understand how those of us living on the Range can ignore the continued expansion of mining waste rock, and the pits and tailings that define our landscape. This is the landscape our children will inherit.

      • Joe Musich says:

        Thanks for Truth Ms Palcich. You speak of the results of mining and how it’s social costs have been and seem to continue to be protected. Iron or tacunite minf=ing has been subsidize. If diversity of employment were equally subsidized then may[=ybe a chance for econmic growth mu=ight exist. The total cost of mining has never been calculated regarding social cost itemization. As long as the I hate to call them old gaurd is around marginalization of the entire expense of mining will not be accounted. I left in the 1960’s when USSteel left. I have returned for a funeral or two. Each time things are more bleek. It’s like when you throw a lobster into clod water and turn up the heat. The cleanest lakes in the country still exist up there. Take advantage of that instead of peeing into them.

  11. Lesson one from economics. Why would you place a plant that requires shipping yet one more transport mode step further …the Iron Range….and increase its cost? It’s just like those who believed the pipe dream of Essar’s mill….why would they build a second steel mill when they owned one one transfer mode away?

Speak Your Mind

*