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.”
True. 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.
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.