U.S. Steel CEO Longhi to retire; Burritt takes over

U.S. Steel’s MinnTac facility is the largest active iron ore operation in the United States, and “king” of the Iron Range mines of Northern Minnesota. (PHOTO: U.S. Steel)

One of the Mesabi Iron Range’s largest mining companies will be under new leadership next month. Mario Longhi, CEO of U.S. Steel, will retire June 1. Company chief operations officer David Burritt will take the helm.

U.S. Steel is an integrated steelmaker, meaning that the company mines its own ores, produces steel in blast furnaces, and finishes that steel into a variety of products. That business model dominated the 20th Century, but has lagged here in the 21st. The world’s largest steelmakers now buy their ore from raw materials companies like Rio Tinto, Vale, BHP Billiton and, here in North America, Cliffs Natural Resources. Most feed into newer “mini mills,” smaller steel plants that use electric arc furnaces and higher grade ore.

U.S. Steel owns and operates Minnesota’s largest mine at Minntac in Mountain Iron and the smaller Keewatin Taconite, which just reopened this year after being idled nearly two years. U.S. Steel also owns a minority stake in Hibbing Taconite.

When the Mesabi Iron Range established itself as a juggernaut of ore production in the 1920s, U.S. Steel was the dominant company in the region and the biggest corporation in the world. Now U.S. Steel, or “X” on your stock ticker, holds a very small share of the international steel market and has fallen off the global corporate ranking chart.

The top steel producer in the world today is ArcelorMittal. Based in Luxembourg but flying many international flags, this company has become very flexible in how they sell products. ArcelorMittal, too, owns an interest in Iron Range mines, including the Minorca Mine in Virginia. But even A-M is struggling to figure out its place in a changing industry amid a more automated and volatile business.

Despite the big picture woes, U.S. Steel stock has enjoyed a meteoric rise since the election of President Donald Trump. Longhi joined other business leaders in fawning over the possibility of lower corporate taxes and less regulation of his industry. U.S. Steel is still in the red, though there is hope it will turn a profit by the end of 2017.

One stock analyst called U.S. Steel “Trump’s Empty Trophy Case.” That is to say, the success of U.S. Steel is tied to the success of the president. If Trump’s policy of slashing taxes for big corporations fails to generate the necessary growth in domestic steel production, U.S. Steel will be about as healthy in 2020 as Trump’s re-election prospects.

Of course, that also requires that the domestic steel production goes to U.S. Steel, and not competitors using newer technology. That’s the big “if” of U.S. Steel’s fortunes and Trump’s policies alike.

 

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