ArcelorMittal will run Hibbing Taconite

A view of the Hibbing Taconite open mine pit in North Hibbing. If you can imagine, the original townsite of Hibbing was on this location, about 100 feet in the air from what you see here. (PHOTO: Aaron J. Brown)

Hibbing Taconite will be run by its majority owner in 2019.

ArcelorMittal announced this week it would gradually take over management of the mine from Cleveland Cliffs over the next eight months. Cliffs resigned from management of the mine this year.

ArcelorMittal is the largest steel company in the world. Hibbing Taconite is the second largest iron mine on the Mesabi Iron Range.

A-M’s decision to run the mine offered some relief to Hibbing Taconite employees, but as Business North reports, big questions remain.

Specifically, Hibbing Taconite currently sits on about four years of full production and seven years of mine life. After that it will need new ore to survive. Hibbing and Chisholm both physically block the mine’s expansion to the south and east. U.S. Steel owns land to the west.

That means that the mine will either need to reroute roads and move towns. This would come with astronomical costs in the modern era. Or it needs to cut a deal with U.S. Steel for land. That seems much more likely.

Cliffs and U.S. Steel remain minority owners in Hibbing Taconite. Cliffs sells ore, not finished steel. So it’s also conceivable that Cleveland Cliffs could continue to supply the production plant from other parts of the Iron Range.

If you really want some deep mining conjecture, I’d point your attention to the long suffering former Essar Steel project in Itasca County. There, Mesabi Metallics, a development company formed amid the bankruptcy of Essar’s Minnesota subsidiary, jockeys with Cliffs for land and control of a rich supply of iron ore.

Essar Steel failed to finish construction of a mine on the same land before jettisoning its subsidiary. Now ArcelorMittal nears regulatory approval to take over Essar Steel. This will not include Essar’s former holdings in Nashwauk. But some of the same investors that had been with Essar now affiliate with Mesabi Metallics.

All of this suggests that the fight in Nashwauk is over the ore in the ground and little else. That comports neatly with the timeline at Hibbing Taconite as well. There’s enough ore there to supply HibTac and allow Cliffs to start a value-added HBI plant, but both Cliffs and A-M have reason to be wary of the competition.

It’s just conjecture. But whatever happens, there’s still enough iron ore on the Mesabi to keep the region’s current level of production going for decades. Who mines it, who profits, and how many people are working remain variables, however.

And none of this will last forever.


Comments

  1. steve baker says:

    The ore in the ground lasts literally “forever”.

  2. The problem is it keeps getting deeper and/or further from the plant. Some also has a town like Kitzville or Hibbing over it.

  3. I think what Steve Baker means is that known ore reserves are always there until they are mined, so maintain their worth.

    As far as the life of the resource, geologic estimates indicate that various ore deposits are approaching their ends, with some being exhausted in less than 20 years and others lasting as long as 50 under full production conditions..

    Please note that that is 20 years or 50 years of actual operation. Periodic shutdowns and slowdowns will undoubtedly extend the life of iron deposits by a considerable amount, as the reserves last, as Steve says, forever if they are not being mined.

  4. There’s a difference between reserve and resource. Reserves are fully identified and can be mined at a profit. Resources are known to be there but can not be mined at a profit under current economic conditions. Their definition varies from known to inferred.

    The taconite mines are 40 to 60 years old. Their reserves are getting limited, but the taconite resource is still huge and barely touched. It pretty much extends to the southeast with a few interruptions until it surfaces again in Wisconsin.

    Every new generation of trucks and shovels extends the taconite reserves by making it cheaper to mine, offsetting the depth or location limits. The value of the pellets or other product also affects reserves. When more money can be made on the product more money can be spent mining.

    The “life of mine” limits I saw at Minntac in the 80’s when equipment was smaller and economics were worse have long since been passed and yet mining continues. It’s the same at every plant.

    • You are correct. However, please note that the same financial facts of operation that could make more extensive mining profitable also would significantly decrease the number of miners employed. Greater efficiency and lower costs of production mean fewer people working to extract the resource.

      In addition, price volatility makes planning for a future of more extensive and expensive mining problematic for companies, and much less likely to occur, since basing plans on prices available at market high points means closures and bankruptcies when lower prices arrive as part of economic cycling and changes in international politics and markets.

      The same is true of copper and nickel, except that at current prices the existing Northeast MN reserves are not profitable, or at best marginally profitable, to extract. Significant decreases in costs, attained by decreasing the number of workers, reducing pay for workers, and/or decreasing the costs of limiting pollution from the mines, are necessary if the mines are to operate at a profit. The model for development of non-ferrous mining in Northeastern MN was constructed at a time when copper prices in particular were much higher than now and trending even higher. Decreased demand related to market conditions and to engineering changes reducing required usage have driven those prices down, and for the immediate future that trend continues. The actual operating status of any real non-ferrous mines is extremely problematic as things now stand, with mine closures a significant feature of any future. Antofagasta was very clear about that in their announcement of their takeover of Twin Metals a few years back.

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