Taconite looks strong in 2014

Iron Range newsThe Duluth News Tribune reported recently that taconite industry insiders predict a strong 2014 market for iron ore and the likelihood of expanded operations at Iron Range mines.

From the John Myers story:

Because most taconite produced in Minnesota goes to large U.S. blast furnaces to make domestic steel, the continued rebound of the U.S economy is critical for continued taconite industry success. Construction is up across the U.S., as are auto sales, driving demand for Minnesota taconite, said Craig Pagel, executive director of the Iron Mining Association of Minnesota, an industry trade group of mining companies and their suppliers.

“We’ve seen 2013 as a very good year with all but one of the major producers near full capacity,” Pagel said.

Domestic U.S. steel production has been slowly growing, from 74 percent of steel mill capacity to 76 percent this year, and Pagel expects that trend to continue. Because Minnesota produces 80 percent of the ore used in those mills, that means increased demand for Minnesota taconite. And that means more cargo shipped by railroad and boat, and more spinoff jobs for companies that service the mining sector.

“I see 2014 as an even better year,” Pagel said. “Not just for the mining companies, but for their suppliers and for regional employment.”

Since the 2008-09 recession, northern Minnesota taconite mines have run strongly, with only a temporary shutdown of a line at Northshore in Silver Bay mixed in. Now Northshore is calling back workers and several new iron ore operations are expanding very quickly.

Leading the pack in new jobs is Magnetation, the western Mesabi scram mining operation that is now eying new kinds of mining in a part of the Range that’s been dormant for decades.

All of this is a lesson in modern economics. Mining remains the dominant industry in northern Minnesota and the industry, from Wall Street’s point of view, is strong. Nevertheless, economic problems remain evident around the region. While production levels constantly approach records, employment is still less than half of what it was when the bottom fell out in the early 1980s. And that’s never coming back.

Clearly, miners are working and ore is moving. It’s up to all of us who are not in the mines to ensure that this economic good news be made permanent, rather than temporary, through economic diversification.

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