Iron ore tumble highlights hole in mining debate

Taconite pellets along train tracks. PHOTO: Michael Hicks, Flickr CC.

Over the past two weeks of the Minnesota legislative session, mining politics and environmental regulation has dominated the headlines here on the Mesabi Iron Range. I’m not sure how many people not directly involved in the debate read the stories. I can barely choke down the blend of rhetoric and repetition myself, but I suppose regular folks might read the headlines. I started writing a post about wild rice, economic and environmental impacts, cultural understanding, waxing poetic and striving for justice and reason. I got to 900 words and decided it was all a steaming pile of gobbledegook.

So let’s have a talk, folks.

Sure, a very contentious debate over several House bills — some written by members of the new GOP majority, others authored by Iron Range DFLers — seems to be the story of the hour. Much attention is paid to Minnesota’s wild rice sulfite standard (10 mg/l), previously the crux of the nonferrous mining proposals near Hoyt Lakes and Ely, respectively. Now “The 10 Standard,” as they’re calling it in committee, has become the bane of the well established iron mining industry. Once again, our choices are being presented as “jobs” or “the environment.”

I believe there’s a fair argument to be made that in some situations the 10 mg/liter wild rice standard might be too strict, especially as you get further from wild rice waters. But there’s also a very reasonable argument that these mines can afford to improve the quality of their discharged water and shore up their tailings basins, and indeed have a responsibility to do so.

That’s not what I’m here to talk about right now.

Look at this:

Taconite iron ore was selling for $63.90/ton last week, marking a low point after a precipitous drop from more than $120/ton over the last year. Anything under $60/ton and you’re nearing the cost of production for the major Iron Range taconite plants. You’re already seeing the smaller, more specialized iron producers like Mesabi Nugget and Magnetation adjust their production, idling lines and stockpiling ore. Though nothing new, historically this set of circumstances portends shutdowns, layoffs and the customary “Bust” of our famed “Boom and Bust” Iron Range economic cycle.

If one detects a faint break in the voices of mining industry lobbyists, executives, or Iron Range lawmakers, it is because everyone knows that a rough period may lie ahead. A mass mining layoff is the most destabilizing event that can occur on the Iron Range. The lobbyists and executives will have to answer to shareholders, an unforgiving lot, while the lawmakers will have to answer to Range voters, who have been remarkably forgiving over the last 30 years. Again, these events are cyclical. We saw this same thing happen just six years ago.

There’s an popular saying: get knocked down eight times, get up nine. Really, that’s been the cultural philosophy of the Iron Range throughout my entire life. But speaking purely from a philosophical point of view, there are limits to how many times one can be knocked down. There is a finite number written in the stars. So it is for any region dependent on natural resources for its sole economic base.

We might be “Rocky” here on the Mesabi Iron Range, but I’ve seen Ivan Drago, and his name is Roy Hill.

The brand new Roy Hill Project will soon be producing 55 million long tons per year from a mine located in remote part of western Australia. For reference, that is more ore per year than we produce at all the mines here in Minnesota. Roy Hill dredged a dedicated new harbor in the Indian Ocean that will ship the ore to markets in Asia, especially China. They are going to build a temporary village to house workers, who will fly in and out on a scheduled basis. In essence, this is a stripped down, low cost, supremely efficient mining operation that will put a huge chunk of supply directly into the part of the world with the most demand.

Do they enjoy more lax regulations there? Well, they don’t have wild rice to worry about, but they’re also not afraid to put vast amounts of money into one of the world’s biggest mines and they had to work with indigenous populations to gain access to the land. I think that bears repeating: a single mine that will dwarf the iron production of the entire Mesabi Range negotiated with native people to a mutually-agreeable solution.

The point is this: Yes, environmental regulation such as the wild rice sulfite standard could be very costly to mining companies, especially given the low price of ore right now. But that low price of ore is the real concern. It’s short-sighted to think that the regulatory environment would change the larger reality.

Companies and their shareholders are jockeying for position, bracing for a tough challenge ahead. We shouldn’t blame them for demanding more favorable conditions. But regular people (all those who do not own or operate mines) hold a negotiating position as well, including our need for quality of life, clean air and water, stronger communities, and a diverse local economy. We in Northern Minnesota are subject to the shrinking share of the global market held by Iron Range mining, and the limits of the North American market. We must not mistake the business of mining for the substance of our communities.

Make no mistake, domestic steelmakers will always have incentives to mine and use Iron Range ore. The industry will exist in some form for a very long time, and will likely see booms again. Technology and developments such as DRI will make Iron Range mines even more competitive. But pricing pressures from mines in Brazil, Australia and Africa will further incentivize extremely efficient mines here with fewer (but more highly educated) employees. Consolidation will continue in Iron Range mining, and even if PolyMet goes forward to mine copper and nickel, the underlying scope will be one of economic modesty and caution.

High speed internet, workforce development, entrepreneurship, community development, education. These represent the hard, hopeful way forward. One must realize that even though our local mines employ people we love and respect, and who believe in responsible mining practices, almost none of those people make the decisions that affect us most. In fact, we must understand that the market is not human and does not care about us at all.