By now, most of you are pretty familiar with the massive Highway 53 project between Virginia and Eveleth on Northern Minnesota’s Mesabi Iron Range. That $240 million re-route of the Iron Range’s most important north-south highway will build two new bridges, included the state’s tallest, to accommodate a 1960s-era agreement with the mines to move the highway upon request.
The Highway 53 project is the single-most expensive highway project in the state right now and will likely go down as the Iron Range’s most expensive single project in a generation or two. And for what it’s worth (apparently very little) the highway is being moved for a United Taconite mine that is currently idled indefinitely.
But Highway 53 is not the only highway being moved for mining. Hibbing Taconite has requested St. Louis County move Highway 5, the road that connects Hibbing and Chisholm to Side Lake and other points north. Again, Hibbing Taconite needs to expand to get at new ore or it, too, is done.
Moving highways, towns or just about anything for the mines is commonplace in Iron Range history, but is relatively less common in the taconite era that has ruled since the 1950s. The dollar figures are much bigger now in 2015 than they were in the old days and there are far more roads, structures and businesses in the way than before. Nevertheless, the mines generally bark and the towns generally jump, same now as ever.
For instance, the city councils of Hibbing and Chisholm were asked to pass a resolution supporting the county plan to move the highway. The plan would move the route of Highway 5 to let out near Chisholm’s Iron Man statue, or thereabouts, changing the flow of traffic through and around Chisholm. Chisholm’s council had many concerns about the matter and asked for further discussion. Hibbing simply rubber stamped the request without any discussion. So now Chisholm is isolated on the Highway 5 issue while the mines are saying that any delay at all could threaten the mine and the hundreds of jobs at stake. Imagine the political pressure. Chisholm has no choice here.
Here’s the reality, though. Those jobs are in danger anyway. No job in mining is safe right now. Now, that’s not a knock on the industry or evidence that mining will go away (the retorts I hear most often), simply a statement that we are going through large scale reorganization in mining, again, and that logos, jobs and business plans are going to change.
The Iron Range mining industry is reeling right now because of low prices for iron ore and a rapidly changing marketplace for our primary export: traditional taconite pellets for blast furnaces. Blast furnace technology is losing popularity in favor of smaller but more efficient electric arc furnaces, which run off scrap metal and higher grade iron pellets that Range mines don’t currently make. In any event, all commodities are selling cheap right now, something that doesn’t favor our older labor-intensive mines.
This struggle is profound. In addition to two idled mines right now — U.S. Steel’s Keewatin Taconite and Cliffs’ United Taconite near Eveleth — all Iron Range producers are in dire fiscal straits. An efficient new mine under construction, Essar, is hurtling toward becoming the lowest-cost producer in North America, but is bashing against the rocks of the market situation. Cliffs and U.S. Steel are losing scads of dollars, the equivalent of a Highway 53 bridge or two every quarter. Most knowledgeable mining people I know are dour about the situation, each hoping that their outfit will be the one that survives the hurricane to see the sunshine of higher prices.
But everyone seems to agree that some companies will not survive.
And yet the highways move, because moving those highways will benefit the mines — and whoever ends up owning them — eventually.
I’m not calling for a revolution here. I’m merely pointing out that when our communities are in trouble, we don’t get to dictate terms the way mines do when they’re in trouble. We don’t get to send half the kids home from schools or temporarily idle the sanitation department. The Iron Range spent a century trying to balance the concerns of workers and their communities with the capitalistic and industrial interests of the mines. There was a balance there — earned with blood and experience — but that balance is tilting back toward the mines.
Fewer than 10 percent of Iron Rangers work in the mines. Most of the money from mines leaves the area. Contracts with Steelworkers remain unresolved because of concessions demanded by the mines.
Without balance between the independent interests of mines and those of communities we will not fare well in these times.
Though we will have some very nice bridges. Spare no expense.
There is no balancing act or conflict as you describe Aaron – “balance the concerns of workers with the interests of the mines”. You continually seem to try and create one, why? The interests of the workers are in lock-step with the interests of the mines. Both wish to be successful…
Aaron
I’m not trying to pick a fight as you’ll conclude, so with that said:
Of course only a small amount of the money made by the steel companies remains on the iron range. Their steel is used in products sold throughout the U.S. / worldwide. It only makes sense that it takes people outside of the iron range to enable that. Do you think all the money Target makes should remain in Minneapolis, all the money the Medtronic makes remain in Dublin, all the money 3M makes remain in Maplewood?
If your expectation is to have all the money U.S. Steel, Cliffs, ArcelorMittal and Magnetation (opps, they’re broke) make remain on the Range, then have them produce only enough ore for products sold on the Range. A very, very small high-cost scram operation could handle that..and it would employ fewer than all the folks in Kinney to operate it.
Have you driven the proposed routes? Chisholm is being overly dramatic about this change and just trying to stir up people to realize their town is struggling separately of a move of the Highway – the current Highway 5 does nothing for Chisholm and beefing up TingTown Road will actually be a better situation for them. Asking people to use 84 is silly and will just tick off people heading to Side Lake. This section of Highway 5 is tiny Aaron.
@R47, to the first point, workers and the mines are mutually invested in the industry, but the needs of workers are different than the needs of the owners. Further, the needs of the community are vastly different, sometimes utterly unrelated to the interests of mining in general. I think I’ve established this in the piece and in hundreds of other things I’ve written. Perhaps we can stop repeating ourselves?
To the second point, R47, that’s a simplistic view and not what I mean at all. Of course we produce more ore than we need, because it’s part of a vast integrated economy. Every step of the path from rock to pickup truck adds value to a natural resource. But our communties’ share of that economic pipeline has shrunk. Production taxes are generous to the mines, given the amount of public subsidy they receive elsewhere. Now ownership is farther away, the profits of mining are rarely found in anything but overtime checks on the Range. My point is that we need to understand mining for what it is, not what it was. We don’t *have* to do anything. We can just let the economy shrink with the mining workforce, wait until the old people die and the medical sector shrinks, too. That’ll just keep happening. Or we can do something.
And Erika, I know these roads. I’ve driven these roads. Perhaps Chisholm is overreacting, and I agree that the routes through town are not the primary reason Chisholm or any other Range town is struggling. My point is larger — more related to the attitudes surrounding these big infrastructure projects as they relate to the realistic lifespan of some mines. Will “the Range” mine ore “for centuries?” Probably yes. Will mines employ 4,500 people consistently for that time? Almost certainly not. And yet we all act and make decisions based on the assumption they will.
“or we can do something” “There was a balance there — earned with blood and experience — but that balance is tilting back toward the mines.” – Aaron
So what is it you propose we do? You obviously believe something should be “tilted” away from the mines. Communicate, what specifically should be tilted away?
You also state “our communties’ share of that economic pipeline has shrunk”. Is that a fact? Give us some data which shows the Ranges’ share of the total supply chain in economic terms comparing today vs. some past dates, whatever data and dates you have.
Economic Diversification, Bob. That’s what I talk about. I’ve written about 3-D printing, value added natural resource products, e-commuting and data centers and more in the past several months. We have had that conversation before. Sometimes I think you ask this every time for rhetorical reasons? At some point you’ll acknowledge that I respond, right? I’m not asking you to like my answers or agree. Perhaps you have some of your own?
The most obvious way that community share of mining has been reduced is in labor. The IMA cites 4,500 workers in taconite right now. That’s about a third of what there was in 1978. Automation and efficiency. What that allows is for the same amount of ore to be mined last year as we mined before the collapse of taconite in the early 1980s with less of the net going into communities through paychecks. Ditto for venders, same issue. Now, that’s just the drumbeat of post-industrial America. I don’t claim to have an answer for that. But , beyond that you have the taconite taxes. In a broad sense taconite taxes are lower than what mines would pay in property taxes, but even if you count that as necessary to keep the mines going, production taxes haven’t risen with inflation or with the reduction in labor. The result is a smaller and smaller cut of mining’s gross income going to the communities that mining surrounds. Skillings and employment data will show you this. It’s fairly self-explanatory. Remember, I’m not talking about tonnage (which has been great) or net revenue over the past five years (better than average, until this year), but in how the money gets into the communities.
The increased use of venders and contractors at new generation mining operations and even some of the old guard operations skews these employment numbers and I don’t think most people outside of the industry account for that when determining how big of an economic impact mining has on our community. Using direct hire employee numbers was much more relevant in decades past. You are missing out on the true number of people who work at a mining facility every day of the year but have never had a mining company employee badge.
My cousin cleans toilets at HibTac. Makes about $7.50 an hour. I am well aware of the number of vendors that, for one reason or another, have replaced mining “regulars” in the workforce, but the labor statistics show that most Iron Rangers work in medical or service sectors. A vast majority. Those mining jobs and some (though certainly not all) of those vendor jobs are GREAT jobs, but they’re held by a smaller and smaller portion of our local workforce. I’m not a miner, but I’m pretty close to workforce issues through the college. I interact with what I consider to be the working majority of Iron Range people. Further, as you know, living as a contractor at the mines is much less consistent, much less predictable than being an employee of a mine. I’m not trying to downplay mining. I’m trying to help people have an understanding that the image of all the able-bodied men of the Range bringing lunch boxes to the local mine is an entirely misleading image of our local economy. I think many people hope to resurrect that image. I do not believe that is possible, no matter how much we may want it.
As a tradesperson in my line of work on a mining site the pay starts at $38.00 an hour and you can almost double that number if you include the fringe benefits paid into our retirement and healthcare. Contractors are typically not cheap but instead offer a customer flexibility. The vast majority of contractor jobs in the mining industry are GREAT jobs with GREAT benefits. A contractors destination in the morning six months down the road may be less predictable than being an direct hire employee of a mining company but making a living at it can be somewhat less stressful as you can work for many customers and are not tied to only the success or failure of one company. By the way I agree with you 100% about diversifying the economy of the Iron Range. However I disagree that being a vocal supporter of our local mining industry takes attention away from that goal. My definition of diversification means to grow other industries and segments of the local economy while also growing our mining economy. Contrary to popular belief we do not need to push one industry down to promote another. How does that saying go… something about growing the size of the pie instead of fighting over an existing piece of it… something like that.
I don’t think our understanding of the facts are far apart. We merely come at this from different perspectives. I will say that preserving some critical detachment from the mining industry is not the same thing as pushing it down. I realize that are some out there that simply oppose mining, but that’s predictable resistance, something any extractive industry should expect.
To steer a ship, you must turn the rudder.
Hi Aaron,
You’ve mentioned economic diversity often in your posts. What’s your take on the proposed Sweetwater Energy biochemical plant in Mountain Iron that is asking for $26 million in State loans for a $52 million project. Is this a good project or another chopsticks factory? Why can’t they get private financing? Why here?
Roads, the $240+ million for the bridge to no where! Do they not already shut down hwy 169 for blast days at Hib Tac(when will that road go away?)? I personally believe that the cheapest option was hwy 37 to hwy 7(around Eveleth). Then build a 4 lane to Hibbing along hwy 37. There are the opportunities for economic development(7 and 37). But, man are you gonna make some business people mad!
Is the proposed new route between Hibbing and side Lake going to be 169 to Chisholm to 73N to 84 to hwy 5?
Aaron’s and other’s arguments aren’t either/or scenarios, but about possible options for Public investment, which is not always just funding, but about time and emphasis. And, since the end of the boom, it has been a consistent sell out to the mines, despite their gradually shrinking workforce and instability, their bankruptcies to avoid pensions and cleanup costs and the continued subsidies. All I, or anyone else arguing for diversification is saying, is it is now time to stop pouring all the resources into the endless black holes in an attempt to recreate the mass thievery of 1977. That’s all. Polymet is nothing more than the same people we have had for 30 years using public resources to create a startup they can sell off their stock from once it becomes operational. They don’t care what happens to the place afterwards as long as they get their cut. And if the biotech startup cannot get private funding in a time when there are billions sitting looking for things to invest in, then it should really raise red flags. But, one of the major problems is if it doesn’t somehow enhance the pockets of the local elite, it doesn’t happen, whether it is the county fairground being forced into Chisholm to help the dying Discovery center, or to line the pockets of the same old group of lobbyists/politicos who profit by extracting fees whether the project happens or not. Reading the who’s who list of the advisers/consultants up there is akin to going through a yearbook from 1965, and people wonder why the young people leave. It isn’t just about ordinary jobs, but it is about the same crew, most of whom are not even qualified to handle their own email and whose last new idea involved a TIF district for a walmart, sucking public money like vampires. There are many young people, which on the Range means anyone under 50, who might gladly move back and have development ideas which might go somewhere, but the patronage/connected/ good old boy system simply sucks everything up.
You can absolutely develop and grow a business idea on the Range without being in any “good old boy system”. However this does require a positive outlook on life, never ending drive and a second to none work ethic. Most of the time we are our own obstacles to success but it is much easier to blame others.
Amen Independent amen, out working the competition is so yesterday. Getting your hands on IRRRB money for some hair brained idea is some folks idea of making it. It takes a ton of WORK, guts and some luck to make a new small business go. It can be done and is being done every year by many who are not standing around waiting for money to fall from the trees and willing to work.