Steelworkers reach tentative deal with U.S. Steel

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)

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. Workers are represented by the United Steelworkers. (PHOTO: U.S. Steel)

The bargaining team for the United Steelworkers announced Saturday they had reached a tentative agreement with U.S. Steel.

Though the union is not yet releasing details, the Steelworkers’ statement indicates that terms of the contract deal are better than what was being offered over the summer.

From the statement:

As you know, our industry is in the midst of a crisis. But we have been determined not to be forced to pay the full price for the problems of unfair trade and global overcapacity. Our goal throughout this process was to make sure we were not made scapegoats for what are global and, we believe, temporary, problems.

U.S. Steel operates Minntac in Mountain Iron, Minnesota’s largest taconite plant. The company also operates Keewatin Taconite, which is currently in an indefinite shutdown.

The Steelworkers are still negotiating with Cliffs Natural Resources and ArcelorMittal over contracts at other Range mines. Typically, once one contract agreement is reached, others follow with similar terms.

The low prices for iron ore and steel are the primary factor behind the downturn in Iron Range mining. Low prices come from a glut of cheap new supply all over the world: huge new mines in Brazil and Australia. These same low prices produce a climate where countries with a state-owned steel industry continue producing cheap steel. The practice of selling steel for less than it costs to make is called dumping. That’s the word you hear most often in relation to the Range’s problems.

Andy Xie, a Chinese economist, predicts iron ore prices to stay below $40 per ton for most of 2016. Xie has a good handle on what’s happening in China and deserves credit as someone who accurately predicted everything that’s happened so far. His predictions were considered crazy at the peak of taconite prices a few years ago, but people are listening now.

The Steelworkers say the problems are temporary. That might be true, but we haven’t figured out how long the “temporary” downturn will be. Or which companies will survive. A smaller, more efficient industry will likely emerge from the crisis in coming years.

Meanwhile, miners will await details as the Steelworkers negotiating committee brings the contract deal back to the Iron Range for ratification.

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