Mining’s musical chairs on the Mesabi

Construction continues at Essar Steel's new taconite plant near Nashwauk on Oct. 8, 2015. (Aaron J. Brown)

Construction at Essar Steel Minnesota near Nashwauk on Oct. 8, 2015. (Aaron J. Brown)

Iron Rangers are celebrating the reopening of United Taconite after parent company Cliffs secured a ten-year contract with ArcelorMittal. In fact, Cliffs is even moving up the opening of the plant to August, instead of October.

But with this good news comes the reality that one of the Iron Range’s biggest public and private investments in the last ten years — Essar Steel Minnesota — is dead in the water.

That’s the subject of Lee Schafer’s column in the Star Tribune today, which you should check out.

So skeptics of the Essar Steel Minnesota project have confirmation of what they’ve long suspected. What started out as an innovative economic development project to bring steelmaking jobs to northeastern Minnesota ended up being nothing but a taxpayer-subsidized effort to shift taconite mining jobs around on the Iron Range.

This pivotal contract with Cliffs, the one that finishes off Essar, was more or less expected. It’s more like a 10-year renewal of agreements than a new deal. Cliffs will keep its position as the sole outside supplier of pellets to ArcelorMittal, a Luxembourg-based global steel industry giant with sales last year of $63.6 billion.

ArcelorMittal also mines its own ore, including at ArcelorMittal Minorca near Virginia on the Iron Range.

That the taconite industry has become nothing more than a brutal zero-sum game had to be top of mind for Cliffs executives as they sought to renew the supply agreement with ArcelorMittal. As Cliffs was negotiating with ArcelorMittal, it was also pointing out whenever it could that it sure didn’t seem fair that it had to compete with a taxpayer-subsidized operation in Essar Steel Minnesota.

The Essar site sits on rich ore near the surface, so it’s probably true to say that someone will end up mining there eventually. But it could be years. And it will probably come with the closing of another mine somewhere else.

That’s how musical chairs works. That’s the reality of the mining industry on the Range right now. Good news for you is always bad news for someone you know, or vice versa.

It’s an important reminder that the drive for economic diversification and sustainability is just as urgent now as it was when United Taconite was shut down indefinitely.

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