Right now preparations are underway to reroute Highway 53, Northeastern Minnesota’s north-south corridor, to accommodate a nearly 50-year-old agreement with mining interests. The Cliffs-run United Taconite has put in notice that it wants to mine the area under the current highway, requiring a new one.
Engineers say the new Highway 53 will track further east out of Eveleth, arcing around the mine dump that holds the current Mineview in the Sky, before crossing the Rochleau Pit into Virginia on what would be the state’s tallest bridge. The same project will also reroute Highway 135, which connects the region to Gilbert, Biwabik, Aurora and Hoyt Lakes with another smaller bridge.
The scope of this project is extraordinary. This single-largest project in last year’s Minnesota bonding bill is also the single-largest state highway project on the Iron Range in at least a generation. It will cost $240 million, and cost overruns are likely.
Just one problem. United Taconite, the mine that triggered this titanic endeavor, has announced it will shut down for six months starting soon. Cliffs Natural Resources says that during this market-induced shutdown, it will be investing in new equipment to create a flux pellet — an iron ore product used in some newer steel mills. But Cliffs remains in a financial struggle for survival, racking up huge debt, unable to sell its flagging coal operations, its stock selling for less than a gas station burrito. It would be reasonable to question whether the outcome of this drama might not be as rosy as Cliffs claims.
As I’ve been writing all year, Iron Range mines are scrambling to cut costs as the international price of iron ore hovers at about $52 per ton, a number roughly similar or even lower than the cost of production for local mines. It’s not just Cliffs that’s hurting. U.S. Steel spent most of the summer burning through pellet reserves with big layoffs at Minntac and Keewatin Taconite. U.S. Steel is losing money and stock value too, while struggling to modernize its infrastructure for changing steel technology.
The Mesabi Daily News ran a major front page feature about Highway 53 Sunday boasting the headline, “BIG project, BIG local work opportunities.” The story briefly describes the project’s status and then concludes with a 50-item bullet-point list of kinds of construction jobs that would be needed. For instance, “bituminous paving” is on the list, as is “rip rap” and “tie-back rock anchors.” And, you know, 47 others. In list form.
The size of the project is not in doubt, nor is the fact that scads of workers would be needed to build it. What the MDN story fails to mention is that the most expensive project of the early 21st Century is being done without strong evidence that it’s necessary to spend this much money, or much assurance that United Taconite will be in the strongest position to mine this area for the next decade.
Cliffs interests are clear. No matter what happens to Cliffs — debt, purchase, bankruptcy or even wild success — it has no reason to cancel its call to move the highway. Moving the highway adds value to whatever parts of the company survive, and if Cliffs really does survive intact it will save money and profits by keeping the highway far away.
But what about the interests of the communities, and the Iron Range in general? If we were to thoroughly examine the best ways to spend $240 million for the future of the kids entering kindergarten this year, would this project even make the top ten? If we were to assume, quite reasonably, that Iron Range mines are entering a sustained period of contraction and reorganization in response to current market pressures, why would we rush to complete a project build around the old structure?
I’m not yet saying that we should make a rash reversal, but I don’t think we should hurtle toward a quarter billion dollar investment without answering some of these questions.
How much money is Cliffs really putting into its proposed upgrades at United Taconite? How many years will it stay open?
Where is the money going to come from? The state has ponied up some, but would need to pay much more. Congress can’t even pass gas, much less a functional transportation bill, so who’s paying for this magnificent bridge to Target?
For generations the Range has boomed and busted with the mines. We’ve moved highways, buildings, even whole towns in the hopes of prosperity. But in the expensive construction climate of the 21st century, with its even more volatile commodities markets, playing by the old playbook seems a losing proposition. For $240 million of the people’s money we’d better get $240 million back in economic value. That means not just survival of one company, or a handful of shops on the highway, but something that makes sense to my great-grandkids. Or yours. Frankly, right now, it barely makes sense at all.
So what you’re proposing Aaron is to break the law…You sound like Obama.
Ranger you need to pull your head out of your pit…..
Aaron – I respectfully disagree with your assessment. The proposed Highway 53 reconstruction is a much better use of taxpayer funds than the state funding that went into the garbage compactor called “U.S. Bank Stadium” in Minneapolis. Highway 53 has been in need of renovation for many years and was one of the few things I actually agreed with the late Congressman Jim Oberstar on. Regardless of what happens in the short term with the mining interests, the ore will still be there and eventually need to be mined. Might as well get the highway project done now rather than delay further and have it cost $500 million later.
The 1960 agreement between the mine and MNDOT called for a three year time period move the highway. U Tac first approached MNDOT in 2010 (when the mines were doing quite well) and gave MNDOT up to 7 years to complete the highway relocation. Just last year, MNDOT said this highway redo would cost $20 million less than this year’s $240 million estimate. Obviously, if MNDOT had not waffled between plans for as long as it has, this project would cost much less.
The facts are that the minerals are under the present road, an agreement made in 1960 has to be honored, and Highway 53 is a major highway that is vital to not just the range, but to the communities beyond and all the way (and into) Canada.
Moving this roadway now makes sense, whether U Tac is in a temporary shutdown or not. Our great-grandkids will eventually thank us.
I agree that Highway 53 needs upgrades and of course it’s vitally important. What I don’t get is the cost-benefit analysis on the totality of the cost. Seems like we have various goals here — get the minerals, keep the artery open — that would be much cheaper to accomplish through other means, especially given the shaky nature of this particular mine. I guess my question continues to be “What would the mines do if they had to pay for it themselves? Again, I’m not saying we have to “shut it down,” but to go into this process without getting more information about the company’s long-term viability seems rather short-sighted to me.
The easement agreement dates back to 1960 and MNDOT agreed to pay for relocation at that time. Why should the mining company now have to pay after a 50+ year understanding? 50+ years, I don’t think is “short-sighted” and again, this process started 5 years ago, not yesterday.
The question to you would be, what public monies have already been spent on this project and should we just change our minds now only to have to restart the whole process in a few years, when it will cost much more?
I’m well aware of the agreement and I’ve been writing about this for years. What I’m asking is “What would the mining companies do if they had to do it themselves?” I don’t think the mines would spend $240 million on this, and so I wonder why we should? Listen, I am under no illusion that the project can be stopped. I am asking the objective question “How will this look through a big picture lens?” I honestly think it seems crazy. It seems like there would be a way to mine the minerals, reroute the highway that didn’t cost this much. I know alternatives were floated years ago, but I think we’re reaping much higher cost that is necessary. I’m skeptical about this company and I think we’re entering a reality where there are only about four mines on the Iron Range. If this is true, we might end up paying for this bridge long after the time when its economic benefits expire. I feel the public would benefit from this conversation. I can be convinced otherwise; I’m just not there yet.
Much like La Point Mining’s insistence that the Gtac mine proposal is still viable. The request by United Taconite is all about propping up the value of their endeavor for as long as possible. After all the purpose of the corporate entity is to provide the most $ to the share holders even when entering bankruptcy. It’s the law.
sorry Aaron. Your not getting quite a few things. You just stated that you don’t get the cost benefit analysis of the move.
If the state didn’t move the road, they would have to “buy out” cliffs and the mineral rights owner. Your looking at a price 2-3 times the cost of the bridge. Then, your shortening the lifespan exponentially (10years or more). That means the local economy would have 10+ years of good paying income from good paying jobs taken out of it. Add that with the buyout cost, and it’s a no brainer to move the road, because not moving it would cost the state 2-3 times the bridge cost in buyout alone.
I’m extremely bummed you wrote this without seemingly knowing the facts and costs behind everything.
Buying out the mineral rights is not an option. I never suggested that. I am suggesting that we are selecting a very expensive way to do this, at the behest of a company that is not currently stable. I think the public benefits from a conversation about this. Moving the road, sure. But do we need to spend $240 million? (Or, more likely $300K by project’s end)?
Then what is your proposal for the route? They have held numerous public meetings one could voice themselves. Isn’t that where the public benefited from conversation? We are well beyond that stage, and the bridge is being built, no stopping it now with the progress that’s been constructed. Let’s hear where you would move the road?
As far as utac being unstable, every mine is subject to periods of downtime, that doesn’t mean they can’t have access to their minerals. You do know why utac was idled currently? The pellet pile at the duluth docks is full, nearing the closing half of shipping season. The pellets there need to be gone before shipping stops, so there is somewhere to put more pellets. If they were still running, the pile would never disappear, and shut down in the winter.
And if by chance cliffs as a whole goes bankrupt (just like evtac did, and many other mines), the ore is so valuable, another mining company will pick it up from forclosure at a bargain price (just like cliffs did), and resume operations. Utac in itself is hugely profitable, it was cliffs prior management making poor purchasing decisions of other worldwide operations which put cliffs into jeopardy.
Listen, I get the situation. It’s a bit of an impossible situation. I don’t know what could have been said at those early meetings that would have changed this current outcome. I do feel like this downturn is different. Worldwide commodities analysts are saying as much. Now, maybe that’s all wrong. Maybe we’re doing great in ten years. Or 50. So, why are we building the new highway on yet another iron formation? Won’t we hit the same problem in 50 years? Won’t we have made the same stupid mistake that they did in the ’60s? It doesn’t feel like anyone really has a plan for the future of this region. It feels like this project, with a future as uncertain as the mine’s, is hurtling toward us not like progress, but like a meteor. I get why some just think “Brown’s spouting nonsense again. He doesn’t know how it is.” But I think I have a pretty objective view. If I thought there were even 20 years of mining in the area of Hwy 53 I might feel differently.
Move the highway, fine. It appears that’s our only option. But I am calling for people to become more aware of the economic realities of the 21st century mining industry. Why is it so easy to spend $240 million to keep a company alive when the same amount spent differently might keep the region alive? It bothers me, and I don’t mind speaking that aloud.
The public has already had a conversation about this. That $240 million is the result of MNDOT’s “public comment period” and Target and those “handful of shops” also employ people and contribute to the economy of the range.
I agree it’s lot of money, but with the present project, the need to relocate the road again in the future can be avoided. The decision has been made and the project is going forward. Rather than complain, wouldn’t it be better to look at the positives?
Hi Mary. I can certainly see that point of view. I’m a pretty positive guy on the whole. I love bridges, architecture, trails and all the things that will come of this project. But I think in the grand scheme of things — 10 years from now when UTac is likely closed, when we’re still paying the bonds — we will look back at this moment and wonder. It’s concerning to me that the response to these issues is usually some version of a shrug and “watcha gonna do?” If people really want this thing, if it’s what we want to place as our marker for this whole generation of the Iron Range, well, OK. But I don’t think most people, save for a highway engineer or two, is approaching it this way. It’s a whole lot of ¯\_(ツ)_/¯. That’s my worry. I’m raising it now because I felt I needed to speak this piece. It’s said.
Not to mention 50-100 years from now when we have to replace this bridge all over again…
It would be interesting to see the comments if the state, as it is doing in other places, was using the powers of eminent domain to shove this through people’s back yards at the behest of the poverty stricken corporation. The State, in many situations, has declared its powers and sovereignty in all sorts of ridiculous property disputes and exchanges. Many commenters here would demand the the State break agreements if there were profits involved, or, god forbid, some sort of mineral wealth was found underneath, when legions of law abiding rangers would immediately demand the breaking of an international treaty if there was the potential of a dollar in it for them. There was no protest over the IRRRB handing out candy to a private corporation in the Polymet land exchange, nor is there any protest when the rest of the state’s taxpayers have to fund this leviathan, while, as usual, the local’s on the range are drooling in dreams of someone else’s cash pouring down from the sky. The state could anything it wants. It could declare sovereign immunity and the mining company could spend time in court until the stars burn out waiting for the decision. Instead, a taxpayer subsidy to save the south side of Virginia, followed by, most likely, more subsidies to re-start the mine later on. A billion dollars later, we might have a new bridge around a closed mine to a closed down mall. If one did the actual calculation for all the subsidies that surround mining it likely costs the taxpayers money much more than the royalties.
There is no eminent domain. Before this road was even built, this land was owned, not by the state. They were given an easement to put the road there, KNOWING it would have to be MOVED in the future. Tell me again how the state should be able to claim eminent domain? Exactly.
Well let’s see, there has been cases of people building on other people’s property which later on courts force the property owner to sell out to the squatter. They have forced others to sell their property through there eminent domain bs. Mines have never been one to care about agreements or there wouldn’t be how many working in their 70s because companies ripped their retirement from them
Just think if we were bonding $240 million for something that would actually add value to the Iron Range. There’s literally zero value created by this new bridge.
No value? Hmm. What about all the money that gets spent on the range from the families who work there, for all the added years of mining? To me that sure seems like a lot of value.
Let’s figure 500 hourly employees, and let’s throw 60k out there for a number for each. That’s 30 million a year. And how about roughly 300 salary? Let’s say that’s another 18 million. That’s 48 million a year. And that’s estimating to the low side. multiply that, by even just expanding 10 years. That’s 480 million. Then, how about the spinoff jobs the mine creates? (Road machinery, lakehead, jamar, joy global, Sandvik, mars, idea) etc, and the jobs from all the contractors and suppliers created. Do the math… It’s pretty clear whether to leave the road, or build the bridge, prolong the life of a mine, and all the jobs that are created by it.
Absolutely on the mark. The people who hate mining and pretend all of their vehicles, homes, electronics, etc. magically appear from thin air have also brain washed themselves to ignore the massive economic engine mining is to the area and will continue to be. They must not understand how extensive the mining contractor and vendor network is and how many people they all employ.
Aaron, I’m shocked you are against an infrastructure project! I also am impressed that you finally get when a project is done by the State 240M is really 300M…. Good thing to remember when you are pushing State run projects you favor. Why, when pushed about money, do the liberals always go with the same old line- if that money went to kindergarten kids? If mining is going to flourish up here, we need more deals like St. Louis county gave Hibtac on 21 acres. I agree the 240-300M price tag is high but the options are breaking the deal and the legal headaches that come with it, then after litigation building the bridge. The argument for using the 240M on other projects up here falls flat on its face when you back the DFL run IRRRB, hell, they’ve done nothing of note with tens of millions they have, why would this 240M be different?
Buying out the mineral value is an option. I don’t think it would cost much more than the bridge.
We do not know that putting in the bridge would give Ev-Tac 10 more years–it may be only a couple of years.
No one is considering the maintenance costs of putting such a bridge over the pit. Who’s planning to pay for that?
Nearby mine blasting may impact the structural integrity of the bridge.
Cliffs is in a very precarious market condition. We might be spending money on an unnecessary bridge that will be inconvenient for traffic flowing north and potentially not very safe for traffic coming and going toward Gilbert.
With Ev-Tac going on idle, it’s time to rethink this idea.
I can tell you don’t know much on the situation already.
How do we know this would give 10 more years, or more and not a couple? Drilling, core sampling, engineering. Evtac knows what type of ore, how many tons of ore, the depth, shape of formation, what their blends are. Testing and science gives exactly the lifespan, knowing everything they know from drilling cores, and sampling. They aren’t just guessing.
And with utac being idled. It’s not because of poor market condition. Drive down past their duluth docks where the pellets are stored to be shipped on boats. It’s nearing the end of shipping season, and the stockpile area is completely full as of when it was idled. Now, ships don’t take pellets during the winter when the lake is froze over. See where i am going? The stockpile area needs to be emptied to make room for winter storage. Can’t run and run and run with nowhere to put the product. The reason they are in this situation is because of being so productive and profitable this past year, in one sense “overproduced”, making so many tons faster than normal. And shipping pellets to duluth faster than the boats could take them.
I plead people, if you don’t have a clue on mining, or ones situation, to keep it to yourself versus spreading blatant lies and rumors.
Aaron can’t explain clearly what he wants, but it’s clear he wishes for “executive order” authority to implement it. As I said, he sounds like Obama.
There has and will always be the nay Sayers that claim mining is dead and gone. The 1st time I heard it was in the 60’s when I was young and it scared me that we were going to have to pick up roots and move. That uncertain time led to taconite, expansion and a huge boom. As long as people need and use steel products there will be mining and yes, there will be boom bust cycles. Hibbing was moved to accommodate the mining industry and I’m sure the nay Sayers were out in force then also.
Where is this 10 year mine life coming from? There are decades of mine life left! Buyout price was 700 million. Countless plan ideas were talked about and this was the best,bar none!!
A friend flew over UTAC’S pile of pellets on Saturday in a helicopter. The pilot said that only 1 or 2 boats worth of pellets are left on the ground. Can’t wait to get back to work. The new bridge will be awesome!