Remember, U.S. Steel deals in the folding money

Just a friendly reminder, the biggest investor of new capital into the Iron Range economy this year will not be Essar Global, Excelsior Energy, Wal-Mart or even the Pabst brewing company. No, the most new money will come from U.S. Steel, which is dropping a smooth $350 million to restart an old line at Keewatin Taconite. It's worth pointing out the things that are real and the things that are proposed or even imaginary.

Furthermore, U.S. Steel will pay full taconite taxes on the pellets they ship off this new line, creating more revenue for local communities. They didn't need fancy new tax breaks to make this expansion happen. They simply needed the ore in the ground and the permits required to mine it. What's the lesson? Healthy economies involve private companies making financially sound decisions (yes, with government assistance and common sense regulation) but not government financing or policies that sell out people who do the actual work and live in the actual towns. I'm not trying to be a booster for U.S. Steel, just pointing out some basic economic facts that seem to elude people around here. We've got to figure out a way to spend our economic development dollars in a way that kick starts independent, diversified growth because we just can't afford to try to build massive "jobs factories" into the distant future.

More steel and speculation in this week's Biz North

Wayne Nelson and the writers at Business North do a fine job of covering the economic news of northern Minnesota and Wisconsin. This week's edition has a couple of interesting Iron Range stories.

First, this story reviews Essar Global's North American steel ambitions, something I talked about earlier in the week. This is the company that is in the process of buying Minnesota Steel, a proposed mining and steel-making operation on the Iron Range.

Then this story explores how the Iron Range is currently driving the region's manufacturing and service economy in advance of what is still believed to be a potential economic boom.

Nashwauk is just one push pin on a big map for global steel company

It's been said before, but Essar Global's ongoing purchase plans of the Minnesota Steel project -- a proposed iron mining and steel-making operations near Nashwauk -- sends the Mesabi Iron Range deep into the complicated global steel market. For two decades, Iron Rangers have come to view the prospective mine and steel mill on the old Butler Tac site as a good "jobs" project, one that would make steel in the same place where ore is mined. Reading these world headlines about Essar's activities in North America shows me that we don't yet fully understand the long term goals of this company in our area, other than they need our ore -- just as all the other steel companies have needed our ore since the 1890s.

Close observers of this story knew that after Essar bought Minnesota Steel, they bought Algoma Steel in Michigan, a facility that processes iron ore much the same way the proposed Nashwauk steel plant was supposed to do itself. Now, Essar is vying for Esmark Steel, a Chicago-based steel company with customers throughout the continent. So Essar now holds ore interests, steel plants and a distribution system -- just like Rockefeller and Carnegie did back in the old days.

First, this business story from the Hindu Times of India:

Essar Steel consolidates presence in N. America

Mumbai, May 2 -- US-based Esmark, which the Essar Group is set to acquire with an enterprise value of $1.1 billion, is part of a well-planned strategy of the Indian steel maker to consolidate its presence in the controlled and well-protected North American steel market that is estimated to be over $100 million tonnes (mt).

Esmark will be Essar’s third acquisition in the North American and Canadian markets — it had acquired Algoma Steel for $1.6 billion and Minnesota Steel for an undisclosed amount in April last year.

With this acquisition, Essar will have a production capacity of 7 mt in the North American and Canadian market — 4 mt from Algoma and 3 mt from Esmark. Significantly, this is higher than that its current production capacity in India, which is at 4.6 mt.Market presence

Although Essar Steel has been exporting to the North American markets for some years now, it became clear to the company that to consolidate its presence in that market, it had to be physically present there. This was because the US steel market, which is one of the world’s largest, is known for its protective nature.

Then, today, we learn that the Steelworkers union may battle the Esmark sale over contract issues. This May 3 story shows some of the seeds of discontent. We also learn that Esmark controls steel facilities throughout the Rust Belt. Essar could conceivably hold a piece of all of the major mining and steel-making regions in the United States if these deals go through. That's not necessarily bad, but it would be foolish of us Iron Rangers to assume we are Essar's top priority. As future negotiations with this company play out, we need to make sure that our interests -- steady jobs, fair payment of taconite taxes to fund our schools and communities, and good business and environmental practices -- are represented at the table.

As far as whether Minnesota Steel ever makes steel or not, well, it would appear that the answer depends far more on the American economy than the continued growth of India and China. Essar is trying to break into the Indonesian steel market, which would provide a much more economical way to feed the steel demand in huge, growing Asian nations. (Just look at how convoluted the Indian steel market is right now; all of this now affects people sitting at the Wauk-In cafe in Nashwauk). If the U.S. needs steel, an efficient direct-reduced steel plant in Nashwauk will be very successful. If the U.S. economy falters more then it may be many years before demand gives Essar the reason it needs to continue onto the final phase of Minnesota Steel: the phase that includes actual steel production. Until then, it may just be another mine with far fewer jobs than we had originally hoped for.

Welcome to the new world order. Find yourself a Hindu translator and get ready for an interesting decade in northern Minnesota.

Taking Requests: Minnesota Steel, sure thing or just a myth?

This is the third and, for now, final installment of the randomly occasional "Taking Requests" segment, in which I blog about Range issues on the minds of MinnesotaBrown readers. Today's topic, at the prompting of a couple e-mails I've received, is the Minnesota Steel project near Nashwauk.

For the past decade, the biggest of all the "proposed" economic development projects on the Iron Range has been the Nashwauk steel plant. It's gone through a few name changes and the details have shifted somewhat, but the idea has always been pretty consistent. Let's take the ore from the Iron Range and turn it directly into steel right here, saving transportation and processing costs and making American steel more competitive in the global marketplace. For a region that has depended on reliable blue collar jobs like mining and manufacturing, the prospect of union steel mill jobs has been a tantalizing possibility.

This is not a new idea. Some in my family remember the idea of turning the old Butler Taconite site near Nashwauk into a direct-reduced mine and steel mill shortly after they closed the Butler plant in the early 1980s ('83, I think, but my Iron Range Almanac of Plant Closures is in the other room). Today the Minnesota Steel plant is closer to reality than ever. It has its permits. It has an owner, India's Essar Global, that is experienced in steel making and international finance. It enjoys widespread political and and public support, more so than any other big proposed economic development project on the Iron Range. It also would provide more jobs than any other project and, to me, makes the most logical sense. Why not make the steel here when the ore product is already all heated up and ready to go.

GOOD NEWS (for Minnesota Steel proponents)

• Minnesota Steel secured its permits. In addition to being necessary this also puts the mine/steel plant first in line for construction, ahead of other projects. The untold story in all this development on the Range is that at some point the federal EPA is going to say "no mas" because of our proximity to the protected Voyageurs and the Boundary Waters parks. Provide it's built in the next year or two, the steel project will avoid this barrier.


• There are, according to a state official, eight engineers from Essar working in Hibbing on pre-construction preparations for the first phase of construction at Nashwauk. These are Essar regulars, not contracted engineers, which to me implies seriousness.


• Despite the bad economy, steel prices are still high and the fundamental motivation for building a direct-reduced steel mill on the Range remains intact.

BAD NEWS (for Minnesota Steel proponents)

• Lots of talk, no shovels. Which means that for all the progress over the past two years there are still the same number of steel plants on the Iron Range as in 1983: zero


• The reason for no groundbreaking is a delay in Essar's financing, caused in part by global trouble in the banking sector. That global trouble isn't going away any time soon, so the worry is that this delay could last longer than we're being told.


• The longer the Minnesota Steel construction is delayed, the greater the risk that the current favorable steel market will enter it's cyclical downward trend and add further financial barriers to the plant's success.


• Howard Hilshorst, the northern Minnesota mining executive brought in to steer the project, is no longer with the company. I still don't know why. Some fear that without a strong local voice inside the room with the Essar executives Iron Range interests might not be represented as well. I still don't think Hilshorst's departure is a signal of devastation for the project because there are engineers working on the Range and there remain Iron Rangers doing political work on this; but that's still not the same as an executive with Iron Range ties.


• Essar also recently bought a low grade steel mill in northern Michigan that functions much like the steel mill proposed for Nashwauk is supposed to. The company itends to begin its northern Minnesota operations by shipping concentrate to Michigan much the way all other Iron Range ore products are shipped east. This begs the unanswered question, "will they follow though in building the Iron Range steel mill if the Michigan option works?" I've heard that Essar has signed papers on steel-making equipment intended for Nashwauk, but we won't know what the company really plans to do until they start construction. A company representative has told the media that the phased introduction of steel-making was always part of the plan, but that's a fairly predictable response.

Now there are some in the environmental community who would rather the whole thing go away, but this project -- unlike Excelsior Energy or even the mineral mines on the east Range -- enjoys wide support. Despite my environmental concerns and my outspoken position against public boondoggles, I still think the steel mill is a good thing for the Iron Range. As the cereal commercials say, it could be part of "this balanced breakfast" so long as we remember to include some metaphorical fruit, orange juice and granola in our economic mix.

We'll see what happens in coming months. If we don't have financial close and groundbreaking by this summer this project can be considered far less certain than we Iron Rangers have been hoping. The fundamental truth remains: Minnesota Steel isn't real until shovels start digging.

Minnesota Steel groundbreaking delayed

Financial close on Essar's Minnesota Steel plant has been delayed until May or even June, according to reports I'm hearing. I have confirmed this in Range political circles. The worldwide financial market is bad, so Essar is having trouble locking in on "financial close" for what would be the first iron to steel facility on the Mesabi Iron Range in northern Minnesota. The worldwide steel demand is holding steady so officials remain hopeful that this delay is only a formality. The danger is that the longer construction is delayed the greater the risk of the steel market slowing and further jeopardizing the financing. Wayne Nelson of Business North said something similar on 91.7 KAXE April 14. A report of a similar nature ran on WDIO last night.

On a more positive front, I have received word that several Essar engineers are working on the Iron Range right now on massive amounts of pre-construction planning. I hear they are Essar regulars, not locals that have been subcontracted. While not as good as a groundbreaking that is the next best possible news. Again, shovels in the ground are the only true indicator of a project go-ahead.

This project would be the biggest job creation project on the Iron Range in more than a decade and would solidify the region's place in the global steel market into the foreseeable future. The project isn't beloved by all, but it is by most, and the idea makes much more sense than several other economic development ideas currently out there.

Pawlenty's bonding vetoes bring mixed bag for Northern Minnesota

Minnesota Gov. Tim Pawlenty announced line-item vetoes on several items in the bonding bill Monday. This was a modest surprise for some in state political circles because it was believed that Pawlenty might veto the whole thing to force legislators to make the unpopular choices about which projects to cut. Instead, Pawlenty did the dirty work himself, but cut the bill down to $718 million -- well below the $825 he originally proposed (the legislature passed a $925 million bill). The Star Tribune has a write-up that lists some of the projects.

In northern Minnesota, bonding priorities enjoyed mixed results. Pawlenty is allowing the $28 million for Essar's Minnesota Steel infrastructure near Nashwauk. He also OK'd the funds to mitigate the flood threat at the Canisteo Pit near Bovey, two of DFL freshman Rep. Tom Anzelc's top 2008 goals. But the science classrooms at Mesabi Range Community and Technical College (indeed, upgrades at MNSCU colleges across the state) got the ax, as did improvements to the Hibbing Memorial Building and other smaller Range projects.

Duluth can finally rest easy as Pawlenty allowed the bonding funds for the DECC expansion. But proponents of light rail are outraged over the veto of a $70 million project to improve passenger rail in the metro area. St. Paul in particular took a big hit in its requested projects, something that some folks consider political retribution for the legislature's rebuke of Pawlenty's pet projects.

In any event local pols may have fodder for the upcoming election but by and large this seems to be a mixed bag for northern Minnesota. It could have been a lot better but it could have easily been much worse.

Nashwauk steel plant still 'go for launch'

Business North is reporting that a groundbreaking announcement on Essar Global's Minnesota Steel iron mine and steel plant near Nashwauk is expected this month. So far, so good. Essar has a lot of "irons" in the fire, however, and I won't pop open a bottle of anything expensive until I see really big shovels in the ground. As you see in the story, this major international corporation has a lot of different ways to get the steel it needs for its Chinese and Indian markets.

Minnesota bonding bill: "Deal or No Deal?"

The Minnesota House and Senate conference committee released its bonding bill list today and there's some good news for northern Minnesota.

Among other smaller projects across the Iron Range, Itasca County would receive $28 million for infrastructure for Essar's proposed Minnesota Steel plant near Nashwauk. That's not nearly the amount required to build the pipeline, roads and railways needed, but it's something and probably keeps the project going after Iron Range Resources makes up the difference.

(By the way, the position of this blog is "Minnesota Steel good, Mesaba Energy Project bad." You know that's an honestly held position because one part of it or the other angers 95 percent of my readers).

It's aggravating that the governor has insisted that IRR use its funds from one-time mineral taxes to build basic infrastructure, but at least it didn't take us half a decade to get anything at all. (I'm talking about you, DECC expansion in Duluth).

The bill rolls in at $925 billion. Gov. Tim Pawlenty says he wants it to stay at $825. He has the option of line item vetoing projects on the list or he can veto the whole bill and make the legislature do the trimming. I think it's more likely he'll veto the whole thing or just sign it. He's can try to blame the DFL for everything by vetoing it. He can also show bipartisan election year appeal by signing it. Based on how things have progressed in the session so far, I'd prepare for the prior. The Minnesota Republican strategy so far has been "no deals, take it to the election." In truth that's not a bad plan for them since they're safely entrenched in most of the seats that are up this year. But boy, a deal made this year would sure go a long way to helping smooth things over in the state.

So, T-Paw. What will it be. Deal? Or no deal?

(Let's hope this one doesn't end with a sad family looking at a briefcase full of $100 and a long plane ride back to Appalachia).

House bonding bill includes partial funds for key Range projects

The Minnesota House of Representatives' proposed bonding bill includes money for the Essar Minnesota Steel plant near Nashwauk and to abate the flood risk at the Canisteo Pit near Bovey. I hear that the governor is sticking to his guns about the creation of the Vermilion State Park I mentioned yesterday, however, which means that the funding that would be going to northern Minnesota will be spread thin.

One encouraging sign is that the House, Senate and Governor all recognize the need to fund the steel mill and Canisteo. Discouraging is the fact that none of them seem to fully fund the needs for these projects and that Iron Range leaders will have to track down other funding sources to get them done this year, probably from the rainy day fund at Iron Range Resources. Yes, that money is there for a reason, but it's one time regional money for a longrange project that will give a lot to the state as a whole. The steel mill alone will need another $30 million plus to make sure that the necessary infrastructure is in place for the company to being construction this spring.

Session battles cast eerie light

Gov. Tim Pawlenty (R-Minn.) lashed out harshly after the legislature overrode his veto of the transportation bill. Today, the Senate is expected to oust Lt. Gov. Carol Molnau from her dual role as Transportation Secretary by denying her long-delayed confirmation. The Senate's bonding bill does not match the governor's (the House's bonding bill is expected soon).

It's not being said yet, but I wonder if this contentious environment, coupled with Pawlenty's possible national ambitions and the DFL legislature's hopes to win a veto-proof majority in the House next fall, could lead to a complete meltdown with no bonding bill and little else of note.

That's important because there are two vital Iron Range projects counting on bonding money -- the Essar Minnesota Steel plant near Nashwauk, which is permitted and waiting for the infrastructure money, and the dewatering of the Canisteo Pit, a flood risk located above Bovey.

The larger impasse might threaten these two generally agreed-upon items during this session.

Iron Range stands at modern crossroads

This is my weekly column for the Hibbing Daily Tribune published Sunday, Feb. 3, 2008.

Iron Range stands at modern crossroads
By Aaron J. Brown

Modern life hums with information and responsibilities, sometimes real and sometimes imagined. Every day I update the blog, prepare classes, and blaze a trail through the woods while connected wirelessly to the whole world. But as I confront my weekly responsibility of writing this column, something strikes me. In story after story, current events will shape the next several decades on the Iron Range.

At the top of most lists stands the proposed Minnesota Steel plant near Nashwauk. Officials from India-based Essar Global recently told local leaders they expect financial close for their $1.6 billion investment in the project sometime in March, followed by construction. With hundreds of jobs and a lasting economic impact, this huge project is as close to reality as ever.

Meantime, just a few miles to the east, U.S. Steel announced a major expansion and environmental upgrade at their Keewatin Taconite plant Friday. Previously, the company had announced that their Iron Range taconite production was up in the last quarter of 2007, but down slightly for the year. A week earlier, news reports detailed a fine against U.S. Steel for environmental violations. It would seem that U.S. Steel is making an aggressive move to address both concerns.

Then, further east, companies like Polymet and Franconia Minerals propose mining precious minerals on the East Range, a subject splashed across state headlines after a legislative hearing last week.

These are important stories not just because of the possible infusion of jobs, but because foreign and domestic companies are investing in the long-range future of mining in Northern Minnesota. Thus, our region could keep a continued economic base to finally achieve lasting diversification. However, this may be the last “up” cycle in the steel market for the Iron Range to truly modernize our economy and communities. To waste these good times could set us up for disaster during the next down cycle. This is no time for complacency or to allow poor judgment to cloud our real desire for jobs and prosperity.

So I come to another news-grabbing project on the Range. Excelsior Energy, a startup company run by lobbyists, proposes the $2.3 billion Mesaba Energy Project, a coal gasification plant to be built near Taconite. Project backers cite the plant as an innovative form of clean coal technology and another source of much-needed jobs on the Iron Range. And while this company continues to show masterful skill in spin, public relations and back room deals, it has continually failed to show exactly how it can build this plant or sell the resulting electricity.

Consider this: Mesaba can only be built if it has a customer and permits. Last summer and again in the fall, the state Public Utilities Commission denied a move to
mandate Xcel to buy power from the yet nonexistent Mesaba plant, thus forcing Excelsior to find another customer. The power from Mesaba, even if produced at lowball estimates, would be too expensive to sell without additional subsidy. Existing power companies like Minnesota Power and Xcel plan to provide all the state’s electricity, including for new projects, without any additional coal plants.

Meantime, because of federal haze standards, permits are limited for projects near national parks like Voyageurs and the Boundary Waters. Many of the aforementioned mining projects are well ahead of Excelsior in the permit process. When Minnesota Steel and U.S. Steel get their permits officials estimate we will meet the maximum for the federal haze standard. That means that Excelsior might only get permits if they get federal laws changed.

In other words, Excelsior is “news” only because of massive federal and state handouts that feed their day-to-day operation. The Mesaba Energy Project can only be built with unprecedented regulatory shortcuts. Other coal gas plants have required government bailouts to survive which is why similar projects across the nation and world, including ones that ran experimental pilot plants, are being cancelled or suspended. When you consider the distant locations of coal, the equally distant locations for carbon sequestration, the limited markets for the power and the proximity of two major national parks, the Iron Range is among the worst possible locations for a power plant like this. The real reason the project was proposed here is our available government funds and willing minions from both political parties who carry literally every bill Excelsior asks them to carry, despite the project’s many
problems.

So I am not interested in Excelsior officials’ bravado regarding pipeline permits or their paltry offers for public wastewater upgrades. Their promises ring hollow and their business plan exploits the sincere hopes of our people.

Meantime rural broadband internet is dismissed. Our health care system is inadequate. Our schools struggle to pay the bills even in good times. Why waste more time and money when real problems need solving?

Yes, there are many possibilities out there, but we Iron Rangers must consider the merits of each separately. So much of our children’s futures will be determined in the next few years, perhaps even the next few months on the Iron Range. Our economy, our health, our environment, our culture will all be shaped by our actions. We must not be passive witnesses to this important chapter in Iron Range history. We must grab hold of our own fate, encouraging development while defending the interests of Iron Range citizens – our schools, our roads and infrastructure, our tax dollars and the mining revenue dedicated to improving our corner of the world. An Iron Range that thrives in the future must be filled with people who make their own history,
with feet planted in reality and hands reaching for opportunity.

Real opportunity.

Aaron J. Brown is a columnist for the Hibbing Daily Tribune. Contact him and read more at www.minnesotabrown.com.

An important day for Iron Range mining projects

There's a lot going on today that could impact many of the precious mineral mining and value-added iron mining projects currently in development on the Iron Range.

First, this morning lawmakers are meeting with representatives of India-based Essar Global, the company that bought the Minnesota Steel project which aims to build a taconite mine and low-grade steel factory near Nashwauk. Essar officials are also meeting with local officials and others associated with the project today. Even if these meetings yield no "new" news, most Iron Rangers in the known hope these talks yield some specific timetables and direction from the company as to how the first Iron Range steel mill will become a reality.

Then this afternoon there is is a multi-committee legislative hearing in St. Paul about the environmental risks of several of the proposed mining projects on the East Range. Local representatives are pretty upset that these hearings are being held at all and I expect some theatrics. This Minnesota Public Radio story gives you a pretty good idea of the situation. I don't think these hearings will stop any of the projects, but the testimony will raise many points that will come up during the state and federal permitting process. In that regard it's not terrible to deal with them up front. The largest determiner of whether these projects go will be whether or not the companies involved can make money mining minerals. The same has been true through all of mining history. Oh, how little it seems we have learned.

Personally, I like how most mining news still comes out on Fridays. It's like their holy day or something.

Steel plant bonding bill update

If you don't like reading about steel or bonding bills, sorry, today's not your day.

As expected, Range leaders came out today stating that Pawlenty's amount proposed for the proposed Nashwauk steel mill was too low. What I didn't realize earlier was that more than 2/3 of his proposal involves money from the 21st Century Minerals Fund or other permanent mining funds, not actual bonding. This project is about mining, but also about value added mining with the addition of a steelmaking operation. I think there's a good argument that such a transition in the steel industry would be worth a more substantial bonding investment by the state. There is going to be heavy negotiations on this issue before the final bill comes out, but it seems something will come together ... so long as the company is fully with the program (as of now, this is unknown).




From today's Duluth News-Tribune:

Lawmakers: Earmark for infrastructure near Nashwauk steel mill falls short
Duluth News Tribune

Gov. Tim Pawlenty’s bonding proposal released today includes $30 million for a planned Iron Range steel mill near Nashwauk.

The money would help develop infrastructure for Minnesota Steel’s proposed $1.6 billion taconite, direct reduced iron, and steel mill.

However, the money is less than half of the $67 million requested by Itasca County for the project.

DFL lawmakers from the region say that Pawlenty’s earmark is a start.

“At least he didn’t shut us out completely,’’ said Sen. Tom Saxhaug, DFL-Grand Rapids. “The good news is that we’re included. The bad news is that we have to go get more money.’’

The 2.5 million ton–per–year steel mill would be the first of its kind, producing taconite, reduce iron and steel slabs at a single site.

If built, it would be the largest industrial project in the state, requiring 2,000 construction workers and 700 permanent employees.

Essar Steel, an Indian steelmarker, last year bought control of the project from Minnesota Steel, a group head by the Longyear and Bennett families of Iron Range mining fame.

Rep. Tom Anzelc, DFL-Balsam Township, said Monday that Pawlenty’s inclusion of the project is the beginning of further discussions.

“It’s to be negotiated,’’ said Anzelc. “It does not appear to do the job, but it’s the first step in a complicated negotiation process. It’s likely that once we get a sit-down with the people of Essar, perhaps some of this will clarify.’’

Iron Range legislators in January hope to meet with Essar Steel officials, Anzelc said.

Not all of the $30 million would come from state bonding, Saxhaug said.

Pawlenty plans to take $15 million from the Minnesota Minerals 21st Century Fund, $9 million from Iron Range Resources funds, and $6 million from general obligation bonding, Saxhaug said.

Of Itasca County’s $67 million request, Pawlenty trimmed $9.2 million from a $23 million natural gas pipeline, reducing it in physical size from a 24-inch diameter pipe to 16 inches. He also cut a $15.7 million roadway request to $3 million and recommends that a $16 million substation line be privately funded. Pawlenty increased an administration and contingency fund to $3 million from $2.4 million.

Pawlenty releases 2008 bonding bill

Gov. Tim Pawlenty released his proposal for the 2008 bonding bill in the Minnesota State Legislature. (See MPR's coverage). This is the plan he would like to see pass, though he will be working with a DFL House and Senate that will have different priorities for borrowing and spending.

Two encouraging things for northern Minnesota: 1) He includes $30 infrastructure for the proposed Essar Global/Minnesota Steel mill near Nashwauk, and 2) there is money for Duluth's DECC expansion. I don't normally get involved in Duluth's DECC issues, but they've been trying so long I kind of feel like they should get some sympathy. Ru-dy! Ru-dy!

Itasca County and the DFL Iron Range delegation want more than twice as much money as Pawlenty proposes for the steel mill infrastructure, so there will be some bartering on that issue. I need to see exactly how the money is going to be applied to roads, rails and sewers before I say who has the more accurate proposal. The fact that there is any money at all from this governor is encouraging.

Meantime, lots of haggling will occur over the transportation funding for bridge and road repairs and mass transit in the metro area. That's an area that could absorb most of the bonding bill if legislators vote on regional lines.

Stay tuned ...

Range 'Boom' talk continues to intesify

The Duluth News-Tribune has another story of note today, one that asks the question "Is the Iron Range ready for all the change that will come if some of these major economic development projects come to fruition?" The full story is available here.

Exciting times, for sure. My only qualm is that it seems officials keep mentioning Excelsior Energy's "Mesaba Energy Project" in the same breath as Polymet, Mesabi Nugget and Essar's Minnesota Steel project. Excelsior's thing remains a pipe dream that would drain more public resources than the project would be worth, economically-speaking. Nevertheless, the original question about the Range's preparedness for change remains quite valid. Read the full story, or at least this excerpt:

Iron Range is preparing for a boom
Lee Bloomquist, Duluth News Tribune - 12/09/2007

As the Iron Range taconite industry expanded in the early 1970s, a temporary trailer park for hundreds of construction workers sprung up on the St. Louis County Fairgrounds in Hibbing. Workers had to move their trailers for a week to make way for the county fair before rolling them back onto the fairgrounds.

A similar scene is about to be played out again as the Iron Range braces for the biggest construction boom in more than 30 years.

Minnesota Steel’s steel mill, Mesabi Nugget’s iron nugget plant and PolyMet Mining Corp’s proposed copper, nickel and precious metals mine are alone projected to require 3,400 construction workers and about 1,300 permanent employees.

A $200 million Minnesota Power environmental control improvement project at
its Boswell Energy Center in Cohasset over the next three years will require up to 800 construction workers. Excelsior Energy’s proposed coal gasification power plant would need about 1,000 construction and 150 to 300 permanent workers.

“We are at a place in time where there’s potential for several large-scale projects to happen,” said Sandy Layman, Iron Range Resources commissioner. “I don’t think we’ve had this kind of investment since several of the taconite plants were built. It’s not only the dollar amount that’s unusual and historically important, but it’s also that these projects are higher value.”

The flood of construction, permanent and spin-off workers would alter economics, education, health, housing, civics, crime, transportation and ethnic diversity within a region that has a 100-year history of being a melting pot of people.

“After 27 years of economic depression, we will become the jewel of the steel industry in the Western Hemisphere,” said former state Sen. Ron Dicklich, now a consultant for Itasca County on the $1.6 billion Minnesota Steel project near Nashwauk. “We’ve always been a mining camp up here, and we have been treated like a mining camp. But now you’re going to have a large corporation located in our area. Just having a foreign owner [Essar Steel of India] here is going to be a big cultural change.”

Another 'new' mine in Iron Country

Steel Dynamics and Cleveland-Cliffs closed a land deal that will allow the Steel Dynamics iron nugget plant to begin construction on the East Range in the vicinity of the former LTV taconite plant. LTV's demise in 2001 kicked off a mini-panic on the Iron Range that included other taconite plant shutdowns or closures and paved the way for harebrained ideas like the Excelsior Energy Mesaba Energy Project. Now market forces and steel prices have expedited the iron nugget plant and Nashwauk's Minnesota Steel project, now owned by India's Essar Global. If we had spent our money differently in the early 2000s, Iron Range Resources and others would have funding for any number of the now crucial infrastructure projects we need to build for our soon-to-grow communities.

True blessings go to those who keep their heads during the bad times and keep their values during the good times. I suppose the same could be said for geographic regions. Here's hoping that we're learning something along the way.

Land deal clears way for new iron ore mine in Iron Range
Lee Bloomquist
Duluth News Tribune - 12/04/2007

Steel Dynamics and Cleveland-Cliffs announced a land deal Monday that would lead to the opening of a new mine to provide raw material for the world’s first commercial iron nugget plant. The mine and plant together would employ about 200 to 300 workers, compared with 50 for the nugget plant alone, said Steel Dynamics chairman and CEO Keith Busse.

The Mesabi Nugget plant is planned for the former LTV Steel Mining Co. site near Aurora and Hoyt Lakes.

“This is excellent news,” Hoyt Lakes Mayor Marlene Pospeck said. “Everything is moving ahead, very much so. I’m very impressed with the progress that’s being made in construction in the first phase of the project.”

Under the $18 million deal, Steel Dynamics Inc. will acquire about 6,000 acres at the former LTV Steel Mining Co. site and assume some environmental and reclamation liabilities that had been Cleveland-Cliffs’ responsibility.

It also will acquire mineral rights to about 133 million tons of iron ore reserves beneath the ground at the former taconite plant, according to Pete Clevenstine, state Department of Natural Resources Lands and Minerals manager of engineering and mineral development.

Steel Dynamics officials in September said there are enough iron ore reserves at the site to operate four iron nugget modules for 100 years.

Game on!

Gov. Tim Pawlenty announced Wednesday that state support for Essar Global's Minnesota Steel plant near Nashwauk is back on after the company assured him it wouldn't violate U.S. sanctions against Iran.

The whole ordeal became a rather fast and scary lesson in international trade and politics. Fortunately, it has worked out in the favor of the Iron Range.

Today's Duluth News-Tribune has a comprehensive story. My state Rep. and quasi-neighbor Tom Anzelc said it best, in the future let's hope that due diligence precedes press conferences. There's no reason Pawlenty couldn't have confirmed details with Essar before he declared his potential withdrawal of state support.

Pawlenty got in a good line, though, saying that he needed to clear this matter up before the governor's hunting opener this weekend near Hibbing (in the heart of the Iron Range) or else "the hunter would become the hunted." He must have been hearing some of the same things I heard around the Range before yesterday's good news.

Sup Town is on our side

And here's why I like Superior, Wisconsin:

EDITORIAL: Pawlenty favors dogma, jeopardizes development
The Superior Daily Telegram
Published Tuesday, October 30, 2007

It appears Republicans are courting Minnesota Gov. Tim Pawlenty to run for vice president. Why else would he jeopardize a $1.6 billion Iron Range development to defend Republican terrorism dogma?

Pawlenty is threatening to oppose state funding for the Essar Global steel mill project because Essar might build an oil refinery in Iran. His beef? Pawlenty claims Iran is a terrorist state, and Essar’s business dealings there should be investigated.

That’s a strange viewpoint considering the Chinese own a Minnesota mine and export iron ore to their communist homeland.

Isn’t Saudi Arabia a terrorist state? Its citizens took down the World Trade Center, killing more than 3,000 Americans. And how about Pakistan, which harbors Osama bin Laden? Why are Saudi Arabia and Pakistan considered U.S. allies but Iran a terrorist state?

Pawlenty’s blind allegiance to misguided GOP foreign policy is troubling. He seems to forget who he was elected to represent. That could have repercussions throughout the region.

Update: After stinging report, gov seeks facts

Gov. Tim Pawlenty has officially asked the U.S. State Dept. for clarification about Essar Global's involvement in Iranian oil. It's a good thing he did this before he called a press conference blasting state support for Essar's Nashwauk steelmaking project as Minnesota possibly funding terrorism.

Oh, wait. D'oh!

Pawlenty asks State Department for clarification on company's Iran ties
Duluth News Tribune - 10/29/2007

Gov. Tim Pawlenty said today he remains “hopeful” that he will be able to support plans to build a $1.2 billion steel slab plant near Nashwauk. But first, he said he needs assurances from its primary investor, Essar Global Ltd., that the company will abide by sanctions aimed at punishing Iran for its terrorist activities.

Pawlenty believes the Indian company’s involvement in a proposed Iranian refinery project could constitute financial support for what the U.S. government has labeled a terrorist state. He’s also concerned about Essar’s other business dealings in Iran, including a potential investment in a joint-venture steel mill, the pending acquisition of exploration rights in the Azadegan oil fields and the purchase of oil and liquefied natural gas from the company.

On Monday, Pawlenty sent a letter to Secretary of State Condoleezza Rice and David Mulford, the U.S. ambassador to India, asking for their help in determining whether Essar’s activities in Iran run afoul of U.S. law.

“I seek the assistance of your department in determining if Essar’s activities in Iran are a potential violation of the Iran Country Sanctions Act or are otherwise a cause for concern. If they are not, I will gladly support their efforts in Minnesota,” the governor wrote.

If the company gets a clean bill of health from federal authorities and pledges to honor trade sanctions imposed against Iran, Pawlenty said he will back Itasca County’s request for about $62 million in state funding to install some of the infra-structure needed to support a steel plant.

“The Minnesota Steel project is one that I have supported, and I want it to go forward,” Pawlenty said. “No one was more heartbroken than me when I learned of this potential problem related to Essar’s involvement in Iran. I still hope this issue can be cleared up and the project will be able to move forward.”

The governor is particularly perturbed by a Reuters news service report that Essar plans to help begin building an $8 bil-lion to $10 billion oil refinery in southern Iran next year. Iran currently has no large-scale oil refining capabilities, and the Reuters report indicated Essar planned to partner with its government to build a facility.

Steel plant Iran away; we need to Iget it back

The shakeup over Gov. Pawlenty's new found opposition of the Essar Minnesota Steel mining/steelmaking plant near Nashwauk continues. Local and state officials are uniting behind a cohesive message (for once): that the Iron Range wants to enter the global marketplace and that snap decisions and loaded rhetoric like Pawlenty's Sunday diatribe harm the Range economy and future.

Let's give this thing a moment, find the facts, and THEN make bold decisions.

Here's the morning roundup. Read these:
"Pawlenty sent message on terrorism" by Jane Brissett (Forum Communication via Duluth News-Tribune)
"Anger, amazement at plant decision" by Bill Hanna (Mesabi Daily News)

Also, read this.
"Pawlenty may join Steger on Arctic trek" (AP)
I'm hoping Pawlenty decides to move to the Arctic when he learns there are no taxes when you camp on a floating sheet of melting polar ice.