Midnight in the halls of Iron Range power

I didn't think Excelsior Energy could go a whole legislative session without deploying its vast lobbying force for something. Recently, in the tax bill conference committee, State. Sen. Tom Bakk inserted language that extends the property tax exemptions from 2010 to 2012 for everyone's favorite black hole of government giveaways and special favors. Excelsior is the company proposing the Mesaba Energy Project, a coal gas power plant intended for the Iron Range. The project enjoys great political support from most elected officials, is deeply misunderstood by the population at large, and will almost certainly break the hearts of the people of the Iron Range at some point in the next decade.

I'm tired of talking about carbon sequestration, private financing, lobbyists and lawyers and all the other things I rail about when I post about Excelsior. Let me try to explain why I care about this.

The first problem I have with this project is that it exists only because, starting in 2002, a group of lobbyist/lawyers succeeded in getting officials in Minnesota and the Iron Range in particular to give them vast amounts of money and favors. There was little debate, very little questioning of this so-called company. There was certainly no discussion about whether the tens of millions of state and Iron Range dollars and hundreds of millions of federal dollars could be better spent in other ways. We were told this was simply a "jobs" project, and that's all Range lawmakers needed to hear in 2002 when it looked like the whole mining industry was falling apart. We were told 1,000 jobs would come from this, when anyone in the power industry could have told them that only about 100-200 permanent jobs could ever come from such a project. In short, the project was built on desperation and deception.

My second problem with this is related to a much larger issue. Who is in charge on the Iron Range? Are the people and their elected representatives in charge? Or is it developers, lobbyists and consultants? Because the Range is doomed if its the latter. We will only survive this fast-changing transition to the global economy if our elected leaders use their judgment in defending the interests and resources of the people ahead of the interests of those who offer lofty promises in exchange for free rein over laws and public coffers. The leaders of Excelsior Energy walked onto the Iron Range pretending to be a group of native Rangers interested in "saving" the region. But their business model has been to clearly and forcibly shift risk from their ledgers onto that of the taxpayers, to promise more jobs than they could deliver and to mischaracterize the nature of the technology they tout, making a science experiment seem like a sure thing.

Meantime, the $9.5 million that the Iron Range gave this company (ostensibly as a loan, but the language clearly implies that we'll never see that money again) could have built a new school. It could have almost met the state match on the federal highway money that could have finally -- after FIFTY years -- finished the cross-Range Highway 169. City sewers. Rural broadband. Streets and roads. All of these real needs were put behind the needs of lobbyists.

Excelsior Energy has acted as though it owns the Iron Range and is entitled to its mineral monies and special treatment. As long as the status quo continues, Excelsior and any half-rate pack of wolves that comes along DOES own the Range. They WILL extract our resources and push our local, county and state officials around like cattle. Every midnight conference committee will contain favorable language for developers at the expense of the regular Iron Range people who mined the ore that funded the whole enterprise. And when the money's gone, the wolves will be gone. No jobs. And people like me and my kids will be sitting around wondering what to do next.

So I will talk about this as often as is necessary. I will post commentaries like this every week, every day if necessary until this company and any like it is driven from the halls of Iron Range power. I don't need votes. I don't need money. I've got no personal stake in this except that I want to see the right thing done and the people put first.

So if I go on and on, now you know why. Believe me, I'd MUCH rather be talking about something else.

Five questions about the Iron Range economic boom

Tony Barrett, an economics professor at St. Scholastica in Duluth, poses five excellent questions about the Iron Range's prospective economic boom in today's Duluth News-Tribune. I sense on the streets and back roads of the Iron Range that people are sitting back, perhaps a bit too comfortable in the belief that good times are about to roll. There is work to do and change to come. This won't be easy. Kudos to Barrett for a concise summary of the issues ahead for the people of the Iron Range.

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.

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.

Taking Requests: Range Retail Rumors

I'm working down my list of "Questions and Request" posts. This is Day 2 of the series. If you have a request, please let me know in the comments or by e-mail.

Jeff writes:

How about commenting on all of the rumors in Hibbing. Every time you turn around there is another rumor about Target, Sam's Club, Best Buy, Scheel's etc. etc. The list goes on and on. Being a "Man in the Know" Maybe you could shed a little light on these rumors.

A good question. Here's one thing I do know. When the end times come, the only life on the Iron Range will be soft, green lichens clinging to the sides of the mine dumps feeding off the pure carbon dioxide of the air and the dim light of a dull, red, motionless sun that hangs low in the horizon. There will be no wind or sound. The air will be cold but the ground strangely warm to the touch. And one day, one lichen will say to another lichen, "I hear we might get a Target." "Yeah," the other lichen will say. "I heard that, too."

I've heard all these retail rumors and have seen the posts on Range gossip sites like this one. I don't have any inside information other than what I've heard from various economic development types over the years. Range cities, Iron Range Resources and others will receive inquiries from all kinds of companies (Yes, including Target, Kohl's and you name it). Information is provided to these companies about zoning, traffic, population, incentive programs and the like. Then companies work in secret until the moment they begin the construction process, which usually comes in the form of a request to the zoning commission or the signing of a lease. In advance, property is usually purchased or held by some kind of real estate company until the final decisions are made. There are many lots in Hibbing currently held by third party companies while these big retail outfits decide if they'll build there or not. That's what fuels all the rumors, coupled with the fact that many companies go so far as to send officials to town to investigate (eg: "OMG, a guy from Kohl's totally stayed at the Super 8 last night!")

I've heard recently that some retail stores looking at the Hibbing area are very close to making a decision (I've heard Target, I've suspected Sam's Club because of some market research that was being conducted at the Hibbing Wal-Mart about a year ago). But the really good information isn't held in any city hall; it's held in the board rooms of these private companies. And if things move slowly I'm betting that the current economic fears seen across the country are only making them move slower. Word is that Lowes, which built a home improvement store in Hibbing last year, is under performing. That might just be the economy as I've heard from Range contractors who aren't getting nearly as many bid requests for next summer as they have in years past. That's based on anecdotes, not evidence, but it's a working theory.

Speaking of the global economic crisis, I'll visit the issue of the delay in the Minnesota Steel project near Nashwauk in my next "Fill a Request" post tomorrow. Don't worry, folks. These glum subjects don't have to depress us. Everything will be OK so long as Busch Light remains affordable.

Wide open spaces (will build to suit)

The Duluth News-Tribune reports today on the practice of public entities building speculative buildings on the Iron Range to attract business. The appeal, according to the stories sources (all governmental), is that these buildings are modern, attractive and can be customized at public expense for any company willing to sign a long term deal that involves new jobs.

Public involvement in the economic development process remains necessary and wise. And you know I'm all about jobs and new growth on the Range. Still, I wonder why these projects always seem to favor expensive new buildings on the edge of town as opposed to the regeneration of vast amounts of empty buildings and spaces inside our Range towns. In a sense, this is a smaller scale version of the same zoning problem that many urban and exurban communities face.

And people do notice. I often provide informal "immersion counseling" for people new to the Range. One political operative new to the area noticed the same spec building discussed in today's DNT, the giant building by the Hibbing airport, on his way into town. "What's the deal with that?" was an approximation of his comment, as even this outsider could recognize the stank of economic desperation that the building seemed to kick out. The empty building has also been the subject of water cooler talk around the central Range since it was built. At $1.6 million, the investment by public entities in that building is enormous. While I understand the desire to create managed growth, I can't help but think certain buildings like this one are a little heavy on dreaming and a little light on long term planning.

I still think the best strategy for community growth includes strong, attractive infrastructure. The kinds of companies that swoop in for low-cost customized buildings are the same that can swoop out just as easily. We want to create an environment where businesses develop independently and people live comfortably and prosperously. That may sound conservative but in practice it requires some very progressive action (eg. public investment in high speed internet and comprehensive highway and rail improvements).

May 8 PUC meeting could reveal fate of Mesaba boondoggle

The Minnesota Public Utilities Commission will revisit the second phase of the Mesaba Energy Project Power Purchase Agreement (PPA) with Xcel at its May 8 meeting. Two major questions are to be answered. Will the PUC recognize Excelsior Energy's proposed coal-gas power plant as a "least cost" innovative project AND will they set a deadline for negotiations between Xcel and Excelsior to set prices?

An Administrative Law Judge, in an advisory ruling, told the PUC last fall that the Mesaba project is far too expensive to be in the public's interest. And Xcel doesn't need or want Excelsior's power. Unless the state PUC mandates that Xcel buy this overpriced power from this boondoggle yet-to-be-built power plant, there can be no project. This May 8 PUC meeting might be the beginning of the long overdue end of this economic development farce. Let's hope so, because if Excelsior gains new life through political dealings then Mesaba becomes an election issue that badly muddies the U.S. Senate race. I prefer not to think about that until May 8.

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.

Help Wanted?

The Duluth News-Tribune has a story today about the estimated number of needed construction workers for the proposed mining projects on the Iron Range.

I'm tired of these stories. I want to see financial close and shovels in the ground before I dance a jig for developers.

Mining plans require thousands of workers
Jane Brissett, Duluth News Tribune

Thousands of construction jobs will be needed for copper, nickel and other metal mining on the Iron Range if those projects come to pass, representatives of three of the companies told a meeting of the Associated General Contractors of Minnesota in Duluth on Thursday.

Three companies — Franconia Minerals Corp., Duluth Metals and PolyMet Mining — will need more than 2,200 construction workers if they go ahead with full-scale production of copper, nickel, platinum, cobalt, silver, gold and palladium, speakers said at a lunchtime presentation at the Duluth Entertainment Convention Center.

Cliffs hires away Hibbing PUC utilities chief to run biomass; a flash of what's to come?

Today's Hibbing Daily Tribune reports that Hibbing Public Utilities general manager Jim Kochevar is taking a job with Cleveland-Cliffs to oversee that company's energy operations in Michigan. Kochevar was one of the leaders who developed the Laurentian Energy Authority, a biomass power generation project shared by the cities of Hibbing and Virginia. Cleveland-Cliffs recently announced plans to develop biomass power plants to provide electricity for its some of its mining operations. They're starting in Michigan, but I expect that if that works they'll be building similar plants in or around their Minnesota operations.

As a newspaper reporter, editor and radio host in Hibbing, I interviewed Jim Kochevar many times. My impression has always been that he's a straight-shooter who deals fairly with the public and press. I hope that his activity with Cliffs leads to the continued development of a market for our area wood products as part of a clean renewable energy strategy.

Picture the not-so-distant future of the Iron Range. Large mining and steel operations, cities and other large electricity customers each have their own biomass plants burning homegrown wood products from nearby forests. Additional power needs are met ably by existing Minnesota Power plants and hydroelectric power from Manitoba. When you factor in environmental upgrades at Minnesota Power's plants, we could see a major economic boom all the time while holding down the amount of carbon emissions in northern Minnesota.

At some point, probably in my lifetime, the Iron Range and northern Minnesota will receive a lot of attention for our vast supply of forests, fresh water and iron ore products. These are all things that will become more important if current climate, population and economic trends continue on their current paths. It'd be great if our region was ready, wide-eyed and sharp-witted about the challenges that will come with these changes.

Stay tuned.

Another blow to local news coverage in northern Minnesota

The Duluth News-Tribune, northern Minnesota's largest newspaper, announced 10-15 percent job cuts in all its departments yesterday. This will mean cuts in the newsroom, further diminishing their ability to cover the paper's large two-state readership area. Based on the recent departure of their Iron Range reporter, I infer this will mean reduced coverage of Iron Range news and politics. The DNT will have to cut back their coverage of local news in general, which will lead to a smaller readership and additional job cuts in the future. (That last part wasn't in the story; I'm just saving everyone the time involved in pretending that the traditional journalism industry will ever get better).

Here's WDIO's story by Cassie Limpert:

There is a shake-up at the Duluth News Tribune. The Duluth newspaper is ownsizing, and will do it by cutting staff as much as 10 to 15 percent. Union members of the newspaper staff got a memo today, alerting them of the company's intention.

The memo says the company needs to cut workers because of falling revenue, and to offset the problem, the company will first offer voluntary buy-outs. Then, if necessary, they'll resort to layoffs.

According to the President of the Lake Superior Newspaper Guild, the memo was sent to 140 of its members at the Tribune, warning them that the troubles seen at other newspapers are about to hit home.

Steve McLister, Publisher of the Duluth News Tribune, says the paper has about 220 employees. He says between fifteen and thirty employees could be cut.

Union President Peter Passi, also an employee at the Duluth News Tribune, says they learned of the cutbacks yesterday during contract negotiations. He says he is unaware of an exact timeline, but buyouts could begin in as little as two weeks.

McLister told Eyewitness News that the cutbacks won't just effect Guild members; they could happen anywhere in the building.

Passi says many of the union members were surprised at the news, particularly at how many employees the company wants to cut. He says they're already tightly staffed. He hopes enough employees will accept the buyout offers, so there won't have to be any layoffs.

Forum Communications, which owns the newspaper, did not return calls for comment.

Wassomatta Tech?

As fans of Bullwinkle know, Minnesota is home to the fictional college "Wassomatta U," where the famous moose received his education (and played football). Well, Bullwinkle's fictional, highly theoretical children (mooselets?) might be headed off to Wassomatta Tech.

During this election year, we're bound to hear plenty of criticism and debate about the federal "No Child Left Behind" program. Often, the debate centers on how the program's testing system fails to prepare students for real life or higher education.

Well, here on the Iron Range there is real concern that this testing-based system is leaving our region ill-prepared for the massive job turnover coming in many skilled technical or vocational fields. Local schools had been scaling back vocational education to almost nothing out of financial necessity. Now, there's a move to bring back a more modern vo/tech approach to our high schools and colleges.

In the 1970s and '80s, there was a sense that "shop" was the easy track in school. In our current economy, industrial jobs that last require great skill and lifelong training. On the Range, we need to change the old mindset. If we do, many local young people really will have the opportunity to stay in northern Minnesota to raise their families and build a comfortable life.

From Business North:

Range revival also revives vocational/tech education
By Richard Thomas

The Iron Range boom will create a huge demand for skilled labor, and for vocational and technical education. Yet over the past decade, the region’s public schools have reduced such programs — automotive, industrial technology, pre-engineering, healthcare and carpentry.

It’s the result of “the perfect storm,” said Roy Smith, regional workforce coordinator at Iron Range Resources.

The programs are expensive, require constant updating of equipment, and certified teachers are hard to find. The federal No Child Left Behind requirements emphasize standardized testing, which doesn’t measure knowledge of industrial arts. Schools have encouraged students to enter four-year colleges and fewer are going into vocational career education. Amid budget shortages and declining enrollment, these programs have been among the first on the chopping block.

In response, many companies already are recruiting nationwide, most aggressively from engineering schools, Smith said. “We’re going to see an influx of new blood from outside the region.”

Last year a collaboration of groups started the Applied Learning Initiative to revive
technical education. It’s a combined effort between Iron Range Resources, businesses, 17 school districts and five two-year colleges in Northeastern Minnesota.

Through the program, students may begin technical training in high school and have those credits accepted and counted at the college level. Local unions also count some of the training program hours toward required apprenticeship hours.

The initiative is funded by $3 million from the state and membership fees from participating institutions. Program administrators purchase the needed equipment and are reimbursed by state funds. The funding also is used for curriculum development and instructor training.

The Applied Learning Initiative will host a business and industry rally March 27 at Valentini’s Supper Club in Chisholm. The rally’s purpose will be “to ask the region what are the next steps to make sure we have a world class workforce,” said initiative coordinator Mark Adams.

People interested in attending may contact the Northeast Higher Education District office at 218-254-7977.

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.

Franken questions coal gas plant in the Bemidji Pioneer

Al Franken, DFL U.S. Senate candidate from Minnesota, gave an interesting interview to the Bemidji Pioneer. (No, Bemidji is not on the Iron Range but many of our people go to college and drink a lot of beer there, so it is a city of note).

Essentially, Franken was stressing his support of basic northern Minnesota issues like gun ownership rights, our natural resource economy and energy.

My favorite part of the story:

He's been asked about the Iron Range's current build-up and the need for more energy, with a "clean-coal" coal gasification plant proposed to generate power. While it seems Franken may oppose the plant, he says he supports the technology but is unsure if it's appropriate for that place at this time.

"The idea of coal gasification where you can sequester the CO2 is a technology that we ought to develop," Franken said. "I'm just not sure at that plant is the best project. We want to get the most bang for the buck, and you want to make sure it's sequestered properly."

The technology is needed, he said, as China and India put up a coal-fired plant once a week. It does no good for the United States to seek a zero-carbon footprint when the other two nations continue unabated with carbon emissions.

Yes, Al Franken actually recognizes the difference between a good "jobs" project and a bad "jobs" project. He is not drinking the Kool Aid on Excelsior Energy's boondoggle Mesaba Energy Project.

Coleman KAXE interview reveals northern strategy, foretells battle over coal gas boondoggle

U.S. Sen. Norm Coleman gave an interview to Scott Hall on the KAXE morning show today in which he covered a broad range of issues. KAXE is a unique and popular independent public radio station serving most of northern Minnesota. The most interesting details came near the end after Scott asked his final question, and Coleman's statements foretell many interesting developments.

First, here are the things that did not surprise me about Coleman's interview:

1) When it comes to a recession and people losing their houses, he's against it.

2) John McCain is A-OK.

3) He's not going for any sort of universal system that involves hurting the private insurance industry. Something, something, something ... rationing of care England and Canada. (Can I just add something: I have good insurance and my wife and I spent two hours in a clinic waiting room with two babies last week despite having an appointment ... OK, sorry for the editorializing).

But then there were a few things that DID surprise me about Coleman's interview:

1) When I first turned on the car radio, I caught the interview just after it had started. My first thought was, "Why is Mitt Romney on KAXE?" Then it hit me ... IT WAS NORM. I can't believe it took me that long to make the comparison.

2) Scott's last question was about universal health care, because he said it has been the dominant topic of all of Coleman's opponents seeking the DFL endorsement. Sen. Coleman didn't even answer the question until pressed later.

3) Instead of talking about health care, Coleman changed the topic to ensure that he got to talk about energy before the interview was over. Coleman said that energy needs were important, he would continue to support Excelsior Energy's Mesaba Energy Project, that Franken opposed the project and was wrong to do so, and that he was working on federal legislation to pay for pipelines to sequester carbon.

Now my opposition to Excelsior is well documented (columns from Aug. 12, 2007 and Feb. 3, 2008). The half dozen or so lobbyist-lawyers and their additional hired lobbyists (I shall call them meta-lobbyists) who comprise Excelsior tout it as a jobs project that would provide clean coal energy. However, the technology is prohibitively expensive and no one will buy the power at the extremely high prices unless forced to by the government. As recently as a week and a half ago I would have considered the project to be near death for these reasons. However, Coleman indicates that he will go to all known lengths to breathe life into this boondoggle.

One of the big stumbling blocks for Excelsior has been the unfortunate reality that, while the Range is the perfect place to find government funding for just about anything, it is physically located over a large, impenetrable sheet of granite. This "clean" technology requires the carbon to be buried beneath this geological formation, which is not practical or commercially viable. Thus the only way to make this a true carbon-capture plant is to pipe the carbon to Canada or North Dakota to bury it. The cost of this is yet unknown, but a billion dollars is probably where we start on that -- and that's not even included in the current Mesaba price tag of $2.15 billion. So guys like me have always assumed that Excelsior would get stopped at the permit stage because it can't bury the carbon as promised and can't afford to pipe it away.

Well, this morning Coleman said that he is supporting a bill that would pay for pipelines to remove carbon from "clean coal" plants. In other words, that billion-dollar plus price tag will be picked up by you and me, the people whose power bills will go up if this boondoggle gets built. When you further consider the fact that Excelsior's current operating budget is funded mostly by federal grants and a Iron Range Resources loan that will never be paid back, you see some unbelievable math.

Plant cost: $2.15 billion -- more than half of which will be covered by federal grants and guaranteed loans; in other words, if the plant fails taxpayers absorb the risk.

Pipeline cost: $1 billion, probably more -- again, funded by the taxpayers under Norm Coleman's plan.

Further parsing this short KAXE interview, we see that Norm Coleman intends to use Excelsior, a project that somehow combines the worst elements of socialism and capitalism, to win votes from Al Franken in northern Minnesota. Franken, who is very realistic on energy policy, says rightfully he needs to learn more about the technology and project before he lends it support. He would prefer other alternatives to coal explored first, which is reasonable given the many problems with clean coal technology. Norm is going to say that Al opposes jobs for northeastern Minnesota and tout Excelsior as an example.

People, it would be cheaper, cleaner and better for our northern economy to just give 150 random Iron Rangers $60,000 a year for the next 30 years, and 1,000 more $60,000 for just one year than to build this awful excuse for an economic development project.

I'm hoping that Coleman's weak answer on health care is all Iron Rangers need to hear to vote him out in favor of some truly innovative thinking.

PS: To all the DFLers who gave life to this project, thanks a billion. Actually, 2.15 billion. You've given a weak Republican incumbent who sits in Paul Wellstone's seat a chance to steal votes in the 8th CD for a project that will help no one but the wealthy lawyers who begat it.

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.

The Range and the "Recession"

The good and bad thing about the Iron Range economy is that it operates somewhat independently from the national economy. Pretty much, our fortunes follow the international steel market. While the so-called mortgage crisis has some reverberation here, people are strangely more optimistic about the future on the Range than they are in the Minneapolis/St. Paul suburbs. Believe me, it's a weird thing to hear people weeping about the recession on CNBC and hear Johnny Ranger say "Boy, I think I can get the bigger truck this year." Behold the following, published in Thursday's Hibbing Daily Tribune:

Disclosure: I know Tom Anzelc well and ran his 2006 campaign. I think he's right about this, but that his statement about the Range's "immunity" from recession was played up a bit too much. If the national economy stinks for too long, everyone is hurt. Ultimately, I think that's what he meant.

Anzelc predicts flush times on Iron Range
Calls region immune -- for now -- from recession
By Mike Jennings, Editor

BALSAM TOWNSHIP—A booming mining sector is likely to prevent the Iron Range
from joining the state’s and nation’s slide into economic recession, at least for the time being, says Rep. Tom Anzelc.

“Quite frankly, on the western Mesabi as well as on the entire Iron Range, I think ‘08 is going to be a very good year,” Anzelc, DFL-Balsam Township, said Wednesday. He said mining exploration and mining development are flourishing in the region.

Anzelc said the Iron Range forms an exception to the recessionary pattern described Wednesday by Sens. David Tomassoni and Tarryl Clark. In a joint press release, Tomassoni, DFL-Chisholm, and Clark, DFL-St. Cloud, called for Gov. Tim Pawlenty’s help in passing an economic stimulus package to counter the state’s negative job growth and high rate of unemployment.

“It is time for the state to make strategic investments in sustainable job growth, before more Minnesotans find themselves in the unemployment line,” Tomassoni said in the press release.

Anzelc said in an interview that the legislature’s principal tool for stimulating the economy this year will be bonding.

“You need to invest, invest in people when your economy starts to slide,” he said. “And a large bonding bill puts people to work — construction people first and then other jobs to follow.”

Anzelc said the Iron Range seems poised for a cycle of growth, thanks to new ventures such as Minnesota Steel Industries, planned $1.6 billion taconite-to-steel plant in Nashwauk, which lies in his district. The wood products industry, another staple of the region’s economy, is unlikely to have a good year, however, he said.

“The linchpins of our Northern Minnesota economy have always been our natural resources,” he said. “And we boom and then we bust. ... Wood prouducts appears to be in the bust cycle.”

Clark, the assistant Senate majority leader, pledged that economic development would be the top priority of lawmakers during the legislative session that convenes Feb. 12. As part of that effort, Anzelc plans to introduce a $67 million bonding bill to help pay for such essentials as gas lines and road and rail access at the Minnesota Steel plant.

He said he also supports vigorous investment through Iron Range Resources in mining communities’ water and sewer systems and other basic needs to heighten their appeal to entrepreneurs. The region would also benefit from fresh investment in its community colleges, he said.

Anzelc said he’s also seeking a $4 million appropriation to dewater the Canisteo Pit, which he called a threat to the towns of Bovey and Coleraine.

If the state’s recession deepens, its effects will ultimately reach the Iron Range, Anzelc said.

“And being a progressive person, I believe that economic stimulus packages proposed by government in cooperation with the private sector historically shorten recessions,” he said. “It’s all really about creating jobs and keeping people here.”

A cheap swipe by Range's biggest paper

The attitude expressed in this Mesabi Daily News editorial shows much of what's wrong with the political climate in my beloved Iron Range.

Iron Range residents who realize we are in a battle for the very economic survival of the region don’t need to hear from elected officials that they need more details on several mining projects. What they need to hear are strong words of support for those initiatives.

But, unfortunately, U.S. Sen. Amy Klobuchar, D-Minn., is being far, far too meek in her general support for some resource-based projects, calling for “more details” on them.

In a Mesabi Daily News story last Sunday, Klobuchar said regarding the PolyMet copper/nickel/precious metals project slated for the former LTV Mining site near Aurora and Hoyt Lakes: “Support economic projects, yes ... but I want to see more details.”

In the same story regarding the Franconia Minerals non-ferrous project at Birch Lake near Babbitt, Klobuchar said: “Open to the project ... but want to see more details.”

Those remarks sound like something that would be voiced by a spokesperson for any of several environmental groups that continually pour money and effort into trying to block darn near every mining-related venture that comes along.

“Support .... but.”

No, no, no, no. It should be, “Support, period.”

Let me stress that I've lived on the Iron Range my whole life. I love it. I will live here the rest of my life and will never stop working to improve our communities and the opportunities for my three young sons. I would like them to be able to stay here if they want to.

I must also stress that I do not oppose mineral mining on the East Range. If it's viable, I'm all for it. This is a mining area after all. But when you have the editor of the Range's largest paper refusing to consider all sides of issues you have an culture where consultants, developers and lobbyists are given a blank check to promise jobs with no risk of bad ideas being exposed. Again, I don't mean to imply that the mineral mining projects of the east Range are bad (frankly, they may well prove viable and they don't take nearly as much public money as other projects; Polymet hasn't taken any). However, the climate behind closed doors and in sparsely attended public meetings on the Iron Range is rapidly becoming bad AND corrupt. And the Mesabi Daily News, with its 1907-style boosterism and dagger-journalism is helping it stay that way.

A public official SHOULD gather all information before making a decision. Especially on issues that take time to develop. When the Range's largest and most-read paper chastises anyone who shows due diligence it simply forces state leaders to either reject the problems of the Iron Range or give the Range lip service, neither of which helps us become competitive in the world economy.

The biggest barrier to modernizing the Iron Range isn't environmental groups, as the MDN editorial suggests, but poor planning and misinformation propegated to our people who only want opportunity and growth for our region. This editorial is a cheap swipe that makes the Range look petty and difficult to everyone outside the walls of the Mesabi Daily News or the well-decorated offices of those who profit off economic development dollars.

The Iron Range will rise again, but only after we knock down bad attitudes like what we see in this editorial.

JOBZ analysis in Hibbing paper

One of the primary economic development strategies of Gov. Tim Pawlenty's administration has been the use of tax-free zones in rural areas, called "JOBZ." The program gives businesses a break from property, payroll and sales taxes during a fixed period to encourage growth. It's one of those ideas that sounds foolproof at first blush, but has had mixed results. The jobs created have been OK or good, seldom great. On the Iron Range, almost every town applied for a JOBZ, so some businesses just moved over to the next town for lower taxes.

Mike Jennings of the Hibbing Daily Tribune wrote an interesting analysis over the weekend. The program has had some recent criticism for being overly secretive. Economic development professionals say that businesses are entitled to keep their records to themselves. On the Iron Range, public subsidy is rapidly becoming a key form of financing for new or expanding businesses. I'm not necessary against that in every case, but as an advocate for freedom of information and wise use of taxpayer dollars this thought comes to mind: If you don't want public scrutiny, don't take public dollars. I'm happy to invest my tax dollars in creating jobs, but not in secret.

Subsidies spur business growth
Some call program overly secretive
By Mike Jennings, Editor

HIBBING — Mike Stiglich says the tax break his company got to build a manufacturing plant in Nashwauk made a clear-cut difference.

With it, he said, Nashwauk will get a new business with a $1 million building, at least $400,000 in equipment, 10-15 jobs and an anticipated $3 million in sales during its first year. Stiglich said the new company, Midwest Manufacturing and Mechanical, will manufacture sizing screens, chiefly for export to mining concerns in other countries.

Without the Job Opportunity Building Zones (JOBZ) subsidy that Nashwauk officials approved in December, the town would get nothing, Stiglich said.

“It was a huge factor in deciding to go to Nashwauk,” he said.

The venture in Nashwauk will build on the design work done at Engineered Equipment Services in Hibbing, he said. Stiglich said he and Mike Anderson co-own both companies.

Under JOBZ, businesses that create jobs in special zones outside the seven-county area around Minneapolis and St. Paul are exempt from most state and local taxes. Since the program began in 2003, more than 300 companies have received JOBZ status.

The state has released summary information showing that, in 2004 and 2005, businesses with JOBZ status received $18.7 million in state tax breaks. Those businesses reported creating 3,669 jobs over the two years.

But the JOBZ law prohibits disclosure of the subsidies received by specific companies. Because of that, JOBZ, an initiative of Gov. Tim Pawlenty, has drawn fire from competitors of businesses that get the tax breaks. Several business owners have challenged the program in a lawsuit.

Stiglich said figuring out the benefit to his company should be a simple matter: Just multiply the costs of his building, equipment and anticipated sales by the applicable tax rates. All the same, he said, keeping specific subsidies confidential is a good idea.

“I think generally it’s just good public policy that companies’ business is their own,” he said.

Duane Northagen, Hibbing’s community economic development coordinator, agrees that disclosing specific benefits would be bad policy. He said that was proven a decade ago, before JOBZ’s passage, when the legislature forced disclosure of information on other subsidies and applications for those programs dropped sharply.

Businesses “don’t want to be open to that type of discussion, ridicule and abuse,” he said.

Northagen, who helps broker and monitor JOBZ arrangements in the Hibbing area, said JOBZ has in some cases motivated businesses “to actually make that leap from concept to reality.” Still, he said, the program is “not perfect, by any means.”

He said JOBZ was supposed to create a lot of jobs at high wages.

“And I’m continually dealing with, and I suspect most communities are dealing with, wages that are at least within the program guidelines, but they’re not high wages by any means,” he said. “And we’re not normally dealing ... with large businesses.”

Among the five companies awarded JOBZ status so far, Iracore International has probably been the biggest success, Northagen said. He said Iracore accounts for about 40 jobs on its own payroll and in its sister company, Industrial Rubber Applications.

Northagen also voiced frustration with the “inflexibility” of some of JOBZ’s requirements, as applied by the state Department of Employment and Economic Development. He said that may cost Sunrise Gourmet Foods & Gifts, a spinoff of the Sunrise Bakery that specializes in mail and internet orders, its JOBZ status this year, he said.

House Majority Leader Anthony Sertich, DFL-Chisholm, said the legislators’ auditor is preparing a detailed report on JOBZ to address concerns about the program.

“I always had some strong concerns about it,” Sertich said. While it may work in some situations, “it doesn’t really go far enough to solve any of our rural economic development needs,” he said.

IRR project season off to fast start

The Iron Range Resources Board met Thursday. (Iron Range Resources is the unique state agency dedicated to diversifying and strengthening our volatile Range economy, supporting public works and infrastructure across the region while repairing the damage from a century of mining. Some call the agency a form of socialism; others call it the shining hope for government to do good in the world. Some, I won't name names, call it "mommy").

There were three notable outcomes from the recent meeting:

1. $250,000 to kick start the University of Minnesota study on the danger of a rare form of cancer found in many Iron Range miners. Commissioners discussed the unfortunate development that Cleveland-Cliffs would be doing their own mining safety study. These corporate studies have been used to cloud the issues in the past. It was believed that all parties involved were going to support this one, comprehensive objective study on the effects of mesothelioma on Range workers. It is refreshing to see that our local legislators seem to have maintained resolve on this issue.


2. $2 million for public works projects across the Range, double the request made by the commissioner. Why double? Board members decided to simply approve a whole roster of public works projects now rather than piece them out. This "add on" tendency has always been an issue for this agency and on the surface it seems rather shady. But you have to remember that this money comes from mining companies in lieu of property taxes that would normally go to cities to pay for their own public works projects. This money, in effect, belongs to all the local government units of the Taconite Tax Relief area. Why should they have to fight like dogs to get their share? Especially for projects that are obviously within the realm of the agency's mission: infrastructure and mineland reclamation. The list of projects is here.


3. More loans for more economic development projects. These sound fine, but it seems more and more like the IRRB is becoming a financier rather than a public agency devoted to economic stability on the Range. Before long I might have a IRRB checking account. (I wonder if they'll have the checks with the little kitties and puppies on them?) Also, I am always wary of using "jobs created" as a form of currency; that science is very hard to predict. I'll start believing the economic turnaround when real estate prices go up. But in general, I like to see smaller growth projects that don't have the risk of multi-million dollar boondoggles like Excelsior Energy's Mesaba Energy Project.