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.

City Pages reports on Iron Range past, present

I'm not sure what drew them to us, but City Pages -- the Twin Cities' alt weekly -- profiles a snippet of Iron Range history and provides a surprisingly detailed look at new nonferrous mineral mining technology on the East Range in this week's web edition. The history portion in particular puts a bit of a perspective on our early years here on the Range. I review how this history manifests in present times in my upcoming book "Overburden: Modern Life on the Iron Range." (October 2008, Red Step Press). Now that I have my semi-random plug in for the day, back to work ...

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.

Governor signs miners' health study funding bill

This was out earlier, but I'll make belated mention that Gov. Tim Pawlenty signed a bill funding research about the cause of higher-than-average rates of a rare form of cancer in former Iron Ranger miners. As I've said, this will provide a whole lot of people a whole lot of answers about the risks of mining. I certainly understand that mining will go on and that there are more dangerous vocations out there than mining. But if there was a way to recognize a specific risk factor and mitigate it, why wouldn't you? This will eventually save lives.

Governor to sign Iron Range health study bill

I just got word from a source at the Capitol that Gov. Tim Pawlenty will sign a bill funding mesothelioma research for former and current Iron Range miners to determine if there is a link between this rare cancer and taconite fibers. Funding for the study will come from state sources and not from the Range's taconite funds, which many believe should be dedicated to communities, schools and economic development. (The taconite tax has funded the University of Minnesota, in part, for decades).

I don't know if this development is part of a deal or if Pawlenty had a change of heart after threatening to veto the bill last week. In any event this is good news. With luck, this University of Minnesota study of about 7,000 people will lead to a clearer understanding of this issue and, ideally, a safer workplace for Iron Range miners in the 21st Century.

Kudos to all those who made this happen.

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 fails to understand Iron Range, again

I'm not as harsh in my criticism of Gov. Tim Pawlenty as most other Iron Rangers and most other progressive bloggers. I've always considered him a likable guy and a worthy political foe. But today, the governor deserves special rebuke for his threat Thursday to veto funding for a state study to investigate the cause of a rare form of cancer found in many Iron Range miners over the last several decades.

Gov. Pawlenty believes that any funding for a "mining" study should come from taconite tax revenue, not the statewide worker's compensation fund. Most House Republicans agreed with him Thursday and voted against the bill, which still passed with bipartisan support. The Senate is expected to pass the same bill and call Pawlenty on his bluff.

I think most people recognize the need for this study and the moral imperative to mitigate potential dangers that would threaten the lives of another generation of Iron Range workers. What Pawlenty and many outside the Iron Range often fail to understand is that our taconite tax revenue, while significant during good times (and not all times are good), is not a secret pot of cash that we use to buy beer and ammunition. It is what mining companies pay IN LIEU of PROPERTY TAX. Mines own or lease thousands of acres of enormously valuable land in northern Minnesota and they don't pay a dime in property tax. Suburbs raise their revenue from those sleek office buildings along the freeways and in overpriced residential homes. The Iron Range raises its school and community funds from taconite taxes, and per capita we get less money over time as a result. But wait, there's more. All the while over Range history a portion of these taconite taxes have gone to the state general fund or to the University of Minnesota fund, money that has benefited more than a million people who couldn't find the Iron Range on a map.

Gov. Pawlenty frequently laments any Iron Range project or program that doesn't rely exclusively on our taconite taxes. We aren't deserving of general state funds, because of our financial privilege. (Anyone who has been to my native Iron Range understands my implied sarcasm).

But every rock of taconite or iron ore that has been taxed was lifted by hand, shovel or machine by Iron Range working men and women. And some of them got cancer after asbestos exposure that may have come from the mining process. And today, the study that was finally going to figure out this problem, providing hope to sick people and their families, was threatened with a veto because T-Paw thinks the Iron Range should take money out of cash-strapped blue collar schools and communities to pay for it. And still today the University of Minnesota thrives in part because of decades of that same mining revenue, while every one of us will today touch steel originating from the Iron Range of Northern Minnesota.

Tim Pawlenty just doesn't understand. At least, I hope he doesn't. Because if he does he has a heart of coal and no business holding his high office.

Ore chasing

For hardcore Iron Rangers or those interested in how mining plays into our culture, take a look at this guest column from today's Hibbing Daily Tribune by retired mining engineer Thomas J. Mesich. He talks about taconite (a low grade iron ore that used to make steel) veins around the central Iron Range and how mining them may impact current highways and cities in the next decade or two. In the old days mining engineers would move towns to get at the ore. Now they write op/eds.

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).

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.

Cliffs looks to another good year

WDIO reported last night (sorry, no direct link available) that Cleveland Cliffs is anticipating a return to pre-2001 production levels at its Minnesota taconite operations, including HibTac and UTac, in the near future. The company is also considering building a biomass power plant to cover some of the power needs for this revived taconite production. The fuel used would be primarily some kind of wood pulp also grown and processed in northern Minnesota.

Isn't it interesting that these big companies are predicting growth on the Iron Range and yet acknowledge that new coal-fired electricity probably won't be an logistically or financially feasible option? I think that's interesting. Kind of makes you wonder about certain boondoggle energy projects doomed to fail but that enjoy widespread political support. Kind of makes you want it to go away, like the guy you invited to the party because you thought he was cool but who drank all the beer in the first two hours and is starting to creep out the girls.

Anyway, I digress. In the midst of all the potential of big ticket new projects, let's not forget that U.S. Steel, Cleveland-Cliffs and their power broker, Minnesota Power, are all having damn fine years and will have a license to print money next year, too.

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.

Range mining: another perspective

Mining. The Range. Sounds familiar, right? A friend sent me some links about mining on the western range that put a new perspective on some of the mining stories we report so often here on Minnesota's Iron Range. These are stories from the High Country News about some of the tough economic choices that need to be made by Western towns that had moved on from their old mining economies. The tone is dramatically different from what you see on Minnesota's Iron Range, where the mainstream opinion is to support as much new mining as possible.

Ruluctant Boomtown (a city in Arizona decides whether it wants to go back to mining after a decade without it)

A Rico Renaissance (a small town finds its tourism economy threatened by the return of mining companies)

Death of a Mine (a modern copper mine in Utah goes belly up after just two years; a warning for our current projects on the East Range?)

I am left with the thought that we Minnesota Rangers need to put a lot more irons in the fire than just mineral mining. These companies reliably follow the price of whatever mineral they mine. If the price goes down, so does the mine. It's good to have options.

Bonding bill nothing to snooze over

The chatter I keep hearing from folks who attend lots of under-reported public meetings is that the $67 million bonding request to fund infrastructure for the Minnesota Steel plant near Nashwauk is vital to the project's viability. In quiet rail authority and city meetings, company representatives and city officials communicating with them say that the costs of things like rails, pipelines and access roads keep going up and that Essar Global, the company that bought the Minnesota Steel project, is relying on that infrastructure to get started quickly.

Now, I have no doubt that the bonding bill will include money for the steel plant infrastructure (unless the bonding bill flames out entirely). The question is how much and where is it coming from? Gov. Tim Pawlenty would prefer that most of the money come from a one-time Iron Range Resources fund built up from mining taxes. Rangers would prefer that money come from the bonding bill because of the unique nature of the project and its long-term benefit for the whole state (not all that mining money stays on the Range, folks). If this argument can't be resolved then we could see major delays on this important project. The morale hit on the Iron Range would be great. This is the one "potential" project for which almost everyone holds the most genuine hope.

I put "potential" in quotes because we have had the good news that U.S. Steel will expand production at Keewatin Taconite, creating about 75 permenant jobs and a brief contstruction boom later this year. It's interesting to me that the KeeTac project happened so quickly it was never discussed as a "potential" project, just as one that happened. What does that tell us about our Iron Range habit of throwing all our money and hopes at proposals rather than economic realities? After all, the steel plant is only at the top of the list because the price of steel is currently very high. Ah, but that's a story for another day.

U.S. Steel is officially rolling in its 5.0, with its ragtop down so its hair can blow

It's official. U.S. Steel will invest $300 million into Keewatin Taconite, increasing taconite pellet production by more than 3.5 million. The whole project will take three years to fully implement. This also makes U.S. the big daddy steel company on the Iron Range as they now own the top two taconite operations here.

PRESS RELEASE
Oberstar Applauds U.S. Steel Investment in Keewatin Taconite

Washington, D.C. – Congressman Jim Oberstar says U.S. Steel’s decision to invest $300 million in Keewatin Taconite (Keetac) is an important step towards making Minnesota taconite more competitive in the global marketplace. The project will produce 500 construction jobs over 3 years and 75 – 100 permanent jobs for the Iron Range. Production at the U.S. Steel’s Keewatin plant will increase from the current six million tons a year to nearly ten million tons of taconite pellets.

“Minnesota iron ore has gone global. Our taconite pellets are feeding blast furnaces from Cleveland to China,” said Oberstar. “With this announcement, U.S. Steel demonstrates it has the vision and capacity to compete world-wide. Keetac sits on one of the richest bodies of iron ore on the Range, and this investment at Keetac will create profits for U.S. Steel and long-term, full-time jobs for iron ore miners on the Iron Range. Steel production is a mainstay of American industrial productivity, and Minnesota’s Iron Range fuels that production.”

Keeping Minnesota’s taconite industry competitive has been one of Oberstar’s top priorities throughout his service in Congress. Oberstar introduced the Water Resources Development Act (WRDA) which was enacted into law last year. WRDA included provisions to dredge, long-neglected, harbors and shipping channels across the Great Lakes.

Shallower navigation channels cause Great Lakes ore freighters to reduce their shipments by as much as 7500 tons light on each trip from Duluth to the eastern steel mills. “We have to make sure those ore boats go out with a full load to reduce Minnesota taconite costs,” said Oberstar. “If we don’t maintain our shipping infrastructure, we are giving an advantage to nations like Brazil and Russia that are competing with Minnesota taconite.”

WRDA also authorized $341 million to construct a second lock to accommodate modern ships at Sault Ste. Marie. Another $134 million is authorized to make other repairs and upgrades on the St. Lawrence Seaway.

The Keetac expansion will also embrace new technology that is more energy efficient and environmentally friendly. U.S. Steel will have to make that case to the Minnesota Pollution Control Agency to obtain the environmental permits the company will need to move forward. Oberstar says he is confident that effort will be successful. “I am ready to work with the gifted and skilled members of the Iron Range legislative delegation on the permitting process that lies ahead,” said Oberstar.

Tomorrow's news today

Business North is reporting the item about Friday's U.S. Steel announcement in Keewatin. Here's what they say:

It’s the worst-kept secret on the Iron Range: All indications point to a major expansion pending at Keewatin Taconite.

Owner U.S. Steel wasn’t commenting publicly, but told Range legislators to expect a Feb. 1 announcement that is “positive.”

U.S. Steel already has air quality permit amendments in hand for a mining expansion at the Keewatin mill. A rumored expansion on the order of $350 million would increase the plant’s production capacity by more than 3 million tons, making it second on the Range only to Minntac, also owned by U.S. Steel.
The operation produced 5.3 million tons of taconite in 2007, employing 375 Steelworkers.

I talked to Business North editor Wayne Nelson last weekend at the KAXE Annual Meeting. He knew about it and I knew about it but we couldn't say for sure, so we just nodded a lot. Then I went to work Monday and all my mining technology students already knew about it. Yeah, this one is pretty much out there. Good news, though, so U.S. Steel probably won't deploy their P.R. plumbers.