Mining seeing major rebound in Minnesota

Duane Hicks

With mining exploration taking place across Rainy River District, one only has to look south of the border to see how successful such an operation can be.
In a presentation to Fort Frances Chamber of Commerce members on Tuesday, Craig Pagel, president of the Iron Mining Association of Minnesota, said iron mining, which has been going on in Minnesota for more than 100 years, has made a strong comeback despite a series of economic setbacks in the past decade.
Minnesota has the capacity to produce 42 million tons of taconite annually. But after dipping to 17 million tons during the recession, Pagel said mines again are close to hitting that full capacity.
About 75 percent of U.S. iron ore comes from Minnesota mines.
Minnesota’s iron mines employ 3,700 men and women directly, with an additional 10,000 indirectly. The average wage and benefit package is about $100,000/year.
The region’s iron mines provide some of the highest-paying technical jobs in the region.
Minnesota’s mining industry is ranked number-one in gross regional product output at more than $3.1 billion annually. This is in the form of purchases, benefits, wages, taxes, and royalties.
Taxes alone top more than $100 million.
Each year, $56.9 million is paid to state education programs, including $45.9 million to K-12 education and $11 million to University of Minnesota trust funds.
A recent study by the University of Minnesota estimates new construction over the next several years will add an additional $5 billion in capital spending and an additional $3 billion in gross regional product.
The six companies operating mines include Arcelor Mittal, Cliffs Natural Resources, Essar Steel Minnesota, Steel Dynamics, U.S. Steel, and Magnetation.
One major new mining project is Essar Steel Minnesota—a $1.6-billion taconite, direct-reduced iron and steel slab facility being built near Nashwauk, Mn.
It will be producing 1.5 million tons of steel once it’s completed in 2012.
Steel Dynamics’ Mesabi Nugget mine started up in 2009 and is producing 500,000 metric tons of iron ore.
U.S. Steel Keewatin Taconite, meanwhile, will increase from six to 9.6 million tons, becoming the second-largest facility on the Iron Range, just behind U.S. Steel’s other mine, Minntac, at 17 million tons.
Magnetation also will be adding 500,000 tons to its production by the end of the year.
“So we’re glad,” Pagel said. “Everybody kind of thinks the mining industry is just this old, archaic [industry].”
He added he was in the Twin Cities, and some people there said, “‘You guys are really mining up there? We thought that was dead, we thought it was done.’
“It’s just not true.”
Pagel said that all in all, there’s $5.1 billion worth of capital construction that started in 2009 and will keep going through 2014.
He conceded the iron mining industry does face challenges, including dealing with Environmental Protection Agency and Minnesota Pollution Control Agency concerns and regulations, not to mention energy costs.
There also is a need for skilled workers.
When asked if there are opportunities for Canadian businesses to supply goods, services, or programs to Minnesota mines, Pagel replied, “I think that those opportunities probably are going to flow both ways across the border, as they have in other industries.”
“What’s important is if you develop a technology or the ability of a certain type of construction that’s wanted, you can go anywhere in the world,” Pagel stressed.
“I think that’s what is going to be beneficial, probably on both sides.
“We’ve got along very well on both sides of the border for years, and I could see where this is going to spur the economy on both sides as you develop your mines,” he added.
When asked about municipal revenues stemming from mining operations, Pagel said that altogether, the iron mines pay $80-$100 million in production taxes annually.
This is done in lieu of property taxes.
When asked whether the iron mines are a tourist draw, Pagel noted tourists travelling on Highway 53 between Virginia and Eveleth do stop and look at mining sites.
The Rainy River Future Development Corp. is working with the town’s Economic Development Advisory Committee to plan a mining-related event to inform the community about mining activities in the district.
More details will be announced in future, but the Chamber of Commerce will hold its annual general meeting that same evening.
It had been planned for Tuesday but had to be postponed due to lack of attendance.