A promising sign in Minnesota’s $5-billion deficit is the continued construction of the Mesabi Nugget refined iron plant near Hoyt Lakes, northern Minnesota, the first steel mill plant in the Iron Range.
Minnesota Steel Industries is building the $1.7-billion project along with other companies expanding their mining projects in preparation to expand mining operations when the economic downturn reverses.
A commissioner of Iron Range Resources, a state agency that is involved with promoting mining operations and sale of various minerals, said some companies do not plan to stop mining operations. One company is Polymet Mining Corp. which is waiting for permission from state regulators to begin mining copper, nickel and other nonferrous metals at Hoyt Lakes, MN.
Keewatin Taconite, a U.S. Steel company, assured the state agency that it is continuing to prepare for a $300-million expansion of its plant at the same time it announced temporary closing of its taconite mine and the layoff of about 400 employees.
Layoffs avoid total industry collapse
Northshore Mining has cut work hours and overtime to avoid layoffs, and Hibbing Taconite is preparing to lay off about 110 employees in January.
The world economic crisis prompted layoffs and temporary closings with the reduced need for metals. However, an expert on the worldwide taconite industry said prices for iron ore will rebound in 2010 when the recession eases and the need increases.
Prof. Peter Kakela, an expert on the worldwide taconite industry, said he expects iron ore prices to drop another 20 percent to 30 percent before a rebound. By cutting production, iron ore will not flood the market and drive prices down. He said the layoffs now will avoid a collapse of the Iron Range mining industry.
The 2008 price for iron ore in the world market is up 375 percent over 2002, said Kakela. Even if prices fell 50 percent, they are well above 2002 levels.
Taconite shipment to steel mills began to fall in October and will continue to fall through mid-2009. In 2008, the iron mining industry pumped $1.5 billion into the state economy.