Minnesota’s iron mining industry continues to face strong headwinds as global market forces threaten its vitality. As has been widely reported, three of the six iron ore mines in northern Minnesota are idled and roughly 2,000 mine workers have been laid off. Many more who worked for contractors, suppliers and local businesses have lost their jobs as well.
In December, President Obama’s chief of staff (a Stillwater native) visited the Iron Range to discuss the devastating effects of global challenges facing the mining industry, including the decline of global iron ore prices and the continued flood of steel imports into the U.S., many of which we believe are in violation of U.S. trade laws.
In the face of these global pressures, mining companies remain committed to northeastern Minnesota’s economic success. Our goal is to continue operating and investing in the success of the region. Over the past 10 years, U. S. Steel has spent and invested more than $8.5 billion in our Minnesota mining operations. Our success depends on everyone who cares about the future of mining in Minnesota doing their part to help the industry remain competitive.
Therefore, we are supporting a proposal by Minnesota Power to repair a system that requires taconite facilities and other industries in northern Minnesota to subsidize the electric rates of Minnesota Power’s residential customers. The Minnesota Public Utilities Commission is holding a hearing Thursday on Minnesota Power’s proposal.
Our task is in making our cost structure competitive. Our foreign competition doesn’t face the same costs we face. In a highly competitive market, every dollar does make a difference. Indeed, United States Steel Minnesota Ore Operations is doing everything possible to reduce our operating costs and be as price-competitive as possible.
State action to produce competitive electricity rates must be a top Minnesota priority. Energy costs represent 25 percent of the total cost to produce taconite pellets. Electricity costs for mining operations have increased substantially in the past 10 years and are projected to continue to rise. Energy costs are one place where the state can act and make a major difference in our ability to compete internationally.
To be clear, we are not asking for a subsidy. We are supporting Minnesota Power’s proposal to repair a broken system that currently requires taconite facilities and other industries in northern Minnesota to subsidize the electric rates of Minnesota Power residential customers.
Our goal is not to harm Minnesota Power’s residential customers — in fact, we strongly supported a law passed in 2015 to protect low-income residents from rate increases. Rather, we are asking the state government to set electric rates that recognize the current global economic situation.
I have been a lifelong resident of the Iron Range. I started my career as a member of the United Steelworkers Union at the National Steel Pellet mine in Keewatin. My neighbors, friends and relatives living on the Range are facing unprecedented challenges. Our workforce and our suppliers live on the Iron Range and are the heart and soul of the mining industry. The future is dire unless we act, and the time is now.
Our workers and mining operations in northeastern Minnesota can compete in the world market. But it has to be a fair fight. Everyone needs to do their part. That must start by replacing artificially high electric rates with rates that better reflect the cost of our electricity.
Larry Sutherland is general manager of United States Steel’s Minnesota Ore Operations and chairman of the Iron Mining Association of Minnesota.