700 could be affected by Minntac taconite plant idling

Another shoe has dropped on the Iron Range, with U.S. Steel announcing Tuesday that it will idle parts of its Minntac taconite plant, the third Minnesota iron-ore operation to announce a shutdown in six weeks.

Roughly 700 hourly and salaried workers are likely to be affected by the June 1 idling of the plant in Mountain Iron, said officials from United Steelworkers District 11.

The news comes just three weeks after Pittsburgh-based U.S. Steel said it would idle its Keetac taconite plant in Keewatin, affecting 412 workers. Six weeks ago, iron ore processor Magnetation said it would indefinitely idle its Keewatin plant, affecting about 20 workers.

The shutdowns — which have prompted worry among legislators and even in the White House — are in response to imports of low-cost steel from South Korea, India, China and other nations that have flooded the United States in the past year.

Taconite producers also face high inventories of iron ore because Australia, Brazil and U.S. producers have increased ore production.

In response, prices of taconite — a key component in making steel — have plunged from $95 a ton as recently as June to less than $60 a ton in March. As a result, U.S. producers are cutting back.

Last week, U.S. Steel announced it will idle its flat-rolled steel plant in Granite City, Ill. This week it was Mountain Iron, and many fear a domino effect of plant closings may just be starting.

The Iron Range, in the northeast corner of the state, is home to eight iron-ore mining or processing operations. A ninth, Essar Steel Minnesota, is under construction. With so many plants tied to the same product, producers, residents, politicians and economists are nervous about where the current trend will lead.

Full impact unknown

In a statement, U.S. Steel said the Minntac "action is due to the company's current inventory levels and ongoing adjustment of its steelmaking operations throughout North America. The company will continue to operate Minntac at reduced capacity in order to meet customer demand."

U.S. Steel said the final number of workers affected "will be based upon operational and, or maintenance needs."

John Rebrovich, an assistant director with the United Steelworkers District 11, said that U.S. Steel officials told union workers Monday that they anticipate about 700 salaried and hourly workers will be affected. Minntac has roughly 1,400 hourly workers and another 500 or so salaried workers, Rebrovich said.

The pullback at Mountain Iron — which can annually produce 16 million tons of iron ore pellets made from taconite — hits six months after the company won approval for a $40 million expansion that would add 483 acres to its Minntac taconite facility. That project is now on hold.

Political leaders respond

Gov. Mark Dayton pledged his help in confronting the new layoffs.

"The Iron Range has endured these industry downturns before, and each time has come back even stronger," he said. "My administration stands ready to do everything possible to help it do so again."

Lt. Gov. Tina Smith will meet Wednesday with steelworkers and local officials in Keewatin. Representatives from the state's Dislocated Workers Program will be present to tell affected workers how to apply for unemployment and to detail job retraining opportunities offered by the state.

U.S. Sen. Amy Klobuchar said Tuesday that she will visit the Iron Range later this week to update workers about recent talks with the Obama administration about toughening trade laws to stop the dumping of foreign products in the U.S. market.

Klobuchar joined fellow Democrats Sen. Al Franken, Rep. Rick Nolan and Smith at the White House Friday and "called for immediate action to stop mining and steel industry job losses."

Klobuchar said she will follow up with the Obama administration in light of the Minntac news.

"U.S. Steel's decision is more evidence of how illegal dumping and declining iron ore prices are undercutting our domestic industry and hurting Minnesota steelworkers," she said.

Political, economic feud

This fall, the United States accused nine countries of illegally dumping specialty-steel pipes used in the oil drilling industry in U.S. markets.

The dumping has since accelerated and now also includes plate, flat and rolled steel, all of which use the taconite pellets produced on the Iron Range.

U.S. Steel Chief Executive Mario Longhi and other industry executives have for months pressed Congress, the Commerce Department and the International Trade Commission for more stringent remedies.

At a congressional hearing last week, Longhi told lawmakers that "American steel companies are being irreparably harmed by illegal trade practices." Without action, he told Congress that U.S. manufacturers will be condemned to "irrelevance or worse."

Rebrovich said the union also is concerned that illegal steel dumping will put more U.S. taconite and steel plants and mines at risk. He noted that some U.S. blast furnaces that convert iron to steel are also beginning to slow production.

Impact at home

In Minnesota, Iron Rangers worry about what the effects of steel dumping and pricing cuts will have on Cliffs Natural Resources and Essar Steel Minnesota, he said.

The long-established Cliffs operates three facilities on the Range: United Taconite in Eveleth, Hibbing Taconite in Hibbing and North Shore Mining Co. in Silver Bay.

Essar, which is owned by Mumbai-based Essar Global, is building a $1.8 billion taconite mine and processing plant in Nashwauk that is supposed to open in December.

"If this steel dumping continues, I don't see why [more plant idlings] wouldn't continue," Rebrovich said.

Steel dumping prompted nationwide rallies last summer and U.S. tariffs on illegally dumped tubular steel. South Korea was the key culprit in that case, which also called out India, Vietnam, Turkey, Ukraine, Taiwan, Saudi Arabia and the Philippines as offenders. The problem of underpriced exports has recently expanded to all types of steel, union workers and steel producers complained.

"The imports are worse than anticipated," Rebrovich said, adding that Minntac's decision to idle "was a bit of a surprise. But since this steel dumping started a year ago, it has just ratcheted up. And now it's drying up the pipeline for U.S. made steel."

Dee DePass • 612-673-7725