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Up North Report

Aaron Brown writes about northern Minnesota.

Dill leaves legacy, challenge in huge rural district in northern Minnesota


State Rep. David Dill (DFL-Crane Lake) died Saturday after battling a rare cancer. He was 60. He had been ill most of the year, but took a turn for the worse this summer.


As we reported last week, Dill lived in Crane Lake near Orr but spent a good deal of his time operating a fly-in resort just over the border in Ontario, Canada.

Dill represented an enormous district, a vast stretch of wilderness speckled with small tourist towns and old logging villages. He specialized in natural resources issues -- paper and logging, mining and recreation.

Gov. Mark Dayton will now call a special election to take place most likely this fall. This could be a very interesting affair, as the DFL of the 6th Senate District is comprised of two distinct clans.

The DFL electorate has tended more conservative, having supported both Dill and State Sen. Tom Bakk against more liberal opposition in the past. But the party organizers, with some exceptions, are more progressive. This could complicate any potential endorsement process (which would use the elected delegates from 2014, not new ones).

The district voted for President Obama in 2012 by more than 10 percentage points, but narrowly supported the "one man, one woman" marriage amendment that same year. (It surprised me to learn, however, that Dill's district was among the least opposed to gay marriage among Range districts).

District 3A is also home to the BWCA, Bois Fort and Nett Lake reservations, the proposed Twin Metals project and the North Shore. It's also home to International Falls and its struggling paper mill and the quirky Range city of Ely.

Dill was among the more conservative members of the DFL caucus, but was well-liked both within the caucus and outside of it. I never got a chance to know him personally, but came to regard him as very competent and effective. People who did know him tended to like him a great deal. He was funny, warm and responsive to people.

His successor will face a tough political battle in coming months, but then will face the enormous challenge of representing this very big, very unusual, and politically tumultuous district. Dill did the job well, and will be missed. Obviously his family lost a husband and father, but the Iron Range legislative delegation lost one of its smartest, most even-tempered leaders.

Watching United Steelworker talks on the Iron Range



After a spring and early summer in which Iron Range mine owners tightened belts, idled workers and sought relief from taxes and environmental regulations, now we come to a new phase of the region's simmering crisis. This week in Pittsburgh, the United Steelworkers, the union that represents most Iron Range miners, opened negotiations with ArcelorMittal regarding the contract at the Minorca Mine near Virginia.

The Minorca is one of the smallest mines on the Iron Range but contract negotiations there will preview the negotiations for U.S. Steel and Cliffs Natural Resources, the two biggest mining companies on the Range which operate several mines. Steelworkers will learn for the first time exactly what the companies project given the continuing analysis that the price of iron will fall and stay low for at least two years. By some reports U.S. Steel, for instance, needs to cut an additional $8 per ton off its production cost to meet company goals for the coming year.

Meantime, in some Fourth of July weekend conversations I've learned that the laid off U.S. Steel workers at Keewatin Taconite and Minntac believe they'll be back to work by October. That is possible, but there are many moving parts within that hopeful proposition.

For instance, what will the price of iron ore actually do? Right now it has inched back up from its total collapse last spring. Construction starts, manufacturing projections and general economic numbers in the United States look pretty good right now. However, Europe and China are swirling in separate financial crises, which will play a role in the American economy eventually.

How will 40 million tons of new ore production in Australia affect the global market? Demand may increase, but so will supply. The Australians are producing ore at nearly half the cost of American mines. And they aren't the only nation where companies are upping low-cost production.

What are the local factors? Many questions remain about Essar Steel near Nashwauk. There is no denying the fact that construction at the Essar plant has been loud and brisk all summer, with about 500 workers on site any given day. But the new mine being built by a new company to Minnesota, India's Essar Steel, is causing other mines fits. This is in part because the state and IRRRB helped Essar get off the ground with infrastructure funding, and in part because added supply will impact demand for ore at other Range mines.

Considering that Essar claims it will produce the lowest-cost pellet in the U.S., one can see the reason for concern. Sources tell me that Cliffs wants to nip this in the bud, perhaps even seeking to buy into or take over the project somehow. Essar says it wants to run the mine alone, but it has a major loan repayment due soon and many are watching to see if they are able to cut the check.

Additionally, Essar and Cliffs are both exploring direct-reduced iron technology, adding value to iron ore products to suit new electric arc furnaces in contemporary steel mills. Iron Range mines produce taconite suited for blast furnaces, once an industry standard but that no one is building anymore and fewer companies are using at all. The entire future of Iron Range mining may well rest in the companies that successfully launch new kinds of pellet products or even flexible forms of pig iron before market forces shut down higher cost mines.

Further, Essar has been touting its off-take agreement with ArcelorMittal, replacing AM mines in Canada, as one of the central reasons Essar's iron ore will have a new market in 2016. But that agreement was signed when iron ore prices were high. As the terms are set to expire after so many Essar construction delays, many doubt that ArcelorMittal will renew the agreement.

Which means Essar's pellets go on the open market alongside Cliffs' pellets. Hence the corporate kerfuffle.

That's a lot to absorb with the news of a little mine opening negotiations with ArcelorMittal. But it bears mentioning that Arcelor-Mittal is the world's largest steelmaker, dwarfing all the other companies on the Range. In a small world, everything is large.