Cliffs Natural Resources laying off 540 workers at Northshore Mining taconite operation

Cliffs Natural Resources will idle its non-union Northshore Mining taconite operation on Minnesota's Iron Range by Dec. 1, renewing concern that economic woes on the Iron Range will only get worse.

Most of the 540 Northshore employees in Silver Bay, Minn. will be laid off, maintenance crews excepted, because of high inventory levels and the continued flood of cheap steel imports to the United States, the company said Tuesday.

"It feels to me like the next six months will be worse than the previous six months and that this [Cliffs' news] is a sign that that is coming true. I think we are in a crisis," said state Rep. Tom Anzelc, DFL-Balsam Township and chair of the Legislature's Iron Range delegation.

It is the second time in four months that Cliffs idled one of its Minnesota-based ore operations. In August, the company idled unionized United Taconite operations in Forbes and Eveleth, laying off 420 employees.

In all, nearly 1,500 have been laid off from taconite operations run by Cliffs, U.S. Steel, Magnetation and Steel Dynamics, although U.S. Steel has called back most of its workers at its Minntac operations.

Cliffs expects the United Taconite and Northshore Mining operations to be idled through the first quarter of 2016, CEO Lourenco Goncalves said in a statement. Cliffs will continue to operate Hibbing Taconite in Minnesota, as well as its Tilden and Empire mines in Michigan, at normal rates.

Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Board, and others said they fear more bad news could strike.

Phillips said he and DFL Senate Majority Leader Tom Bakk drove through Silver Bay two weeks ago and saw the excess stockpiles of taconite pellets from the road. During the next two weeks, the state's dislocated workers program will help the newly laid off secure unemployment benefits and training for new jobs.

The severe mining downturn has hurt companies across the country. Gov. Mark Dayton has requested a special session so lawmakers can extend state unemployment benefits for laid-off miners.

Dayton also joined U.S. Sens. Amy Klobuchar and Al Franken, both D-Minn., in lobbying to extend federal unemployment benefits and for a host of new trade protections that will swiftly penalize countries for illegal steel dumping. All have complained that it has taken far too long to secure new trade protections for the ore and steel industries.

The U.S. iron and steel industries have been clobbered by historically low global ore prices plus a swell of cheap steel imports from other countries. Taconite, which is mined iron ore converted into concentrated pellets, is a key ingredient to steel.

While conditions are not optimal, Goncalves expects some improvement next year. "As our pellet inventory at both Northshore and United Taconite is adequate to meet current customer demand, we will be able to optimize our working capital and cash flow by temporarily idling production at Northshore," he said.

"The resolution of the trade cases currently filed by the domestic steelmakers against several countries and covering a broad range of steel products should bring a positive impact to the domestic market sometime during the first half of 2016," Goncalves said.

Anzelc isn't convinced. "I hope [Goncalves] is right, but I have learned to be skeptical."