Northshore Mining on Iron Range open again after a year of idling

Local officials said all workers were offered their jobs back.

April 25, 2023 at 8:53PM
The Northshore taconite processing and shipping facility in Silver Bay for “swing production.” (Aaron Lavinsky, Star Tribune/The Minnesota Star Tribune)

Northshore Mining has partly reopened this month after being shuttered for nearly a year. However, Cleveland-Cliffs, Northshore's owner, does not expect to run the iron ore operation at full capacity in 2023.

Cleveland-Cliffs declined to disclose how many of Northshore's 450 employees were back at work. Northshore mines taconite in Babbitt and ships it by rail to Silver Bay, where it is fashioned into marble-sized balls of more than 60% iron.

Higher levels of steel production led to a "partial restart" of Northshore's operations earlier in April, Cleveland-Cliffs CEO Lourenco Goncalves said in a quarterly earnings conference call Tuesday.

However, Goncalves told stock analysts that Northshore will continue to serve as "our swing operation." That means Northshore will be used "as needed," Cliffs said in an email.

"At this time, we still do not expect to operate Northshore in full any time this year," Goncalves said.

State Sen. Grant Hauschild, DFL-Hermantown, said Tuesday he was told that Cliffs gave offers to all Northshore employees to return to work.

Wade LeBlanc, Silver Bay's mayor, said the same, and like Hauschild said some workers did not return. They had found new jobs, including at other taconite plants or railroads, LeBlanc said.

"Everybody who wanted to come back came back," LeBlanc added. "The fact that they are mining — that is good news for our community, for our schools and for everybody. It's good to see steam coming out of [the plant's] stacks."

Cleveland-based Cleveland-Cliffs is Minnesota's largest iron ore miner and one of the nation's biggest steelmakers. The company owns three of the Iron Range's six taconite operations in full and has an 85% stake in a fourth.

Cliffs idled Northshore in May 2022. At the time, the company had enough ore capacity at its other properties, and it was enmeshed in a long-running and bitter dispute over royalty payments connected to Northshore.

The dispute with Mesabi Trust, which receives royalties for ore it owns near Babbitt, does not appear to be solved. Goncalves has previously described the royalties as "absurdly high."

The current royalty agreement dates to 1989, when Cyprus Minerals bought and resurrected the shuttered Babbitt and Silver Bay assets of Reserve Mining. Cliffs purchased Cyprus Northshore in 1994 and assumed the royalty agreement.

Cleveland-Cliffs reported a first quarter net loss of $42 million, or 11 cents per share, compared with a net profit of $814 million, or $1.50 per share, for the same period a year ago. Cliffs' first quarter loss was less than the 22-cent loss forecast by analysts polled by Zacks.

Cleveland-Cliffs' first quarter revenues tallied $5.3 billion, down from $6 billion a year earlier, but $100 million above the Zacks estimate. Cliffs stock closed Tuesday at $15.27, down nearly 6%.

about the writer

Mike Hughlett

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Mike Hughlett covers energy and other topics for the Star Tribune, where he has worked since 2010. Before that he was a reporter at newspapers in Chicago, St. Paul, New Orleans and Duluth.

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