REGIONAL—The latest downturn in the iron-mining sector took a turn for the worse Tuesday morning, as U.S. Steel announced it would temporarily slash operations at its flagship Minntac plant in Mt. Iron. As many as 700 workers will be laid off as a result of the action, which takes effect June 1.

A company statement said sluggish markets and a large inventory of unsold taconite pellets have prompted the decision. The announcement comes on the heels of similar announcements by several iron producers on the Range, including U.S. Steel’s Keetac plant, and smaller facilities operated by Magnetation and Mesabi Nugget. U.S. Steel has announced similar layoffs across the country in recent days. Earlier in the week, the company announced the layoff of over 2,000 workers at a facility in Granite City, Ill.

U.S. Steel said it would continue to operate Minntac at reduced capacity in order to meet customer demand. As part of the Minntac idling, all employees have been advised of the upcoming layoffs and are being issued notices under the Worker Adjustment and Retraining Notification (WARN) Act. The number of employees impacted will be based upon operational or maintenance needs, according to the company.

Gov. Mark Dayton, in a statement issued in the wake of the announcement, noted that the Iron Range had weathered widespread layoffs in the past, and would get through the latest idling, coming back stronger than ever. “My administration stands ready to do everything possible to help do so again,” he stated.

Factors behind slowdown

Steel producers and politicians from steel-producing states have cited foreign steel dumping as the primary cause of the slowdown in demand for American steel.

“The heart of the problem is that enforcement takes too long and there are no tariffs on steel imports,” said Rep. Rick Nolan, in a statement issued Monday. “By the time the lengthy and costly process of determining harm from illegal trade is complete, the damage has already been done. As a result, thousands of good paying jobs are in jeopardy due to millions of tons of low-grade, foreign government-subsidized steel from Asia being dumped into the U.S. marketplace.”

Nolan joined Minnesota Senators Amy Klobuchar and Al Franken, and Lt. Gov. Tina Smith at the White House last Friday, where they urged quicker action to stem the flow of foreign imports.

“During our White House meeting, we pointed out that despite growing demand for steel here in the U.S., our domestic steel industry is operating at only 69 percent of capacity,” said Nolan. “Meanwhile, finished steel imports increased by 36 percent last year and now occupy a record high 28-percent share of our marketplace. In my judgment, the worst culprits are America’s so-called “free” trade agreements - which require that serious and often permanent damage be allowed to happen, and then must be proven - before remedial steps can be taken against the offending nations.”

An economic slowdown that has hit China has also contributed to reduced demand for steel and other commodities. China’s hunger for minerals to build its cities and infrastructure over the past decade fueled a surge in commodity prices across the board. Now, according to the Wall Street Journal, China’s slowing pace of growth is hitting exporters of those raw materials particularly hard— and that includes taconite producers on the Iron Range.

Iron ore prices had slipped to just $55 a ton as of mid-March, a price below the cost of production at many iron ore facilities in the region. And the outlook for prices is bearish, according to the Wall Street Journal. Earlier this month, Merrill Lynch cut its iron ore price forecast by 21 percent, and doesn’t see prices recovering to $60 a ton until 2017.