REGIONAL- The uncertainty surrounding the future of Northshore Mining taconite mining and processing operations in Babbitt and Silver Bay was magnified last week when parent company Cleveland Cliffs announced that it was extending the current shutdown of the facilities that began in May.
Cliffs CEO Lourenco Goncalves said that with the increasing use of scrap metal at its steel making facilities, “the pellets from Northshore are not needed at this time.”
“We are extending the ongoing idle at our Northshore swing facility until at least April of next year,” Goncalves said during an investors’ earnings call on July 22.
About 400 of Northshore’s 580 employees were laid off when the facilities were idled in May, and Babbitt Mayor Andrea Zupancich said Monday that there will likely be more due to the extended shutdown.
“This hits everyone really hard right now because it was extended before the layoff was even close to being done,” Zupancich said. “And it’s a possibility it could be extended again, so there’s just a lot of unknowns.”
Cleveland Cliffs has been working to transfer some employees to other facilities, such as Minorca in Virginia, Zupancich said, but others have started to re-evaluate their future.
“There are 20 workers that have families that started within the last two years and they’re weighing their options now,” Zupancich said. “Everyone knows it’s happened before, not to say that that makes it ideal or acceptable. But this one just feels a little bit different.”
District 3A Rep. Rob Ecklund, DFL-International Falls, noted that with Cleveland Cliffs now relying more heavily on scrap metal rather than taconite pellets for its steel manufacturing needs, this could be a signal of things to come.
“With Cliffs getting out of the commodity pellet business and just supplying their own pellets, this may be something that we see going on down the road where these plants will be run as needed, at least until the scrap metal prices go high enough where it’s cheaper to use pellets,” Ecklund said. “When you’re dealing with world economies and world commodities that’s how things work.”
In his remarks to investors, Goncalves again highlighted his dissatisfaction with amount of royalty fees the company pays to the Mesabi Trust, holder of the mineral rights to the former Peter Mitchell mine in Babbitt, citing that as a reason to extend the shutdown.
“Rather than deplete this finite resource for the benefit of the Mesabi Trust ... we’ll keep Northshore idle until we decide otherwise,” he said.
Ecklund said that the first closure announcement, he has tried to arrange a meeting involving Gov. Tim Walz and Cliffs and Mesabi Trust officials regarding the dispute but has gotten nowhere.
“The Mesabi Trust folks and (Goncalves) haven’t been willing to make an appointment to even chat about it,” Ecklund said.
Both Zupancich and Ecklund noted that the Northshore shutdown will have a wider impact throughout the area by diminishing the revenue available to the Department of Iron Range Resources and Rehabilitation.
“Commissioner (Mark) Phillips has done a terrific job on developing a budget that can absorb these cycles, but when you take one plant out of production that’s less revenue that we can use in the rest of the region,” Ecklund said. “It’s going to make it tougher for the agency to provide its vital services.”
The immediate concern, however, is trying to get an extension of unemployment benefits for affected workers that will run out in fall.
“Their unemployment right now is not going to be extended unless there’s a special legislative session,” Zupancich said.”
The likelihood of a special legislative session appears remote, as Republican legislative leaders have not reached a deal with Walz and the DFL for one, but Ecklund hasn’t given up hope yet that middle ground can be found.
“I’m doing everything I can to get us back into session and get these extensions ironed out,” he said. “I’ve got a bill drafted and ready to go, so we’ll be ready as soon as a special session is called.”