Reopened plants mark possible turnaround of taconite industry

Increased demand for steel is providing some welcome relief in northeast Minnesota, where taconite pellet plants are coming back online after one of the worst years in recent memory.

The U.S. Commerce Department says factory orders posted a surprisingly big gain in November - reflecting strong demand in a number of industries from computers, to chemicals to steel.

There's something going on in Hibbing this week that hasn't happened since last May. Cliffs Natural Resources's spokeswoman Maureen Talarico said the company is bringing the Iron Range's last idle taconite plant back to life.

"Yesterday was the day back on the job for the first set of recalled employees," Talarico said. "They started on January 4, and then we'll be gradually, in stages, bringing back up to the workforce of about 500 people."

The Commerce Department's report says factory orders rose by more than one percent in November, which was about twice what economists had forecast. Iron and steel production increased 5 percent over October.

In Hibbing, 100 workers are preparing the company's pellet plant and open pit mine for production starting around April 1. With management, about 650 people will be back on the job, marking something of an unofficial end to the great taconite slump of 2009.

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HibbTac is the last of Minnesota's six taconite companies back in production. This is a sharp contrast to 2009 which saw each of the plants completely off line at some point; HibbTac since May, while nearby KeeTac was down an entire year.

Talarico maintains a common attitude in this economy - cautious optimism.

"2009 was a very difficult year for many industries, iron ore included, so [in] 2010, I'm seeing glimmers of hope," Talarico said. "Optimistic that it will be better than 2009, but still you know you have to proceed cautiously, especially when you're dealing with employees and facilities and millions and millions of dollars worth."

"2009 was a very difficult year for many industries, iron ore included, so [in] 2010, I'm seeing glimmers of hope."

Nobody is predicting yet how much taconite will be produced in the state in the coming year. 2009 production reached around 17 million tons; less than half the 39 million tons produced the year before.

But it's a trend in the right direction, according to Craig Pagel, president of the Minnesota Iron Mining Association.

"I think what we'll start to see is more of a confidence as consumers start to spend more money," Pagel said.

And, he predicts continued investment in the mining industry. Several companies used downtime to maintain and upgrade production lines. Despite the recession, work continued on new projects like a steel plant near Nashwauk, and a high-iron nugget plant near Hoyt Lakes.

Pagel said there's another reason for optimism. Last week, the U.S. International Trade Commission announced $2.8 billion in tariffs on steel pipes imported from China. Pagel said it's another encouraging sign the United States is willing to defend its domestic steel industry.

Steel Industry expert Phil Englin still couches his enthusiasm for the industry, but he sees improvement. Englin is a Special Projects Manager with World Steel Dynamics, and he describes the market as a pendulum that last year swung too far to one side, liquidating steel inventories. A small production surge last fall replenished those inventories.

He said the market has been fluctuating. "You had this big dip, then it kind of came back up in a corrective manner, and now it's sort of oscillating up and down, but on an upward slope - a very slight upward slope," Englin said.

But in the long run, he sees hope.

"You know one thing that we do believe quite firmly is that the bottom is already behind us, so from here on, obviously, it can only get better," he said.

Englin said the only debate is on the rate of growth - just how quickly the economy and the steel industry will climb back from last year's bottom.

At least during the month of November, that rate was quite a bit faster than the experts were predicting, and no one in northeastern Minnesota is complaining if the experts were wrong.

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