Cliffs breaks new ground on the Iron Range

After a year of layoffs and mine closures in northeast Minnesota that occurred while the U.S. steel industry grappled with a historic downturn, the Iron Range celebrated a piece of good news Thursday.

Gov. Mark Dayton and other state leaders were on hand as Cliffs Natural Resources broke ground on a $65 million expansion at its United Taconite plant in Forbes.

The upgrades will allow Cliffs to produce a new specialty iron ore pellet it calls the "Mustang" pellet, which will supply North America's largest steel blast furnace at the Indiana Harbor facility outside Chicago, operated by the steelmaker Arcelor Mittal.

In May, Cliffs announced a new 10-year supply contract with Arcelor Mittal. The new pellet, which will begin production in March 2017, replaces a pellet produced at the Empire Mine in the Upper Peninsula of Michigan, which Cliffs closed earlier this month when the mine ran out of ore.

"With our Mustang pellet contract, our future looks a lot brighter than it did a year ago," said United Steelworkers Local 6860 union president Brian Zarn. "We're going to have a wider market, we're going to have a more versatile and valuable pellet, so that's all we can ask for."

Cliffs brought back all of United Taconite's roughly 450 employees this week. The mine in Eveleth and pellet plant in Forbes had been shut down for about a year, as U.S. steelmakers — the customers who purchase Cliffs' iron ore pellets to make steel--struggled against a tide of imported, illegally subsidized steel.

At one time nearly 2,000 mineworkers were laid off on the Iron Range, when three of the six big taconite mines were idled and several smaller facilities were also shut down.

The U.S. has since slapped tariffs on much of the imported steel, and Cliffs has rebounded. It reopened its Northshore Mining facility in Babbitt and Silver Bay earlier this year. But nearly 1,000 workers elsewhere on the Range remain unemployed.

Still, Cliffs CEO Lourenco Goncalves said the groundbreaking on the new pellet project signals a new chapter for the company on the Iron Range that will allow families to have fifth- and sixth-generation mineworkers.

"We'll continue to create jobs in this area, for another generation, and another generation," he said. "The steel's not going away. Your iron ore, your pellets, are the best in the world."

Goncalves also reiterated his intention to take control of the stalled Essar Steel mine site on the Iron Range, and eventually not only open a taconite mine there but also build a direct reduced iron facility that could supply the growing electric arc furnace segment of the steelmaking industry.

Essar's state-owned mineral leases have expired, and Gov. Dayton said the state has initiated legal action through the Attorney General's Office to extricate those leases from Essar's bankruptcy proceedings.

Dayton said the investments at United Taconite, combined with the possibility of opening the Essar Steel site and the ongoing permitting of the PolyMet copper-nickel mine, signal "a resurgence of jobs and economic opportunity on the Iron Range, as you make everybody want to stay here and bring your kids back here and stay here for a couple more generations."