1. BusinessNorth 14 August 2015
MinnesotaIron.org
Every day, in nearly every facet of life, we use products
created by Minnesota’s iron mining industry. First un-
earthed on northeastern Minnesota’s Iron Range in 1884,
iron mining has long-played, and continues to play, a vital
role in every individual’s life.
From the cars we drive and the bridges we drive on, to the
skyscrapers that line our country’s skylines, iron mining has
built America.
We salute all iron workers (past, present, and future) and
the supporting industries who’ve helped to shape our na-
tion and the world for the last 130 years and look forward
to a prosperous future for us all.
Celebrating the past, present,
and future of Minnesota iron mining.
Steel companies fight back
By DAVID BOE
W
ith five months of uncertainty
still remaining, 2015 is turn-
ing out as a red-letter year for
iron mining in the Northland. Hundreds
have lost their jobs as mines on the Iron
Range have been idled, with more losses
possible as the industry – and the region
– staggers from the brutal effects of not
only the fickle global steel market, but
unfair industrial and trade policies of
other countries.
Coming off a wretched 2014, iron
ore prices have continued to plummet,
caused by a significant supply surplus
globally and falling demand, especially
in China. Economically speaking, the in-
dustry is in a bust phase, with a boom no-
where to be seen. It’s the worst the indus-
try has seen since 2009. But that’s just
the broad part of the market equation.
With UTAC, Mesabi Nugget, Keetac
and Minntac shuttered for an indeter-
minate time (although Minntac began
rehiring in July), steelworkers and their
families are worried, steel executives are
fuming, and legislators are calling for
action. And all are pointing their fingers
at one target as the cause: illegal steel
dumping.
Dumping is the bogeyman in trade.
Basically, it’s the act of exporting a prod-
uct to another country at a price either
below that charged in its home market or
below its cost of production. The word
dumping itself sounds negative, but oth-
er descriptions of it by advocates of fair
trade include “predatory,” “protection-
ism” or just plain “illegal.”
That’s the strong sentiment coming
from steel executives, who have been
forced to shut down plants not only on
the Iron Range, but in equally vibrant
communities across the country. In the
annual State of Steel hearing in Wash-
ington, D.C. held earlier this year, the
executives harshly voiced their con-
cern to members of the Congressional
Steel Caucus that more mines could be
shut down. The reason, they testified, is
that steel imports have increased while
American steel mills are running less
than 70 percent capacity. And it doesn’t
help, they said, that foreign countries and
their manufacturers are simply not play-
ing by the rules.
“The American steel companies are
being irreparably harmed by illegal trade
practices,” testified Mario Longhi, presi-
dent and CEO of U.S. Steel, which owns
the Keewatin and Mountain Iron mines.
While the industry points to several
countries as culprits in dumping, they
reserve much of their vitriol for China,
mainly because that country and the
United States have become inexorably
intertwined commercially over the past
three decades. According to a report
from the Congressional Research Ser-
vice, total U.S. - China trade rose from a
paltry $2 billion in 1979 to $592 billion
in 2014. China is currently the U.S.’s
second-largest trading partner, its third-
largest export market and its biggest
source of imports. China is estimated to
be a $350 billion market for American
firms. The downside is that the United
States trade deficit with China is estimat-
ed at $342 billion, which some consider
is adversely skewing trade relations.
However, in recent years, the Obama
Administration has been in negotiations
for a bilateral investment treaty (BIT)
to expand investment opportunities in
China; the last BIT talks were held last
November. Whatever tension caused by
the complex trade relation, the view held
among U.S. companies is that partici-
pation in Chinese markets is critical to
staying globally competitive.
The key word is competitive, and U.S.
steel leaders and some analysts are argu-
ing that China isn’t being competitive. It
continues state-directed policies (“state
capitalism”) that promote unbalanced
and unfair trade that is damaging the
U.S. economy.
Case in point, last October in a hear-
ing on China’s compliance within World
Trade Organization (WTO) commit-
ments – Kevin Dempsey, senior vice
president for public policy and general
counsel for the American Iron and Steel
Institute – said China has failed to com-
ply with WTO commitments, all while
Chinese crude steel production increased
from 2000 to 2013 by 651 million metric
tons – a volume seven-and-a-half times
the total crude steel production in the
United States, spurred, in large part, by
massive government subsidies.
“In fact, there is broad consensus that
China has abandoned a policy of eco-
nomic liberalization and instead increas-
ingly follows a policy of state capitalism
that is antithetical to the principles of
free and fair trade,” said Dempsey. “This
trend is a major problem, both for the
American steel producers and for other
U.S. manufacturers.”
The “major problem” has manifest-
ed itself in the highly visible reaction
of massive mining layoffs across the
country. While the Iron Range layoffs
have been shocking enough, they are
but a fraction of the number of pink
slips handed out. At U.S. Steel’s Gran-
ite City, Ill., mill alone, more than 2,000
workers were laid off. But the damage
wrought extends beyond the direct lay-
offs, and the effects are more acute in
a less-densely populated area like the
Northland. According to the Minnesota
Department of Employment and Eco-
nomic Development, the average weekly
wage for an employee in the mining in-
dustry was $1,738 in 2014, which would
equate to more than $90,000 per year per
employee. Multiplied by, for example,
the 400 workers ultimately laid off at
Minntac (down from the estimated 700),
the result is approximately $36 million in
labor income that is not going to regional
workers.
“This has a considerable ripple effect
throughout the economy, affecting local
businesses such as hospitals, restaurants,
nursing homes, banks, auto repair shops,
grocery stores and other retail establish-
ments,” said Monica Hayes, director of
the bureau of business and economic
research at the University of Minneso-
ta Duluth. “If the idling continues, and
there are more layoffs, businesses and in-
dustries throughout the region will begin
to feel the pinch. Hypothetically, a $100
million decrease in spending in the iron
ore mining industry equates to a $129
million decline in total output throughout
the seven-county Arrowhead region and
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Price, trade issues pose tough challenge

2. August 2015 15 BusinessNorth
Minnesota is poised to become a global leader in supplying the critical and
strategic metals that are essential to our way of life. And with new technologies
and a comprehensive environmental review and permitting process, we’ll set the
standard for environmentally responsible mining right here in Minnesota.
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Douglas County in Wisconsin.”
Pushing back
This economic ripple effect is causing
the steel executives to not only stand up
and testify, but to take action. In June,
six steelmakers, including U.S. Steel and
Steel Dynamics, filed a formal letter of
complaint with the U.S. International
Trade Commission (USITC) against
five countries accused of dumping. The
companies want the USITC to impose
counter veiling and anti-dumping du-
ties on certain corrosion-resistant steel
products from not only China, but India,
Italy, Korea and Taiwan. Still, executives
bemoan the belief that such trade cases
sometimes come too little, too late, with
not enough teeth to make a dent.
“When Congress incorporated the in-
jury standard, it did not intend for com-
panies or workers to suffer severe, per-
sistent harm before they can seek relief,”
Longhi said at the State of Steel hearing.
“It would be perverse to insist that an
American company experience griev-
ous harm before being entitled to the full
protection of its nation’s laws.”
According to the American Iron and
Steel Institute’s (AISI) 2015 Public Pol-
icy Agenda, Congress and the adminis-
tration need to ensure strict enforcement
of current trade laws and agreements,
as well as enacting legislation that stiff-
ens trade laws and updates existing
trade remedies, and support WTO cases
brought against, specifically, China’s il-
legal export restrictions. It also supports
only a strong Trans-Pacific Partnership
(TPP) agreement that essentially keeps
trade relations on a level playing field.
While the AISI’s support of the TPP is,
at best, conditional, Congressman Rick
Nolan, (D-Crosby) isn’t shy in his oppo-
sition of it, claiming the TPP is as bad or
worse than has been imagined. Remem-
ber the too little, too late of U.S. trade
enforcement? Nolan agrees, saying the
system has loopholes and is essentially
broken. He further argues that the TPP
contains nothing to fix it, and adding in-
sult to injury, will destroy good paying
American jobs and the middle class with
the sending of millions of jobs overseas.
“Defeating the Trans-Pacific Part-
nership is the best way to protect good
American jobs and help prevent millions
more tons of low-grade, foreign gov-
ernment subsidized steel, and countless
other sub-par knockoffs of American
manufactured goods, from being illegal-
ly dumped into our marketplace,” said
Nolan. “It’s imperative Congress put a
stop to the TPP and the race to the bot-
tom it promises for us all.”
But for Nolan, it’s not just about
blocking Administration trade treaties,
but passing pro-steel legislation. One
problem he noted was federally permit-
ted pipelines being built with foreign
steel while the U.S. steel industry is us-
ing only about 70 percent of its produc-
tion capacity. Nolan’s American Pipeline
Jobs and Safety Act would require virtu-
ally all new pipeline construction in to
use materials that are made in America.
“We cannot rebuild America’s econ-
omy and infrastructure with foreign
steel,” said Nolan. “We must fix this
glaring omission in federal law.”
Senator Al Franken agrees, saying he’s
fed up with toothless regulations while
mining jobs are threatened.
“We’ve seen firsthand the damage that
happens when we don’t have – and just
as importantly, can’t enforce – strong
trade protections,” said Franken. “I have
pressed top Obama Administration offi-
cials to limit the damage being done by
countries that are dumping their goods on
U.S. markets at anti-competitive prices.”
Franken has also opposed “fast track”
authority in trade deals without the abil-
ity of Congress to make any changes,
and, like Nolan, supported various “Buy
American” provisions, and the Playing
Field Act, which has been enacted into
law.
“The Playing Field Act will give our
government and our domestic industry
more, stronger tools to fight against un-
fairly traded imports,” Franken said.
Whether through legislation, regula-
tion, market forces or the oft-cited Iron
Range resilience, there appears signs of
hope – some workers being called back
and talk of restarting production. As
many eagerly eye any hint of rebound,
they also are re-hashing the old argument
that the Iron Range needs to diversify,
find smarter ways to reap its resources,
and, like the Boy Scouts, “Be Prepared.”
“One way to help mitigate the impacts
of those downturns is to help the mining
companies develop alternative sources
of revenue that they can rely on during a
bust period,” said Hayes. “The NRRI has
been doing lots of research on ways to
address this issue, including non-ferrous
and precious metals development, value-
added iron production and by-product
recovery. The goals of their research are
to improve the quality of the iron ore
we’re currently producing, and create
new products from waste materials.”
Such analysis is welcomed by all the
players. Nolan himself summed up why
Rangers are ultimately confident about
the future: “American workers and
American companies produce the best
products in the world.”
David Boe is a Duluth-based freelance
writer.