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Serving Northern St. Louis County, Minnesota

Northshore to recall workers but questions still remain

David Colburn
Posted 2/22/23

REGIONAL- As area and state politicians joyfully shared the news Monday that laid off Northshore Mining workers were being recalled for an April re-start of operations in Babbitt and Silver Bay, …

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Northshore to recall workers but questions still remain

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REGIONAL- As area and state politicians joyfully shared the news Monday that laid off Northshore Mining workers were being recalled for an April re-start of operations in Babbitt and Silver Bay, parent company Cleveland-Cliffs remained strangely silent about the details of the recall and their plans for the operation.
Third District Sen. Grant Hauschild, who sponsored the bill to authorize retroactive unemployment benefits for the more than 400 workers affected by the layoffs in May 2022, was among the first to break the news of the recalls in a noon press release.
“I’m encouraged that Cleveland-Cliffs is beginning the process to reopen their facilities in Babbitt and Silver Bay,” Hauschild said. “In recent months, I’ve held several meetings with Cleveland-Cliffs to discuss the importance of reopening these plants as soon as possible. These mines and jobs are critical to our regional economy. I heard from numerous miners who were impacted by this closure who said they wanted to get back to work. My primary goal has always been to reopen these two plants. I’m glad to say that we’re one step closer to making that happen.”
District 3A Rep. Roger Skraba added his accolades later in the afternoon. “I am extremely happy to hear that Cleveland-Cliffs has started the process of contacting workers to begin reopening their facilities in Babbitt and Silver Bay,” said Skraba. “This has been an issue that we have been working hard on during the first month and a half of the legislative session.”
Gov. Tim Walz and U.S. Senator Amy Klobuchar also issued statements expressing their support for restarting Northshore operations.
“I’m relieved to learn that the collaboration between state and local leaders has paid off and that the Iron Range families who depend on these jobs can rest easy knowing that they’re heading back to work,” Walz said. “This is a win for Silver Bay, Northeastern Minnesota, and the state as a whole.”
Cliffs silent
Goncalves made no mention of the Northshore situation during a recent investors’ call to discuss the company’s 2022 performance, and as of Tuesday afternoon the only new news release on the company’s website was to announce a price increase in steel products.
The Timberjay contacted Cleveland-Cliffs via email asking for more information about the recall, but had not received a response as of press time. The Duluth News Tribune did manage to get through to Cliffs spokesperson Pat Perisco, but she declined to shed any more light on the situation.
“At this time, Cleveland-Cliffs is calling back some workers to Northshore Mining,” Persico said in an email to the News Tribune. “We will provide more details when we decide when and at what capacity this operation will be brought back online.”
Persico declined to say how many workers would be called back, and her answer leaves open the possibility that Northshore could resume operation at less than full capacity.
Goncalves idled Northshore operation and shifted pellet production to Virginia’s Minorca facility amid a royalties dispute with the Mesabi Trust, which owns the rights to the ore in the Peter Mitchell Mine in Babbitt. As prices spiked and shipments soared in 2021, the royalties owed to the Mesabi Trust soared dramatically to $71 million, including $27.1 million in bonus royalties. In February 2022, Goncalves called the Mesabi Trust royalty structure “ridiculous” and announced the shuttering of Northshore. At the time, Goncalves also said that he now considers the mine and pellet processing facility in Silver Bay to be a “swing” facility that will operate only as Cliffs needs new base ore.
In October, the Mesabi Trust initiated arbitration against Northshore and Cliffs related to alleged underpayments of royalties by the company in 2020, 2021, and 2022. The trustees elected not to make quarterly distributions to its investors in October 2022 or in January due primarily to the uncertainty caused by the Northshore shutdown. In a Jan. 12 release, the Mesabi Trust outlined multiple factors that have caused concern about the future revenue they might generate from Northshore.
“The Trustees’ determination of no distribution this quarter also takes into account numerous other factors,” the release said, “including uncertainties resulting from Cliffs’ prior announcements to make Northshore a swing operation as Cliffs’ Minorca operation becomes increasingly utilized, Cliffs’ increased use of scrap iron in its vertical supply chain planning, potential volatility in the iron ore and steel industries generally, national and global economic uncertainties, the cost and expense related to the Trust’s initiation of arbitration against Northshore and its parent, Cliffs, possible further disturbances from global unrest, and the potential impacts from further outbreaks of the coronavirus (COVID-19) pandemic.”

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