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Serving Northern St. Louis County, Minnesota

United Taconite to reopen in October

Marshall Helmberger
Posted 6/1/16

REGIONAL—Have steep steel tariffs and stricter port enforcement helped the U.S. steel industry turn the corner? It’s starting to look that way after Cliffs Natural Resources announced Tuesday …

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United Taconite to reopen in October

Posted

REGIONAL—Have steep steel tariffs and stricter port enforcement helped the U.S. steel industry turn the corner? It’s starting to look that way after Cliffs Natural Resources announced Tuesday that it will be re-opening its United Taconite mine and processing facility in Eveleth by October. In a press statement, the company said it hopes to have the plant back to full production by November, which should put 450 miners back to work just ahead of the holidays.

The announcement comes on the heels of the restart of the Northshore Mine in Babbitt and Silver Bay this past month. That startup put more than 500 taconite workers back on the job.

Word of United Taconite’s reopening came on the same day that Cliffs announced a new 10-year iron ore pellet supply contract with ArcelorMittal that includes an increase in iron ore purchases over the existing contracts between the two companies. Cliffs CEO Lourenco Goncalves also announced that the company plans to invest $65 million at United Taconite over the next two years to produce a so-called “superflux” pellet tailor-made for ArcelorMittal’s Indiana Harbor 7 steel plant.

The new pellet will replace a similar product that Cliffs has been producing at its Empire Mine in Michigan’s Upper Peninsula. That mine is slated to close later this summer as it runs out of ore.

News of the deal sent Cliffs’ stock price surging, finishing up 35 percent for the day. Still, the company’s stock remains down 95 percent from previous highs in 2011.

Cliffs shuttered the United Taconite plant last August in the midst of a surge of cheap imported steel products that left U.S. steel producers reeling and prompted the shutdown of all but two major taconite plants on the Iron Range, putting about 2,000 miners out of work. U.S. steel producers argued much of the foreign steel was being illegally dumped on the American market. Minnesota lawmakers joined those from other steel-producing states to mount a full court press on the Obama administration, urging tough action to stem the flow. In February, President Obama took new executive actions intended to slow the influx of illegally dumped foreign steel at U.S. ports. The measures include sending additional inspectors to ports of entry and bringing additional staff on board at the Commerce Department and elsewhere in order to better enforce trade laws. At the same time, President Obama signed additional trade legislation, known as the Trade Facilitation and Trade Enforcement Act, or HR 644, which provides wide-ranging tools to more aggressively enforce anti-dumping regulations already in law. The new law will give U.S. Customs and Border Patrol officials more authority to initiate investigations over whether imports entering the country are compliant with existing trade rules.

Not surprisingly, Minnesota political leaders praised Cliffs’ decision to restart operations at United Taconite. Sen. Amy Klobuchar said the announcement “shows that our continued efforts to crack down on the dumping of foreign steel on our shores and to level the playing field for American workers are getting results.” But Klobuchar said more needs to be done. “The next step is for Congress to pass our bills to strengthen America’s trade enforcement capabilities and ensure laid-off workers affected by steel dumping receive the support they deserve,” she said.

Eighth District Rep. Rick Nolan praised Cliffs CEO Goncalves, in particular. “Mr. Goncalves has long been a man of his word, and he has said repeatedly that if we can restore market conditions, he would invest in the future of our mining and steel industry,” said Nolan in a statement.

Cliffs’ announcement heralds at least a partial recovery for the Iron Range since the start of the year. The week’s developments also reflected positive news for Cliffs, which has attracted a bit more interest from investors since its stock price bottomed out at just $1.20 a share back in January. Goncalves has been widely credited by analysts for instituting significant cost cutting and prioritization that appears to have helped the company stave off bankruptcy during one of the most significant market challenges in years.

Market conditions, including a modest rebound in steel prices in recent months, have also helped the company improve its bottom line.