Chris Johnson heard the news from a reporter. By the time he was done answering phones and calling management at Hibbing Taconite, he still had no answers.

It was early February and the Iron Range was breaking out of the late-arriving cold snap that drove wind chills to 45 below. About a week earlier, Gov. Tim Walz wrote to the executives and Cleveland-Cliffs and U.S. Steel about the very answers Johnson was trying to seek: What solution is there for the shrinking ore reserves at Hibbing Taconite?

What Johnson found out on Feb. 8, was that Cliffs apparently identified a solution to the governor. What it was, was still a mystery to seemingly everyone but Cliffs Chairman, President and CEO Lourenco Goncalves. “Nobody knows the plan,” Johnson said on Feb. 9. “He told the governor there’s a plan. Nobody is telling us what the plan is.”

The company didn’t identify its solution when asked, or how long it would extend life at HibTac and only offered that its using land already under its control. “With this solution, no land swap with other companies will be necessary to extend the life of HibTac,” the company said in a statement. “Gov. Walz stated his commitment to direct his agencies to take all legally possible actions to support Cliffs’ initiative.”

Walz, through a spokesperson said, “Governor Walz appreciated the opportunity to talk with Cleveland-Cliffs about keeping Hibbing Taconite open and protecting 800 jobs on the Iron Range. The Governor also looks forward to talking with U.S. Steel and is committed to exploring all options to find a solution.”

What’s at stake is 750 jobs directly at Hibbing Taconite, maybe thousands more in spinoff positions if the mine closes for good. For Johnson, there’s a range of outcomes that depends on what exactly the solution is from Cliffs: Will HibTac still run at full capacity? Will there be a reduction in the union or salaried workforce?

His phone calls that February day underscored that very uncertainty, mixing excitement from some members to weariness from others. They’re giving Goncalves and Cliffs the benefit of the doubt. They’ve done everything they’ve promised from reopening United Taconite with an influx of hundreds of millions of dollars after the 2015 downturn that punished the region’s mining industry, to building an hot-briquetted iron facility in the Midwest (Ohio over Minnesota, for the first one), to going on the offensive to keep HibTac open in previous years by buying land in Nashwauk and pursuing the stalled project of Mesabi Metallics.

“I’m skeptical to say it’s a good thing only because I haven’t seen what the actual plan is,” Johnson reiterated. “I wish I had a better outlook. I just want to be able to not lose anybody. I hope I’m wrong.”

Worries over declining ore reserves at HibTac have increased in recent weeks as local officials and union leaders grew more concerned about the timetable for when mineable land expires in 2024-25.

Mike Jugovich, a retiree of Hibbing Taconite and USW Local 2705, stopped into his former union hall in January, on Lake Street in Chisholm, to hold a swearing-in ceremony for his second term on the St. Louis County Board of Commissioners. Sporting a Cleveland-Cliffs mask and USW jacket, he celebrated his reelection but turned the ceremony toward the potential closure of HibTac and how it could devastate cities on the Iron Range.

“Right now this union is facing some uncertain times with an ore body that is quickly being depleted,” he said. “So, it’s critical that we get somewhere that we can have Hibbing Taconite continue to operate.”

Johnson, a 15-year veteran of the mine, acknowledged that some workers have already begun searching for jobs elsewhere.

“People with 10 years are probably looking and for sure under 10 years are looking at other places,” he said. “People are weighing the fact: Do I wait and hope that this comes through and then fight 600 people at a job somewhere else or do I just jump now? It’s a scary time. Everyone’s nervous.”

He continued, “But you got people trying to pay off all their stuff, in a hurry — cars and houses, whatever they have — so they can start saving, conserving, because if it happens, like many of the other layoffs, you want to have a nestegg you can fall back on because who knows how long it will be.”

A number of solutions have reached the decision makers, but most have hit the cutting room floor for a variety of reasons. When Cliffs completed its purchase of ArcelorMittal USA late last year, it regained majority ownership of HibTac, managing partner status over minority owner U.S. Steel, and vowed to tackle the issue head on.

Now, at least one solution is taking steps forward, we just don’t know which one it is. The only thing clear is that HibTac is running out of land — and soon.

The land swap that wasn’t

The easiest solution for what ails Hibbing Taconite is a chunk of land currently controlled by U.S. Steel’s Keewatin Taconite operation. The mines share a border and the Carmi-Campbell leases have long been identified as ore that could buy HibTac another dozen years or so.

That’s not an insignificant amount of ore or mine life.

ArcelorMittal, who was the majority owner and managing partner before it was purchased by Cliffs, tried negotiating for the land on numerous occasions but came up empty-handed each time. The same for Cliffs, according to Goncalves, who as the company neared its purchase of Arcelor, told the state Executive Council in December 2020 that “I have absolutely no hope that anything will happen” concerning the Carmi-Campbell leases and a potential land swap.

The leases were subject of a 2019 lawsuit in which Glacier Park Iron Ore Properties, a company that owns land and minerals in the area, sued U.S. Steel in an attempt to force the Carmi-Campbell into the possession of Hibbing Taconite. They claimed U.S. Steel illegally obtained the leases from the former Great Northern Iron Ore Properties Trust in 2010 by negotiating a 47-year lease deal for the Carmi-Campbell, Mississippi Enterprise and Grant leases were set to dissolve in 2015.

The suit was eventually dismissed.

In the meantime, negotiations among the companies still failed to materialize.

“That didn’t go our way,” Johnson said. “We hope and we pray that we find some land in our permitted area to at least get us through before we get some other permitted land.”

Earlier this year, Walz sent a letter to the chief executives of U.S. Steel and Cliffs asking for a conversation about solutions to declining ore reserves at two Iron Range mines. He was pointing to a land swap that would give the Carmi-Campbell leases to HibTac and the Buhl-Kinney leases controlled by Cliffs’ Minorca Mine near Virginia to U.S. Steel’s Minntac operation in Mountain Iron, which is about a decade or so away from needing more land itself.

“As you know, Hibbing Taconite has limited access to mineable ore reserves and is facing the possibility of closure in the coming years,” the governor wrote. “While it is my understanding that Minntac has reliable reserves available for the immediate future, U.S. Steel has expressed interest in securing leases for additional high quality ore that would solidify the long-term options for the mine. Closure of any mine would be devastating to the individuals who work at the facility and to those in the surrounding community who depend on the mines.”

In response, Cliffs on sent a letter to Walz on the following and welcomed the opportunity for the state and the two companies to discuss the leases. “I propose that Cleveland-Cliffs, U. S. Steel and the State of Minnesota each designate a representative to meet together and work toward a solution as soon as possible and as often as necessary,” wrote Goncalves.

In a statement, U.S. Steel said that it “recognizes the importance of Hibtac and all iron mining operations to the communities, employees and businesses on the Iron Range. We have and will continue to work collaboratively with the Governor and the Iron Range legislative delegation to seek a workable solution that will benefit all concerned stakeholders.”

That led to the call between Goncalves and Walz where an apparent solution was found that didn’t involve the Carmi-Campbell leases and land that Cliffs already owns.

Land and leases

After completing its purchase of ArcelorMittal USA, Cliffs has more potential options to shift its own land around for HibTac, including land at the newly-owned Minorca Mine in Virginia. It could also utilize other properties like United Taconite in Eveleth or land it controls in Nashwauk.

Those appear to be the solutions in the company’s control.

Cliffs has been aggressive in trying to get the Mesabi Metallics project in Nashwauk after its bankruptcy, emergence, failure to start and now an apparent final deadline of May 1 for funding and Dec. 31 for construction. But they don’t control that outcome — only the state and an almost completely unknown leadership at Mesabi Metallics do now — much to the chagrin of many close to the Hibbing Taconite project.

“The Essar deal is a head scratcher and it seems like we’re battling the governor at times,” Johnson said. “But they made their decision and now we have to find something else.”

He acknowledged in a separate interview that gaining control of the project “would change things,” but with repermitting and additional environmental review, it would be a ways off. “It doesn’t solve it immediately. That’s the better option and that’s what they want, but they can’t bank on another business failing.”

The Buhl-Kinney leases near Minorca, land at United Taconite and ore controlled by Cliffs within the Nashwauk site are the obvious options on the table, but come with significant time and financial commitments, the latter being one that has rarely bothered Cliffs in the past.

Those lands would require the company to build some sort of transportation system to have ore reach the processing plant at HibTac, whether by rail or conveyer belt line. United Taconite has large ore reserves, some untapped from the early 2000s before Cliffs owned the operation, making the Eveleth mine a pseudo ore barn for HibTac.

Sources within the industry speculated that those options could involve a massive multi-year permitting process and cost around nine figures. They spoke on background as they don’t have direct knowledge of Cliffs’ plans.

Still unknown is the human cost and whether the full workforce and tonnage output — 5.1 million tons in 2020 — could be realized without mining directly at HibTac. “ There is no more land around there,” Johnson said of HibTac. “And reduced capacity? That’s good news for some and bad for others.”

As for immediate solutions? There doesn’t seem to be one readily available yet. It’s a matter of time and the permitting process once a plan is made public and issued to the state. If Goncalves and Cliffs are certain they have a path forward, the Steelworkers are standing behind them.

One thing that’s also for certain, according to those industry sources, Hibbing Taconite is likely facing down time after 2025. It’s just a matter of how long it will be.

0
0
0
0
0

Recommended for you

Load comments