12/27
With demand strong, iron ore industry sees 2008 production rising
Five years ago, Minnesota's iron ore industry was in a tailspin. Two taconite plants were shut down because of financial distress, and U.S. Steel even put up for sale its Minntac mine, North America's largest taconite producer.
The outlook is far brighter headed into 2008. Industry consolidation has made it stronger and less subject to economic swings. And surging worldwide demand for iron ore has turned ore properties into valuable assets.
The taconite mining outlook "probably hasn't looked this good in a long time," said Craig Pagel, president of the Iron Mining Association of Minnesota trade group. "There's been so much change, not just in the last five years, but even in the last couple," said Peter Kakela, a Michigan State University professor who tracks the iron ore industry.
"You now have companies like Essar Steel buying steel producers like Algoma and a mini mill company like Steel Dynamics coming in to do an iron nugget plant. The whole groundwork has changed." Taconite production for 2007 is expected to come in around 37.6 million tons of pellets, said Robert Wagstrom, Minnesota Department of Revenue Minerals Tax Office engineering specialist.
That's down slightly from 38.9 million tons in 2006. The decline was due in part to a water freeze-up at Hibbing Taconite early this year that shut down the facility for about a month and cost that plant hundreds of thousands of production tons. Production for 2008 is projected to increase to about 38.5 million tons, Wagstrom said.
Plant owners are projecting that all six facilities will operate at or beyond designed capacity, Pagel said. And the industry will get a boost in the first quarter when Cleveland-Cliffs' Northshore Mining's processing plant in Silver Bay restarts idled lines, adding 800,000 tons to its annual capacity. One good sign is "a lot of capital investment in Northern Minnesota," Pagel said.
He pointed out examples of new equipment or refurbishing including Northshore Mining's purchase of a new shovel, Minntac's modernization of one taconite line, and ArcelorMittal's opening of an open pit mine near McKinley. About 4,000 people work at Iron Range taconite mines. About another 14,000 work in spinoff jobs dependent on the mines.
Explosive economic growth in countries such as China and India is driving demand for steel for bridges, roads, buildings, pipe, automobiles and appliances. The price of Iron Range ore pellets has jumped from just above $31 several years ago to about $78 today, Kakela said.
"I think 2008 is going to be a good, solid year," Kakela said. Domestic demand "is good and global demand is very good. Things are slowing down in Michigan as far as car production and parts, but the industry is recession-proof much more than it was in the past." Labor will be a key issue in 2008.
Contracts between the companies and Steelworkers at all the plants expire Sept. 1. Steelworkers leaders were in Pittsburgh recently to begin laying out issues and negotiation strategy. With steel companies reporting record revenues over the past two years, Steelworkers want to share in the good times.
However, Bratulich said Steelworkers hope to avoid a strike. "We're not looking for a labor dispute," said Bob Bratulich, United Steelworkers District 11 president. "How the companies behave in bargaining will determine whether we have a fight or not. It's not like any of them are in poverty. Nobody can claim they're poor in this bargaining."
Source: Bemidji Pioneer
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24-12-2007 The SSY Australian Coal Port Congestion Index finished the year at 14.8 days. This compares with an average of close to 17 days for the year and an average of around 8 days for 2006. According to local agents, over 70 Panamaxes and over 40 Capesizes are currently waiting to berth off the country’s coal and iron ore ports.
