Minnesota’s taconite iron ore producers will make less product in 2013 than they did in 2012, but the downturn looks to be brief.
It appears 2013 will end up with about 38.9 million tons produced and shipped from the Iron Range, according to state estimates. That’s down about 2 percent from 39.7 million tons produced in 2012, said Bob Wagstrom, who tracks taconite production for the Minnesota Department of Revenue.
Most of the difference was spurred by a million-ton drop in production at Cliffs Natural Resources’ Northshore Mining, which idled two production lines for most of 2013 after losing a customer. Some of that loss was buffered by an increase at U.S. Steel’s Minntac plant in Mountain Iron, Wagstrom said, and by continued increasing production by Magnetation, which has several small plants that recover useable ore from old mine waste sites.
“With the exception of Northshore, everybody was right at last year or even a little up for this year,” Wagstrom said. Northshore officials already have announced that they will restart their idled lines in 2014, boosting production. And Wagstrom said that with continued incremental increases by Magnetation and Mesabi Nugget — the state’s first iron nugget plant near Hoyt Lakes — taxable production could total about 40 million tons in 2014, a level not seen since 2000.
Taconite production levels are important for local and state tax coffers. The mining companies pay taxes based on what they produce and sell. The production tax alone, what mining companies pay instead of property tax, pumped nearly $103 million into local government and school funds for 2012 production alone. That number should hit $110 million for 2013, Wagstrom said.
That taconite production tax was $2.53 per ton in 2013 and is slated to go to about $2.60 per ton for 2014 unless state lawmakers act to freeze it. The mines also pay a so-called occupation or business income tax to the state, and they pay mining royalties if ore is mined where the state owns mineral rights.
Taconite production also is a good measure of the health of the region’s single largest industry; iron ore mining amounts to one-third of all gross regional product. If production begins to drop markedly, it can signal hard times ahead, often including layoffs at plants and a ripple effect across the region.
Because most taconite produced in Minnesota goes to large U.S. blast furnaces to make domestic steel, the continued rebound of the U.S economy is critical for continued taconite industry success. Construction is up across the U.S., as are auto sales, driving demand for Minnesota taconite, said Craig Pagel, executive director of the Iron Mining Association of Minnesota, an industry trade group of mining companies and their suppliers.
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