KeeTac is one of a handful of U.S. Steel's American operations hit by yesterday's announcement of pending cutbacks. It's the first Minnesota taconite operation to shut down altogether since the recession cut deeply into the demand for Minnesota's taconite pellets.
Company officials have provided few details of the pending shutdown at KeeTac, saying the mine and plant at Keewatin will be idled within the coming weeks.
Spokesman John Armstrong declined to be recorded for broadcast, but said the company will keep enough maintenance staff on hand to bring the taconite mine and production plant back on line when market conditions improve, but couldn't guess when that might happen. Armstrong blames market conditions for steel, which have cut into the sales of autos, appliances and steel used in building construction.
Despite the industry's troubles, a full shutdown was shocking to Keewatin residents. Keewatin Mayor Tom Sampson said maybe half the plant's workers live in the small Itasca County town. He's been uneasily watching U.S. Steel's customers struggle for business.
"Well I kind of watch the steel market, and it just went from great guns to nothing in two weeks," Sampson said. "Then the rest of the mines started working shorter shifts, and all that stuff, but I didn't think they'd shut this one down."
Mining company, Cliffs Natural Resources, announced weeks ago it would cut production at three of its Minnesota mining operations, based in Hibbing, Eveleth, and Silver Bay. But a complete closure of a taconite mining operation like this is the first in years.
It brings back bad memories for State Representative Tom Anzelc of Balsam Township.
"This was the mine that my dad worked at," Anzelc said.
Anzelc said it's hard on the families, especially on young families that maybe haven't prepared for the inevitable ups and downs of mining.
"I feel very bad for the families, and the kids, and the workers, and the spouses and all of that, but we're a pretty resilient group up here in northern Minnesota, as you know," Anzelc said. "I'm hoping that people will hang in there and that toward the end of '09 things will start to look up again. But 2009 is not going to be a good year in Minnesota."
What's surprising is how quickly the fortunes of Minnesota's mining industry have changed. KeeTac is supposed to be getting a $300 million investment to add new equipment for another taconite production line. All that was expected to add 75 new permanent jobs. Anzelc said he's been told permitting and engineering will continue for the expansion, although it's hard to see how U.S. Steel could invest in the plant in the current economic climate.
The temporary closing isn't a surprise to Duluth College of St. Scholastica economist Tony Barrett.
"It's a little worse than I expected when I hear that they're shutting down the whole mine for a while," Barrett said. "But it's not a surprise. And if anyone thought we might be able to dodge this recession like we did the last two national recessions, this is proof that we're not. This is going to be the start of a rough 2009."
U.S. Steel owns another of Minnesota's six taconite operations. Yesterday's annoucement did not mention production or employment cuts at U.S. Steel's MinnTac mining facility in Mountain Iron. MinnTac is Minnesota's largest taconite operation, employing about 1,200 people. But, U.S. Steel is shutting down two other facilities, one in Michigan and one in Missouri.