Ore market woes trigger more Iron Range layoffs

The steep decline in global iron ore prices has led to more layoffs on Minnesota's Iron Range.

Indiana-based Steel Dynamics said Tuesday it will shut down two plants on the Iron Range for at least two years. That includes an iron concentrate plant near Chisholm and Mesabi Nugget near Hoyt Lakes, which converts that concentrate into a very pure form of iron nugget.

Together the two facilities employ about 200 workers. The company said it would offer jobs at other Steel Dynamics operations for those laid off in Minnesota and would keep a small group in Minnesota to maintain the site and facilities.

Mesabi Nugget has been idled since January. Steel Dynamics initially said the shutdown would only last six to eight weeks. Then in April the company announced the plant would remain closed indefinitely.

Political Coverage Powered by You

Your gift today creates a more connected Minnesota. MPR News is your trusted resource for election coverage, reporting and breaking news. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.

In a statement Steel Dynamics CEO Mark Millett blamed the idling on the "continued significant decline in pig iron pricing," adding that the current cost of producing iron nuggets is more than the selling price.

The global price of iron ore has recently jumped to above $60 per ton, up substantially from a low of near $45 a ton in April. But that's still sharply down from prices that soared above $190 a ton in 2011.

The announcement follows similar shutdowns and layoffs at other Iron Range producers in recent months. U.S. Steel is laying off about 800 workers at its KeeTac and MinnTac plants. Magnetation has shut down a small plant and filed for bankruptcy protection. And Cliffs Natural Resources has cut several management positions.

Hoyt Lakes Mayor Mark Skelton says the 200 layoffs announced by Steel Dynamics will have a big impact on the Iron Range.

"It's devastating to us," he said. "We don't have a lot of industry up here, and that's the frustrating part. Everybody has to travel to work now. I mean that's what we have is natural resources."

Industry experts blame the crash on overproduction of ore from mines in Australia, Brazil and elsewhere, coupled with a sharp reduction in demand from developing economies, especially China.

Mesabi Nugget opened on the Iron Range in 2009, a first-of-its-kind plant in Minnesota that manufactures nuggets that are about 97 pure iron. That compares to traditional taconite pellets, which are about 65 percent iron.

While taconite pellets can only be used to fire blast furnaces to make steel, nuggets supply a newer technology known as electric arc furnaces, or "mini mills," which make up a rapidly growing portion of the American steel industry.