Obama's chief aide to see a strapped Iron Range

It's been a devastating 2015 on Minnesota's Iron Range. Nearly 2,000 mine workers have been laid off; dozens if not hundreds of related jobs are also gone.

For many who grew up on the Iron Range, working in the mines is a dream job. It was for Tanya Gustafson, despite the long days.

"Twelve-hour shifts, they get long," she admitted. "But I love my job, I love my crew, I love everybody I work with."

Two years ago, the diminutive 32-year-old was hired at Keewatin Taconite to drive the mammoth trucks that haul ore from the mine to where it's made into taconite pellets.

"I think there's 22 steps that I counted to get into my cab," she said. "It's like driving a house."

Gustafson's community revolves around the mines. And she loved being at the center of it.

But last May, Keetac shut down and she was laid off. At the same time, Gustafson's husband lost his job erecting steel building frames with the Iron Workers Local 512. They have three kids. There's no word on when the mine might reopen.

"We're very optimistic," she said. "The holidays, it's a little bit harder — this is the first year I had to use a credit card. I wasn't going to make my kids suffer through it."

The Iron Range has weathered ups and downs in the mining industry before. But people are suffering, said Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Board, or IRRRB. He pointed out that mining makes up 30 percent of the region's economy.

"So you'd have to look at the Twin Cities, and if they lost 30 percent of their economy, there'd be a special session tomorrow," he said.

Layoffs on the Iron Range are not like workforce reductions at Target or 3M, he said. There aren't dozens of other companies offering jobs that pay upwards of $70,000 a year.

"There's no places for these people to turn to find other jobs," he said.

Keetac was the first major mine on the Range to close last spring. Others followed like dominoes. Now United Taconite in Eveleth and Northshore Mining in Babbitt and Silver Bay are also closed. So are Mesabi Nugget and three of Magnetation's four plants.

"The fact of the matter is, we're going to need some help from our government," said Dan Pierce, a diesel mechanic at Keetac and vice president of the Local Steelworkers 2660 union.

Pierce and other union and elected officials accuse foreign state-owned steel companies, mainly in China, of illegally dumping steel in the United States at below the cost it takes them to make it.

"We're going to need some trade cases to come back in our favor, to where they're going to put a stop to this dumping," he said. "Because if they don't it's just going to continue."

It can take a long time to prove illegal dumping cases. But recent decisions have supported the industry's arguments. Last week the U.S. Department of Commerce slapped huge tariffs on Chinese imports of cold rolled steel. It found China subsidized its steelmakers by more than 200 percent.

College of St. Scholastica economist Tony Barrett suspects illegal dumping is a main culprit behing the Range's struggles. The world is producing more steel than it's consuming. He said growth in developing countries, especially China, has slowed.

"With their slower growth, their demand for steel isn't there," he said. "They're still producing the steel, and they have to sell it somewhere. And we are the world's largest and healthiest economy right now."

That's what's so frustrating about current Iron Range layoffs. In the past they've always coincided with downturns in the American economy. This time, the Range is hurting while the rest of the state is thriving.

In the longer term, Barrett said, there will be demand for Minnesota ore as long as there's American-made steel. It's too expensive to ship ore from mines in Australia or Brazil.

"The question is, how much of a beating is our steel industry going to be allowed to take?" he said. "What's going to be left, when action finally is taken, or when the business cycle turns around in China and the other developing countries?"

That's the backdrop for today's visit by Denis McDonough, President Obama's chief of staff. Democratic Sen. Amy Klobuchar will be one of many Minnesota politicians joining him on the Iron Range, pushing for stronger federal intervention.

"I've always believed that if you have an even playing field, our workers are going to win," she said. "They are hard workers." One of those workers is Joe Meyer. He was laid off three weeks ago from his job with Northern Belt and Conveyor, which services the mines.

His family is getting by on a little over $500 a week in unemployment benefits. That's less than half his regular income. His wife Alanna is picking up work at the local liquor store.

"I'm just trying to remain positive. I guess," she said. "Because otherwise you just let it eat you up and you end up fighting and getting more stressed out."

Joe Meyer worries other young workers in their 30s will leave the Iron Range. His family, he said, is here to stay.

"Our heart and soul is here on the Range, and that will probably be where we end up retiring," he said.

And he's banking on something other than work related to the iron mining industry. He wants to work at PolyMet, the proposed copper nickel mine 5 miles down the road from his house in Hoyt Lakes.

"It will create a lot of work, and even move younger families back in, and keep the families that are here, here," he said.

PolyMet is expected to clear a major hurdle in February, when the state will decide whether the project's final environmental impact statement is adequate. The company can then apply for the nearly two dozen permits it will need to operate.

But the mine also faces likely lawsuits, an effect of the larger debate over the project that's gone on for a decade. Can PolyMet create hundreds of jobs and protect the region's sensitive water-rich environment?

And that public policy debate may not be the biggest obstacle to the project anymore. Even if it does ultimately win environmental approval, the company still must raise an estimated $600 million to build the mine. And it will be trying to do that when the price of copper is at a six-year low.

Edward Meir, a senior commodities strategist with INTL FCStone, said that's driven by a big drop in Chinese demand — just like with iron ore and steel. He said that a decade ago, when PolyMet started its environmental review, China unleashed a huge bull market for copper, iron ore and other commodities.

"What we're seeing now is the Chinese bull story moving in reverse," he said. "Now we're seeing the back end of it. As China slows down, you're seeing a bear market engulf all these commodities."

Meir said PolyMet's outlook depends on what potential investors think of the situation in China. He anticipates PolyMet having a tough time attracting financing.

But others, like analyst Chris Krueger with Lake Street Capital Markets in Minneapolis, point out copper is also needed for new technologies like medical devices and renewable energy.

"I think if they get [the required permits], then raising capital is the next step," he said. "I don't think it will be a problem; it's a pretty lucrative opportunity there."

Investors will look at the long-term horizon, he said.

For Iron Rangers, the immediate concern is seeing the taconite mines reopen. Many hope that will happen by late spring.