The layoffs at Minntac amount to almost half the workforce. 500 union and 90 management workers are being idled as US Steel shuts down two production lines at the mine.
A spokeswoman for U.S. Steel declined to speak on tape, but she said the layoffs are temporary. Workers will be brought back if the market improves, but orders for steel are down and she says it's impossible to know when that could happen.
The mayor of nearby Mountain Iron says it won't be soon enough. Gary Skalko said news of the layoffs have hit the town hard.
"We are a tough breed up here. The people will survive but it is devastating and we will stick together," Skalko said. "The biggest concern that I have is that the economy can or will turn around to get these people back to work for a long term basis."
Skalko said the layoffs will have a massive ripple effect because most of the other industry in the area is mining related.
In the final three months of last year, when the financial crisis hit, U.S. Steel's profit fell by two-thirds compared to the previous three months.
As the economy continued to weaken, U.S. Steel idled several plants and reduced operations at others around the country. The company laid off 3,500 workers late last year after idling production at plants in Michigan, Illinois and Keewatin Minnesota.
Officials with the United Steelworkers couldn't be reached for comment, but one told the Associated Press that this round of layoffs blindsided the union.
Skalko worries the laid off workers won't be able to find other jobs because the entire economy is suffering.
"We have got to get them back to work in a relatively short period of time," he said. "I don't even want to think of the alternative. I don't even want to think about that right now. It would be totally devastating."
The layoffs at Minntac are expected to take effect over the next couple of weeks.