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Northshore Mining extends shutdown into summer

Production at Northshore Mining Co. in Silver Bay has been shutdown for six weeks, and will continue until July because of weak demand for iron ore pellets. (2005 file / News Tribune)

The shutdown at Northshore Mining Co. in Silver Bay and Babbitt will extend into July and will affect hundreds more employees.

The taconite facility was to have resumed operation next week after a six-week shutdown, but weak demand for iron ore pellets has prompted its owner, Cliffs Natural Resources, to scale back production another 13.5 percent.

As a result, Cliffs now projects the mine and plant will produce 3.2 million tons of pellets this year instead of 3.7 million tons. About 120 of 550 workers at Northshore have been laid off already; another 280 workers are expected to be placed on layoff Sunday, leaving about 150 on the job to continue shipping pellets, maintaining equipment and performing other duties during the shutdown.

Northshore has the capacity to produce 5.8 million tons annually, and is now expected to churn out only 45 percent of that amount.

Maureen Talarico, a spokeswoman for Cliffs, said the iron ore company will continue to adjust to customers' needs.

"Our employees have been very understanding," she said. "Ideally, the market would skyrocket, and we could call everyone back early."

Northshore is the only unorganized mine on the Range.

"This is an unfortunate but necessary action as a result of the reduced industry demand for iron ore pellets," said Donald J. Gallagher, president of Cliffs Natural Resources North American Business Unit in a written statement.

"As a result of the global economic downturn and its effect on our business, we must keep production in line with current demand to ensure the long-term success of Northshore Mining Company."

Other Iron Range mines have cut production, too. US Steel Corp. idled Keewatin Taconite Co. in December.

Minntac, also owned by US Steel, has scaled back production, laying off a total of 634 workers.

The Minorca mine, owned by ArcelorMittal, is scheduled to begin an 11-week shutdown on May 10, resulting in the voluntary layoff of 127 people.

United Taconite Co. in Eveleth and Forbes begins a four-week shutdown this month, which will be followed by a mandatory vacation for most workers during the first two weeks of June. When they return, employees of United Taconite plan to continue working a 32-hour week as a way to reduce production yet avoid layoffs.

Workers at Hibbing Taconite Co. will begin a shutdown May 16 that's expected to last until Aug. 30.

Domestic steelmakers are operating at about 40 percent to 45 percent of their capacity. Consequently, Craig Pagel, president of the Iron Mining Association of Minnesota, predicts Iron Range pellet production will come in around 20 million tons. That's about half of the Iron Range's total current production capacity of about

40 million tons of iron ore pellets.

"The economy remains soft, but there are indications that construction is coming back up," Pagel said, citing a recent rise in commercial and industrial construction.

"As things cycle down they feed on themselves, but it also works the same way going up" said Frank Jenko, president of United Steelworkers Local 2705, which represents workers at Hibtac.

He said the economy, and particularly the automotive and construction industries, will need to strengthen in order for steelmakers to recover.

"We'll get back to normal again. Not soon enough. But we'll get back to normal," Jenko said.