The clash of two big steel companies will help shape the future of the Iron Range | Analysis

Hibbing Taconite (pictured here) and Keewatin Taconite mines have dug closer to one another over the years and will eventually collide. Photo by Christina Hiatt Brown.

One day, making tracks
In the prairie of Prax,
Came a North-Going Zax
And a South-Going Zax.
And it happened that both of them came to a place
Where they bumped. There they stood.
Foot to foot. Face to face.
— From “The Zax” by Dr. Seuss

The Mesabi range city of Hibbing owes its existence to the manufactured canyon that envelops its northern borders. This enormous iron ore mine built the original village, rebuilt an even bigger Hibbing after forcing it to move a century ago, and generated about three-quarters of U.S. iron ore for World Wars I and II. And it’s still producing.

The Hull-Rust-Mahoning pit remains both Hibbing’s greatest economic driver and most persistent challenge. Now, this behemoth runs headlong into an early 21st century problem.

For the 20 years I’ve reported on the Iron Range, well-informed people told me that Hibbing Taconite and Keewatin Taconite would eventually collide. Working off the same massive Mesabi iron formation, these mines have dug closer to one another each of many passing years. And while the two pits have not yet merged, the companies that run these properties have nevertheless reached an impasse.

Cleveland Cliffs is our North-Going Zax. It’s the majority owner of Hibbing Taconite. And this Zax needs ore. Officials estimate that about three more years of ore remain within the current reach of the mining company, a dire deadline for more than 500 local miners and affiliated workers.

U.S. Steel is our South-Going Zax. It owns a minority share of Hibbing Taconite, but wholly owns Keewatin Taconite and the state’s largest iron ore mine, the mighty Minntac in aptly-named Mountain Iron.

Both companies need a solution here, but they’re working on a much bigger map. For the people of the Iron Range, the outcome here will determine the future of livelihoods and families. But these companies are also grappling for control of the North American steel market. For them, and especially their shareholders, human consequences on the Range come second.

It’s not that the situation lacks solutions. There are at least a few obvious possibilities. Most expediently, U.S. Steel holds an ore reserve called the Carmi-Campbell west of Hibbing Taconite that would buy several more years of mining for Hibtac. One idea is for U.S. Steel to swap this section of ore for a Cliffs property near Buhl adjacent to U.S. Steel’s Minntac mine. Early talks to accomplish this trade fell apart in 2019, but could resume.

Another well-documented option is for Cliffs to acquire the holdings of the fledgling Mesabi Metallics on the grounds of the long-dormant Butler Taconite mine near Nashwauk, all the way on the opposite side of the Keetac mine. Ore could be conveyed to Hibbing in several possible ways, similar to how Cliffs’ moves raw material at its other mines. Northshore Mining in Babbitt and Silver Bay and United Taconite in Eveleth both mine ore in one place and process it miles away.

However, the Mesabi Metallics property, trapped in a 15-year economic development debacle, remains tied up by state mining leases, which officials like Gov. Tim Walz are reluctant to pull for fear of legal liability that could cost the state millions. The partially constructed iron mine and processing plant built by Essar Steel ten years ago still stands, a rusting albatross of forgotten hope. Cliffs wants the land and leases, but views the existing plant structure as mere scrap metal. 

If both Carmi-Campbell and Nashwauk fall through, Hibbing Taconite faces far more expensive and unlikely options. They could move highways north of Chisholm, or try to jump Highway 169 to mine reserves south of Chisholm. But the costs would be prohibitive. These tricky prospects would likely spell the end of Hibbing Taconite.

A generation ago, it seems unlikely that such a matter would remain unresolved for long. Mining companies on the Iron Range may be competitors, but generally accommodate one another. This was especially true when U.S. Steel was the largest corporation on earth while Cleveland Cliffs and others were just small operators, known locally as “independents.” 

But a lot changed last year. 

Cleveland Cliffs bought AK Steel and ArcelorMittal USA, making itself the largest integrated steelmaker in North America. That title had been held for almost 120 years by U.S. Steel. Cliffs now has many ways to make steel and a diverse new supply line.

For its part, U.S. Steel is also making relatively bold moves. This year it acquired the Big River steel works in Arkansas, the company’s first mini-mill, with $774 million in cash. For generations, Mesabi iron ore has fed U.S. Steel’s big blast furnaces. But as the steel industry seeks lower emissions, efficiency, and product variability, smaller mini-mills have become more successful. If U.S. Steel’s experiment at Big River succeeds, we could see dramatic change. Companies would still need iron ore, but they wouldn’t need the traditional taconite pellets produced by existing Range mines.

So while we on the Mesabi are worried about Hibbing Taconite staying open, these companies are literally dueling over the very future of American steel production.

Neither U.S. Steel nor Cleveland Cliffs will happily abandon their market position. So, breaking this impasse will require a bold move. Walz has encouraged the companies to negotiate, while Cliffs CEO Lorenco Goncalves has asked for his help on the mining leases.

Either U.S. Steel will be forced to retrench around MinnTac, conceding the western Mesabi to Cliffs. Or maybe the state takes an unusually aggressive stance in routing Mesabi Metallics out of the Nashwauk property. Either would be a big story on its own. Nevertheless, just like the North-Going and South-Going Zax, someone has got to move.

If not, the Iron Range could find itself down another taconite plant, and so many jobs that even long-shot copper-nickel projects like PolyMet or Twin Metals couldn’t hope to make up the difference.

Of course the world didn’t stand still. The world grew.
In a couple of years, the new highway came through
And they built it right over those two stubborn Zax
And left them there, standing un-budged in their tracks.