1964 Taconite Amendment gave new life to Mesabi Iron Range

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Erie and the Taconite Amendment

As written in the Erie book, “Taxation of iron ore had long been a matter of contention between the steel industry and the State of Minnesota. To promote the development of the vast amounts of taconite that lay under the state, the Minnesota Legislature in 1941 enacted a taconite production tax imposed on taconite pellets when they were produced, rather than being levied against its proven value in the ground as was done with natural ore. Following the initial success of the Erie and Reserve taconite operations in the 1950s, the steel industry was evaluating additional multimillion dollar investments in Minnesota taconite.”

But the steel companies wanted guarantees that the new expanding taconite industry would not be taxed unfairly. In 1964, the Minnesota Legislature negotiated a proposed amendment to the state constitution, “which guaranteed that for 25 years increases in certain taxes on the taconite industry would be limited and would be comparable to tax increases imposed on other manufacturing businesses in the state.”

Erie, Pickands Mather and other industry leaders, together with northern Minnesota legislators, worked hard to gain support for passage of the Taconite Amendment. “Confidence in Minnesota taconite was almost immediately rewarded with the announcement of hundreds of millions of dollars in investments for development of long-planned taconite projects and the creation of thousands of new jobs across the Mesabi Range.”

And this is when the taconite boom happened all across the Mesabi Iron Range. As “Within weeks, U.S. Steel began construction on its huge taconite plant at Mountain Iron. By the end of 1964, Ford Motor Company and Oglebay Norton were employing more than 800 workers at the taconite facility the partners were building near Eveleth. Butler Taconite Company at Nashwauk and National Steel Pellet Company at Keewatin, both managed by Hanna Mining Company, began producing pellets in 1967. Both Erie and Reserve expanded their pellet production. In the early 1970s, construction of Inland Steel Corporation’s Minorca taconite project near Virginia and Pickands Mather-managed Hibbing Taconite Company were announced.”

Edward Wilson Davis’s prediction that Minnesota taconite producers would be making 40 million tons of pellets by 1975 had been correct. The Minnesota industry surpassed that mark in 1973, producing 41.6 million tons of pellets—with almost 30 percent of that total coming from Erie. He became known as “Mr. Taconite.”

At the University of Minnesota Davis developed an engineering process to economically extract iron ore from hard taconite rocks, making taconite valuable as iron ore for the iron and steel industries.

In 1913, Davis began working on taconite. Over the next four decades, Davis devised a process to crush the hard rock, separate the iron from the crushed rock using magnets, and roll the iron into pellets suitable for transport and use in a blast furnace. Davis earned 19 patents for his many innovations. In the 1950s, Davis’s research was used to create several taconite processing plants in northeast Minnesota. The Reserve Mining Company honored Davis by naming its Silver Bay facility the E. W. Davis Works.

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Taconite makes New York Times

The news about the upcoming vote on the Taconite Amendment made the New York Times in October 1964, before the voters in Minnesota would decide on the Taconite Amendment:

“MINNEAPOLIS, Oct. 4—Ask a resident of northern Minnesota’s Iron Range what he considers the major issue in the November 3 election, and he may say, ‘civil rights,’ or ‘extremism.’ Then again, he may say, ‘taconite.’ It is a proposed taconite amendment to the Minnesota constitution which has caused more optimism in economically depressed Range communities than anything else since Minnesota began its gradual decline as the world’s leading iron ore-producing area. Taconite is the name given to an extremely low‐grade material, which when reduced to marble‐sized pellets through an expensive process can be used in Great Lakes blast furnaces instead of the richer ores.

“Minnesota began pinning its hopes on taconite several years ago when depletion of natural ores caused a gradual shutdown in the huge open pit mines on the Mesabl and Vermillion ranges northwest of Duluth.

“The issue before the voters in November will be whether the Constitution shall be amended to guarantee, for 25 years, ‘tax equity’ for the taconite industry. This, it is argued, will guarantee that the big mining firms will invest millions of dollars in new taconite processing plants, thereby increasing the Range’s sagging economy for years to come.

“The amendment would guarantee that taxes on taconite production would be no higher than levies on other industries.

“In several surveys by the Minneapolis Tribune’s Minnesota poll the last three years, voters have consistently favored the amendment by wide margins. In the latest poll, the amendment was endorsed by 81 per cent of the respondents.

“Historically, mining has been taxed on a different basis, and at higher rates, than other industries. (Unlike other industries, mining pays no income tax).

“Taconite plants have sprung up and the industry has expanded. Plants like the mammoth Reserve Mining Company operation at Silver Bay increased Minnesota’s taconite capacity. This was 54 per cent of the total United States and Canada capacity.”

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Name ‘Taconite’ derived from Taconic Mountains of New England

From MNOPedia:

“Though taconite was identified as an iron-bearing rock on the Iron Ranges of northern Minnesota long before the 1950s, it wasn’t until then that it was extracted, processed, and shipped to steel mills on the Great Lakes. As natural ore reserves were diminished, taconite became an alternative source of iron that allowed the Iron Range to continue mining operations in a changing global economy.”

The word taconite is derived from the Taconic Mountains of New England, with “taconic” coming from an Eastern Algonquian language—probably Mohican or Lenape. Newton Horace Winchell, Minnesota’s state geologist, created the name in 1892 after he noticed that the rocks in New England looked like the rocks plentiful throughout the Iron Range in Minnesota. The geological structure of taconite, however, is different from the rocks of the Taconics. Taconite has a very low iron content—at best, only 32.5 percent of the rock is iron ore. Since there were many accessible deposits of natural ore with iron contents closer to 60 percent of the rock, taconite was at first passed over in favor of ore that could be shipped directly to smelters without processing.

Taconite was officially documented on the Range years before mineable natural ore was found near Mountain Iron. In 1870, prospectors Christian Wieland and Peter Mitchell traveled to the Mesabi Range and found a massive deposit of taconite near current-day Babbitt.

The first taconite mine was run by the Reserve Mining Company at Babbitt, and the first shipment was in 1955. Reserve opened a taconite processing plant at Silver Bay in 1956. By the late 1950s, this plant was producing 6 to 10 million tons of pellets a year and disposing of taconite tailings in Lake Superior. Lawsuits ensued.