‘Imagine if there was a shutdown’ with 3,000 area jobs at stake

Chris Johnson, President of USW Local 2705 talks about the importance of HibTac to the region Monday afternoon in Chisholm.

CHISHOLM — Hibbing Taconite could run out of ore reserves at the end of 2024 and shut down by early 2025, barring a viable solution for the mine’s majority owner, Cleveland-Cliffs.

At least 735 workers in northeastern Minnesota might have benefited from a land swap deal with the mine’s co-owner, U.S. Steel. But that failed to happen. Now politicians and United Steelworkers in the region are calling on Gov. Tim Walz and Metro-based legislators to join them in figuring out how to come across more ore. There are about 3,000 area jobs at stake when counting spin-off gigs.

Cliffs CEO Lourenco Goncalves has made it known that “there’s a very real possibility that Hibbing Taconite suffers some layoffs, cutbacks or possible closure if we can’t find something,” USW Local 2705 President Chris Johnson recently told the Mesabi Tribune.

After COVID-19 related layoffs, hundreds of Steelworkers in the area are worrying about job security for years to come.

“When there’s layoffs people feel it,” Johnson said. “Imagine if there was a shutdown.”

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Mike Jugovich, a retiree of Hibbing Taconite and USW Local 2705, stopped into his former union hall earlier this week on Lake Street in Chisholm to hold a swearing-in ceremony for his second term on the St. Louis County Board of Commissioners.

Sporting a Cleveland-Cliffs mask and USW jacket, he celebrated his reelection beside his applauding wife, daughter, colleagues and the union members who he called “brothers and sisters.” His attitude soon changed from enthusiasm to earnest as he began describing how the potential closure of Hibbing Taconite in four years could devastate cities on the Iron Range.

“Right now this union is facing some uncertain times with an ore body that is quickly being depleted,” he said. “So, it’s critical that we get somewhere that we can have Hibbing Taconite continue to operate.”

So, what is the best pathway forward now that Cliffs is the majority owner?

It would have been the Essar property in Nashwauk, but the state in December extended the long-embattled project’s timeline to almost line up with Hibbing Taconite’s ore reserve limit.

There remains a slim chance Cliffs and U.S. Steel, the latter of which owns about 14 percent of the Hibbing mine, could swap land known as the Carmi-Campbell that sits close to Hibbing Taconite, but is part Keewatin Taconite. Goncalves all-but dismissed that possibility in December on a conference call with state leaders.

The Carmi land holds about 500 million tons of resources and would provide seven to 12 years of mining.

“But that didn’t go our way,” Johnson said. He added, “We hope and we pray that we find some land in our permitted area to at least get us through before we get some other permitted land.”

Still, one of the current challenges in finding ore reserves includes having to wait several years to permit land and start digging. By that time, the mine could have already run out of ore reserves and there would have been cuts and layoffs.

“The commissioners and local politicians have been trying to find a way,” Johnson said. “The Essar deal is a head scratcher and it seems like we’re battling the governor at times. But they made their decision and now we have to find something else.”

Meanwhile, the local president, who has 15 years at Hibbing Taconite, acknowledged that some workers have already begun searching for jobs elsewhere.

“People with 10 years are probably looking and for sure under 10 years are looking at other places,” he said. “People are weighing the fact: Do I wait and hope that this comes through and then fight 600 people at a job somewhere else or do I just jump now? It’s a scary time. Everyone’s nervous.”

He continued, “But you got people trying to pay off all their stuff, in a hurry — cars and houses, whatever they have — so they can start saving, conserving, because if it happens, like many of the other layoffs, you want to have a nestegg you can fall back on because who knows how long it will be.”

•••

For Jugovich, he decided to use his swearing-in ceremony to reach out to the governor and politicians elsewhere to ask for their support.

He provided financial figures to show how the mine benefits the region: $449 million in annual impact; $314 million in local services and supplies purchased and $28 million in local and taconite taxes. He also noted the number of employees and the nomination of payroll and benefits at $107 million.

“There are people that get it,” he said. “But I don’t think that everyone understands that in [four] years time Hibbing Taconite might be no more.”

“We’re hoping we can catch the ear of anybody to help us with this process,” Johnson added. “It’s not just St Louis County. People come from Brainerd, Hill City, Bemidji to work here. It’s far-reaching.”

•••

At the commissioner’s ceremony, both Jugovich and Johnson made references to the 2000 closure of LTV Steel Company in Hoyt Lakes. Their stories sound like cautionary tales for mine-reliant economies: the permanent closure of the taconite plant devastated its surrounding communities, which have not recovered.

The future of Hibbing Taconite is the epitome of an age-old argument about diversifying the economy beyond just mining. But that has borne little fruit. Local economic development officials have propped up the region’s tourism industry while also shopping for other job sources, which now include a solar plant factory in Mountain Iron, but they have also been spurned in recent years by a wood siding plant in Hoyt Lakes, among others.

Many local elected officials have turned to the prospects of copper-nickel mining in the region: PolyMet’s permitted mine in Hoyt Lakes and the proposed underground mine of Twin Metals in Ely. But both projects face an extended timeline to open. PolyMet has taken more than a dozen years and counting without a shovel in the ground to start construction, due in large part to a long permitting process and lawsuits that followed.

Both mines have faced intense scrutiny and numerous legal challenges from environmental groups opposed to the new mining over concerns of water quality. Twin Metals, they note, would sit right next to the Boundary Waters Canoe Area Wilderness, and the Obama administration in 2016 halted exploration of the area for two years to study potential impacts of industry, until the Trump administration reversed course.

So far, those same environmental and legal hurdles have spared the Range’s taconite mines, which have operated for more than a century in the region, though there is growing concern among the Steelworkers and local officials that copper-nickel is just the tip of the iceberg.

“We are definitely the sins of our past but we’ve come a long way,” Johnson said, adding that he would like to take politicians and groups on tours of their facilities to show the improvement in safety and technology.

The COVID-19 pandemic that has forced some employers to permit working from home has some in the region seeing future diversification in a new light: Rural living, with improved broadband, could lead to well-paying remote jobs from larger companies not based on the Range.

As of today, though, that scenario exists only in the form of hopes and dreams.

“I understand that there’s people who say we have to learn a new way of life and move on,” Johnson said. “But we don’t have anything here yet. We don’t have any industries that produce the numbers he’s just given you. If you give us those numbers and we can find something great. Right now, this is our way of life. This is what we need to survive.”

He said that the mining jobs help sustain positions for Ziegler CAT and RMS, as well as bringing families into the communities which adds to the workforce in bars, restaurants and schools, among other industries.

“Mining has been 135 years plus in this area,” Jugovich said. “This is what we do and we do it best. I know we’ve all heard stories about looking at other ways to have an economy that’s prosperous here. That’s great, but if you can show us something that puts $449 million into the economy annually, we’ll jump at that. But until then, our bread and butter is underground. And we’ll keep digging.”

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