The Mesabi Daily News web site this morning has a "Breaking News" banner that "U.S. Steel to announce 700 layoffs at Minntac in Mountain Iron." I first saw it when I started to read "MnDOT committed to Highway 53 funding" following a Tweet that caught my eye. Of particular interest was the statement that
"MnDOT officials told the Virginia City Council last week that they are trying to have Cliffs Resources agree to push back the company-imposed May 2017 deadline for the Highway 53 relocation project to be completed. But they said that’s a doubtful proposition."The May 2017 deadline reference is a year ahead of the period when the iron sector is projected by the World Bank to begin an economic recovery, according to 2012 a report prepared for the European Commission (Mapping resource prices: the past and the future). As a recovering planner, I'm well aware of the dangers of taking forecasts as a given. Never-the-less, I suspect that the World Bank used best available information in updating its Commodity Price Forecast.
A comparison of the World Bank forecast with historical prices for the past 5 years leads me to believe that the forecast has been generally on target, allowing for a relatively short-lived bump up in prices during late 2012 and 2013, prices have been declining much of the past two years and that strongly suggests a depressed iron ore world market through 2018, as forecast.
Source: Index Mundi: Commodities: Iron Ore
I started looking at some of this information while thinking about and researching the whole question of sustainable mining on the Iron Range. Some have argued, incorrectly I believe, that environmental regulations are notable contributors to the problems and costs faced by mining in northern Minnesota. From what Google searches yield, Europe appears to be well ahead of Minnesota in looking at the future of indigenous ore production. The Mapping resource prices report includes a breakdown of production costs. Environmental regulations are not listed as a separate category and neither are they mentioned as a major cost factor.
My Minnesota has been among those asserting that the Iron Range needs a more diversified economy to be sustainable. One of the world's leading consulting firms highlights another way to consider why a sustainable economy for Minnesota, including the Range, is becoming more critical. McKinsey & Company, back in 2011, produced Resource revolution: Meeting the world’s energy, materials, food, and water needs. Their conclusion seems relevant to northern Minnesota's future. What do you think?
"In the 20th century, governments and businesses didn’t have to worry about resource productivity; they were able to focus on capital and labor instead. Over the next 20 years, resources needs to be put at the heart of public policy and business strategy."Increased resource productivity implies reduced demand for the raw material, similar to the way taconite processing helped the Range recover. It might also be worthwhile to give some thought to the potential effects of climate change mitigation on the steel industry lest a certain folk singer from the North Country be found to be too prophetic.
They complained in the east, they are paying too high
They say that your ore ain't worth diggin'
That it's much cheaper down in the South American towns
Where the miners work almost for nothin'
Thanks for visiting. Come again when you can.
Please be kind to each other while you can.