Central Range Mining
The Transition to Taconite
The
early 1960s brought economic hardship to iron range communites; natural ore
production was going down, and the pace of taconite growth was disappointing.
Nothing could be done to reverse the trend in natural ore; the only solution
was to spur expansion of the taconite industry.
Taconite's
growth has not come easily because capital requirements are so extremely large,
competition keen, and a changing steel industry has brought periods of
uncertainty to the iron ore market. The 40 million tons annual taconite production
capacity attained by 1974 cost investors 1.2 billion dollars, and development
came neither quickly nor automatically.
While Minnesota was launching
a taconite industry, other states and nations were also beginning to develop
their resources of taconite or similar material. In fact, Minnesota, where the taconite process was
pioneered, fell behind in its competition for taconite investment.
This
challenge to Minnesota
was met in 1964 when the people overwhelmingly voted for a Constitutional Amendment
assuring taconite companies that they would not be singled out for state tax
increases.
The pledge
of fair tax treatment helped win further taconite investment. New projects
totaling over $400,000,000 were announced following the statewide referendum.
Within ten years, taconite plant capacity grew 165%, from 15,000,000 to
40,000,000 tons per year.
A second
period of taconite industry growth began in 1974, "the second taconite
decade". In that year construction began on two new plants, and three
expansions were announced. This brought total capacity to about 65,000,000 tons
annually, at an additional investment of over a billion dollars.
But Minnesota's taconite
industry has never operated at its full capability. Shortly after the expansion
in the '70s, the domestic steel industry faltered due to declining markets,
economic recession and foreign competition. North America
found itself with a 25% oversupply of iron ore. Iron ore production slipped to
70% of capacity in 1980, dropped below 40% in the early '80s. Two plants closed
in the mid-'80s, one permanently, and the other reopening under new owners at
reduced output. Today, the industry continues its struggle to control costs as
its traditional steel market in the Great Lakes
region fights for survival.
Today's
goal of the Minnesota taconite industry is to stabilize its relationship to the
steel industry, a difficult task when influenced by worldwide economic factors
over which the mining and steel industry have little or no control.
