HibTac mine on Iron Range expected to run out of ore in 5 years

Hibbing Taconite has neighbor troubles.

Hemmed in by cities to the south and east — and by the competing Keewatin Taconite to the west — HibTac's open pit mine will run out of accessible, quality iron ore by 2024.

There are options to expand the Hibbing mine, but they are complicated and potentially involve making a deal with the lease holders of other ore reserves or scrambling development plans for a long-stalled iron mine in Nashwauk. Other possibilities include finding new technology to sniff out tiny, untouched slivers in the current mine.

The solution, if one is found, is likely to be a combination of ideas.

"I am definitely concerned," said Chisholm Mayor John Champa. "It would be a huge economic impact to the city [of Chisholm] if we were to lose HibTac. A big percentage of their workers are from Chisholm, which is basically touching HibTac. It's one of our bigger employers for Chisholm."

HibTac, which began pelletizing iron ore in 1976, injects $449 million into the Iron Range economy. That includes the $107 million in annual wages paid to its 735 workers.

Hibbing Taconite is jointly owned by three companies: Luxembourg-based ArcelorMittal (62.3%); Ohio-based Cleveland-Cliffs (23%); and Pittsburgh-based U.S. Steel (14.7%).

All three companies declined interviews for this story, but ArcelorMittal Americas issued a statement.

"As a leading consumer of iron ore pellets produced on the Iron Range, the future of mining on the Range is very important to ArcelorMittal," the company said. "We are actively working on efforts to ensure the long-term supply of quality iron ore from both Minorca [mine in Virginia, Minn.] and Hibbing Taconite to our key operations in the United States."

HibTac, with help from state and local authorities, has done everything it can to extend the life of the mine.

In 2016, HibTac, the Minnesota Department of Transportation (MnDOT) and St. Louis County shut and moved part of County Road 5 and merged it with County Road 136 so HibTac could access fresh land for mining.

This year, the Hull Rust Mine View station was moved so that HibTac could tap the iron-rich ore hiding under the "overlook" stands. The new observation deck opened in May.

Come 2021, 40 Xcel Energy workers plan to move 3 miles of power lines between Hibbing and Chisholm so HibTac can more easily access another sliver of ore — at a cost of $15.5 million.

"The relocation will allow Hibbing Taconite to expand their mining operations in the area west of Hwy. 169," said Xcel Energy spokesman Matt Lindstrom.

"They are squeezing every possible option out of that mine that they possibly can," said Kelsey Johnson, president of the Iron Mining Association of Minnesota. "It's an unfortunate circumstance. HibTac has the ability to stay open and operate much longer, but they can't get access to leasable property at the present time."

Hoping to change that, area mayors last month discussed a possible, but complex, land-exchange proposal that might let HibTac access leased ore reserves near Keewatin that are now controlled by U.S. Steel.

Chisholm's Mayor Champa, who was at the September Range Association of Municipalities and Schools (RAMS) meeting, admits the proposal faces "several conflicts," including ongoing litigation.

"I am hoping they can work through the problem because HibTac definitely needs that property," Champa said. "If Hibbing Taconite could get control of that ore reserve, it would extend their life quite a bit."

Steve Giorgi, executive director of RAMS, said he too hopes for a land swap, but noted it's neither a sure thing nor a quick fix.

"There are obviously some permitting issues that have to take place if a land exchange were to occur. But the sooner it were to happen, then the better off for HibTac," Giorgi said. "HibTac is in a better position to utilize that ore than somebody else. [Still] I don't have a crystal ball to know how all those discussions and deal makings are going to go."

Giorgi said he just hopes the negotiations continue.

Residents, workers and politicians agree they need to try every option to keep the Hibbing mine operation open.

"HibTac is important," said Hibbing Mayor Rick Cannata. "Anytime you hear that a mine might be shutting down, it's a concern for the people in northern Minnesota. It impacts the whole community," including suppliers, vendors and restaurants.

Last year, HibTac workers produced 7.8 million tons of taconite iron pellets that lake freighters then shipped to customers in Canada and along the Great Lakes.

While the northeast pocket of Minnesota boasts six iron-ore mines and pelletizing plants, HibTac has long carried its weight, producing money and jobs for many companies, Cannata said.

City and state officials said solving the problem of limited mining space in Hibbing will probably fall to HibTac's majority owner, ArcelorMittal, plus a few other property owners in the region.

ArcelorMittal, the largest steel producer in the world, also runs the Minorca Mine near the city of Virginia, and buys taconite iron pellets from nearly all the players on Minnesota's Iron Range. It took over management duties for Hibbing Taconite in August from Cleveland-Cliffs.

State officials are closely watching the situation but acknowledge there's not much they can do. Since production began back in 1976, much of the land in HibTac's ore pit was controlled by the state but has already been mined.

"Within the current mine pit area, the state now only has remnant parcels of ore with small quantities and questionable grade," said Joseph Henderson, division of lands and minerals director at the Minnesota Department of Natural Resources.

"There are substantial quantities of high quality ore in the area, but that ore is privately owned," Henderson said. For the sake of the area, "we hope the parties can reach agreement to secure a future for Hibbing Taconite."

Rep. Julie Sandstede, DFL-Hibbing, said she believes there are still options to help HibTac.

"Unfortunately, the situation has become difficult and complex with recent lawsuits that have been filed," she said. "These lawsuits appear largely baseless and have been made without regard to our economic future in northern Minnesota. ... Once we work through these challenges, I'm hopeful we can move forward with solutions."

Some mining firms are exploring external remedies.

In December 2017, Cleveland-Cliffs — which owns United Taconite in Virginia/Eveleth, Northshore Mining in Silver Bay/Babbitt, and part of Hibbing Taconite — purchased or leased 3,768 acres of iron-rich land in Nashwauk. Cliffs' property sits just 14 miles west of Hibbing Taconite and just yards from a rival's property in Nashwauk.

Cliffs CEO Lourenco Goncalves envisions one day using Cliff's Nashwauk ore for Cliff's own pelletizing or advanced hot-briquetted iron (HBI) operations in Minnesota and Ohio. Cliffs could also sell some of that ore to third-party steelmakers, he said. Still, he concedes such plans could be years away.

Cliffs has yet to secure mining permits in Nashwauk from the state of Minnesota. Those mineral leases are now held by a rival, Mesabi Metallics. Industry experts warn that Mesabi Metallics risks losing its Minnesota mining permits because it has yet to deliver on key promises made to the state.

Mesabi Metallics promised to finish constructing the half-built ore-processing plant in Nashwauk it acquired when it bought the Essar Steel Minnesota out of bankruptcy in 2016. That $1.9 billion taconite plant and project, however, remains unfinished, despite a December construction deadline plus financing questions. Mesabi Metallics was supposed to have been the project's savior after Essar Steel Minnesota went bankrupt in 2016 after a decade of stops and starts and lots of disappointment.

Today, area residents said they have little hope of ever seeing the 350 jobs the Nashwauk site once promised.

But Champa in Chisholm said he is hoping the site may one day help HibTac.

"Iron Range mayors are really pushing for something to happen over by Nashwauk," he said. "If they can get something going there, and if Hibbing Taconite does close, at least there would still be mining jobs" in the region.

Dee DePass • 612-673-7725