Lawmakers: $650M Federal Loan Would Harm MN Mining
Some Minnesota lawmakers and the state’s mining industry are up in arms as a massive iron ore mine being built in Australia may receive a loan from a U.S. government-sanctioned bank—despite the competition it would create for Minnesota businesses.
U.S. Senators Al Franken and Amy Klobuchar, along with U.S. Representative Rick Nolan, are all fighting a plan that calls for the official export credit agency of the United States, the U.S. Export-Import Bank, to invest in exporting equipment to Australian iron ore mine Roy Hill, according to the Duluth News Tribune.
Cleveland-based Cliffs Natural Resources, which operates three iron ore mines in Minnesota, said the Australian mine will strain U.S. mining jobs, as well as steel industry jobs—as the Australian ore will be produced for Asian-made steel, the Duluth newspaper reported.
The Roy Hill mine will reportedly produce 55 million tons of iron ore annually, more than all U.S. mines combined. It’s a $10 billion project that is expected to flood the iron ore market by 2015.
The $650 million loan in question would help fund the export of products from Peoria, Illinois-based Caterpillar to the Australian mine. According to the Duluth News Tribune, the bank’s board of directors will vote on the loan in the coming weeks.
Nolan wrote a letter to the bank urging it to deny the Australian application. “While we understand and appreciate the desire to help facilitate the export of manufactured goods, it is hard to comprehend how the bank could ignore the competitive implications of helping to establish a single new mine that is larger than the entire U.S. industry,” he reportedly wrote.
While Cliffs and Minnesota officials don’t hope to stop the colossal mine from being built, they do want to keep the United States from lending a hand.
“It is estimated that, over the eight-year life of the loan, Roy Hill’s output would displace nearly $600 million of U.S. iron ore exports,” Cliffs officials said, according to the Duluth News Tribune. “[Which] would cause a reduction of approximately $1.2 billion in U.S. domestic sales, for a total loss to the U.S. iron ore industry of $1.8 billion.”
On the other hand, Caterpillar has reportedly spoken out in defense of the loan, arguing that the mine will be built either way, and the loan would at least allow U.S.-made equipment to be used in its operations.
Bill Lane, a Caterpillar official, reportedly said his company is “befuddled that there’s this opposition,” which he said is “pitting Minnesota against Illinois.”