MN Taconite Production More than Doubles in 2010

The state's taconite production is nearing pre-recession levels-and a handful of new projects indicate that 2011 will mean even more production, and in turn, more taxes.

The Iron Range in northern Minnesota is showing positive indicators as 2010 taconite production more than doubled that of 2009.

Bob Wagstrom, engineering specialist from the Minnesota Department of Revenue, said in a Tuesday phone interview that he estimates 2010 production levels of between 34.3 million and 34.6 million tons.

According to the state's annual mining tax guide, 2009 saw the lowest production level in decades, totaling only 17.1 million tons.

Based on trends from the past three months, Wagstrom projects that 2011 production levels will reach about 38 million to 39 million tons-similar to the quantities produced between 2004 and 2008.

Taconite mining and production has long been a key industry in the northern Minnesota economy. Companies drill and blast to obtain the taconite, which typically consists of about 20 percent iron, and then grind it into a fine consistency. A magnetic process then separates the iron ore from other elements, and it is compressed into pellets, which contain about 65 percent iron. The pellets are shipped to other facilities, typically around the Great Lakes.

More production means more taxes for the state. According to Wagstrom, taconite plants don't pay property taxes but do pay a production tax. The production tax was $2.38 per ton in 2010, and he projects that it will be around $2.41 per ton next year.

In 2009, the six taconite plants on the Iron Range ceased production for various periods as companies scaled back during the recession. In 2010, the region saw ramped up activity at those existing plants, and new companies-with new technologies-entered the territory.

For example, the new Mesabi Nugget plant near Hoyt Lakes creates what it calls iron nuggets-which contain upwards of 95 percent iron, according to Wagstrom. Although the plant is not yet operating at full capacity, Wagstrom said that within a few years the company will be contributing a significant amount of taxes, and its higher-concentrate nuggets will be taxed higher than traditional pellets.

Magnetation, a new facility located near Keewatin, will also contribute to production levels, and Wagstrom said that the plant uses a new technology to reclaim old iron ore for new uses.

Plus, Essar Steel Minnesota has commenced construction on a new plant near Nashwauk. According to Wagstrom, future plans for the site include the construction of a steel plant in addition to the taconite facility, which will eliminate the need to ship the taconite to a separate location.

In addition to a revitalized taconite industry, new forms of mining could soon benefit the region. Eveleth-based Iron Range Resources recently extended a $4 million loan to PolyMet Mining Corporation-the next step toward commencing the first copper-nickel mining operation in Minnesota.