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IRRRB rebates taconite tax to mining companies

Commissioner Mark Phillips of the Iron Range Resources and Rehabilitation Board tells a Minnesota legislative panel Friday, March 18, 2016, that his agency is working to fix problems a year-long audit discovered in its loan and grant programs. (Fourm News Service photo by Don Davis)

DULUTH, Minn. — Minnesota's largest mining companies got some gifts a few days late this holiday season, but it was well worth the wait.

The Iron Range Resources and Rehabilitation Board on Wednesday doled out nearly $6 million in taconite tax rebates to mining companies. That's on top of nearly $3 million approved for the companies in October.

The companies pay a tax on every ton of taconite iron ore shipped out of the Iron Range. But the state gives some of that money back for construction projects.

The rebate, ordered by state lawmakers and dubbed the Taconite Economic Development Fund, is aimed at encouraging the companies to reinvest in their Minnesota properties. The companies have to match the state tax rebate dollar for dollar on projects that will help maintain or add employment.

In addition to approving rebates for ArcelorMittal's Minorca operations in Virginia, Minn., Northshore Mining in Silver Bay/Babbitt and U.S. Steel's Minntac plant in Mountain Iron, the IRRRB also approved rebates for two operations that were shuttered for all of 2016 and are expected to remain closed into 2017 — Mesabi Nugget near Hoyt Lakes and U.S. Steel's Keetac operations in Keewatin.

The 2016 rebates are based on taxes paid in 2015. Several of the projects improve operational efficiency or pollution control requirements.

Minorca's two proposed projects total $649,457; Northshore Mining will get $1.127 million; Minntac, the largest iron ore producer in the U.S., received a rebate of $3.257 million; Keetac received just over $1 million and Mesabi Nugget just over $12,000.

The IRRRB in October approved rebates of $1.876 million to Hibbing Taconite with the money going to help pay for a highway relocation for the operation to expand its mine. The board in October also approved $1.1 million for United Taconite with the money going toward its Forbes plant conversion to make a new customer-specific pellet called the Mustang.

Keetac officials 'hopeful' of reopening

Travis Kolari, Keetac plant manager for U.S. Steel, told the IRRRB Wednesday that he remains "very, very hopeful'' that the operation will reopen sometime soon but that demand and prices for specific steel products still haven't rebounded enough to warrant the extra iron ore production.

Many of Keetac's more than 400 employees have been out of work for more than 18 months, But Kolari said all Keetac managers remain working and that 49 Keetac workers are filling in at nearby Minntac. He said another 43 Keetac workers are now "temporary assignment'' elsewhere and that 13 employees remain on the job keeping Keetac ready to reopen.

"Things are starting to look more favorable,'' Kolari said.

As the company has said in the past, Kolari tied the reopening of Keetac production to the status of U.S. Steel's Granite City Works near St. Louis which makes oil industry pipe.

Mesabi Nugget future 'still cloudy'

Officials of Mesabi Nugget told IRRRB members that their future remains uncertain and likely tied to higher pig iron prices.

The Hoyt Lakes area operation, and its Mining Resources iron ore concentrate feeder plant in Chisholm, have been closed since 2014 due to low iron and steel prices. Steel Dynamics said in May 2015 that the Minnesota operations likely would remain shuttered for two years.

About 200 people were laid off, although about 16 employees remain on the job, keeping the two facilities ready for a possible reopening.

"This project is an ongoing project; we're keeping the place ready to run,'' said Mark Lorenz, manager of Mining Resources operations.

Lorenz said the "situation is still cloudy'' for Mesabi Nugget until pig iron and scrap iron prices increase. Those prices, which dropped as low as $190 per ton in 2015, have rebounded to about $300 per ton but are still not high enough to warrant reopening the plant.

IRRRB gets more Republican influence

Wednesday's IRRRB meeting in Eveleth marked the last official duties for two state lawmakers. State Rep. Carly Melin, DFL-Hibbing, chose not to run for re-election, while state Sen. Tom Saxhaug, DFL-Grand Rapids, was defeated by a Republican in the November election.

Two other DFLers, Rep. Tom Anzelc, DFL-Balsam, and Rod Skoe, DFL-Clearbrook, also were defeated in November but did not attend Wednesday's meeting.

The IRRRB board consists of all the state senators and representatives elected from state senatorial or legislative districts in which one-third or more of the residents reside within the IRRRB's area of taxing and distribution authority — essentially a broad definition of the Iron Range. One additional state senator is appointed by the Senate, which in 2017 will be run by a Republican majority.

Joining Republican incumbent Rep. Dale Lueck of Aitkin on the board will be new Sen. Justin Eichorn, R-Grand Rapids, who defeated Saxhaug, and Rep. Sandy Lehman, R-Cohasset, who topped Anzelc.

Melin was the only DFLer replaced by another DFLer, Julie Sandstede of Hibbing.

When the Senate appointee is added (to replace Skoe), Republicans will make up a modern-day record four of the nine positions on the IRRRB.

"It was a great run and I think we did a lot of great things,'' Saxhaug said.