Taconite Production Projected to Increase

By KBJR News 1

July 24, 2012 Updated Jul 24, 2012 at 6:58 PM CST

Iron Range (Northland's NewsCenter) - According to the Minnesota Department of Revenue's Mineral Tax Office in Eveleth, a projected 39.3 million tons of taconite are expected to be mined this year.That's up slightly from 39.1 million tons mined last year and a major increase compared to the 17 million tons mined in 2009.

"Car and truck sales are up, which make up 25 percent of the demand for steel in the United States," said Iron Mining Association President, Craig Pagel.

It's a welcome increase after the 2009 mining year, in which only 17 million tons of taconite were mined and the mines temporarily shut down.

However, according to Pagel, that shut down may have helped the mines get back on their feet quicker when the economy started to come back.

"Even during the recession, even though the mines were down, a lot of maintenance was done that we couldn't have otherwise done while they were up and running," he said.

Minnesota Department of Revenue Engineering Specialist, Bob Wagstrom, projects the following totals for 2012 taconite production:

Keewatin Taconite - 5 million tons

Hibbing Taconite - 7.8 million tons

Minntac - 13 million tons

United Taconite - 5.2 million tons

ArcelorMittal - 2.6 million tons

Northshore Mining - 5.2 million tons

Totals are based on dry tonnages of taconite.

According to Wagstrom, taconite production tax revenues are expected to be up by about $20 million, payable in 2013. Wagstrom says this is due to having more taconite to tax and an increase in the taconite tax rate of about a nickel per ton, bringing the rate up to $2.46 per ton.

Taconite production is based on a three-year average. Now that the low-production year of 2009 is no longer part of that average, production totals are higher, which is a good thing for those benefiting from the state's taconite production tax revenue.

"The Mountain Iron–Buhl or the Eveleth–Gilbert school districts were losing anywhere from $100,000 a year less than what they had gotten before that crash [2009 mining year] and now they'll pick it up again," said State Representative, Tom Rukavina.

Pagel says that the mining industry is creating plenty of job opportunities, he said many companies are looking to hire.

"There's going to be a need for new employees and these are high paying technical jobs with starting salaries well above other private industries," Pagel said.

Officials from the Minnesota Department of Revenue attribute the projected increase in revenue over last year to the expansion of Magnetation's new plant near Taconite.

According to Wagstrom, Magnetation, a mineral processing company, is taxed differently than the taconite mines. Their taxes are based on a single year instead of a three-year average.

Written for the web by Jennifer Austin.