CLEVELAND — Mining and steelmaking firm Cleveland-Cliffs will at least temporarily idle its Northshore Mining operation in Minnesota, which includes a 47-mile railroad connecting its mine in Babbitt to a processing plant at Silver Bay on the North Shore of Lake Superior.
The Duluth News-Tribune reports the move — announced by company CEO Lourenco Goncalves during a Friday earnings call with investors — comes as Cleveland-Cliffs is involved in a royalty dispute over the taconite it produces, as well as a reduced need for taconite pellets as the company uses scrap metal in its electric arc furnaces.
The Babbitt and Silver Bay facilities will be idled this spring and will remain out of operation at least until the fall, Goncalves said. Northshore Mining employees 590 people; it is unclear how many will be laid off.
Goncalves said the move reflected the company’s plan to move pellet production to a plant in Minorca, near Virginia, Minn., as well as what he called “the ridiculous royalty structure we have in place with the Mesabi Trust …. No production, no shipments, no royalty payments.” The Trust receives royalty payments based on the amount of ore mined from the Peter Mitchell Mine in Babbitt, which provides Northshore’s ore and is located on trust-owned land.
The railroad connecting the two Northshore facilities was opened in 1955 by then-owner Reserve Mining Co. and has been featured in Trains Magazine on a number of occasions, most recently as part of an October 2021 article, “Uncommon Carriers,” on private railroads. It currently operates 24 hours a day with crews making two 6-hour round trips on each shift, moving 156-car ore trains with a locomotive fleet including five SD70ACe locomotives, eight rebuilt SD40-3s and two SD40-2s.
— Updated at 3:15 p.m to correct location of Minorca facility.
Gee the trust wants to be paid for what is taken out of their lands, what are they thinking?
It’s not the fact that Cliff’s has to pay royalties, rather Cliff’s feels that the rate per ton is too high. It seems that Cliff’s pays less for Iron Ore mined at its Minorca Mine near Virginia, MN. With the shift towards using Electric Arc Furnaces producing steel from scrap metal. The amount of steel produced from Iron Ore is shrinking.