(The following article by Peter Passi was posted on the Duluth News Tribune website on May 9.)
DULUTH, Minn. — What becomes of an idle Taconite Harbor ore dock once used by LTV Steel Mining Co. could have significant implications for the region.
If the facility is reopened, it could deal a blow to the Twin Ports and Canadian National Railway Co., which this week expects to acquire the Duluth Missabe & Iron Range Railway Co. and its ore docks.
Cleveland-Cliffs Inc. owns the Taconite Harbor dock and is exploring whether it might make sense to ship pellets produced by United Taconite, formerly EVTAC, through the facility. Those pellets now are transported by DM&IR to its Duluth and Two Harbors docks.
“Transportation is a major component of our delivered cost, and we’re always looking at different opportunities to reduce cost,” said Dana Byrne, Cleveland-Cliffs director of public affairs. “Taconite Harbor is just one of several options we’re looking at. There’s nothing definite about it. We study lot of things.”
If Cleveland-Cliffs did reopen the Taconite Harbor facility, it also might siphon away pellets Hibbing Taconite now sends to the Burlington Northern Santa Fe ore dock in Superior.
Rep. James Oberstar said Cleveland-Cliffs first began to talk openly about the prospect of restarting Taconite Harbor while in freight-rate negotiations with DM&IR.
But Byrne said Cleveland-Cliffs isn’t trying to use the threat of reopening Taconite Harbor as leverage to negotiate more attractive rail rates. He noted that even if the dock in Taconite Harbor is reactivated, his company will still rely on area railroads to move pellets to it.
By shipping pellets out of Taconite Harbor, Cleveland-Cliffs could shave about six hours off every round trip an oreboat makes through the Soo Locks. The cost savings in a year could be significant, Byrne said, adding that detailed estimates have yet to be developed.
However, bringing Taconite Harbor on-line would require a sizable investment. Byrne said it would probably take about $15 million for load-out facilities, rail improvements and storage needed to support pellet shipments from United Taconite.
If Cleveland-Cliffs is interested in tapping a federal loan program to help finance the work, Oberstar said he would support the company’s application.
But fears that the Twin Ports may lose jobs and revenues to North Shore communities have stirred controversy. A few weeks ago, Superior Mayor Dave Ross helped organize a task force aimed at derailing efforts to resurrect Taconite Harbor’s dock. Ross estimates Superior would lose about $1 million in local tax revenues if the BNSF dock closes.
Brian Sweeney, BNSF’s director of government affairs, estimated the Twin Ports stands to lose about 115 jobs and $6 million worth of local spending if local ore docks are put out of commission by Taconite Harbor.
“Obviously, I would like to see jobs stay here in the Duluth-Superior Harbor,” said Adolph Ojard, executive director of the Duluth Seaway Port Authority. “But if business does stay, it will stay based on transportation rates.”
Richard Stewart, director of the University of Wisconsin-Superior’s Transportation and Logistics Research Center, said the Twin Ports may enjoy a competitive advantage over Taconite Harbor if it is able to attract more inbound freight that oreboats could carry on their return trips from steel mills. He suggested that clay for coated papers and fertilizer are two bulk cargoes that might hold promise.
Ojard said the Twin Ports enjoys another advantage in that it offers refueling services absent from the scene in Taconite Harbor.
“Stepping back, I’m an advocate for the lowest-cost, most-efficient transportation system we can foster in the region,” Ojard said, stressing that the Twin Ports will attract business only so long as it remains competitive. “You can’t justify maintaining artificially high rates just to protect local jobs.
Oberstar agreed, saying, “If Duluth-Superior wants to keep the ore flowing, it will need to look at its cost structures.”
The congressman said keeping Minnesota iron mining competitive must remain the top priority.
“We need to remember that we’re now part of a world market,” Oberstar said. “We’re competing with countries like Australia and Brazil. And we need to be the low-cost source of high-quality ore.”