Pipeline projects won’t do much for the Iron Range

Judging by Sunday’s assessment by the Star Tribune, people are feeling pretty good on Minnesota’s Iron Range, where mines are starting to reopen after a couple of years.

“It seems like once he got in, things kind of turned around,” Greg Furin told the paper about the popularity of Donald Trump in Hibbing. He’s been out of work since August 2015.

Coincidence or a true reflection?

The people on the Iron Range, whose politics now matches the color of its topography, have a lot riding on the president’s promise to bring the steel industry back.

There’s plenty standing in the way, the Boston Globe reports today in an analysis of what that will entail.

His order to finish the Dakota Access Pipeline won’t do much, even with his emphasis on buying American steel. It’s almost finished. The pipe for Keystone pipeline has already been purchased. It’s sitting in a field in North Dakota and has been for years.

It didn’t come from American plants.

But maybe a new emphasis on more pipeline projects will rev up the industry. Maybe not.

“This is not the panacea for steel demand,” Gordon Johnson, a steel industry analyst with Axiom Capital Management, tells the Globe. “People are saying that it is. But it’s really quite the opposite. . . . Analysts who have touted this as a positive for steel are cheerleading.”

“Somebody at the White House doesn’t have a clue,” said Charles Bradford, the president of Bradford Research Inc. “This is not a common type of steel. It’s a very high strength steel which very few people make.”

An international trade attorney says the president’s declaration that pipelines should use U.S. steel in order to gain government approval probably runs afoul of trade laws.

And Trump isn’t the first presidential candidate to play to the Rust Belt and Iron Range. But little has worked. Foreign steel has friends in high places.

Senator Al Franken of Minnesota attempted to include a Buy America clause via an amendment to pipeline legislation in 2015.

It was blocked by Republicans.

Trump is intimately familiar with steel from his previous career as a construction baron. The Trump Organization purchased Chinese steel and aluminum for at least two of his recent construction projects, according to a Newsweek investigation that was published during the presidential campaign.

The projects included the Trump International Hotel Las Vegas and Trump International Hotel and Tower in Chicago.

Even the steel industry association, which is supportive of Trump, acknowledges that the pipelines order alone isn’t going to be a massive boon for American steel.

“What it shows is a positive approach to energy and it shows a way to get the markets excited,” said Philip K. Bell, the president of the Washington, D.C.-based Steel Manufacturers Association. “If you look at the reaction to the statement you’d think that oil is coming out of the ground.”

China’s news agency reports today, by the way, that with prices on the rebound, many of its steel plants are reopening.

Background: Iron Range voters turn to Trump to boost region’s struggling economy (MPR News)

  • jon

    So for coal there are some graphs on wikipedia that I like…
    https://en.wikipedia.org/wiki/Coal_mining_in_the_United_States
    The amount of coal mined per year, and the number of miners employeed per year…

    Number of Miners peaked in 1920’s and has been largely dropping since, production only recently started a downturn (like last decade).

    I’m not sure if something like this exists for Iron, I hope it does…

    The big take away for the coal graphs for me is that increased production doesn’t need increase employment… I suspect the same holds true for iron.

    We can increase demand for steel… but even if those mines all reopened, would those jobs come back, or would automated machinery be doing most of the work?

  • Bob Sinclair

    A question: Is the mineral content in the ore compatible for these types of steel that are being used? And, is it then economically feasible to ship that ore overseas where it will be used?

    • Aaron Brown

      Iron is iron. But modern steel furnaces are built to take ore in higher concentrations. The Mesabi Range still produces traditional taconite pellets for traditional blast furnaces. So these higher quality steel products cannot use Iron Range pellets. It is not feasible to ship ore overseas. Even when prices were insanely high in 06-07 Minnesota mines couldn’t figure out how to do that and still make a profit. Most of the ore in the world comes from Australia and Brazil, where the supplies dwarf ours tenfold.

      For the Iron Range to “survive” as an iron ore producer in the long run, companies must invest in the newer value added iron ore products that feed the newer steel furnaces. It will take many billions with many “B’s.”

      • Bob Sinclair

        Thank you for the clarification.

  • Carl Crabkiller

    Unintended consequences can happen, when W. Bush imposed steel tariffs to support the steel industry thousands of machinists were out of work as the high value machining work shifted offshore due to the high cost of domestic steel.

  • jane

    “…. to finish the Dakota Access Pipeline won’t do much, even with
    his emphasis on buying American steel. It’s almost finished. The pipe
    for Keystone pipeline has already been purchased. It’s sitting in a
    field in North Dakota and has been for years.

    It didn’t come from American plants.

  • rallysocks

    //The Trump Organization purchased Chinese steel and aluminum for at least two of his recent construction projects, according to a Newsweek investigation that was published during the presidential campaign.//

    Other factors aside, this is perhaps what makes me the most crazy in re: Trump. All of the things he is now going to ‘fix’ are things he has done. And he’s proud to have done them because it means he’s a good businessman. It’s maddening…

    • jon

      “It’s maddening…”

      Someday this will be a sub title in a history book as they talk about the (hopefully brief) Trump presidency, and the american experiment with “populism” in the 20-teens.

  • Will

    Sure but something is better than nothing, much of the emotional state of blue collar workers has to do with the attitude of the president. Being supportive of big projects instead of saying things like “You didn’t build that”, offers encouragement to get out there and work. I’m actually thinking of starting a business for the first time in my life, maybe the message Trump is sending is working.

    • J-dawg

      Wow.