If recent job cuts at U.S. Steel and idling at an ArcelorMittal blast furnace in Indiana speak to one thing, it’s the need for the state of Minnesota to step up its game for the Iron Range.

There’s a belief in the steel industry that the current pricing slump is more of a fluctuation than a full-blown indicator of a 2015-esque downturn, meaning if they’re right, the Iron Range will be spared this time around.

But what about next time?

In temporarily idling Blast Furnace No. 3 at Indiana Harbor, ArcelorMittal raises the question of under what market conditions will it come back? Temporary, for a blast furnace based on demand, might as well be indefinite, especially in the ever-changing landscape of the steel industry that is relying increasingly on more efficient electric arc furnaces.

Lourenco Goncalves, chairman, president and CEO of Cleveland-Cliffs, pointed out as much during his investor call last month. EAFs are coming slowly and only the most competitive and resilient blast furnaces will survive.

As for pellet producers, Cliffs is the one responding. The company now creates more direct-reduced iron pellets at Northshore Mining than blast furnace pellets, which will ship next year to its hot-briquetted iron plant in Toledo, Ohio. That product will feed EAFs — a big step in the direction of diversifying the company’s offerings.

The success of Toledo will have wide-reaching impacts on the Range, too, underscoring the need for Minnesota to enter the EAF market and advance the state’s steel industry into the next generation.

The good news is that there’s a path to make that happen sooner than later, if the state is willing to help. In Nashwauk, where Cliffs owns a large portion of land and minerals at the former Essar Steel Minnesota site, a project has failed to launch and state officials are fed up. They’re refusing to work with former-but-new owners, Essar Global, who drove the project into bankruptcy once already.

If the state is serious about developing the Nashwauk land, and also moving the Range into the next generation through the EAF market, then the time is right for Gov. Tim Walz and the Department of Natural Resources to at least reach out to Cliffs — the only viable company to express interest in an HBI plant in Nashwauk — as it moves where the iron ore market is heading.

The results could be outstanding for the region. The West Range and trades unions want a project built and operated — without discern for which company does it. Minnesota wants an HBI plant to feed EAFs. And Cliffs — which completed investments at United Taconite and Northshore recently — wants to do something in Nashwauk, where it’s land and minerals holdings make it a party to be reckoned with whether or not the state pulls Essar/Mesabi Metallics’ leases.

The volatility of the market is giving us an early glimpse of the steel industry version of Darwinism — only the strongest blast furnaces will survive — where the forward-looking companies will thrive.

“We will come with something, we will come with something after HBI one, could be HBI two could be something else,” Goncalves told investors in October. “But we are going to continue to follow the trends. We are going to continue to evolve Cleveland-Cliffs to adapt to an American steel market that will continue to produce steel.”

The questions for the state now are how long can the Iron Range remain competitive in this market without a definitive step into the EAF future, and what role does it want to play in getting the region there?


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