- Associated Press - Wednesday, December 2, 2015

ST. PAUL, Minn. (AP) - Minnesota officials approved a cost break for three taconite producers Wednesday by retroactively lowering their royalty rates on ore mined on the Iron Range.

The decision drops the amount companies must pay on each ton of ore by almost 19 percent and revises a separate formula for ore shipped out of state. Together, the moves will lower the amount that flows to a special school trust fund account and local coffers by an estimated $890,000, which the Department of Natural Resources said would have come in between this April and next June.

“Everybody understands and knows that the iron ore industry is in a world of hurt right now,” DNR Commissioner Tom Landwehr told the State Executive Council, which is made up of the governor and four other statewide elected officials.

A fourth producer, U.S. Steel, got the same break earlier this year and could reap up to $4.5 million in savings alone. Landwehr’s agency received the request for equal treatment from three others - Arcelormittal, Northshore and Hibtac - the day after the U.S. Steel vote. Gov. Mark Dayton said it would be unfair to reject the temporary revisions to leases for the other companies after granting it to U.S. Steel.

The latest break was approved by a 4-1 vote, with Auditor Rebecca Otto the lone dissenter. She questioned whether cost savings would merely go to company shareholders and executives rather than to keep Minnesota mine workers employed.



“Does this help our workers and our taxpayers in our state?” Otto asked.

The royalty payments account for a large percentage of school trust fund infusions. That investment account - fed by timber sales, mining royalties and other revenue from DNR-managed lands - has existed for more than a century and provides annual payouts to school districts around the state.

Sandy Karnowski, public affairs manager for Cliffs Natural Resources that runs two of the operations, said the company bases executive compensation largely on stock performance. With share prices down, executives are being paid less.

“We’re turning over every rock we can find to help our industry,” Karnowski said. She added that the savings will help keep 70 to 90 workers on the job longer at Northshore, which has idled production until market conditions improve. “Our intent is to operate Northshore again and that asset needs to be maintained while it’s idled.”

A domestic steel downturn has prompted numerous production slowdowns at mines and layoffs in northeastern Minnesota.

Lawmakers are contemplating a special session to extend unemployment benefits for idled steelworkers, many of whom are nearing their maximum allotments.

Dayton said he will meet Monday with Republican House Speaker Kurt Daudt and Democratic Senate Majority Leader Tom Bakk to discuss a session agenda and timing.

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