Mining is a small part of Minnesota’s economy. So why is it such a big political issue?

downtown Hibbing
MinnPost photo by Gregg Aamot
Mining has been an important pillar of the economy in Iron Range towns like Hibbing for well over a century.
Visit Iron Range towns like Babbitt, Hibbing, Virginia and Eveleth, Minnesota this election season and it’s not just signs supporting candidates that decorate lawns and businesses.

Signs with slogans like “We Support Mining” are pretty much permanent fixtures in this part of the state, where mining has been an important pillar of the economy for well over a century.

The signs may be numerous, but the number of people actually employed in mining in Minnesota isn’t: Mining is directly responsible for about 0.2 percent of Minnesota’s jobs and less than 3 percent of its economic output, according to state data.

Despite making up a relatively small share of Minnesota’s economy by those measures, mining is a big political issue in races for Minnesota governor, Senate, and Congress. What makes this relatively small industry such a big political deal?

A big impact in Northeastern Minnesota

Mining has a long history in Minnesota, beginning in the 1800s when prospectors looking for gold in the northeastern part of the state struck on something different in the region’s reddish landscape: iron ore.

At first, they passed up the mineral to continue the search for gold. But, by the 1910s, iron ore was mined and shipped from the Vermilion, Mesabi and Cuyuna ranges. Soon, mining was one of the state’s biggest industries.

More than a century later, the majority of the mining activities in Minnesota still have to do with extracting iron ore. Up to 44 million tons of it gets pulled from the Mesabi Iron Range — a narrow strip that stretches from Grand Rapids through Babbitt — each year.

But mining makes up a relatively small share of employment in Minnesota these days. According to the Minnesota Department of Employment and Economic Development (DEED), the state’s mining industry is made up of 210 businesses that employed about 5,700 people in 2017 — fewer than the 8,300 working for Target in downtown Minneapolis in 2017.

Proportionally, though, as Target headquarters is to Minneapolis, mining is to northeastern Minnesota — roughly speaking.

A sign promoting mining in a window at Lind Industrial Supply.
MinnPost photo by Gregg Aamot
A sign promoting mining in a window at Lind Industrial Supply in Hibbing.
Whereas Target’s 8,300 downtown employees make up about 3 percent of employment in the city of Minneapolis, mining makes up nearly 4 percent of the jobs in northeastern Minnesota, according to DEED’s data (data do not include farm payroll or self-employed people).

What’s more, mining jobs pay considerably more than the average job in the region: nearly $90,000, compared to $43,000 for jobs overall.

Mining jobs are some of the best-paying around in northeast Minnesota, but they aren’t the most stable.

Employment in mining has been dropping in the long-term, thanks to automation and outsourcing, said Cameron Macht, regional analysis and outreach manager at the Minnesota Department of Employment and Economic Development.

In the last two decades, employment went from about 6,800 to about 5,300.

Mining jobs in Minnesota, 2000-2018
Note: Data shown for the first quarter of each year.
Source: Minnesota Department of Employment and Economic Development Quarterly Census of Employment and Wages

Though the long-term trend has been a decline in employment, employment in the mining industry is closely tied to to the performance of the economy overall. Mining employment dropped during the early 2000s recession and again during the 2008 recession.

Despite a booming economy overall in Minnesota in 2015 and 2016, the state’s mining mining industry saw mines shutter and employment slashed due to low foreign steel prices, said Kelsey Johnson, the president of the Iron Mining Association of Minnesota.

Mines began to reopen in 2016, when President Barack Obama’s administration cracked down on foreign steel dumping. Early this year, President Donald Trump’s administration imposed tariffs designed to further protect the domestic steel industry.

Impact on GDP

If you just look at employment, though, you’re not going to get a full picture of the economic impact of mining in Minnesota.

While employment has been on a long-term decline, the economic impact of mining has not.

The portion of Minnesota’s gross domestic product — a measure of all the goods and services produced in the economy — contributed by the mining industry saw a marked increase as the economy recovered from the 2008 recession. As with employment, the drop in output in 2015 due to foreign steel prices had an effect, but the economic output is well over early-2000s levels now.

Mining and natural resources GDP, Duluth metro area, 2001-2017
The Duluth metro area, the geography most analagous to northeastern Minnesota for which gross domestic product data is available, includes St. Louis and Carlton counties in Minnesota, and Wisconsin's Douglas County. Note: 2008 data were not available for the Duluth MSA. Amounts shown in millions of 2009 chained (inflation-adjusted) dollars.
Source: U.S. Bureau of Economic Analysis

But while that number is up in value, it’s not up much in proportion to Minnesota’s other economic sectors. That’s especially true in northeastern Minnesota, where the economy is in transition — depending more on health care and education in particular than in the past.

Again, mining and natural resources only make up about 3 percent of GDP in the state of Minnesota. But in the Duluth metro area — the area most analogous to northeast Minnesota with available GDP data — mining and natural resources accounted for 13 percent of GDP in 2017.

Mining and natural resources as a share of GDP, Duluth metro area and Minnesota, 2001-2017
The Duluth metro area, the geography most analagous to northeastern Minnesota for which gross domestic product data is available, includes St. Louis and Carlton counties in Minnesota, and Wisconsin's Douglas County. Note: 2008 data were not available for the Duluth MSA.
Source: U.S. Bureau of Economic Analysis

Economists cite another advantage to industries like mining for a regional economy: Because it’s an export business, mining brings money in from outside the region that then gets spent in the community.

“That money is coming from outside of the area and landing in the region then, and that money gets turned around many different times in many different ways, primarily through the payroll through those mining establishments,” Macht said. “They spend that money at retail stores and on accommodations and food services, at car dealerships and schools and all that kind of stuff, too.”

Non-export businesses, by contrast, tend to circulate money from within a community around and around — or, if you shop at say, a big box store, partly out of the community.

Also worth noting: these numbers are just measuring the employment and economic input that result directly from mining.

A study by the Labovitz School of Business and Economics at the University of Minnesota-Duluth found that while about 4,000 people were employed directly in iron mining in Minnesota in 2010, 2,300 were employed indirectly by mining, in businesses that support the industry, and an additional 5,000 were employed because of economic effects induced by mining (this could be jobs in restaurants or stores, for example). The report estimated total employment due to mining at 11,200 people.

The report also found iron mining directly brought in $1.7 billion to Minnesota’s economy in 2010, but accounting for indirect effects brought the total to $3 billion. All told, iron mining was responsible for 5.3 percent of Minnesota’s gross product and 30 percent of Northeast Minnesota’s (defined in the report as Minnesota’s Arrowhead region, plus Douglas County, Wisconsin) in 2010.

Deciding mining’s future

Mining has been around in Minnesota for a long time, but it’s a big political issue now because of questions about the industry’s future. Those questions center around two controversial proposed projects.

PolyMet, a proposed mine near Hoyt Lakes that would be the first copper-nickel mine in Minnesota, has been hung up for years as environmentalists and mine proponents battle it out. A Labovitz School report found the project would directly employ 360 people and indirectly create about 600 jobs.

Twin Metals, a proposal for a mine near the Boundary Waters Canoe Area Wilderness, would extract copper, nickel, platinum, palladium, gold and silver. Twin Metals says ithe mine would directly employ 650 people and indirectly employ 1,300 jobs.

Not everyone agrees that these mines would be beneficial to northeastern Minnesota’s economy. Some criticize economic impact reports, saying they downplay the potential effects of mining on protected wilderness areas that form the backbone of the area’s tourism industry. Others say allowing the area to rely too heavily on mining is dangerous because of the industry’s boom and bust nature.

Whoever is in charge of the government after the November election — both in Washington, since federally-protected land and regulation play into the debate, and in Minnesota, could play roles in determining the fate of these two contentious projects and in mining projects in the future.

Comments (16)

  1. Submitted by Richard Lentz on 10/17/2018 - 11:51 am.

    Like so many other issues, it is identity, psychology, tribalism, and image. 3M Used to be a Minnesota mining and Manufacturing.

  2. Submitted by David Schimpf on 10/17/2018 - 12:25 pm.

    Good work. Two other things to remember when considering why mining gets so much political support in Minnesota:

    1) As Range job opportunities declined, many of the younger Rangers moved away but stayed within the state. Their political leanings often persisted, and strongly pro-mining views are now more geographically dispersed.

    2) Every gravel pit is actually a mine. Gravel pits are distributed throughout much of the state. If one’s livelihood depends on gravel mining, it is harder to be against mining more generally.

  3. Submitted by joe smith on 10/17/2018 - 12:30 pm.

    Let’s see. Mining pays over twice what other jobs pay, 2-3 local support jobs are related to each mining job, NE Minn is blessed with an abundance of minerals, taconite from the Range gets shipped (jobs), gets milled (jobs), produces steel (jobs), steel is used in almost every construction job, steel is used in the cars industry. Why wouldn’t we mine it up here?
    If you are talking copper/nickel mining only, same question why not here? No mine will have had to pass a more strict permitting process, have been more scrutinized and be as safe as Polymet.
    NAFTA killed the logging industry up here, crippled the mining industry up here, until finally, someone had the sense to redo the agreement. All of the small businesses up here are excited about more opportunity to grow, add to their hiring and hopefully thrive.
    The only folks who don’t want mining up here are the elitist Globalists who feel a job in the Chinese steel market is as important as a job in Northern Minnesota. I and many up here don’t agree.

    • Submitted by Ray Schoch on 10/17/2018 - 04:35 pm.

      Just out of curiosity, how are you defining “elitist?” How are you defining “globalist?”

      In the meantime, not a single sulfide mine on the planet has managed to conduct its operations without polluting the local watershed and water supply. The toxic wastes from such mining have to be contained in perpetuity, meaning forever. If they’re not, you get an acid river like the Dolores in southern Colorado a couple years ago. Not only no fish, and literally poisonous to drink, but no aquatic life whatsoever, and that pollution won’t go away.

      When the deer, elk, turkeys, bears and other wildlife that rely on clean water have died from poisoning (I’m not enough of a botanist to be able to speculate credibly about damage to plant communities), even the miners are going to be pretty unhappy, and there will be very little reason for tourists, other than the usual “disaster tourists,” to visit that part of the state, so not only will the mining jobs go away, so will most of the other jobs disappear. Minnesota might well have its very own local “empty quarter.”

      I’d have liked to see Greta compare the number of mining jobs, and the number of other jobs associated with mining, to the number of jobs in the recreational and hospitality industries in the Arrowhead and on the Range. I have no idea where to find those figures, but my guess – and it’s only a guess – is that those recreational and hospitality jobs at least match, and perhaps substantially outnumber, the jobs associated with mining. A sulfide spill will damage ALL of them.

      • Submitted by Frank Phelan on 10/18/2018 - 09:44 am.

        Here’s my definition of an elitist: someone who thinks we should erect barriers to the ballot box instead of letting every citizen vote.

    • Submitted by Frank Phelan on 10/17/2018 - 05:39 pm.

      If you support mining because of the high paying jobs, do you support the right of miners to organize and collectively bargain for better wages and fringe benefits? I don’t just mean in theory. By support, I mean opposing the expansion of big government when they prohibit private parties from agreeing that all employees who get contract pay and benefits actually have to pay the costs of negotiating, administrating, and sometimes grieving the contract?

      If these foreign corporations are really interested in our well being, they would sign an agreement with the Steelworkers now. But they have not. They have not signed a project labor agreement with the building trades. When they do those things, I’ll consider these to be high paying jobs. But not until then.

    • Submitted by Rod Portage on 10/17/2018 - 06:29 pm.

      13 of 14 copper sulfide mine water treatment systems have failed to contain contaminated mine seepage in the US. Use the google machine, it’s as easy to access as ever.

      Also, some short memory spans are forgetting the Dunka Mine in MN, which will help after a spill occurs…”how could we have possibly known?”….

      https://www.minnpost.com/community-voices/2011/04/minnesota-legislators-wage-war-international-lake-district/

      Maybe some northern bootstrappers can use some of their own talking points to uproot and find a better life rather than refusing to change and begging a multinational corporation to bankroll their lives while they fleece our State. Are those the global elites you prefer to support? Lastly, living close to the BWCA doesn’t make your opinion more important when talking about publicly held land- it makes it gilded.

    • Submitted by Brian Gandt on 10/22/2018 - 10:39 am.

      Last person I heard of being concerned about Chinese jobs was D Trump, in a tech brouhaha.

  4. Submitted by Ray Schoch on 10/17/2018 - 12:59 pm.

    Excellent rhetorical questions in the column’s headline, and no persuasive answers – beyond the power of tradition – in the data presented. Of course mining jobs are important to miners and the people who depend upon the miner’s paycheck to support their own business. Even in greater Minnesota, however, the number of miners, and the number of other jobs dependent upon those miners, is – in relative terms – pretty small. In effect the rest of the area’s citizens, not to mention the rest of the state’s citizens, are being held hostage by the economic needs of a relative handful – using Greta’s figures, about 3,000 jobs directly or indirectly involved in the proposed pair of mining ventures.

    To insist that these jobs are essential to the area in economic terms is a distortion, if the numbers are to be believed, and to further assert that mining is somehow essential to Minnesota’s economic survival would appear to be somewhere between gross exaggeration and outright falsehood. People who like to call themselves “conservative” often come down on the side of “free trade,” with as few regulations as possible, and, one supposes, ideally there’d be none at all. Suddenly, in the case of iron and steel, “free trade” gets tossed under the bus in favor of the sort of protectionism not seen in a century. It’s economically and ethically inconsistent, at best.

    While I’m reasonably literate scientifically, I’m not a scientist, specifically not capable of analyzing either water quality issues that seem likely to arise from sulfide mining or the statistical analysis that might determine whether mining can profitably be pursued in the face of potential environmental catastrophe – a situation that could easily eliminate the jobs of most people in the Arrowhead **except** the miners, but in any case, would render the pursuit of “making a living” in a poisoned atmosphere pretty much moot point.

    Obviously, that this issue continues to bubble on the back, then front, then back, then front again burner indicates sizable amounts of money stand to be made by the foreign mine owners. Back in the day, when I occasionally complained about the low pay I was receiving for a job that required a college degree and a license from the state, I was routinely told by businessmen and other political “conservatives” that a solution to my problem was simple: find another job. Perhaps the Arrowhead’s economy should follow similar advice and wean itself from mining.

  5. Submitted by Patrick Tice on 10/17/2018 - 01:58 pm.

    Nothing, absolutely nothing, can be done to #MAGA the mining industry in NE MN in the way some might hope. Mines always play out, leaving moonscapes and toxic waste. Even if we push that unpleasant reality aside to concentrate in the here and now, automation will continue to eat away at manpower. This is exactly what has been happening in industrial operations for a generation – and why manufacturing productivity in the USA continues to rise while fewer and fewer workers are needed in the process. In the near term, mining propped up by tariffs will end up in decline as the overall economy suffers from higher prices and lower demand. So the bottom line is the Trump Party is on a nostalgia trip that will end up making the region even worse off, all without making a significant economic impact for most residents – even in the short term. But hey – your fantasy is a $90K mining job in a place where you can hunt and fish, so don’t bother with reality.

  6. Submitted by richard owens on 10/17/2018 - 02:31 pm.

    The reason this chemical smelting in the 2 most pristine watersheds of our state is controversial is because the negative effects will be irreversible.

    If MINNPOST wants to keep running stories about Twin Metals and Polymet, and genuinely wants readers to know why this is different than legacy mining in MN, you will ask for detailed plans and a primer on the methods of extracting the metals from the ore.

    Decision makers (and voters) need to understand the risks and cannot do so without actual descriptions of the methods and the risks imposed by the processes.

    Enough already about generic mining and politics and on with the specific science, the specific process and the specific risk management that is being proposed..

    Environmental cleanup efforts at all the mining messes around the world will contribute to substantially to higher GDPs.

    Bigger GDPs and lots of job opportunities are not ample justifications for environmental disaster. No amount of money will bring back these watersheds from environmental ruin.

    Most of the world’s mining towns are now poor and abandoned by the folks who took the natural blessings and left piles of overburden and poisoned ground water. The new mining towns are full of promises that “this time it will be different.”

  7. Submitted by Peter Gove on 10/17/2018 - 04:53 pm.

    Great job, Greta. An excellent example of how Minn Post adds value and facts to the exchange of ideas in Minnesota about mining.

  8. Submitted by R. Hanson on 10/17/2018 - 06:18 pm.

    Multinational mining firms pay tens of millions of dollars to political PR firms to make mining in MN a big political issue. It wasn’t an issue until Antofagasta PLC decided it was.

  9. Submitted by William Hansen on 10/18/2018 - 08:19 am.

    Copper/nickel mining never strengthens nearby communities. It is a hot political issue only because the pro-mining investors have access to huge amounts of dark money for negative campaign advertising.

    Here is a clear explanation of what happens to communities that bet their futures on resource exploitation: https://en.m.wikipedia.org/wiki/Resource_curse

  10. Submitted by Nancy Gibson on 10/18/2018 - 02:50 pm.

    For the record, Montana and New Mexico have the strongest mining laws now. They learned from their mistakes although a little late. The copper/nickel mines left a trail of superfund sites. Remember it took a lawsuit to stop the taconite tailing from being dumped into Lake Superior so these foreign mining companies don’t have much investment into our clean water.

  11. Submitted by Joe Musich on 10/19/2018 - 02:32 pm.

    But where is the like breakdown for the tourist industry for Ne MN.? And where is the loss of tourism and property value calculated in if these miniing projects move forward ? And the figuring for the social costs into the formula? If there is failure will those 90,000 dollar salaries be leaned against or garnished in any way ? A worker maybe getting a pretty nice wage in the short term but seriously they will be thrown to the wayside if the mining shuts down through either resources being played out or terrible environmental destruction through miscalculation. Look at the closed steel mills as an example. Conservation through reuse are also not overed. The piece seems like a pitch for mining expansion which will only in the end benefit the very few and even those who are not citizens. In this light is could be said let’s build a wall around interational exploitation of America wages

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