The Port of Duluth-Superior is one of the largest ports in the United States, an economic engine long known for shipping iron ore mined in northeast Minnesota to steel mills throughout the Midwest. Yet its second largest commodity is less well known, and sourced nowhere near Minnesota and Wisconsin: coal.
For decades since the 1970s, the port has been a juggernaut of the fuel, shipping it primarily around the Great Lakes region. Roughly 20 million tons of coal moved through the twin ports at its peak, in 2008, a year in which only 16 million tons of iron ore did.
“The Port of Duluth-Superior has always been, at its core, a natural resources port, beginning with lumber in the 1800s and then in the later 1800s branching out into additionally iron ore and coal,” said Jayson Hron, a spokesman for the Duluth Seaway Port Authority. “Coal continues to be one of the primary commodities.”
But while iron ore has been on an upswing lately, the story is very different for coal. Shipments have declined since 2008. Steadily. And though coal remains the second largest commodity at the port, shippers moved more of it 1987 than they did in 2018.
The twin ports are now facing a future with far less coal. And while that might be celebrated by environmentalists, it will also create an economic “ripple” across the region, said Richard Stewart, Ph.D., director of the Transportation and Logistics Research Center at the University of Wisconsin, Superior.
“It has an economic impact on the shipping company, it has an economic impact on the mariners who operate the ships, on the shipyards in the Great Lakes, on the ship supply companies on the Great Lakes,” Stewart said. “A decline in the movement of coal has an economic impact on the City of Superior because taxes are collected from this.”
The rise of Superior coal
Until the 1970s, the Duluth-Superior port was largely an importer of coal, Stewart said. Anthracite coal mined in places like Pennsylvania and West Virginia was shipped through the Great Lakes to power industry and transportation.
While coal tonnage had hovered between 5 and 12 million tons between 1910 and 1950, it declined until the 1970s as the market for the high-sulfur fuel dropped. In 1973, public data from the Port Authority show coal was at a meager 62,000 tons.
Over time, however, an alternative, cleaner-burning source of fuel emerged that transformed the port: bituminous coal from the Powder River Basin in Montana and Wyoming. That coal is transported from the West by rail, where much of it is taken to the Duluth-Superior port and shipped outbound to power plants around the Great Lakes. By 1987, the port was again handling more than 10 million tons of coal per year.
The vast majority of coal shipped out of the port since the ’70s has come through a terminal in Superior run by the Midwest Energy Resources Company, or MERC, a subsidiary of Michigan’s DTE Energy and its electric utility.
After the MERC opened 1976, coal began its ascent at the Duluth-Superior port, climbing gradually until the 2008 peak. MERC’s website says the company is the largest mover of coal in the Great Lakes basin.
Since 2008, however, shipments from MERC have slowed. Port data show only 8 million tons of coal moved through the port in 2019, which is less than half the tonnage of a decade earlier. MERC’s data show a similar drop.
That decline reflects the country’s shift in energy supply in the last 10 years. Cheap natural gas has boomed, offering electricity with the potential for fewer carbon emissions than coal. And as climate change escalates across the globe, utility companies have invested in wind and solar power to rapidly increase clean energy.
Stewart said power generation around the Great Lakes has changed too, with great effect on the MERC.
One MERC customer was the Taconite Harbor coal plant along Lake Superior’s north shore in Minnesota. One unit of the plant was closed in 2015 and the two remaining units were idled in 2016 by the Duluth-based utility Minnesota Power, around the same time the utility completed a giant wind farm in North Dakota. In 2005, Minnesota Power ran on 95 percent coal. Now the utility plans to generate half its energy from renewable resources by 2021, it says.
Another important MERC customer was Ontario’s Nanticoke Generating Station on Lake Erie. Once the largest coal-fired power plant in North America, it closed in 2013 and the site is now a modest-sized solar farm.
Even MERC’s owner is moving on from coal. DTE Energy plans to close three coal plants by 2022, another one by 2030, and completely remove coal from the portfolio of its electric utility by 2040. In September, the company pledged its utility will go carbon-neutral by 2050, a transition that CEO Jerry Norcia called “the right thing to do for our customers, business and the environment.”
“We are doing as much as we can, as fast as we can, to provide our customers and the state of Michigan with clean energy that is affordable and reliable,” Norcia said in a news release at the time.
While some ports that move coal to Europe and Asia have increased exports lately, the domestic shipment of coal has dropped across the country as coal use has decreased. The industry troubles have led to bankruptcy for coal mining companies across the resource-rich Powder River Basin where MERC sources its coal.
DTE Energy’s own views on the future of MERC are unknown. The company repeatedly declined interviews and would not answer questions asked by MinnPost about the slowing coal shipments. DTE also declined to provide basic information about terminal operations. In an email, spokeswoman Renee McClelland said any impact the closure of its coal plants would have on MERC and its employees is “speculative at this time.”
Stewart, the UW Superior professor, didn’t predict MERC is in danger of shutting down. He said the company could still hold long-term contracts that keep it running. And many power companies still plan to use coal for decades, since it’s a reliable form of energy production, he said.
Even so, coal demand could change based on the pace of technological advancement for clean energy and the cost of using renewable power, Stewart said.
Public documents show MERC remains a valuable asset for DTE. The company told Michigan regulators last year the utility continues to market coal and shipping services to third parties, which lead to lower power rates for customers. It also ships coal and petroleum coke, most from the Powder River Basin, through MERC for use at its power plants “at rates well below market, lowering the delivered cost of coal.”
What would a drop in coal mean?
A downswing in coal shipments would have a significant effect on the region. In 2018, MERC had 92 employees, which is “on the higher side” of any individual terminal at the port, said Hron, the spokesman for the Duluth Seaway Port Authority. Overall, there are 2,800 jobs directly supported by the port. The CN Duluth Dock and BNSFW Railway Dock 5, the two major iron ore and taconite terminals, have about 130 employees between them.
Stewart said a business with as many workers as MERC is a meaningful employer in Superior, a city of 26,000. Plus, the movement of coal boosts other industries and local taxes.
The MERC has also been a “great community partner” for decades, Stewart said, working hard to reduce air pollution, clean water at a treatment plant and connect with the city to support everything from youth sports teams to programs at UW Superior.
Superior Mayor Jim Paine, however, said he’s “not very concerned” about declining shipments, which he said is likely signaling “the end of that coal dock.”
“We are all very concerned about the effects of the climate crisis up here,” he said. “To say nothing about general quality of life and general environmental stewardship.
“The idea that the energy sector is divesting from coal is a good thing for us for a number of reasons.”
Paine said MERC doesn’t have a big impact on the city’s economy, especially as automation has increased at the harbor. When it comes to organized labor, Superior’s economy is more driven by carpenters, plumbers, teachers and nurses, Paine said. “The closure of (MERC), while it will impact some folks’ lives, it’s not the dramatic impact that it might have had a hundred years ago,” Paine said.
And unlike iron ore, coal isn’t mined in Wisconsin or Minnesota, limiting the overall impact it can have, Paine said. “That’s mining — that’s not shipping,” he said of taconite’s effect on the regional economy. “Shipping is a big part of it, but again, transport, it’s not a relatively labor-intensive operation anymore.”
Paine also said a decline in coal doesn’t mean people have to lose jobs. The dock could be converted to another commodity, and he said he believes shipping is a vibrant industry even if coal is not.
Jeff Stollenwerk, director of government and environmental affairs for the Port Authority, said they have expected, anticipated and planned for a coal slump as they watched power plants shift to natural gas and renewable power. Hron, the port spokesman, said cargo diversity is important in a port dependent on natural resources, which come with “ebbs and flows” in production.
Wind cargo gains steam at the port
While many docks at the port are privately held, one way the Port Authority has sought to diversify is through wind energy. In 2006, the port-owned Clure Public Marine Terminal and its partner Lake Superior Warehousing began taking shipments of wind turbine parts to serve wind farms being built in the upper Midwest.
Hron said the parts are shipped from all over the world and are generally trucked out of Duluth to places across the Midwest and West, plus central Canada. The port’s history of handling heavy, oversize cargo and its location make it desirable, Hron said.
“As the farthest inland port in North America, Duluth is geographically well-situated to support these wind farm installations,” he said.
Last year, the port set a new record for intake of wind cargo when 306,000 tons of the energy components arrived at the port. While that business pales in comparison to coal’s millions of tons, the wind shipments have still been celebrated as an industry gaining steam at the port.
Hron said federal tax credits continue to spur development of wind farms, and the dropping cost of renewable energy production “further increased demand.”
“Our port is well suited to satisfy that demand from a cargo movement standpoint,” he said. “Our schedule of 2020 wind cargo arrivals is plentiful.”
Ultimately, Stewart, the UW Superior professor, said the port is subject to larger forces when it comes to coal. “What drives the movement of coal is demand,” he said. “Those market forces that produce a cleaner energy of whatever nature at a lower cost are not something that the twin ports have much control over, if any.”
This story is part of a collaborative reporting project, “From Rust to Resilience: What climate change means for Great Lakes cities,” that includes six members of the Institute for Nonprofit News (Belt Magazine, The Conversation, Ensia, Great Lakes Now at Detroit Public Television, MinnPost and Side Effects Public Media) as well as WUWM Milwaukee, Indiana Public Broadcasting and The Water Main from American Public Media. This story is part of the Pulitzer Center‘s nationwide Connected Coastlines reporting initiative. For more information, go to https://pulitzercenter.org/connected-coastlines-initiative.