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Gogebic Taconite cancels northern Wisconsin project

Citing dissatisfaction with a bill that would loosen environmental permitting, officials for Gogebic Taconite announced the cancellation of their plans to mine taconite near Ashland, Wisconsin.

Citing dissatisfaction with a bill that would loosen environmental permitting, officials for Gogebic Taconite announced the cancellation of their plans to mine taconite near Ashland, Wisconsin.

Gogebic Taconite CEO Bill Williams offered this brief statement:

Senate rejection of the mining reforms in Assembly Bill 426 sends a clear message that Wisconsin will not welcome iron mining. We get the message. GTac is ending plans to invest in a Wisconsin mine. We thank the many people who have supported our efforts.

Business North talked to Williams and quotes the area’s State Sen. Bob Jauch for this story. The account tells the tale of a company that wanted very specific reforms and incentives for mining and found no changes to their requested legislation acceptable. A bipartisan amendment would have altered the language Gogebic requested from the Wisconsin Assembly and rather than deal with the political debate over that language, the company appears to have simply pulled up stakes.

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This has been a big story across the whole region, not only because these taconite plants provide several hundred jobs, but also because of the environmental impact on an area that isn’t used to the kind of earth-moving common here in northern Minnesota’s Iron Range region. Anishinabe tribes had strongly opposed the mining project and, indeed, probably possessed the ability to tie up the project in litigation for some time.

Though I am not as familiar with the inner workings with this deal as the activities here in Minnesota I find this event striking. First, new mining in the 21st century always involves discussion and likely disagreement about the balance between jobs and the environment and the role of public regulation. Gogebic appears to have pulled its project with relatively little warning to the central players about their concerns. U.S. Rep Sean Duffy (R-WI7) was just here on the Range with our Rep. Chip Cravaack (R-MN8) touring taconite mines, likely in efforts to assist Gogebic. The sudden end to the project suggests either a company that is somewhat volatile or, more likely, a company that had a very specific business plan that required government help and very little opposition to succeed.

Opponents of mining in this forested area are celebrating the decision. Supporters, in disappointment are pointing fingers. Bob Jauch will have a heckuva political mess on his hands before this year’s election.

Still, I find another aspect of this story troubling. The narrative of new mining in the Great Lakes region, whether its this project or the nonferrous projects in northern Minnesota, has always rested on the vast demand for the minerals and the inherent profitability and economic benefit in the mining. Most mining companies know that a little fighting is going to be necessary to sink shovels in the ground. The abrupt nature of this decision by Gogebic seems to me not something that the current political debate produced, but rather some other economic concern that the company had about its ability to wring profit from iron mining in that area.

Since I tend to fall into the Chicken Little role rather easily, I worry that this will signal economic risk for other new iron mining ventures here in northern Minnesota, such as Essar Steel near Nashwauk or the expansion at U.S. Steel’s Keewatin Taconite. Both of those projects enjoy broad support but are still at a stage where companies could pull back if market demand falls. They, too, face some permitting debates in coming months, though not of the magnitude of the Wisconsin mining reforms.

Color me concerned, not because I think mining is the sole future of the region (it can’t be) but because the the safe and prudent mining of northern Minnesota reserves is necessary for the region to move into the next phase of its economic life. A big collapse would suspend the region’s ability to diversify. A big collapse is always possible. It’s the existential threat that comes with living in a place like this.

This is perhaps another exclamation point on the need to hasten efforts to diversify the economy of northern Minnesota (and Wisconsin and the U.P. of Michigan for that matter). Minnesota mining is healthier, more vertically integrated and, thus, in no danger of drying up overnight. But hopes that mining alone can close the jobs and population gap that built in this area over the last 30 years are naive.

All the yelling and blaming you’ll here from northern Wisconsin over this won’t help anything. Only a viable business plan to mine iron and play politics would. Chasing smokestacks is a high risk proposition that ends this way as often as not. The woe-some state of the economy in northern Wisconsin has less to do with its lack of enthusiasm for resource extraction today as it does with the region’s dependence on mines and logging over the last 150 years.

This post was written by Aaron J. Brown and originally published on Minnesota Brown. Follow Aaron on Twitter: @minnesotabrown.

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