Just For Glenn 
As Minnesota taconite producers cut their costs,
labor contracts are next 
Today at 7:22 a.m.
With lower electric rates and a break on state mineral royalties already in hand, Minnesota's taconite mining industry is expected to turn to another cost-cutting measure in coming weeks:
union labor contracts. Five of Minnesota' six large taconite iron ore operations are represented by the United Steelworkers of America, and the three largest companies that own those plants - Arcelor-Mittal, U.S. Steel and Cliffs Natural Resources - all are entering contract negotiations with the union.
The contract talks come as the industry faces its worst crisis in decades - the nation flooded with cheap foreign steel and global iron ore prices in the basement. That
may not bode well for workers who almost certainly will be asked to take concessions to lower company production costs.
"The companies say they need to take $10 per ton off their production cost just to remain viable. They are looking at every way they can to do that," said state Rep. Tom Anzelc, DFL-Balsam Township, chairman of the Iron Range delegation of state lawmakers.
Cliffs said earlier this year that the production cost at its Minnesota operations was about $59 per ton. The global spot price for taconite is about $52.
Earlier this month U.S. Steel asked for and received a reduction in the mineral royalties it pays the state to dig ore where the state holds the mineral rights.
The reduction, from 91 cents to 75 cents per ton for the next 25 million tons mined, amounts to a $4 million taxpayer subsidy.
All of the state's taconite plants will be able to negotiate lower electric rates under a bill that passed the 2015 Minnesota Legislature. That bill would see homeowners potentially paying more for electricity so heavy industry can pay less, eliminating what utility officials have called an industry subsidy of residential electric costs.
Industry insiders also note that the large taconite producers are renegotiating with their suppliers and vendors, seeking cost reductions on the stuff they need to operate.
Union officials concede that their employers face troubled times, which often means more difficult negotiations."It's no secret that unfairly traded and subsidized foreign products along with global overcapacity will be problematic this round," Wayne Ranick, spokesman for the United Steelworkers of America in Pittsburgh, told the News Tribune.
But Ranick also noted that the union has been through this situation before.
"We also know that the demand for steel has always been cyclical and the market will change," he added.
Officials with Steelworkers Local 1938 on the Iron Range, which represents workers at U.S. Steel's Minntac operations, also talked of
standing tough 
:
in an update to members.
"While we recognize that the current climate is difficult, we refuse to allow the company to use that as an excuse to attack the union. We are committed to having an honest and open dialogue and working together toward
," the local posted on its website. "We have faced bad times in the past and made it through them together. We will do the same this time, without turning our backs on the workers and retirees who have helped to build this union and this company."
* Steelworkers and ArcelorMittal, which owns the Minorca mine in Virginia, began pre-negotiation meetings this past week. The current contract expires Sept. 1. The union represents some 13,000 hourly workers at 11 different ArcelorMittal facilities.
"We expect to meet with management when the committee returns to Pittsburgh on July 6 and will be prepared to receive, review and discuss a 'comprehensive' contract proposal from the company," the union reported in an update to members.
* The Steelworkers also were expected to start negotiations with U.S. Steel last week, with that contract also expiring on Sept. 1. U.S. Steel, which owns and operates Minntac in Mountain Iron and Keetac in Keewatin, is Minnesota's largest iron ore producer. It also is a co-owner of Hibbing Taconite.
U.S. Steel in recent months announced hundreds of layoffs at both Minntac and Keetac, citing decreased demand for steel and a backlog of iron ore.
* Ranick said the union contract with Cliffs Natural Resources also expires later this year but that contract talks traditionally hold off until after the union reaches a deal with U.S. Steel. Cliffs operates Hibbing Taconite, United Taconite and non-union Northshore Mining in Minnesota as well as two union operations in Michigan's Upper Peninsula, Empire and Tilden.
Officials for U.S. Steel and Cliffs Natural Resources did not respond to requests to comment for this story.
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