Growth In Transportation Anticipated In Northern Wisconsin, Minnesota

High-paying jobs with benefits. That’s always the battle cry in Northeastern Minnesota and Northwestern Wisconsin. Despite the recession, more of those coveted positions are likely to emerge, but not in headline-grabbing technology positions.

The growth of mining activity is expected to generate additional jobs in the transportation sector, primarily maritime and rail. New sources of taconite pellets, the addition of iron nuggets, slab steel, new uses for tailings and nonferrous metals will add to the number of train and ship loads needed to haul material to mills.

“There’s no question that the jobs element of these new projects is not limited to the mining silo,” said Bob McFarlin, vice president of public and government affairs at Twin Metals Minnesota.

Although much of the shipping infrastructure already exists, more may be needed. A flurry of inquiries have been received this year by interests seeking to acquire property along Superior’s working waterfront, according to David Hozza, CEO of Wisconsin Woodchuck, which is sandwiched between the Midwest Energy Resources Co. coal dock and the Cenex Harvest States grain facility.

“A number of local, national and international potential (land) buyers are making inquiries about the property. There’s serious interest,” Hozza said.

Superior Mayor Bruce Hagen acknowledged local officials have met with one possible waterfront land buyer to provide information about the city.

There’s also space available on Duluth’s waterfront. Garfield slips C&D have more storage capacity than the Globe site and could accommodate development. Currently, however, nobody has publicly said they want to develop the parcel.

The Superior harbor visitors have not revealed whom they represent. So far, there have been no specific offers, negotiations or deals. But some mining executives say it’s not too early for them to begin investigating their options.

For instance, Gogebic Taconite LLC, which hopes to mine iron ore in northwestern Wisconsin, has identified four possible shipping scenarios, according to Bill Williams, president. The company currently isn’t pursuing any of them, he stressed, because its proposal remains in such an early stage. But Gogebic also must ensure it has viable transportation options should its plans advance, he noted.

Without doubt, Essar Steel, which is developing a mine near Keewatin, also is exploring its options, according to those familiar with transportation and mining issues. Essar is expected to begin pellet production in mid- to late-2012 at an initial annual rate of 7 million tons, with slab production to begin in 2015.

The most likely destination for Essar’s pellets is the company’s Algoma steel mill in Sault Ste. Marie, Ont., which is located west of the Soo Locks and could receive maritime deliveries via Lake Superior year-round. But there’s one obstacle.

“Self-unloaders won’t work for slab steel,” said Richard Stewart, PhD., director of the Transportation and Logistics program at the University of Wisconsin-Superior. There’s also a rail option via Canadian National, he said, although the train would have to follow a round-about route through Rhinelander and Stevens Point.

There’s also new production that will begin at Keetac. U.S. Steel is reopening a pellet line that has been closed since 1980, adding 3.6 million tons of production annually that will move via rail and, most likely, ship.

Magnetation, meanwhile, also will contribute to the growth. Next year, it will transport 650,000 tons of high-grade iron ore concentrate by rail to Mexico, and 150,000 tons by rail for transshipment to Great Lakes vessel (approximately two ship loads). Similar rail transport is expected in 2013, but Magnetation plans to add 800,000 tons via rail to cargo vessel, about 10 shiploads, depending on ship capacity.

Copper-nickel-precious metals developments will further stimulate the transportation sector further down the time line, providing that regulators approve their developments.

PolyMet intends to process some copper concentrates locally but, in a 2011 change of plans, also announced it will process some of that concentrate in outside plants. Shipping will be via train, said spokeswoman LaTisha Gietzen. Although PolyMet has access to a Cliffs Natural Resources private rail line to the Taconite Harbor docks, the firm likely will transport all rail, she said.

Twin Metals has not yet defined its options, but they likely will involve existing carriers, McFarlin said.

Gathering far less media attention are taconite aggregate byproducts (also called “course tailings”), for which 400 uses have been found from 1960 to 2006, according to a UMD Natural Resources and Research Institute report for the U.S. Economic Development Administration. The study concluded:

Taconite aggregate construction materials and value‐added aggregate by-products could create longer lasting pavement if used in concrete or asphalt based highway mixtures. Widespread use of the materials in the Midwest will lead to economic development and immediate job creation in Northeastern Minnesota, the report said.

Delivery is feasible using unit trains and Great Lakes shipping, with the maritime option being least expensive. Possible backhaul cargoes include limestone, which will be needed as a neutralization agent in non-ferrous mining project; western coal, which already shipped to mining areas for power generation; grain from northwestern Minnesota, the upper plains and Canadian provinces.

Area rail service is dominated by two carriers – Burlington Northern Santa Fe and Canadian National. Representatives of both firms in the highly-competitive industry were guarded in their comments about what negotiations, if any, they’ve had with specific firms.

“We are aware of the new iron ore projects and would be interested in new transportation opportunities,” said CN area spokesman Patrick Waldron.

In Minnesota, CN has main lines on the east Range from the Hibbing area to Hoyt Lakes, then south to its waterfront docks in Duluth and Two Harbors. Its current customers include United Taconite and Minntac.

In Wisconsin, CN has lines running from Mellen and the Penoke Range, where Gogebic hopes to operate, north to Ashland, east to Escanaba and, in a round-about way, south, then west, then north to Superior. CN also has an all-rail route to the Chicago area.

CN also owns the waterfront loading dock in Ashland, which is among the waterfront loading sites that possibly could be used by Gogebic Taconite. That dock is strong enough to support four loaded trains, said Gogebic’s Williams. Rail lines to the dock, however, have been removed, according to Stewart.

“We wouldn’t need a structure of that strength. If we were to use it, we’d replace the overhead train unloading system with a conveyor system,” he said.

BNSF’s presence is strongest on the west Range, where it has lines between Hibbing and Grand Rapids, then south from each city to its waterfront loading facility in Superior’s Allouez neighborhood. It currently transports taconite for the Keetac mine and Hibbing Taconite.

“BNSF Railway has been actively expanding our business on the Iron Range,” said BNSF spokeswoman Amy McBeth, who also declined to be more specific.

A few other options are available, but some former ones have disappeared. As mentioned earlier, Cliffs owns a rail line from Hoyt Lakes to the Taconite Harbor dock.

“There’s been talk about having the ability to ship from there,” said Craig Pagel, president of the Iron Mining Association of Minnesota.

With heavy industry nearly written off in the 1980s, several rail lines stopped being used, including the former Northern Pacific rail line that directly connected Ashland with Superior. Its right-of-way was converted to the Tri-County Corridor. Another line that would provide a better route through middle Wisconsin, the CN line between Ladysmith and Prentice, is available for use but is out of service, Steward said.

“It’s nice to have recreation trails, but I think we’ve shortchanged our future,” said Superior’s Mayor Hagen. “If this country ever had a major disaster, we’d regret eliminating these lines. Rail and sail still provide the cheapest transportation.”

This article first appeared on BusinessNorth.com.