Challenges Facing the North American Iron Ore Industry 

By J .D. Jorgenson 

Open-File Report 2006–1061 

U.S. Department of the Interior 

U.S. Geological Survey 
U.S. Department of the Interior 

Gale A. Norton, Secretary 

U.S. Geological Survey 

P. Patrick Leahy, Acting Director 

U.S. Geological Survey, Reston, Virginia 2006 

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Survey Open-File Report 2006-1061, 51p.


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ii 
Challenges Facing the North American Iron Ore Industry 

By J .D. Jorgenson 

Summary 

This report is derived from a presentation the author presented in late September at the Iron Ore 

2005 Conference sponsored by The Australasian Institute of Mining and Metallurgy and held in 

Fremantle, Western Australia. Some slight revisions have been made for the new audience. 

The report consists of 24 slides; the comments for each slide precede the slide. 
Slide 1: This talk is based on a paper that I presented in late September at the Iron Ore 2005 

Conference sponsored by The Australasian Institute of Mining and Metallurgy and held in Fremantle, 

Western Australia. I have made some slight revisions for the new audience. 

In my presentation, I will discuss the iron ore industry in Canada and the United States and the 

market forces that have influenced recent changes. My apologies to our neighbors to the South, since I 

have not included Mexico in this talk because their logistics and markets for iron ore are quite different 

from those of her northern neighbors. 

Just to put this in context, I’ll start out with two slides from the presentation that Dave Menzie 

and I gave here last year. 
January 2006 January 2006

SME-DC Section Meeting SME-DC Section Meeting

Challenges Challenges Facing

the North American American

Iron Ore Industry Industry

J .D. Jorgenson
Slide 2: On the right, we consider the world’s major producers of iron ore -- China, Brazil, and 

Australia, in that order on a gross tonnage basis. 

On the left, we consider iron content. The order then becomes Brazil and Australia, followed by 

China. The gap between Brazil and Australia cannot be seen to be narrowing, as one might expect when 

considering Australia’s proximity to China and therefore reduced shipping costs. 

The U.S. and Canadian production is shown, as stacked lines, both in terms of gross tonnage and 

iron content for comparison with the major world iron ore producers. 
Major Producers of Iro

Major Producers of Iro

(million metric tons) (million metric tons)

0

20406080

100120140160180

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Year

0

50

100150200250300350

1990

1991

1992

1993

1994

1995

Fe content 

Source: U.S. Geological Survey Minerals Yearbook

China Brazil Australia U.S. U.S. + Canad
Slide 3: This graph shows iron ore imports from 1980 through 2004 for the four major importing 

nations – China, Germany, Japan, and the Republic of Korea. The United States net imports are also 

shown for comparison. 

It shows a more or less steady level of imports by Japan and Germany, a steady increase by the 

Republic of Korea, and a steady increase followed by a steep increase beginning in 2000 by China. 

Two major items can be observed in 2003. China surpassed Japan as the No. 1 importer of iron 

ore, and in Germany, the largest consumer in the European Union, imports reached the lowest levels in 

over 20 years. 

U.S. imports in 2004 were 11.8 Mt, while exports were 8.4 Mt for net imports of 3.4 Mt – the 

lowest in over 18 years. In 1990, Chinese expansion became evident, while U.S. production decreased 

slightly. 
Leading Importers of Iron Ore Leading Importers of Iron Ore—

Gross Weight

0

50

100150200250

1980

1982

1984

1986

1988

1990

1992

1994

1996

Year

Million metric tons

China Japan Germany United States

Sources: U.S. Geological Survey Minerals Yearbook; United NTrade and Development.
Slide 4: As an introduction to my presentation, I will briefly discuss the North American iron 

ore industry in the 20th Century. U.S. domestic production represented a very large share of world 

production until after World War II. 
z U.S. domestic production peak

U.S. domestic production peak

WWII at 120 Mt in 1953 WWII at 120 Mt in 1953

z Pellet production increased, as 

Pellet production increased, as 

ores decreased ores decreased

z Until 1982 recession, most U.S

Until 1982 recession, most U.S

mines owned by steel compani

mines owned by steel compani

z Large Canadian iron ore mines 

Large Canadian iron ore mines 

into production after 1950 into production after 1950

North American Iron 

North American Iron 

in the 20 in the 20th Centur

Centur
Slide 5: This graph shows U.S. iron ore production and net imports from 1900 through 2000. As 

one can see, until World War II, U.S. production represented a sizeable portion of the world’s 

production of iron ore, but after WWII, large high-grade deposits were discovered and put into 

production in Canada, Brazil, and Australia. 
U.S. Iron Ore Produc

U.S. Iron Ore Produc

in the 20 in the 20th Centur

Centur

0

200400600800

10001200

1900 1912 1924 1936 1948 1960 

Million metric tons

gross weight

U.S. Product ion U.S. Net Import s W

Source: U.S. Geological Survey
Slide 6: This is the same graph, emphasizing U.S. production figures and our net imports, a large 

part of which come from Canada. 
0

50

100150200

19 0 0 19 12 19 2 4 19 3 6 19 4 8 19 6 0 

Million metric tons

gross weight

U.S. Product ion U.S. Net Import s 

U.S. Iron Ore Produc

U.S. Iron Ore Produ

in the 20 in the 20th Centu

Centu

Source: 
Slide 7: In the mid-50s, high-grade ores declined and upgrading taconite ores for pellet 

production increased. 
z U.S. domestic production peak

U.S. domestic production peak

WWII at 120 Mt in 1953 WWII at 120 Mt in 1953

z Pellet production increased, as 

Pellet production increased, as 

ores decreased ores decreased

z Until 1982 recession, most U.S

Until 1982 recession, most U.S

mines owned by steel compan

mines owned by steel compan

z Large Canadian iron ore mines 

Large Canadian iron ore mines 

into production after 1950 into production after 1950

North American Iro

North American Iro

in the 20 in the 20th Centu

Centu
Slide 8: And that is the most important story told by this graph -- that as U.S. ore grades 

declined, less direct-shipping ores were produced and low-grade taconite ores began to be developed. 

The upgrade of these ores through pelletizing became important and by the mid-1980s made up over 

95% of U.S. production. 
U.S. Iron Ore, Iron Ore, By Type of Product By Type of Product

Source: U.S. Geological Survey 
Slide 9: Until 1982 most iron ore mines were owned by steel companies. Then many steel 

companies began to sell off what they considered as non-core businesses or businesses they felt were 

taking up too much of management’s decision-making efforts. Early in the 21st Century changes away 

from this philosophy of divesting non-core businesses began to stabilize, as steel companies realized 

that the control of feedstocks was a critical issue. 

Iron Ore Company of Canada (IOC), the largest producer in Canada, came into operation in 

1954, Quebec Cartier Mines started up in 1957, and Wabush Mines, the second largest producer, in the 

late 1960s. 
z U.S. domestic production peak

U.S. domestic production peak

WWII at 120 Mt in 1953 WWII at 120 Mt in 1953

z Pellet production increased, as 

Pellet production increased, as 

ores decreased ores decreased

z Until 1982 recession, most U.S

Until 1982 recession, most U.S

mines owned by steel compani

mines owned by steel compan

z Large Canadian iron ore mines 

Large Canadian iron ore mines 

into production after 1950 into production after 1950

North American Iron 

North American Iron 

in the 20 in the 20th Centu

Centu
Slide 10: Canadian iron ore is mainly produced in Quebec and Newfoundland-Labrador, where 

three major operations are found. 

Iron Ore Company of Canada is owned by Rio Tinto, Mitsubishi, and a State trust fund. In 

2004, they produced 11.9 Mt of pellets and 9.9 Mt of concentrates, which they ship out through their 

port at Sept-Iles. 

Wabush Mines, which is owned by Stelco, Dofasco, and Cleveland-Cliffs, has capacity for about 

6 Mt of pellets per year. 

And Quebec Cartier has capacity for 9 Mt of pellets and can also produce concentrates. 

Each of these operations has ports on the St. Lawrence Seaway and exports to Asia, Europe, and 

the United States. 

British Colombia produces a minor amount of byproduct iron ore in Western Canada. 
Iron Ore in Canada 2002 Iron Ore in Canada 2002

Source: Natural Resources Canada, Perron, 2002 
Slide 11: Major U.S. operations include the Tilden and Empire mines in Michigan; United 

Taconite, the Northshore Mine, and Hibbing Taconite all managed by Cleveland-Cliffs, Minntac and 

Keewinaw Taconite (Keetac), owned and operated by U.S. Steel, and Minorca, owned and operated by 

Mittal Steel, in Minnesota. 

Almost all ore is moved through Lake Superior ports to Lower Lakes ports in Ontario, Canada, 

and Ohio, Indiana, and Michigan in the United States. 

China’s Laiwu Steel exchanges its share of United Taconite production for part of Cliffs 

production from the Wabush Mines in Canada in order to lower shipping cost to Asia. 

U.S. Steel ships some of their product by rail to its Granite City plant on the Mississippi and as 

far as its steel plant in Alabama. 

Slide 12: As the steel market deteriorated in the 2001 to 2002 period, the high cost producers 

dropped out. Consolidations were seen in both the iron ore and steel industries. 

Unions made concessions to keep mines operating (for example, U.S. Steel was able to 

restructure the union contract at Keewatin Taconite before it finalized the purchase of this property, and 

Iron Ore Company of Canada achieved reductions of personnel at their operations over a number of 

years through an agreement to accept normal rates of attrition that resulted in a reduction of operating 

costs by about $5 per metric ton). 

Examples of operating efficiencies include the combining of staff functions and infrastructure at 

the Tilden and Empire operations in Michigan under one entity – Cliffs Michigan Mining Company; 

alteration of pelletizing systems to use less expensive fuels, such as coal and petcoke. 

And new processing technology has been introduced to upgrade ore to iron nuggets with an iron 

content of between 96 and 98%. 
North American Iron Ore (2000 North American Iron Ore (2000 – 04)

 Poor markets markets in 2001-02 2001-02

 High cost producers drop out High cost producers drop out

 Consolidation of iron ore and steel producers Consolidation of iron ore and steel producers

 Union concessions Union concessions

 Operating efficiencies increase Operating efficiencies increase

 High price of natural natural gas affects affects pelletizing pelletizing

 New processing processing technology technology

 Mesabi Nugget project Nugget project
Slide 13: The next two slides depict iron and steel ownership changes early in the 21st Century. 

Production is shown at the bottom of the graphic with the quantity of the Canadian iron ore production 

increasing and that of the U.S. decreasing. 

In Canada, the change in ownership of Quebec Cartier Mining has continued into 2005. 

Previously, Dofasco and Caemi of Brazil had agreed to divest and buy preferred shares in QCM, but 

earlier in 2005 Dofasco bought out Caemi’s portion of ownership entirely. Now, Arcelor and Thyssen 

Krupp are both interested in purchasing Dofasco, as much for its iron ore reserves as for its steel 

business. 

In the U.S. changes have been even more dramatic, as LTV Steel closed up its operations and 

such companies as Bethlehem Steel and National Steel went out of business. U.S. Steel, which had 

been trying to sell its only iron ore operation – Minntac -- at the end of 2003, decided instead to 

purchase the iron ore assets of bankrupt National Steel Corporation. Cleveland-Cliffs increased its 

holdings in Hibbing Taconite, United Taconite, and the Empire and Tilden mines in Michigan. Mittal 

Steel took over Inland Steel with its Minorca Mine and International Steel Group’s holdings in Hibbing 

Taconite. A new player entered the market – China’s Laiwu Steel purchased 30% of the iron ore assets 

of Eveleth Taconite. 
Production

%

Notes 1: U.S. Steel purchased the assets of National Steel

2: Cleveland-Cliffs increased holdings in Hibtac, United Taconite, Empire, and Tilden3: Cleveland-Cliffs, Acme Steel4: LIORIF, Cleveland-Cliffs5: Wheeling-Pittsburgh, Stelco, Rouge Steel, AK Steel, Algoma, Auburn6: Laiwu Steel, Stelco

Source: Cliffs Iron Ore Analyses (2000-04); Skillings Mining Review ; USGS Minerals Yearbook (2000-04)

10208090405060

100

70

Canada Unit

2000 2004 2000 

30

26.1 Mt 27.3 Mt 63.0 Mt 

2 Others

BethlehemLTV Steel

U.S. Steel

6 Others

LIORIF

3

5

Nat'l SteelClevelandCliffs

Inland Steel

Rio Tinto Rio Tinto

Dofasco

Dofasco

QCM

2 Others

Mitsubishi

Caemi Stelco Stelco

Mitsubishi

4

Iron Ore Ownership (Canada and 

* Production tonnages referred to are gross weight.
Slide 14: Looking at Steel ownership. 

In Canada, as shown on the left-hand side of this diagram, we can see that between 2000 and 

2004, Stelco and Algoma maintained their market share, while Dofasco increased its share. Co-Steel 

was absorbed by Gerdau Ameristeel and is now shown as the increase in Other Canada. 

In the United States, U.S. Steel and Nucor increased their market shares; Bethlehem and LTV 

filed for bankruptcy; and Mittal Steel formed from Ispat Inland and Wilbur Ross’s International Steel 

Group. Many of the smaller producers in the United States went out of business – in 2000, they 

represented over one-third of the U.S. Steel industry; by 2004 they represented less than one-fourth. 
%

Notes 1: Includes National Steel, Birmingham Steel, Rouge Steel, North Star, and Weirton Steel

2: Wheeling-Pittsburgh3: IPSCO4: Steel Dynamics5: Commercial Metals

Sources: Metal Bulletin, USGS Minerals Yearbook 2003, and IISI

8090

100

40506070102030

16.6 Mt 16.4 Mt 102.0 Mt 

2000 2004

Canada United S

2000

Stelco

Dofasco

Co-Steel

Other 

Canada

Stelco

Dofasco

Algoma

Other 

Canada

Algoma

U.S. Steel

Nucor

Bethlehem

LTV Steel

AK Steel 

Note 1

Other

U.S. 

Ownership of Steel Produc

(Canada and the U.S.)
Slide 15: New processing technology is under development to improve the North American iron 

ore industry. 

The ITmk3 process consists of four distinct steps – Feed Preparation, Reduction, Product 

Discharge, and Offgas Treatment. 

A 97% iron, 2% carbon nugget is produced. These nuggets can be fed to either Basic Oxygen 

Furnaces or Electric Arc Furnaces for steel production. 

A Mesabi Nugget plant was successfully run on a pilot plant basis with assistance from the U.S. 

Department of Energy. A full-scale plant is planned for construction either in Minnesota or Indiana. 

The eliminating factor probably will be in which of these States environmental permits can be obtained 

most quickly. 
Midrex Technologies ITmk3 Technologies ITmk3® Process Process

Source: Midrex Technologies Inc. 
Slide 16: The sustainability issue related to the North American iron ore mining industry I have 

associated with four major factors – 

management of transport; environmental management; reserves; and the availability of funds for 

investment in regional sustainability. 
North American Iron Ore (Sustainability) North American Iron Ore (Sustainability)

 Transportation Transportation Management Management

 Infrastructure Infrastructure

 Invasive species Invasive species

 Environmental Environmental management management

 Reserves Reserves

 Sustainability Sustainability funds

 Economic development projects Economic development projects

 Maintaining Maintaining funds
Slide 17: The distance from Duluth to the mouth of the St. Lawrence is 2300 miles. Locks are 

located at the St. Mary River (4 parallel), the Welland Canal (8 locks) and on the St. Lawrence (2 U.S. 

and 5 Canadian). The locks have a maximum length of about 740 feet and beam of 77 feet, except for 

the Soo Locks. 

On the Great Lakes, a recent 5-year annual average for iron ore transport was 42 Mt traveling 

through the Soo locks with maximum capacity of over 60,000 t per shipment. 

For the St. Lawrence Seaway, a recent 5-year annual average was 12.1 Mt iron ore transport. 

This does not include ocean transport of pellets and ore. 

The 15 locks on the St. Lawrence Seaway, including the Welland Canal, raise ships 174 meters 

from sea level to the level of Lake Erie. Lake Superior, and this is where all of the iron ore mined in the 

U.S. is shipped from, is at 184 meters above sea level. 

The 5 largest steel producing States in the United States all border the Great Lakes. This region 

is the home to about one-quarter of North America’s population. 
Great Lakes - Seaway Shipping Great Lakes - Seaway Shipping
Slide 18: The Poe Lock, the large lock second from the left, can handle Super Lakers, vessels of 

over 60,000 t draft capacity. 

One of the major bottlenecks to the shipping infrastructure is the climate with winter freezing of 

the lakes, rivers, and canals and summer drought limiting vessel draft capacities. For example, in 2004­

05, season traffic from Duluth was halted on December 17 and through the Soo Locks on January 15. 

Traffic did not reopen on the Soo Locks until March 25 and at the Welland Canal until March 17. In 

order to offset the icing, large icebreakers assist vessels struggling with the ice on the Great Lakes. 

Drought is another climate-related economic risk that recently lowered lake levels on Lakes 

Michigan and Huron by 22 inches. This was equivalent to a loss of almost 6000 tonnes of capacity on 

each of the Lake Superfreighters. 

And, of course, channel dredging is required to keep ports functioning. 
Soo Locks – Canada-U.S. Border Canada-U.S. Border

Source: U.S. Army Corps of Engineers 
Slide 19: As mentioned 25% of North America’s population lives in the Great Lakes region. 

Recreational fishing generates about $4.5 billion of income per year. Since 1800, more than 160 exotic, 

non-native species have entered the Great Lakes, including zebra mussels and Asian carp. 

Solutions such as electric fish barriers have been tried to restrict fish movement. Ocean-going 

vessels are required to dump salt water ballast or have shipments transferred. 

Some of the solutions being considered bring worse environmental problems than those they are 

meant to resolve. For example, restricting traffic through the Welland Canal and using truck 

transshipments would greatly increase air pollution. Restricting traffic altogether would have a 

profound effect on iron ore, steel, and the automotive industries – all of which are centered around the 

Great Lakes. 
North American American Iron Ore Transport Transport

Source: Great Lakes Information Network 
Slide 20: In the Canadian and U.S. iron mining areas, there is a net positive rainflowevaporation balance or better said it rains more than it evaporates. This requires clarification systems be 

set up in tailings disposal areas to meet mandated discharge requirements. 

Environmental management efforts, especially in Minnesota’s Mesabi Range, which borders a 

wilderness area, are critical to area sustainability. Each of the mines has committed to efforts to 

preserve wetlands for future generations. 

A good example of the environmental stewardship is Michigan’s exhausted Republic Mine, 

which Cleveland-Cliffs closed in 1996 and where a wildlife habitat of more than 800 hectares has been 

created. 

Iron Ore Company of Canada (IOC) was among last year’s recipients of the North American 

Waterfowl Management’s Award for work in establishing a biodiverse habitat for water fowl. This 

award resulted from a greater than $30M program in which environmental assessments and engineering 

design developed a Tailings Management Project, which included input from key external stakeholders 

in the planning stages. 
North American Iron Ore (Sustainability) North American Iron Ore (Sustainability)

 Transportation Transportation Management Management

 Infrastructure Infrastructure

 Invasive species Invasive species

 Environmental Environmental management management

 Reserves Reserves

 Sustainability Sustainability funds

 Economic development projects Economic development projects

 Maintaining Maintaining funds
Slide 21: Reserves are an essential sustainability issue. Before a mine’s reserves run out, the 

region must have already developed alternative sources of income to remain viable. 
North American Iron Ore (Sustainability) North American Iron Ore (Sustainability)

 Transportation Transportation Management Management

 Infrastructure Infrastructure

 Invasive species Invasive species

 Environmental Environmental management management

 Reserves Reserves

 Sustainability Sustainability funds

 Economic development projects Economic development projects

 Maintaining Maintaining funds
Slide 22: Again, reserves at current and projected mining rates for most of the Canadian and 

U.S. mining areas extend up to and beyond 20 years, but there are areas of concern. Mining companies, 

as well as the governments of the regions in which they mine, need to focus on what opportunities will 

be available for the communities in which they are centered once mining ceases. Local governments 

will need to determine what alternative sources of revenue can be obtained to minimize the impact on 

their communities. 

Alternatives may include attracting downstream industries to the region, as would be the case for 

the Mesabi Nugget facilities or the proposed Minnesota Steel Industries project in which the State of 

Minnesota has invested $5M towards developing a new taconite mine, pelletizing plant, and a directreduced-iron steelmaking complex on the Mesabi Iron Range. This project would provide 700 jobs and 

require a $1.7 billion investment to produce 2.4 Mt/yr of hot-rolled steel. 
Iron Ore Reserves and 

Expected Year of Depletion 

• Tilden 290 2040

• Empire 29 2008

110 2029 e • United Taconite United Taconite

• Hibbing Taconite 180 2025

• Northshore 2070

• Keetac and Minntac (U.S. Steel) 680 2047

United States United States

• Wabush 58 2014

• Quebec Cartier 836 2040

• Iron Ore Company Company of Canada 1,400 2040

Canada Reserves Reserves (Mt) Year

e estimate Source: Skillings Mining Review; Company Annual Reports 
Slide 23: The sustainability issue relates not only to these economic development projects, but 

also to where seed money for their development will be obtained. Taconite production taxes at more 

than $1.75 per metric ton in Minnesota need to be wisely invested. Some feel that this revenue should be 

invested in those regions of the country from which the wealth was produced and the depleting assets 

removed. 

Society will always depend on the industrial managers, engineers, and scientists to increase 

reserves through greater efficiencies and innovative technology, but local areas will still depend on 

receiving their share of revenues, which they have generated, in order to survive. 
North American Iron Ore (Sustainability) North American Iron Ore (Sustainability)

 Transportation Transportation Management Management

 Infrastructure Infrastructure

 Invasive species Invasive species

 Environmental Environmental management management

 Reserves Reserves

 Sustainability Sustainability funds

 Economic development projects Economic development projects

 Maintaining Maintaining funds
Slide 24: This is the Silver Bay Terminal in Minnesota, where Cleveland-Cliffs processes its ore 

from the Northshore Mine and produces about 4.8 Mtpy of pellets. 

I just wanted to end the presentation with a terminal. To the iron ore industry this may be an 

end, but to the steel industry, it’s just the beginning. 
Source: Cleveland-Cliffs Inc