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Iron mining past gets a wake up call
by Paul Lundgren
It’s been four decades since mining ended in the Penokee-Gogebic Range, but the rich deposits of magnetic iron ore remaining in two counties in Northwest Wisconsin are again on the radar.
There’s no clear indication that iron ore mining will resume, but two land and mineral management companies are betting it will.
A 22-mile-long stretch of the range, cutting through Ashland County just south of Mellen, and Iron County through Upson, contains more than 2 billion tons of iron ore. That’s an estimated 15 percent of all recoverable iron ore in the United States.
Two companies have secured nearly all of the land and mineral rights in the area, sharing parcels totaling about 22,000 acres. RGGS Land and Minerals, Ltd., of Houston, TX, owns or controls about 62 percent of the potential mining area. LaPointe Iron Co. and several related interests control the rest. RGGS holds stock in LaPointe.
John P. Congdon, LaPointe’s president, anticipates more interest in the Penokee-Gogebic Range as the magnetic iron ore along Minnesota’s Iron Range is removed.
“We’ve contacted a number of mining companies and sent them information on the deposit,” he said. “There are some companies that are considering it at the present time, but we don’t hear heavy breathing on the phone when we talk to them. The mines on the Iron Range and (Michigan’s) Upper Peninsula are producing pellets at a pretty steady clip, and that’s meeting everybody’s needs for now,” Congdon said.
Led by Texas oilman Russell D. Gordy, RGGS bought its share of the Penokee-Gogebic Range from United States Steel Corp. in early 2004 in a deal that included land in Minnesota and 13 other states. Gordy and his staff couldn’t be reached for this story as they were evacuating their Houston headquarters in preparation for Hurricane Rita.
Cautioning that he has no authority to speak for RGGS, Congdon said he believes the company is quite hopeful its property will be mined. “I think their interests and ours are rather well aligned,” he said.
A question of when
The Penokee-Gogebic Range was mined from the 1880s to the 1960s. But the iron ore there is buried deep in long, narrow bands, and is difficult to mine. Over time, production shifted to other areas with wider, more accessible deposits, such as Minnesota’s Iron Range. As price of taconite and virgin steel continue to rise, and the reserves of other mines are slowly depleted, the Penokee-Gogebic Range is expected to get more attention from the industry.
“It hasn’t been mined in the past because the technologies weren’t there yet,” said Frank R. Kempf, retired executive director of the Ashland Area Economic Development Corp. “The technologies are there now, and they get better every year.”
As China’s dependence on steel continues to grow, mining the Penokee-Gogebic Range could become “inevitable,” Kempf said. “When is the question,” he said. “As long we use steel for this and steel for that, iron ore is always going to be valuable.”
Ashland Mayor Fred P. Schnook is both hopeful for, and skeptical of, potential mining on the Penokee-Gogebic Range. “We’re talking about over 1,000 jobs, paying at least $30 per hour,” he said. “Economically, that’s a real shot in the arm for the area.”
Environmentally, however, Schnook said a lot of questions would have to be answered before mining plans could move forward.
“We’re talking about a strip mine, fairly deep … one hell of a hole. Questions need to be asked and answered about what it would do to the area’s water table,” he said.
“It’s my understanding that most of the water that feeds the Ashland and Chequamegon Bay area basin comes from the Penokee Mountain Range. What’s the environment impact of that? We don't know.”
Starting from scratch
Congdon said mining companies likely will play the waiting game as long as they can before investing in a new mine because it’s costly to start from scratch while established mines are producing.
“If you can get the iron you need without spending a couple of billion dollars to develop and construct a mine, and put in all the ancillary facilities that you would need to process the material, you wouldn’t rush to try and invest that kind of money,” he said. “To a certain degree it’s a question of what would push somebody to want to make the kind of capital investment that starting a new mine would require. At this point nobody has wanted to make that investment.”
Congdon said mines on the Penokee-Gogebic Range could operate for 30 to 60 years, depending on the rate of iron removal. He anticipates a great deal of additional jobs would be created in the area by steel fabricating companies.
“The more value you can add to your steel, at or near the point of production, the better it is for the economy in that area,” he said.
Rather than just providing the raw product, Congdon said a new mining industry likely would transform the iron ore into a usable product, such as a car fender, that would be shipped directly to the manufacturer’s assembly line.
He cited the $1.6 billion mill proposed by Minnesota Steel Industries on the former Butler Taconite site near Nashwauk as a model. The Minnesota project has begun a state permitting process.
LaPointe Mining Co. was the first corporation ever formed in the state of Wisconsin. It has owned the mineral rights to some of its Penokee-Gogebic Range land for 146 years. The company’s headquarters is in Hibbing; Congdon’s office is in Denver.
John is the great-grandson of mining and timber tycoon Chester Congdon. He has worked for LaPointe Mining Co. for five years. Before that he was with the St. Mary Land and Exploration Co. of Denver, an oil and gas company that originated in Duluth.
Jay Moynihan, an Ashland-based management and strategic planning consultant, contributed to this story. Paul Lundgren is a Duluth freelance writer.
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