The Pioneer Press reports that Governor Mark Dayton is seeking an audience with President Obama to take action to aid the domestic steel industry. Democrat Senators Al Franken, Amy Klobuchar, U.S. Rep. Rick Nolan, along with Minnesota Senate Majority leader Tom Bakk, (R-Cook), would also attend any such meeting.
Dayton stated, “It’s not just about a meeting. We want him to take action that President Bush took, that President Reagan took….This is a very precarious situation and if we tip this industry over the brink it is virtual impossible to bring it back.” Dayton refers to President Reagan’s negotiation of voluntary quotas which covered steel-exporting countries which limited imports into the U.S. to 18.5% of total U.S. sales for 1985-1989. President George W. Bush also placed a temporary tariff on imported steel that was in place from Mar. 2002- to Dec. 2003.
The U.S. Department of Commerce set import duties on some Chinese steel products as high as 236% in early November according to The Wall Street Journal. China is the largest producer of steel in the world and has been accused of using illegal government subsidies in the communist country, and even direct government payments, in order to drive down the cost of their steel exported to markets like the U.S.
In September, Obama hosted his second state dinner for a Chinese president, a special honor usually reserved for close allies. But the controversial steel export issue wasn’t discussed. Instead, cyber-security, counter-terrorism, along with sustainable development, ocean conservation, and wildlife trafficking were on the agenda. Obama is in Paris this week at a United Nations Climate Change summit. CNN reports, “The leaders have one mission: Agree on legally binding reductions in greenhouse gas emissionsmeant to hold global average temperatures short of a 2 degrees Celsius increase over preindustrial global temperatures.” Chinese President Xi Jinping is also in attendance and has already stated that “countries should be allowed to seek their own solutions according to their national interest”, signaling that any changes to how they power their steel plants would be highly unlikely. Meanwhile, energy costs at home continue to increase, and liberal environmentalist groups keep up their pressure on business to do more to address global warming.
In addition to the meeting with the President to address steel exports, Bakk and Dayton want a special legislative session called, prior to the regular session which begins in March, in order to extend unemployment benefits for 600 iron-ore workers laid off due to decreasing demand and increasing costs. They also want to use the special session to address inequities between black and white Minnesotans.
Sen. Bakk told the Pioneer Press that he was getting “no interest” from Republican leadership on the unemployment benefits issue. However, last spring he wasn’t only blaming Republicans, he was blaming high energy costs for the problems in The Range. Northland News quoted Bakk as saying, “Minnesota Power is spending hundreds, and hundreds, and hundreds of millions of dollars modifying the Clay Boswell Plant, passing costs onto the industry and U.S. Steel projects, in a few years, those mines are going to have the highest energy cost of any U.S. steel facilities in the world.” State and federal environmental mandates have required companies like Minnesota Power to add renewable energy, and costs are passed down to the customers, with a severe impact to industrial customers.
Indeed, the Motley Fool reports that increased energy costs are a factor in the hurting U.S. steel industry and that “steel prices are low and the overcapacity that’s causing that is also causing U.S. mills to run below optimal levels putting upward pressure on the cost of production.”
According to the Pioneer Press, two more iron ore plants in northeastern Minnesota are facing shutdowns that would affect over 700 additional workers.