The Economic Impact of Ferrous and Non‐Ferrous Mining on the State of Minnesota and on the Arrowhead Region and Douglas County, WI
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This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp Research Report The Economic Impact of Ferrous and Non‐Ferrous Mining On the State of Minnesota And on the Arrowhead Region and Douglas County, WI March 2009 NOTE AN ACROBAT PDF OF THIS FULL REPORT AT: https://lsbe.d.umn.edu/departments/bber/projects/2009MNMiningImpact.pdf For MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT MINNESOTA POWER NATURAL RESOURCES RESEARCH INSTITUTE, UNIVERSITY OF MINNESOTA IRON RANGE RESOURCES IRON MINING ASSOCIATION OF MINNESOTA MININGMINNESOTA Research Team UMD Labovitz School of Business and Economics Bureau of Business and Economic Research James A. Skurla, Acting Director Jean Jacobson, Senior Editor Taha Kasim, Undergraduate Research Assistant Lyle Solem, Undergraduate Research Assistant Vickie Almquist‐Minko, Executive Administrative Specialist Bureau of Business and Economic Research 213 Labovitz School of Business and Economics 1318 Kirby Drive University of Minnesota Duluth Duluth, MN 55812 (218) 726‐8614 http://www.d.umn.edu/lsbe/bber.php BBER would like to express special thanks to industry representatives from Duluth Metals, PolyMet, Kennecott , Franconia , Teck‐Cominco , Encampment Minerals, Cliffs Natural Resources, ArcelorMittal , Essar Steel Minnesota, Hibbing Taconite , Keewatin Taconite , Magnetation , Mesabi Nugget, Minntac , Northshore Mining , United Taconite , Dyno Nobel, Tufco, and Noramco, and others, for their willingness to respond to questions. Thanks also go to Minnesota State representatives from the Department of Natural Resources, Department of Revenue, and Department of Employment and Economic Development, and the University of Minnesota Natural Resources Research Institute, for help with fact‐finding and background information. Bureau of Business and Economic Research Labovitz School of Business and Economics University of Minnesota Duluth i Table of Contents Research Team ............................................................................................................................................................... i Table of Contents .......................................................................................................................................................... ii Executive Summary ....................................................................................................................................................... 1 I. Project Description .................................................................................................................................................. 11 Modeling ....................................................................................................................................................... 12 Deliverables ................................................................................................................................................... 12 Study Area ..................................................................................................................................................... 13 II. Impact Procedures and Input Assumptions ............................................................................................................. 15 IMPLAN Models ............................................................................................................................................. 15 Data ............................................................................................................................................................... 15 Definitions Used in This Report ..................................................................................................................... 16 Industry Definitions ....................................................................................................................................... 16 Model Assumptions ....................................................................................................................................... 17 Project Time Lines and Selection of Impact Year .......................................................................................... 18 III. Findings: Ferrous Mining Impacts ........................................................................................................................... 20 What Does the Ferrous Mining Industry Add to the State’s Economy? ........................................................ 20 The Economic Impact of Proposed Ferrous Mining Expansions ................................................................... 22 and New Projects .......................................................................................................................................... 22 Minnesota Construction: Proposed Ferrous Mining Expansions and New Projects ..................................... 23 Minnesota Operations: Proposed Ferrous Expansions and Mining Projects ................................................ 23 Minnesota Operations: All Proposed and Continuing Ferrous Mining, 2013................................................ 24 Region Construction: Proposed Ferrous Mining Expansions and New Projects ........................................... 24 Region Operations: Proposed Ferrous Mining Expansions and New Projects .............................................. 24 Region Operations: All Proposed and Continuing Ferrous Mining, 2013 ...................................................... 25 Ferrous Mining Tax impacts .......................................................................................................................... 25 Ferrous Mining Tax Impacts on Minnesota and the Region .......................................................................... 25 Ferrous Mining Development Scenarios ....................................................................................................... 27 75% or 50% Impact of Possible Ferrous Mining Projects Completed, Minnesota and the Region ............... 28 IV. Findings: Non‐Ferrous Mining Impacts................................................................................................................... 29 What Does Non‐Ferrous Mining Add to the State’s Economy? .................................................................... 29 The Economic Impacts of Non‐Ferrous Mining Proposed Projects ............................................................... 31 Minnesota Construction: Proposed Non‐Ferrous Mining Projects ............................................................... 32 Minnesota Operations: Proposed Non‐Ferrous Mining Projects .................................................................. 32 Minnesota Operations: All Proposed and Continuing Non‐Ferrous Mining, 2013 ........................................ 32 Region Construction: Proposed Non‐Ferrous Mining Projects ..................................................................... 33 Region Operations: Proposed Non‐Ferrous Mining Projects ........................................................................ 33 Region Operations: All Proposed and Continuing Non‐Ferrous Mining, 2013 .............................................. 33 Non‐Ferrous Tax impacts .............................................................................................................................. 34 Non‐Ferrous Mining Tax Impacts on Minnesota and the Region .................................................................. 34 Non‐ferrous Development Scenarios ............................................................................................................ 35 75% and 50% Impact of Possible Non‐Ferrous Mining Projects Completed, Minnesota and the Region..... 35 V. Findings: Ferrous and Non‐Ferrous Mining Impacts ............................................................................................... 36 Bureau of Business and Economic Research Labovitz School of Business and Economics University of Minnesota Duluth ii What Do the Ferrous and Non‐Ferrous Mining Industries ............................................................................ 36 Add to the State’s Economy? ........................................................................................................................ 36 The Economic Impacts of Proposed Projects ................................................................................................ 38 Minnesota Construction: Expansions and Proposed Ferrous and New Non‐Ferrous Mining Projects ......... 39 Minnesota Operations: Expansions and Proposed Ferrous and Non‐Ferrous Mining Projects .................... 39 Minnesota Operations: All Ferrous and Non‐Ferrous Mining Operations .................................................... 40 Region Construction: Expansions and Proposed Ferrous and Non‐Ferrous Mining Projects ........................ 40 Region Operations: Ferrous and Non‐Ferrous Expansions and Proposed Projects ...................................... 40 Region Operations: All Ferrous and Non‐Ferrous Mining Operations .......................................................... 41 Ferrous and Non‐Ferrous Tax impacts .......................................................................................................... 42 Ferrous and Non‐Ferrous Development Scenarios ....................................................................................... 43 75% and 50% Impact of Possible Ferrous