U.S. Steel will idle its Keetac mine and processing facility in Keewatin and lay off 375 of its 423 employees as the COVID-19 pandemic continues to hurt demand for steel.
Keetac is the second Minnesota mine and plant to idle and lay off employees. On Monday, Cleveland Cliffs announced it would idle Northshore Mining in Silver Bay and Babbitt until at least mid-August, laying off 470 of its 570 employees.
U.S. Steel's decision follows "operational adjustments" it announced in March, U.S. Steel spokesperson Meghan Cox said in an email to the News Tribune on Thursday afternoon. Cox would not say if U.S. Steel's other Minnesota facility, Minntac in Mountain Iron, would also be affected.
"After further study of current demand, we must make additional adjustments to our raw materials production and indefinitely idle our Keetac facility to respond to the sudden and dramatic decline in business conditions resulting from the worldwide COVID-19 pandemic," Cox said.
Cox said 75 employees with fewer than three years of experience would be laid off first, but a total of 375 union and non-union employees will be laid off over the next month.
Dan Pierce, United Steelworkers Local 2660 president and a diesel mechanic at Keetac, told the News Tribune on Thursday that layoffs would begin Sunday for people with fewer than three years of experience, and the union sent letters to members Wednesday informing them of the layoffs.
As of Thursday morning, the union continued to negotiate additional layoffs with U.S. Steel.
"We're in the process of negotiating with the company for employees that have three years or more," Pierce said.
Over the last month, U.S. Steel has idled two of its blast furnaces at Gary Works plant in Indiana as demand for steel sunk.
Demand for steel has fallen not only from consumer markets, but also from companies such as General Motors, Ford and Fiat Chrysler voluntarily shuttering plants to help curb the spread of coronavirus. All three halted production in March. Other factories requiring steel have also closed.
In the last month, capacity utilization of the country’s blast furnaces has fallen from 80.5% to 56.1%, according to the Iron and Steel Institute.
Iron ore pellets produced on the Iron Range from mined taconite supply many of those blast furnaces. Keetac produces about 6 million net tons of pellets each year for U.S. Steel's steelmaking plants.
Reached by phone Thursday, Keewatin Mayor William King summed up the situation for the town of about 1,000 residents: "It sucks."
King, a 40-year resident of Keewatin, said unlike past shutdowns, some of the businesses in town are already closed due to the pandemic. He's not sure all three of Keewatin's restaurants and bars will survive if the order to halt dine-in service and the mine shutdown last a long time.
"They might have been able to get by a month, maybe two. But if this continues, then when they open up, there's nobody to come," King said. "Then it's gonna be really tough for their small businesses."
Ben DeNucci, an Itasca County Commissioner representing the district that includes Keewatin, said he's also worried about area small businesses.
"It's challenging to own and operate a small business. So with a pandemic, it just makes things even harder," DeNucci said. "We are very concerned about how this is all going to shake out, how businesses are going to get through it. We have a real level of concern in Itasca County about the current state and the future, and then when you add on a layoff of this nature, it just compounds that."
And, DeNucci said, mining jobs are the area's "good" jobs.
"Those are family-sustaining, good-paying jobs," he said.
For now, King said he hopes all the Keetac workers will be able to get by on unemployment.
"Hopefully, these guys, once they start laying them off, won't have any trouble getting into unemployment," King said.
This story was updated at 5:25 p.m. April 16 with additional information and quotes from Mayor William King and County Commissioner Ben DeNucci. It was originally posted at 1:40 p.m. April 16.