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State of Minnesota lowers mineral royalty for U.S. Steel

Minnesota's top elected officials voted unanimously Wednesday to cut the fees the state charges U.S. Steel Corp. to mine iron ore on state lands on the Iron Range.

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Minnesota's top elected officials voted unanimously Wednesday to cut the fees the state charges U.S. Steel Corp. to mine iron ore on state lands on the Iron Range.

The vote is an effort to help the big U.S. steelmaker navigate through tough economic times pushed by a flood of cheap foreign steel and iron ore.

The Executive Council-the governor, lieutenant governor, secretary of state, treasurer, auditor and attorney general-voted to cut the royalty rates for U.S. Steel operations for 15 months, a break that could hit more than $4 million.

Royalties are the fees mining companies pay to whoever owns the mineral rights where they mine, in this case, the state of Minnesota.

The move means less money coming in to the state's Permanent School Trust Fund and other funds stocked by the mining fees.

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U.S. Steel's rates were cut from 91 cents to 75 cents per ton for the next 25 million tons mined, a move the company said would save millions of dollars as it works to make its U.S. operations competitive with a flood of foreign iron ore and steel that has drastically reduced prices and cut into U.S. markets.

"They came to us and asked for a little relief and we thought we should help out where we could,'' said Jess Richards, the DNR's director of Lands and Minerals. "They asked for permanent relief, but we decided to start with a shorter term cut."

U.S. Steel earlier this year announced hundreds of layoffs at its Minntac and Keetac taconite iron ore mine and processing operations because of reduced demand for its steel products and thus reduced demand for Minnesota iron ore.

Other companies also mine on land where the state holds the mineral rights, but U.S. Steel accounts for more than 80 percent of the current state mineral royalties, Richards said. The DNR could consider reducing the rates for the other companies as well, he said.

The Minnesota Department of Natural Resources requested the item on the council's agenda, according to the Department of Administration, which oversees the council.

John Myers reports on the outdoors, natural resources and the environment for the Duluth News Tribune. You can reach him at jmyers@duluthnews.com.
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