Estimating the Economic Impact of Direct Reduction and Steelmaking for Northeastern Minnesota with Full Capacity Taconite Production

Abstract

An economic impact analysis for Northeastern Minnesota has been carried out using the SIMLAB computer model and is part of a much larger regional study to examine the feasibility of direct reduction and steelmaking in the upper Great Lakes Region. For this analysis, two scenarios have been adopted. The first assumes a declining steel industry and adopts the OTA liquidation scenario data. The second assumes solution of the technical and economic problems necessary to permit development of a direct reduction industry in Northeastern Minnesota. For the OTA liquidation scenario alone, the taconite pellet production increases from 50.1 million tons per year in 1980 to 67.1 million tons per year in 2000, and the estimated Gross Regional Product declines from $3.42 billion in 1980 to $4 .6 billion in 2000. This scenario depends on no new increases in imported ore. The ORI development scenario assumes an output of 3.6 million tons per year of steel billets by 2000 and shows an estimated Gross Regional Product of $6.8 billion in the year 2000, an amount which doubles the impact of the total current taconite industry and ensures a strong regional growth with less dependence on the cyclic performance of the national steel industry. It is clearly of great local interest to actively seek routes that will lead to further processing of the local iron ore resources.