SIC 1011 Iron Ores
SIC 1011
This classification covers establishments primarily engaged in mining, beneficiating, or otherwise preparing iron ores and manganiferous ores valued chiefly for their iron content. This industry includes production of sinter and other agglomerates, except those associated with blast furnace operations. Blast furnaces primarily engaged in producing pig iron from iron ore are classified in SIC 3312: Steel Works, Blast Furnaces (Including Coke Ovens), and Rolling Mills.
212210
Iron Ore Mining
Virtually all of the iron ore mined in the world is used in steel making. In the United States, the largest producers are concentrated in a few states that account for the country's national output of usable iron ore. According to the U.S. Geological Survey, mines in Minnesota, Michigan, and two other states shipped about $1.2 billion worth of usable iron ore in 2003. Minnesota accounted for 73 percent, while Michigan accounted for 27 percent. In 2004 the total production of usable iron ore increased to about $1.6 billion. Overall, the United States produced 4 percent of world iron ore output and consumed approximately 5 percent.
In 2002 the U.S. Census Bureau reported 40 establishments engaged in mining, beneficiating, or otherwise preparing iron ores and manganiferous ores valued chiefly for their iron content. At that time, the industry employed about 5,403 people.
The U.S. iron ore industry is dependent on the domestic steel industry, most notably the large integrated steelworks along the Great Lakes. These integrated manufacturers use blast furnaces to turn iron ore, coke, and limestone into pig iron and then into steel.
High labor and fuel costs, declining ore grades, and the inland location of the country's mines make it difficult for the United States to compete in the world iron ore market. U.S. iron ore producers are meeting these demands by making higher-quality fluxed iron ore pellets that can meet the tight chemical and physical specifications that are needed to make higher quality steels.
U.S. iron ore production decreased in the late 1990s in response to the Asian financial crisis that began in 1997, when Thailand devalued its currency and set off a chain reaction of devaluations in the region. Foreign producers, unable to find buyers for their steel products in their depressed regions, supplied low-cost exports to the United States, thereby decreasing the need for domestic iron ore. The situation did not improve during the first years of the 2000s. U.S. mine production of iron ore dropped 26.8 percent to 46.2 million metric tons in 2001, down from 63.1 million metric tons in 2000. Production increased in 2002 to 51.6 million metric tons only to decrease to 46.4 million metric tons in 2003. Production then increased in 2004 to 54.0 million metric tons. That trend was expected to continue on into 2005 and beyond.
In fact, global iron ore demand and prices were predicted to increase dramatically in 2005 and 2006. One analyst cited the price hike as a direct result of China's growth in relation to rapid industrialization, indicating that this was spurring significant demand for commodities. Other analysts attributed the price increases to supply constraints. Whatever the turnaround, mining companies were looking forward to increased profits, while others were concerned about worldwide price hikes that could cause a domino effect in related sectors.
The United States maintained a close relationship with Canada in regard to iron ore trade. Over the course of the 1990s, the United States was a net importer to meet demands for iron ore. Since 1990 about 54 percent of U.S. imports have come from Canada, while 99 percent of U.S. exports went there. The reasons for the tight relationship included ownership and proximity. In 1998 Canadian steel mills owned part of three of the nine iron ore producers that accounted for 99.5 percent of U.S. ore production. Likewise, one U.S. iron ore company and one U.S. steelmaker had partial ownership of one of three iron ore producers in Canada. Also, the proximity of the countries and the location of the Great Lakes, which were used for transportation, meant lower shipping costs for each country.
The high-grade direct shipping ore of Michigan and Minnesota has all been mined in the United States. Lower-grade taconite, which requires the more expensive processes of beneficiation and pelletizing, makes up the bulk of U.S. mining today. Many of the pelletizing and taconite mining facilities are in the interior of the country, forcing higher transportation rail costs to ship to the Mid-Atlantic and Alabama steelworks. Since these mines are far away from saltwater harbors, imported iron ore from Canada, Brazil, and Venezuela makes up a large portion of iron ore consumed on the East Coast.
For the inland steel-making region, the same high rail costs that keep U.S. iron ore from being competitive for use at coastal steelworks also act to keep foreign ores from being used in their region. The St. Lawrence Seaway is an inexpensive transportation route to the Great Lakes, but it can also become a bottleneck for iron ore carriers trying to supply the steelworks in this region. Some oceangoing iron...
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