Iron ore industry suffers historic downturn.

The industry that supplies American steel companies with iron ore is suffering a deep retrenchment. Iron ore pellet shipments have fallen by 65 percent this year compared to 2008. Significant inventories exist at mines and ports, which will slow a recovery once demand picks back up.

The U.S. industry that produces pellets for blast furnaces is comprised of eight mines, six of which are located in northeast Minnesota and two in Michigan's Upper Peninsula. The eight mines have the capacity to produce up to 55 million tons of iron ore pellets. They employ more than 5,000 workers and generate sales of $4 billion. Five of the U.S. mines are owned by Cliffs Natural Resources, the largest producer of iron ore pellets in North America and a merchant producer that has been in business for 162 years. Two mines are operated by U.S. Steel Corp., and one by Arcelor Mittal.

"Production curtailments are having a significant adverse impact on the communities in which we operate," says John Tuomi, vice president and general manager of Cliffs Natural Resources' United Taconite plant in Minnesota. Here is the status of the U.S. iron ore industry, as provided by Tuomi to the House Steel Caucus:

* Northshore Mining is operating two of its four pellet furnaces. The plant was totally idled from April to July;

* United Taconite is operating one of two pellet furnaces. The plant was totally idled in May and through the first half of June;

* Hibbing Taconite is operating one of three pellet furnaces. The plant will be totally idled from mid May until September 1;

* Minntac's plant was idled from May 10 to May 30. It has a "vacation" shutdown scheduled from June 28 until July 18;

* Keewatin Taconite has been idled indefinitely beginning in December 2008;

* Minorca Mine's plant is idle from May 10 thru August 1; and

* Empire and Tilden is scheduled to run at 50 percent of production capacity in 2009.

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