Mining Tax Guide - Minnesota State Legislature

Iron Range Resources & Rehabilitation Board
Introduction
Iron Range Resources & Rehabilitation Board (IRRRB) is a unique
Minnesota state agency whose mission is to diversify the economy
of the Taconite Assistance Area (TAA), a 13,000 square-mile area
of northeastern Minnesota.
IRRRB was established in 1941 by the Minnesota Legislature and
Governor Harold Stassen to advance economic development
within a region of the state largely dependent on one industry,
iron mining.
IRRRB’s mission is to invest in business, community and workforce
development for the betterment of northeastern Minnesota. The
agency, through business development, seeks to create new jobs
and economic development by supporting existing businesses
and attracting new businesses. Agency community development
programs are designed to prepare cities and townships for change
and growth. To develop a well-trained workforce that meets the
needs of existing and emerging industries, the IRRRB partners
with schools, colleges and industries in creating and implementing
innovative educational programs.
IRRRB programs and operations are funded by a portion of the
taconite production tax, paid by mining companies on each ton
of iron ore pellets produced in lieu of property taxes.
Governance
IRRRB headquarters are in Eveleth. A commissioner, appointed
by the governor, oversees agency operations and programs. The
commissioner is advised by a board comprised of five state senators
appointed by the Senate majority l eader and five state representatives
appointed by the House speaker. A majority of the senators
and representatives on the board must come from TAA districts.
Three citizens from the TAA are also appointed to the board, one
each by the Senate majority leader, House speaker and governor.
Economic Development
While much of the agency’s business support is for other industries
and companies to diversify the regional economy, financial assistance
provided by the IRRRB has helped leverage the development
and construction of new large-scale mining projects. IRRRB support
in creating new value-added products such as iron nuggets,
iron unit reclamation and steel production, has created hundreds
of construction and permanent jobs across the region.
Near Nashwauk, the $1.6 billion Essar Steel Minnesota iron ore
pellet, direct-reduced iron and slab steelmaking facility is under
construction, making it the first steelmaking facility on Minnesota’s
Iron Range. More than 2,000 construction workers will be
required to build the facility, which will employ 500 permanent
workers when complete.
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The $300 million Mesabi Nugget facility near Aurora and Hoyt
Lakes, is the world’s first commercial demonstration iron nugget
plant. Iron nugget production began on January 12, 2010. The
97 percent pure iron nuggets are being shipped to co-owner Steel
Dynamics, Inc. in Indiana, and used in electric arc furnaces to
make steel. The iron nugget plant, which began construction in
2007, required more than 2,000 construction workers and currently
employs 90 permanent workers.
Magnetation, Inc., an iron unit reclamation company, uses a
proprietary process to extract weak magnetic particles from previously
mined natural ore deposited years ago in tailings basins.
Magnetation’s Plant1 near Keewatin made its first shipment in
February 2009. In June 2010, Magnetation successfully started up
a new patent pending Rev3 Separator, increasing production to
400,000 tons of concentrate per year. The company in 2011 employed
approximately 90 permanent workers. Magnetation plans
to open a second production facility, Plant2, near Bovey producing
800,000 tons per year, requiring 200,000 man hours of construction
and creating 50 additional permanent jobs. A third facility,
Plant3 near Chisholm, with a capacity of 1 million tons annually,
is planned as a joint venture between Magnetation, Inc. and Steel
Dynamics, Inc. Concentrate produced at Plant3 will feed Mesabi
Nugget in Hoyt Lakes. Beginning in January 2012 through 2018,
Magnetation will ship up to 650,000 tons of concentrate per year to
a Mexican steelmaker. Additional Magnetation production facilities
may be built in Minnesota as well as elsewhere in the world.
Beyond iron ore pellet, iron concentrate and steel production,
IRRRB supports the development of a non-ferrous mining industry
in northeastern Minnesota. The Duluth Complex, with an
estimated 4 billion tons of crude, non-ferrous ore, is perhaps the
largest deposit of base and platinum group metals in the United
States.
PolyMet Mining Corporation’s NorthMet project near Hoyt Lakes
and Twin Metals’ Nokomis project near Birch Lake and Ely hold
the potential to create hundreds of construction and permanent
jobs and generate millions in new revenue to local units of government,
the state and federal government. Additional non-ferrous
projects are under exploration or in various stages of development
in northeastern Minnesota. Copper, nickel and platinum
group metals can be mined, processed and used in applications
to help manufacture electronic components, catalytic converters,
hospital equipment, jet engine fuel nozzles, piping, and in power
transmission.