Resurgence in Bunyan Country

Northern Minnesota's lake-strewn hills are Paul Bunyan country. Their open-pit iron mines were originally scooped, as all followers of legend know, to provide suitable shoes for Babe, Bunyan's Big Blue Ox. In recent years, another Bunyan, or another Babe, seemed needed to save Minnesota's fading mining industry. After a century of use, the 110-mile, Z-shaped Mesabi Range (Chippewa Indian for "sleeping giant") began running out of the rich ore that once was the base for 60% of all U.S. iron and steel production. The grey taconite rock in which the remaining ore was pocketed appeared too hard and the ore of too low a grade for profitable mining. The pits and shipping docks slowed down, and miners lost their work. Northern Minnesota slowly became an aspen-covered Appalachia.

Today, the slump is being dramatically reversed. The steel industry has devised a way to drill the once useless taconite with 4,300DEG jet flames. Machines then crush the ore, magnetize it and roll it into pea-sized pellets that are then baked to produce a product that is richer per ton than natural ore. So important is this development that Governor Karl F. Rolvaag's Democratic-Farm-Labor Party last year finally persuaded Minnesota voters to approve a "taconite amendment" to the state constitution that gives mining companies, traditionally fair game for steep taxes, an assessment no higher than other businesses. One day after the election, in an indication of what was to come, U.S. Steel announced that it would build a $120 million taconite plant at Mountain Iron, Minn.

Catalyst for More. Seven companies, mostly organized by steel firms, are now building $1 billion worth of taconite-processing plants that will employ 9,000 men and ship 33 million tons of pellet ore annually. By 1990 the capacities of these plants will double. Two new Minnesota towns, Silver Bay and Hoyt Lakes, have recently been created. The taconite boom is also reviving older towns: in Chisholm (pop. 7,100), unemployment has fallen from 33% three years ago to only 6% today. Mining company payrolls and purchases will soon reach $194 million a year, and Minnesota expects the taconite industry to act as a catalyst for others.

Minnesota's good fortune has caused ripples elsewhere. With ranges like the Mesabi running low, the U.S. steel industry since World War II has increasingly depended on imported ore, now buys 33% abroad. The guarantee of a 300-year supply of taconite ore, which produces twice as much pig iron per ton as natural ore and requires less coke and limestone in the steelmaking process, is luring new steel mills, traditionally centered in an arc around Pittsburgh, to the lower Lake Michigan area. Another lure: the rising demand for durable goods in the Midwest, where automakers, farm-machinery plants and appliance plants within a 400-mile radius of Chicago are hard-pressed to fill orders.

Lift in Output. The two trends together have touched off the greatest migration and building program in the steel industry's 101-year history. U.S. Steel and Inland, both longtime Chicago producers, have major expansion programs under way to add furnaces and finishing mills. Jones & Laughlin will erect a ground-up $600 million plant at Hennepin, 111. (TIME, July 9). Bethlehem is spending $400 million on a 3,300-acre complex of finishing mills at Burns Harbor, Ind. Youngstown Sheet & Tube is laying out $375 million for a blast furnace and finishing mills at East Chicago, and Midwest Steel, a division of National Steel, has opened a new $115 million plant.

Because of the lift in steel output and orders, employment and construction in the Chicago area are rising. Last week the state of Indiana sought first bids for a new port at Burns Harbor that will cost about $100 million, will handle ore boats carrying iron ore from the Mesabi and from similar mines in Upper Michigan. The Burlington Lines railroad recently decided to add 100 covered gondola cars to carry finished steel, later revised the total upward to 200 because of the rising volume of traffic. The New York Central System is planning to build a 4,100-car marshaling yard near the new mills, is shifting three miles of the Central's New York-Chicago main line in the process. So strong is the future that Chicagoans have adopted a somewhat condescending attitude toward Pittsburgh. "In steel," says Inland's Vice President William Caples, "this is where the action is."

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