The agricultural equipment supply chain: Iron Range

VIRGINIA, Minn. — With the start of spring, farming brothers Troy and Brent Adam of Richland are pulling their lanky blue-painted steel agricultural planter, a Kinze 3600, across bare fields, sowing seeds of corn and soy.

It's the start of a grain production cycle that ends on store shelves, kitchen tables, fuel tanks and animal feed bins, where little evidence reveals their origin or who had a hand in its creation.

The Kinze planter didn't just appear on a storeroom floor, either, and it, too, has a story to tell by following its supply-chain upstream.

Many agricultural implements that underpin Iowa's farm industry, such as the 3600, start in rocky earth 450 miles north, in the Mesabi Iron Range in northern Minnesota, about 75 miles from the Canadian border.

[naviga:h3 style="font-size: 21px; text-align: left;"]Links in the agricultural equipment supply chain

For the next month, reporter Brian Morelli will be looking into how agriculture planters are built. For the first part of the series, Morelli visited Minnesota's Mesabi Iron Range.

Mine cart icon by Creative Stall. Steel icon by Pedro Martínez. Factory icon by Krisada. Tractor icon by Bernar Novalyi. All icons from the Noun Project.

It starts with people such as Steve Mekkes, the senior engineer of mining and crushing at ArcelorMittal's Minorca mine outside Virginia, a mining city of about 8,900 people.

Mekkes stands on top of a snow-covered rock pile overlooking a blast site 2,000 feet away in one of Minorca's three pit mines. The site is so far north and so remote, it's not unusual for bear or wolves to be seen in the distance.

Snow delayed the blast from 11 a.m. to noon on this Wednesday, April 6. Two thousand pounds of ammonium nitrate and fuel oil fill 160 of the 16-inch-diameter pilot holes drilled 50 feet deep and spanning a 25-and-a-foot-by-30-foot grid.

Shelves or benches in the rock face denote previous blasts in the pits, which sink about 100 feet deep and have roads wide enough for 240-ton haul trucks.

Years ago, a fuse line would have run from a trigger to the blast zone. But these days, it's all done remotely. Engineers have much more control of the blast, explained Mekkes, who designs the explosion on computers in his office.

'We can control the size of the fragments and how far they fly by the location of the holes, how much explosive we use and the timing,' Mekkes said. 'It is sort of an art.'

The 110-mile-long Iron Range supplies iron ore for the majority domestic steel and is ground zero for many essential products for the modern world — automobiles, bridges, tools, appliances and even cellphones. Kinze's 3600 series planter also is born here.

'This is where it starts — the rock in the ground,' said Jonathan Holmes, operations manager at Minorca. 'It just so happens there's a high concentration of iron here in the Mesabi Range.'

Minorca is one of the smallest operations in the range, which had listed 11 mines until low prices and an oversupply of steel slowed production and forced plants to close or idle. Layoffs have affected 2,000 workers, plus thousands more from supporting industries. As of April only six were in operation in the range.

Williamsburg-based Kinze, a relatively small manufacturer compared to competitors such as John Deere, also is struggling as it navigates large industries, including steel, transportation and agriculture.

A slumping farm economy has seen corn and soy prices tumble. Farm incomes are expected to slide 3 percent this year to $54.8 billion, which is the lowest level since 2002 and down 56 percent from $123.3 billion three years ago, according to the U.S. Department of Agriculture.

Kinze has laid off 336 workers since last June, including 121 last week. Kinze, as with Deere and Caterpillar, have pointed to weak demand as the reason.

At the blast site, an operator gives a two-minute warning over a radio. One minute, 30 seconds, 10 seconds.

Then, a rapid-fire sequence of bursts explode eight and 25 milliseconds apart.

The ground rumbles 2,000 feet away. A plume of dust and snow puffs a few dozen feet in the air.

In the rubble below lay 250,000 tons of chunked up taconite, which contains a low concentration of iron that eventually is the base to make steel. It takes 1,700 truck loads over 10 days to haul the rock from the blast site seven miles to the plant where the magnetic iron is separated from the overburden, or waste rock.

In years past, taconite would be considered waste. It only has about 21 or 22 percent iron. A once-ample supply of rich ore deposits with 80 percent iron concentration is nearly exhausted.

The refining process has made the rock valuable, though, and should mean at least another 50 years of resources for Minorca, Mekkes said.

At the plant, the taconite, a rock known for its hardness, is pulverized and remanufactured. It runs through primary crushing, finer crushing, separation by magnets and chemicals, grinding into powder under pressure of steel rods and balls, rolling with clay into pellets and firing at 2,450 degrees Fahrenheit into a durable form for shipping.

'The only way to get the magnetic units out of the rock is to ground it real fine and magnetize it,' said Nick Frederickson, who started in the primary crushing division in 1976 and is now a contracted trainer.

Minorca is unique because it produces flux pellets, in which iron is mixed with limestone and dolomite, which typically is added during the steelmaking process at the mill to remove impurities. This process produces a very consistent pellet in size and composition.

It contains no more than 3 percent silicate and 67 or 68 percent iron. Flux pellet burns more efficiently and has become a niche for ArcelorMittal.

ArcelorMittal has 357 staff members and has avoided layoffs in the recent downturn. It has only one shut down, in 2009, since converting to a flux pellet in 1987. Holmes attributes the focus on the flux pellet for the stability.

The company still is down from 600 workers in the heyday of the 1970s and 1980s, Frederickson estimated, in part due to automation.

The mining process has stayed much the same since minable ore was discovered in the Mesabi Iron Range northwest of Duluth in 1890. Large scale mining began by 1910.

The Minorca plant started in the 1960s and was taken over by ArcelorMittal, a multinational steel company based in Luxembourg, in 2007.

Mekkes, who relocated to the nearby town of Hibbing after getting a mining degree at Michigan Tech, imagined he'd stay five years and move on. Yet despite the ups and downs of the industry, he feels stable in his job and the area is a good place to raise a family, he said.

Plus, for the outdoor lover, it is hard to beat the vast area for hunting, snowmobiling, boating, fishing and hiking, he said.

However, times are tense in the iron range these days, and people in the industry are feeling pressure from a variety of sources — an oversupply of steel, dropping prices, what they see as encroaching regulations, and scrutiny from environmentalists. Mekkes estimates it costs $10 million to get permitted for a new pit, and often it comes with political opposition.

'People need to understand, you have to mine materials,' Mekkes said. 'If you want to do it in an environmentally friendly way, do it in the developed world where we have more strict regulations.

'But if you make it too strict, business is going to go elsewhere.'

Holmes added that consumers should be mindful of the products they use.

'Mining is really important to everybody, but to a lot of people, it's out of site, out of mind,' Holmes said. 'Without the knowledge or understanding that as long as you are using a product, to me you are responsible. You bear some responsibility for where that comes from.

'If we didn't have the elements and metals we mine — iron, copper, lead, zinc, silicon, that's all mined — we wouldn't have some of these things, like cellphones. We wouldn't have this stuff if it didn't start in the ground.'

Beer brewers, of all people, have become an outlet for ire.

Bent Paddle Brewing Co. of Duluth is part of a 60-member Downstream Business Coalition, which has opposed a proposed new mining venture called PolyMet Mining Co. They caution a malfunction at the proposed nickel and copper mine could spill into natural resources, such as drinking water downstream.

"Without the knowledge or understanding that as long as you are using a product, to me you are responsible. You bear some responsibility for where that comes from."

Pro-mining advocates, however, see an opportunity to restore jobs to a beleaguered local economy. At least one community's city council, Silver Bay, voted to ban Bent Paddle beer, while liquor stores and bars throughout the Iron Range have stopped carrying the product.

Another lightning rod was a photo in a local newspaper of a steel pipe for a local bridge project with a stamp that said 'Made in China.'

Chinese steel has flooded the market and caused prices to plummet. Leo W. Gerard, international president of United Steelworkers, wrote a column for the Huffington Post that stated China had overproduced 500 million tons more of steel than needed in 2015 and dumped 100 million tons into overseas markets, sending prices into a tailspin, causing 13,500 steelworkers to receive layoff notices, and halting production at some mines and steel mills.

International ore prices have dropped from $180 per ton in 2011 to $55 in 2016, which has rebounded slightly from a low of $41 in December.

'Production of that steel was subsidized by the Chinese government in ways that violate international trade rules, so the price was artificially low,' Gerard wrote in an April column. 'And China suppresses the value of its currency, further falsely reducing the cost of the steel.'

Similar to how many Iowa communities are linked to corn and soy prices and the overall farm economy, towns along the Iron Range, such as Virginia and Hibbing, are closely tied to steel prices and the mining industry. Supply of steel from Australia, China and new markets such as Brazil have direct connection to life on Chestnut Street, the main drag in Virginia.

Chestnut is dotted with vacant or closed signs, and many homes around town have for-sale signs.

Unemployment for Virginia had climbed from 4.6 percent in August 2015 to 9.5 percent by March 2016, according to Department of Employment and Economic Development.

'Between the layoffs and the Wal-Mart that opened two years ago, business is down,' said Laura Collins, who owns the 71-year-old Peps Bake Shop on Chestnut Street. 'It's hard to stay open.'

Collins and her daughter, Allison Collins, a student at Mesabi Range Community and Technical College, are well-informed about issues in the steel industry — the flood of steel from China saturating the market, driving down demand and prices. Everyone in town either works for the mine or is friends with someone who does, they said.

'We just need people to buy more things in the USA,' Allison Collins said. 'We are importing much more than we are exporting.'