Japan, Korea, and most of the rest of the world get their imported 
iron ore primarily from Brazil and Australia. Both countries have 
mind boggling massive deposits of direct shipping ore that need only 
to be dug up, screened into size fractions and shipped. These 
deposits are so large that they make the Mesaba deposits look like a 
drop in the bucket. Each country ships between 100 and 200 million 
tons of ore per year and each has several individual mines that ship 
more ore than Minnesota and Michigan combined.

The three largest producing companies are CVRD in Brazil and Rio 
Tinto and BHP in Australia. CVRD ship about 150 million tons per 
year each and BHP ships about 60 million tons per year. Cliffs is a 
very distant fourth place at about 36 million tons per year (last 
year).

No, there is no chance that Minnesota or Michigan pellets would be 
competitive on the world market.  It would cost more to just ship them 
to the ocean than overseas ore is selling for. Minnesota and 
Michigan iron ore is limited to a market area defined by Lake Huron, 
Pittsburgh, Birmingham, AL, and Provo Utah. No domestic ore is 
shipped beyond these and domestic ore supplies the above areas only 
in part. 

If it weren't for the inertia of the large but shrinking domestic 
integrated steel industry along the Great Lakes, and the fact that 
America has a love affair with the automobile, Minnesota and Michigan 
would no longer have an iron mining industry. As it is, the industry 
is on shaky ground.

Since Rio Tinto bought out Iron Ore Company of Canada, who's main 
processing facilities are on the Gulf of St. Lawrence, they have made 
cost improvements that make those pellets cost competitive as far 
inland on the Great Lakes as Detroit, even with tolls on the St. 
Lawrence Seaway.

The following site has a list of the major iron ore producing 
countries:

http://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/340301.pdf

The top 10 iron ore producers for 2000 in declining order (million 
tons per year)

China 215
Brazil 190
Australia 158
Russia 80
India 68
USA 61
Ukraine 50
Canada 34
South Africa 30
Sweden 19

Total world production is around 1 billion tons per year and about 
300 to 400 million tons per year takes a trip on the ocean to its 
consumer.

Just for reference, during the highest years in the early 50's, 
domestic iron ore production approached 120 million tons per year.

In the United States, in 1975 we made about 100 million tons of 
steel, mostly from iron ore from some source. Imports were an 
additional 10 million tons per year.

In 1999, in the United States, we made about 110 million tons of 
steel, of which 58 million tons came from iron ore from some source 
and the rest came from melting scrap. Minnesota and Michigan ore 
accounted for about 42 million tons of this steel.

This year, iron ore production in Minnesota and Michigan will be 
around 40 to 45 million tons and will never again reach the 62 
million tons seen in 2000. For reference, domestic iron ore 
production in 1975 was just over 70 million tons, accounting for 
about 50 million tons of steel.

Australia, like the US, is a high labor cost country. They are also 
a high energy cost country. Energy and labor are the two highest 
costs in making steel, even more than ore. It makes economic sense 
for an Australian producer to ship ore to Korea and get back slabs to 
roll instead of making their own steel. 

Unfortunately it also makes sense for an American steel producer to 
import slabs made overseas, mainly from Asia, Russia, and South 
America, and roll them here. Slab imports displaced about 15 million 
tons of iron ore in the USA last year, and this number is growing. 

When Ispat bought out Inland Steel, their plan was to get rid of 
their blast furnaces and mines and roll slabs imported from Ispat 
operations in Mexico. Somebody screwed up and didn't realize that 
the Steelworker's contract with Inland prevented them from importing 
slabs unless a certain threshold of raw steel production was 
maintained. They are still in the integrated steel business. They 
are loosing money big time like most of the rest of the integrated

companies.

In short, no one overseas could possibly afford to buy American 
produced iron ore and ship it back as steel slabs.

Bruce Kettunen