Posted on Sun, Mar. 16, 2003 story:PUB_DESC
Point of View by REP. TOM RUKAVINA
Steel's restructuring, not taxes, threaten mining industry's future

It is time for the steel captains to learn how to compete, use the 21st Century Minerals Fund for new technologies, capture more of the steel market ... and stop whining about their Minnesota taxes ...

AMarch 3 Point of View column by Jonathan Holmes, manager of the Minorca Mine near Virginia, deserves a response.

First, the mining industry has been squawking about "unfair taxation" for more than a century and has always threatened to leave the state. Some things never change.

But let's review Holmes' assertions. He said the mines have reduced costs and how the steelworkers and vendors have helped the cause, but then Holmes implies that the Legislature has not helped. Nothing could be further from the truth.

From 1976-85 the mining companies paid an average of $13.2 million in occupation taxes (the state's corporate income tax on ore). Today, they pay nothing, because of the action taken by the Iron Range legislative delegation.

In 1985, the taconite production tax (their property tax) was $2.11 per ton; today it is $1.75. Further, the Iron Range legislative delegation helped pass legislation that eliminated sales tax for most mining companies' purchases.

As a regular citizen, who wouldn't want such income and sales tax exemptions? But it is never good enough for the companies. It is all about fairness. Which one of you, whether a small business owner or homeowner, can say you are paying 17 percent less in property taxes in 2003 than you paid in 1985? Only the mining companies can make that claim.

The Iron Range delegation passed $116 million in tax breaks and grants for the mines over the past 10 years. Isn't that enough? When will it ever be enough for U.S. Steel or Ispat Inland?

As far as Holmes' reference to the Iron Range Resources and Rehabilitation Board, that "no other industry pays for the entire operation of a state agency," let me say this:

First, no other industry has removed 4 billion tons of Minnesota ore and left behind poor communities and thousands of unemployed.

Second, I challenge the mining company CEOs to visit the Keweenaw Peninsula in Michigan. Calumet used to have 85,000 people and a downtown that looked like Duluth's. Today there are about 3,000 people and it looks like a ghost town. For more than a hundred years, copper ore was produced in the Keweenaw Peninsula. Their mines electrified and plumbed America. But their wealth, just like ours, went east for a century. They never thought ahead nor put aside for their future.

What we have done with the IRRRB is create our foundation for the future -- and we saved $80 million in the Doug Johnson Fund. We saved just like our grandparents taught us.

I went to a sustainable mining conference in Kimberly, British Columbia, in 2002. The brightest minds in the mineral world were in attendance as were commissioners of mining from many countries and members of the World Bank. When we told them about Minnesota's IRRRB they were amazed because that was what they were proposing --putting a mining area's tax money aside for the future when the mines are gone.

As long as I can breathe, I will never help the mining companies turn our beautiful Iron Range into ghost towns! The bottom line is this: Minnesota's taconite industry is not threatened by taxes. It is threatened by the restructuring of the steel industry.

The failure of the mines to take minimills seriously has resulted in their loss of 50 percent of the domestic steel market. To imply that Minnesota's $1.75 per ton tax is hurting them, when their finished costs are $40 per ton more than their 21st century competitors is hypocritical.

When 128 million tons of steel are consumed in this country annually and U.S. steel producers can only produce 88 million, it is embarrassing. Moreover, the taconite tax is less than one half of one percent of the selling price of their steel products. Whining about that is also embarrassing.

It is time for the steel captains to learn how to compete, use the 21st Century Minerals Fund for new technologies, capture more of the steel market, give up their Iron Mining Association membership at the Kitchi Gammi Club in Duluth and stop whining about their Minnesota taxes that have nothing to do with their inability to compete!

As many of you know, my Dad, Benny Rukavina, passed away last fall. But his thoughts as a steelworker and an Iron Ranger live on. In a letter to the editor in 1962, Benny Rukavina said: "When the iron companies... only want to pay 10 percent of the tax and we, the small taxpayers, have to pick up the tab for the other 90 percent, we sure are not in a free country anymore." Forty years later, Holmes is doing the whining, like the Oliver Iron Mining Co.'s Christian Bukema did in the past. Some things never change.

REP. TOM RUKAVINA, DFL-Virginia, has served in the Minnesota House of Representatives since 1986.