A few weeks ago, The Financial Times reported that the price of steel rebar (the reinforcing rods used in concrete construction) had plunged to a record low on the Shanghai futures market. And the price of iron ore had dropped as well, meaning that mining companies would likely cut production.
That was bad news for the Wisconsin economy. The Badger State has a substantial — but struggling — mining equipment industry in the Milwaukee area.
More to the point, the cooling of the Chinese economy is a major reason why the pipe dream of a revived iron ore mining in northern Wisconsin quickly burst. I examine the flawed thinking of the mine promoters — notably Gov. Scott Walker and the business group Wisconsin Manufacturers & Commerce–in a piece for Isthmus.
Thomas Power, 75, an emeritus natural resources economist at the University of Montana, has studied mining for almost 50 years. He chuckled and said “certainly not” when I asked him in a phone interview if mining iron ore in northern Wisconsin was a good bet for producing jobs and wealth.
“Mining in the United States hasn’t been a growth center or a source of regional prosperity for at least a half century,” he says. “Just look across the country. When was the last time the Iron Range in Minnesota was prosperous? Or the last time when Butte, Montana, was prosperous? Or the Appalachian coal fields? Or the Ozark lead fields? Or the Arizona copper towns?”
The only contemporary success story he could cite was gold mining in the middle of nowhere Nevada, where the workers commute to work.
Reality is that mining operates on a recurring boom-and-bust cycle, he notes, and the bounce-backs are inevitably fueled, in part, by technological advances that reduce the workforce.
Mining jobs, as a result, has been greatly reduced. “It’s like agriculture,” Power says. “The rural Great Plains is losing people. Its not because we’re producing less and less wheat. It’s because we need almost no people to produce the wheat. It’s the same with mining.”
“It’s hard to imagine how some sort of sustainable prosperity can be built around an industry of that sort,” he adds. “That’s not badmouthing mining. That’s just the facts of the matter.”
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Stories by Marc Eisen 