Commodity experts are forecasting that the world supply of iron ore will exceed the demand by 2015 as China's rate of economic growth slows down.
In response to the forecasts, Cliffs Natural Resources Inc., which recently appointed Wisconsin Mining Association president Tim Sullivan to its board of directors, announced in November it will at least temporarily shut down its Empire Mine operation in Michigan's Upper Peninsula in the second quarter of 2013, laying off 500 employees. Cliffs also is curtailing production at its Northshore Mining operation in Minnesota, affecting 125 employees.
The company said it needs to scale down its production volume of iron ore to be in line with market demand.
Iron ore prices reached a record $191.90 per metric ton on Feb. 16 last year, but may plunge as low as $50 per metric ton before the middle of 2013, Andy Xie, a former Morgan Stanley chief Asia-Pacific economist, told Bloomberg News. "We forecast a surplus of iron ore in 2014," Citigroup analyst Daniel Hynes told Bloomberg News. "Demand growth is easing while several new projects in the western hemisphere and in Western Australia will be coming on stream concurrently."
As a commodity, iron ore demand has traditionally been highly cyclical, fluctuating with changes in supplies and the global demand for steel.
Republicans are working to help Florida-based Gogebic Taconite open an iron mine just south of Lake Superior near Hurley. Company officials have promised the mine would create 700 jobs in northern Wisconsin, but they want legislators to ease the state's regulatory path.
The Assembly Committee on Jobs, Economy and Mining and the Senate Committee on Workforce Development, Forestry, Mining and Revenue conducted a hearing Wednesday that included public testimony both for and against the proposed changes to the state's mining laws.
Wisconsin Manufacturers & Commerce vice president of government relations Scott Manley lobbied for the changes.
"The comprehensive mining reforms proposed in the legislation before you will help create thousands of jobs and billions of dollars in economic impacts from mining, while maintaining robust environmental protections," Manley said. "The legislation directly addresses many of the key deficiencies in our current law."
Gov. Scott Walker has endorsed the iron mining reforms, and the Legislation is the highest priority in both houses having been introduced as Senate Bill 1 and Assembly Bill 1.
Democrats, Native American tribes and advocates of public health, agriculture, the environment and tourism have been among those who have expressed concerns about the proposed mine. During Wednesday's testimony, several opponents of the mining law changes vowed to fight them in court.
Wednesday's hearing came one day after Sen. Tim Cullen (D-Janesville) introduced his own mining bill. Cullen and Sen. Dale Schultz, who broke with his Republican colleagues to stall a mining bill last year, hammered the GOP bill and its proponents during a press conference Tuesday.
Schultz, of Richland Center, charged he was misled when he and others were told updated wetlands language passed last session would not be used as a "backdoor" to a mining bill.
"This was not a little point, it was a big point," Schultz said. "I heard the governor say the other day that he wanted an environmentally responsible bill. His spokesman called (the 'backdoor' assertion) a lie. What does this say about our credibility and being able to move forward here in a real fashion?"
The state hearing is being livestreamed today at www.wisconsineye.org.