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Economic Impact Analysis for the Final
National Emission Standards for Hazardous Air
Pollutants: Taconite Iron Ore Processing
Amendments
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EPA-452/R-24-008
January 2024
Economic Impact Analysis for the Final National Emission Standards for Hazardous Air
Pollutants: Taconite Iron Ore Processing Amendments
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Health and Environmental Impacts Division
Research Triangle Park, NC
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CONTACT INFORMATION
This document has been prepared by staff from the Office of Air and Radiation, U.S.
Environmental Protection Agency. Questions related to this document should be addressed to the
Air Economics Group in the Office of Air Quality Planning and Standards, U.S. Environmental
Protection Agency, Office of Air and Radiation, Research Triangle Park, North Carolina 27711
(email: OAQPSeconomics@epa.gov).
ACKNOWLEDGEMENTS
In addition to U.S. Environmental Protection Agency staff, personnel from RTI International
contributed research, data, and analysis to this document.
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TABLE OF CONTENTS
Table of Contents v
List of Tables vii
List of Figures viii
1 Introduction 1-1
1.1 Background 1-2
1.1.1 Statutory Requirements 1-2
1.1.2 Regulatory Background 1-3
1.1.3 F inal Requirements 1-4
1.1.4 Economic Basis for this Rulemaking 1-5
1.2 Final Amendments 1-5
1.2.1 Baseline and Regulatory Options 1-5
1.2.2 Methodology 1-6
1.2.3 Differences Between the Final and Proposed Action 1-7
1.3 Organization of this Report 1-7
2 Industry Profile 2-1
2.1 Introduction 2-1
2.2 Supply Side 2-2
2.2.1 Taconite Pellets 2-2
2.2.1.1 Mining 2-2
2.2.1.2 Beneficiation 2-3
2.2.1.3 Agglomeration 2-3
2.2.2 Products 2-4
2.2.2.1 By-products 2-5
2.2.3 Costs of Production 2-5
2.3 Demand Side 2-6
2.3.1 Product Characteristics 2-6
2.3.2 Uses and Consumers 2-7
2.3.2.1 Uses 2-7
2.3.2.2 Consumers 2-9
2.3.3 Substitution Possibilities in Consumption 2-10
2.4 Industry Organization 2-11
2.4.1 Industry Structure 2-11
2.4.1.1 Horizontal and Vertical Integration 2-12
2.4.1.2 Firm Characteristics 2-13
2.5 Markets 2-14
2.5.1 Market Structure 2-14
2.5.2 Market Volumes and Prices 2-15
2.5.2.1 Domestic Production and Consumption 2-15
2.5.2.2 Prices 2-16
2.5.2.3 Supply and Demand Elasticities 2-16
2.5.2.4 Foreign Trade 2-17
2.5.3 Market Forecasts 2-19
3 Emissions and Engineering Costs Analysis 3-1
3.1 Introduction 3-1
3.2 Facilities and Emissions Points 3-1
3.2.1 Taconite Iron Ore Processing Facilities 3-1
3.2.2 Indurating Furnaces, Emissions, and Current Controls 3-2
3.2.3 Facility Projections and the Baseline 3-3
3.3 Description of Regulatory Options 3-4
3.3.1 Mercury (Hg) 3-4
3.3.2 Acid Gases (HC1/HF) 3-6
3.3.3 Summary of Regulatory Options 3-7
3.4 Emissions Reduction Analysis 3-7
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3.4.1 Baseline Emissions Estimates 3-7
3.4.2 Projected Emissions Reduction 3-8
3.4.3 Secondary Emissions Impacts 3-9
3.5 Engineering Cost Analysis 3-10
3.5.1 Facility-Level Impacts Tables 3-10
3.5.1.1 Facility-Level Impacts ofHg Regulatory Options 3-11
3.5.1.2 Facility-Level of Acid Gas Regulatory Options 3-13
3.5.1.3 Summary of Facility-Level Impacts 3-14
3.5.2 Summary Cost Tables for the Final Regulatory Options 3-16
3.6 Uncertainties and Limitations 3-18
4 Economic Impact Analysis and Distributional Assessments 4-1
4.1 Introduction 4-1
4.2 Modeling Approach 4-3
4.2.1 Supply 4-4
4.2.2 Demand 4-5
4.2.3 Equilibrium 4-5
4.2.4 Baseline Data and Parameters 4-6
4.2.5 Economic Impact Results 4-8
4.2.5.1 Market-Level Results 4-8
4.2.5.2 Welfare Change Estimates- 4-11
4.2.5.3 Limitations 4-13
4.3 Employment Impact Analysis 4-14
4.4 Small Business Impacts 4-15
5 References 5-1
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LIST OF TABLES
Table 1-1: Current and Final Standards for Hg and Acid Gas Emissions from Taconite Indurating Furnaces 1-6
Table 2-1: Iron Ore Mined and Pelletized in the United States (metric tons) 2-3
Table 2-2: Total Production Costs for Iron Ore Mining, 2019-2021 2-5
Table 2-3: Breakdown of Cost per Metric Ton for Iron Ore Mining, 2019-2021 2-6
Table 2-4: U.S. Consumption of Iron Ore by End Use, 2017-2020 (thousand metric tons) 2-7
Table 2-5: Integrated Iron and Steel Mills in the United States 2-10
Table 2-6: Taconite Iron Ore Facility Ownership, Capacity, Production (million metric tons), and Employment3 2-11
Table 2-7: U.S. Coking Facility Ownership and Capacity 2-13
Table 2-8: Taconite Iron Ore Facility Owner Sales and Employment, 2021 2-14
Table 2-9: Domestic Production, Consumption, and Prices, 2010-2021 2-15
Table 2-10: Supply and Demand Elasticities of Iron Ore and Steel Mill Products 2-16
Table 2-11: Iron Ore Imports and Value of Imports, 2010-2021 2-18
Table 2-12: Iron Import Value by Country and Product, 2021 2-18
Table 2-13: Iron Ore Exports by Value, 2010-2021 2-19
Table 2-14: Iron Export Value by Country and Product, 2021 2-19
Table 3-1: Taconite Iron Ore Processing Facilities 3-1
Table 3-2: Indurating Furnaces at Taconite Iron Ore Processing Facilities 3-3
Table 3-3: Regulatory Options Examined in this EIA 3-7
Table 3-4: Baseline Emissions from Indurating Furnaces for Taconite Iron Ore Processing Source Category 3-8
Table 3-5: Projected Emissions Reductions for Regulatory Options 3-9
Table 3-6: Projected Secondary Emissions Impacts of the Final Amendments 3-10
Table 3-7: Facility-Level Impacts of the Final Hg Standards (2023$) 3-12
Table 3-8: Facility-Level Impacts of the Less Stringent Alternative Hg Standards (2023$) 3-13
Table 3-9: Facility-Level Impacts of the More Stringent Alternative Hg Standards (2023$) 3-13
Table 3-10: Facility-Level Impacts of the Final Acid Gas Standards (2023$) 3-14
Table 3-11: Summary of Facility-Level Impacts of Final Hg and Acid Gas Standards (2023$$) 3-15
Table 3-12: Summary of Facility-Level Impacts of the Less Stringent Alternative Hg and Acid Gas Standards (2023$$) 3-15
Table 3-13: Summary of Facility-Level Impacts of the More Stringent Alternative Hg and Acid Gas Standards (2023$) 3-16
Table 3-14: Summary of Total Capital Investment and Annual Costs per Year of the Final Option by Pollutant (2023$) 3-16
Table 3-15: Costs by Year for the Final Options (2023$) 3-17
Table 3-16: Present-Value, Equivalent Annualized Value, and Discounted Costs for Final Options, 2027-2036 (million 2023$). 3-
17
Table 4-1: Total Annualized Cost-to-Sales Ratios for Taconite Facility Owners by Regulatory Alternative 4-2
Table 4-2: Total Capital Investment-to-Sales Ratios for Taconite Facility Owners by Regulatory Alternative 4-2
Table 4-3: Baseline Price and Quantity Data Taconite Pellets and Steel Mill Products, 2019 4-7
Table 4-4: Elasticity Parameters for Taconite Pellets and Steel Mill Products 4-7
Table 4-5: Facility-Level Compliance Cost Shocks for Final Options, ($2019) 4-8
Table 4-6: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and Steel Mill Products under the Final
Options 4-9
Table 4-7: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and Steel Mill Products under the Less
Stringent Alternative Options 4-10
Table 4-8: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and Steel Mill Products under the More
Stringent Alternative Options 4-10
Table 4-9: Summary of Proj ected Consumer and Producer Surplus Changes under the Final Options 4-12
Table 4-10: Summary of Projected Consumer and Producer Surplus Changes under the Less Stringent Alternative Options.... 4-12
Table 4-11: Summary of Projected Consumer and Producer Surplus Changes under the More Stringent Alternative Options ..4-13
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LIST OF FIGURES
Figure 2-1: The Taconite Iron Ore Pelletizing Process
Figure 2-2: Share of BF/BOPF and EAF Steel in the U.S., 2001-2021
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1 INTRODUCTION
The U.S Environmental Protection Agency (EPA) is finalizing amendments to the
National Emission Standards for Hazardous Air Pollutants (NESHAP) for facilities in the
Taconite Iron Ore Processing source category (40 CFR part 63, subpart RRRRR). Facilities in
the Taconite Iron Ore Processing source category mine and process iron ore from taconite and
produce taconite pellets, which are used as feedstock to blast furnaces at integrated iron and steel
manufacturing facilities. The blast furnace reduces taconite pellets and other iron-bearing inputs
to molten pig iron, which is fed to a basic oxygen furnace and used to produce steel. This
document presents the economic impact analysis (EIA) for this final rule.
Specifically, the EPA is finalizing NESHAP requirements for mercury (Hg) emissions
and revisions to existing NESHAP limits on acid gas (hydrogen chloride (HC1) and hydrogen
fluoride (HF)) emissions from indurating furnaces at taconite iron ore processing facilities. The
final Hg standard addresses a regulatory gap in the NESHAP. The final amendments also include
compliance testing and revisions to monitoring and operating requirements for control devices.
The final amendments cumulatively reduce projected emissions of Hg from this source category
by about 250 pounds (lbs) per year, directly emitted PM2.5 by about 91 short tons per year, HC1
by about 680 short tons per year, and HF by about 36 short tons per year. A qualitative
discussion of the expected health benefits of reducing these emissions may be found in Section
IV.B of the preamble for this rulemaking. Taconite processing facilities are projected to incur
$110 million in total capital investment and $68 million in total annualized cost per year to meet
the emission limits and other requirements in the final NESHAP amendments.
This EIA analyzes the costs and emissions impacts under the final requirements, a less
stringent set of alternative requirements, and a more stringent set of alternative requirements.
The projected impacts of the final rule and regulatory alternatives are presented for the 2027 to
2036 time period. The regulatory alternatives are discussed in Section 3.3. This EIA analyzes
less and more stringent alternative options to better inform EPA and the public about the
projected impacts of the final rule, and these results are included at EPA's discretion.
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1.1 Background
1.1.1 Statutory Requirements
The statutory authority for the final NESHAP amendments is provided by sections 112
and 301 of the Clean Air Act (CAA), as amended (42 U.S.C. 7401 et seq.). Section 112 of the
CAA establishes a two-stage regulatory process to develop standards for emissions of HAP from
stationary sources. Generally, the first stage involves establishing technology-based standards,
and the second stage involves evaluating those standards that are based on maximum achievable
control technology (MACT) to determine whether additional standards are needed to address any
remaining risk associated with HAP emissions. This second stage is commonly referred to as the
"residual risk review." In addition to the residual risk review, the CAA also requires the EPA to
review standards set under CAA section 112 every 8 years and revise the standards as necessary
taking into account any "developments in practices, processes, or control technologies." This
review is commonly referred to as the "technology review," and is the subject of this final
rulemaking.
In the first stage of the CAA section 112 standard setting process, the EPA promulgates
technology-based standards under CAA section 112(d) for categories of sources identified as
emitting one or more of the HAP listed in CAA section 112(b). Sources of HAP emissions are
either major sources or area sources, and CAA section 112 establishes different requirements for
major source standards and area source standards. "Major sources" are those that emit or have
the potential to emit 10 tons per year (tpy) or more of a single HAP or 25 tpy or more of any
combination of HAP. All other sources are "area sources." For major sources, CAA section
112(d)(2) provides that the technology-based NESHAP must reflect the maximum degree of
emission reductions of HAP achievable (after considering cost, energy requirements, and non-air
quality health and environmental impacts). These standards are commonly referred to as MACT
standards. CAA section 112(d)(3) also establishes a minimum control level for MACT standards,
known as the MACT "floor " In certain instances, as provided in CAA section 112(h), the EPA
may set work practice standards in lieu of numerical emission standards. The EPA must also
consider control options that are more stringent than the floor. Standards more stringent than the
floor are commonly referred to as beyond-the-floor standards.
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1.1.2 Regulatory Background
The sources affected by the current NESHAP for the Taconite Iron Ore Processing source
category (issued under 40 CFR part 63, subpart RRRRR) are taconite iron ore processing
facilities that are major sources of HAP. Taconite iron ore processing facilities separate and
concentrate iron ore from taconite, a low-grade iron ore, and produce taconite pellets, which are
approximately 60 percent iron and are used primarily as feedstock to iron-smelting blast furnaces
at integrated iron and steel manufacturing facilities. Taconite iron ore processing facilities
process both magnetite (Fe3C>4) and hematite (Fe2C>3) iron ore. There are seven facilities currently
producing taconite pellets that will be affected by this final rule and are anticipated to incur
costs: six in Minnesota and one in Michigan.
40 CFR part 63, subpart RRRRR applies to each new or existing ore crushing and
handling operation, ore dryer, indurating furnace, and finished pellet handling operation at each
major source taconite iron ore processing plant and covers emissions from ore crushing and
handling emission units, ore dryer stacks, indurating furnace stacks, finished pellet handling
emission units, and fugitive dust emissions. The primary HAP covered by the original NESHAP
include HAP metals (e.g., manganese, arsenic, and lead), acid gases (HC1 and HF), and products
of incomplete combustion (e.g., formaldehyde). Indurating furnaces are the most significant
sources of HAP emissions at taconite iron ore processing facilities. Two types of indurating
furnaces are in use within the source category: straight grate furnaces and grate kiln furnaces.
The NESHAP for Taconite Iron Ore Processing facilities was originally finalized on
October 30, 2003. EPA performed a residual risk and technology review (RTR) for the source
category, which was finalized July 28, 2020. As a result of the RTR, EPA proposed no
significant changes to the original NESHAP and determined that the standards provided an
ample margin of safety to public health and the environment. On April 21, 2020, while EPA
prepared the final RTR for signature, the D.C. Circuit Court issued a decision in Louisiana
Environmental Action Network (LEAN) v. EPA (955 F.3d 1088 (D.C. Cir. 2020)) which held that
EPA must establish standards for all listed HAP known to be emitted from a source category.
Any new MACT standards related to gap-filling must be established under CAA sections
112(d)(2) and (d)(3), or, in specific circumstances, under CAA sections 112(d)(2) or (h). This
decision created an obligation to regulate Hg emissions from indurating furnaces at taconite iron
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ore processing facilities under the NESHAP and prompted a reconsideration of the technology
review for the source category.
1.1.3 Final Requirements
The final amendments to 40 CFR part 63, subpart RRRRR regulate Hg and acid gas
emissions from indurating furnaces by setting numerical limits for each pollutant. EPA is also
finalizing compliance testing requirements (performed initially and every 2.5 years thereafter),
and revisions to monitoring and reporting requirements for control devices. Hg emissions from
indurating furnaces are currently unregulated, while acid gas emissions are currently regulated
using particulate matter (PM) emissions as a surrogate.
The EPA is finalizing a production-based MACT floor emissions limit for Hg based on
the 99-percent upper prediction limit (UPL) of the top five performing indurating furnaces at
taconite facilities. The MACT floor is 2.6 x 10"6 lb Hg/long ton pellets for new sources and 1.4 x
10"5 lb Hg/long ton pellets for existing sources. The MACT floor limit would apply to each
furnace at each facility. The EPA is also finalizing a compliance alternative that allows facilities
to demonstrate compliance by averaging mercury emissions across existing indurating furnaces
located at the same taconite facility. Under this emissions averaging compliance alternative
(referred to as the "alternative compliance option" in this EIA), a taconite iron ore processing
facility with more than one existing indurating furnace may average mercury emissions across
the indurating furnaces located at the facility provided that the mercury emissions averaged
across all existing indurating furnaces at the facility do not exceed a mercury emission limit of
1.3 x 10"5 lb Hg/long ton. This emission limit reflects a 7 percent adjustment factor to the MACT
floor standard. EPA projects the alternative compliance option will result in lower cost to
facilities and greater emissions reductions. For this reason, the analysis of this EIA is focused on
the alternative compliance option. This EIA also examines the MACT floor limit for Hg without
the alternative compliance option as a less stringent regulatory alternative.
The EPA is also finalizing revised numerical limits for acid gases (HC1 and HF). The
revised limit for HC1 is 4.4 x 10"4 lb HCl/long ton for new sources and 4.6 x 10"2 lb HCl/long ton
for existing sources. The revised limit for HF is 3.3 x 10"4lb HF/long ton for new sources and 1.2
x 10~2lb HCl/long ton for existing sources. Acid gas emissions from indurating furnaces are
currently controlled using PM emissions as a surrogate. For each straight grate indurating furnace
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processing magnetite, the current PM emissions limit is 0.006 grains/dry standard cubic foot
(gr/dscf) for new straight grate furnaces and 0.010 gr/dscf for existing straight grate furnaces. For
each grate kiln indurating furnace processing magnetite, the current PM emissions limit is 0.006
gr/dscf for new grate kiln furnaces and 0.011 gr/dscf for existing grate kiln furnaces. For each
grate kiln indurating furnace processing hematite, the current PM emissions limit is 0.018 gr/dscf
for new grate kiln furnaces and 0.025 gr/dscf for existing grate kiln furnaces.
1.1.4 Economic Basis for this Rulemaking
Many regulations are promulgated to correct market failures, which otherwise lead to a
suboptimal allocation of resources within a market. Air quality and pollution control regulations
address "negative externalities" whereby the market does not internalize the full opportunity cost
of production borne by society as public goods such as air quality are unpriced.
While recognizing that the optimal social level of pollution may not be zero, HAP
emissions impose costs on society, such as negative health and welfare impacts, that are not
reflected in the market price of the goods produced through the polluting process. For this
regulatory action the good produced is taconite iron ore pellets, which are used as feedstock to
blast furnaces in integrated iron and steel manufacturing plants. If the process of mining taconite
iron ore and processing it for use in steel production pollutes the atmosphere, the social costs
imposed by the pollution will not be borne by the polluting firm but rather by society as a whole.
Thus, the producer is imposing a negative externality, or a social cost from these emissions, on
society. The equilibrium market price of iron ore and steel products may fail to incorporate the
full opportunity cost to society of using taconite as an input in steel products. Consequently,
absent a regulation or some other action to limit emissions, producers will not internalize the
negative externality of pollution due to emissions and social costs will be higher as a result. This
regulation will work towards addressing this market failure by causing affected producers to
begin internalizing the negative externality associated with HAP emissions.
1.2 Final Amendments
1.2.1 Baseline and Regulatory Options
The impacts of regulatory actions are evaluated relative to a baseline that represents the
world without the regulatory action. In this EIA, we present results for the final amendments to
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the NESHAP for taconite iron ore processing facilities relative to a world without the
amendments. The final NESHAP amendments set numerical MACT floor emission limits for Hg
and revised numerical limits for HC1, and HF emissions from indurating furnaces. The final
requirements are presented in Table 1-1 below.
Table 1-1: Current and Final Standards for Hg and Acid Gas Emissions from Taconite
Indurating Furnaces
Regulated Pollutant Current Standard Final Standard
TT , T . . , , New Sources: 2.6 x 106 lb Hg/long ton
Hg No current standard . . c . . In s , a
Existing Sources: 1.4 x 103 lb Hg/long tona
PM surrogate standard for both
HC1/HF
New Sources: 4.4 x 10~4 lb HCl/long ton
Straight grate indurating furnace Existing Sources: 4.6 x 10"2 lb HCl/long ton
(Magnetite)
New Sources: 0.006 gr/dscf
Existing sources: 0.010 gr/dscf
Grate kiln indurating furnace
rip (Magnetite, Hematite) New Sources: 3.3 x 104 lb HF/long ton
Existing Sources: 1.2 x 10 2 lb HF/long ton
New Sources: 0.006 gr/dscf, 0.018
gr/dscf
Existing sources: 0.010 gr/dscf, 0.025
gr/dscf
a This standard applies to each indurating furnace at a facility. An alternative compliance standard, 7 percent more stringent than
the MACT floor limit, applies to average furnace emissions at a facility.
Throughout this document, the EPA focuses the analysis on the final requirements that
result in quantifiable compliance cost or emissions changes compared to the baseline. We
assume each facility achieves emissions control meeting current standards and estimate
emissions reductions and cost relative to this baseline. We also analyze a less stringent and more
stringent alternative regulatory option as compared to our final option. The results of this
analysis are presented alongside analysis of the final option in Chapter 3.
1.2.2 Methodology
The impacts analysis summarized in this EIA reflects a nationwide engineering analysis
of compliance cost and emissions reductions. Using survey response and testing data collected
from each taconite facility in a CAA section 114 information request, the EPA estimated costs
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and emissions reductions of the final and alternative regulatory options based on the indurating
furnaces at each facility and stack testing data from each furnace. We calculate cost and
emissions impacts of the final and alternative regulatory requirements over a 10-year analytical
timeframe from 2027 to 2036. This timeframe spans the projected first year of full
implementation of the final NESHAP amendments and presents 10 years of potential regulatory
impacts. We assume the number of active facilities in the source category is constant over the
analysis period.
1.2.3 Differences Between the Final and Proposed Action
The final MACT floor limits for Hg and revised limits for HC1 and HF have been updated
to reflect corrections to emissions data received during the public comment period on the
proposal. As a result, the estimated emissions reductions have been updated to reflect the
finalized limits and the appropriate emissions data. In addition, a variety of updates have been
made to the cost analysis in response to public comments received on the proposal. These
updates include revisions to the dollar-year used for cost estimates to reflect recent inflation,
revisions to the interest rate used to annualize capital that reflect changes in the bank prime rate
since proposal, revisions to the wage rate used to estimate the cost of labor associated with the
finalized requirements, and revisions to the cost of inputs to pollution control devices such as
activated carbon and sorbent.
1.3 Organization of this Report
The remainder of this report details the methodology and the results of the EIA. Chapter
2 presents a profile of the taconite iron ore processing industry. Chapter 3 describes emissions,
emissions control options, and engineering costs. Chapter 4 presents analyses of economic
impacts and a discussion of employment and small business impacts. Chapter 5 contains the
references for this EIA.
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2.1 Introduction
2 INDUSTRY PROFILE
This industry profile supports the EIA of the final amendments to the NESHAP for
taconite iron ore processing facilities. The North American Industry Classification System
(NAICS) code for iron ore mining is 21221, and all taconite mining and processing operations
fall within this classification.
Taconite is the primary source of iron ore mined domestically, making up 98 percent of
the iron ore market in the United States. Taconite is a low-grade iron ore, with an iron content
between 20 percent and 30 percent; it only became an economically viable source of iron
because of decreases in the supply of high-grade ore and innovations in extracting iron ore from
taconite. The low-grade ore is processed and concentrated to reach the 62.5 percent iron content
benchmark required for steel production (Tuck, 2022a). It is found nearly exclusively in hard,
fine-grained, banded iron formations along the coast of Lake Superior in Minnesota and
Michigan. These two states account for virtually all domestic production and have seven mining
and processing operations, all of which are owned by two parent companies: Cleveland-Cliffs
(five facilities) and US Steel (two facilities). The seven operations are open-pit mines and were
estimated to employ 4,200 people total in 2021 (Tuck, 2022a). Each operation has associated
concentration and pelletizing plants. The United States produces more iron ore than it consumes,
producing 1.8 percent of the world's supply and consuming 1.4 percent. Relatively low
consumption of iron ore in the United States is the result of a declining reliance on traditional
blast oxygen process furnace (BOPF) steelmaking (a process that uses iron ore as a primary
input). In 2021, the share of steel produced by BOPFs was estimated to be 28 percent, down
from 37.3 percent in 2015, as a result of increased reliance on electric arc furnaces, which are
more energy efficient, have reduced environmental impacts, and use the United States' readily
available supply of steel scrap (Tuck, 2022c).
Iron ore demand is fully dependent on the demand for steel, which fell sharply in 2020
because of the economic slowdown resulting from the COVID-19 pandemic. Production fell
from 47 million metric tons in 2019 to 38 million in 2020a drop of 19 percent (Tuck, 2022a).
Estimates for 2021 show a near total rebound of domestic iron ore production to pre-pandemic
levels, back up to 46 million metric tons (Tuck, 2022c).
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2.2 Supply Side
Domestic iron ore supply reliably meets domestic demand, and the United States was a
net exporter in 2021 as it has been each year since 2007 (Tuck, 2022b). Seven open-pit taconite
mines in Minnesota and Michigan account for nearly all of the domestic production of iron ore.
Minnesota accounts for 83 percent of production of the national output of iron ore and Michigan
accounts for 17 percent (Tuck, 2022a). These facilities not only mine the ore but also perform
beneficiation and agglomeration of the ore to achieve a final pellet product that is shipped more
easily. The process is explained in the following subsections.
2.2.1 Taconite Pellets
Low-grade taconite ore from the upper midwestern United States is the primary source of
blast furnace (BF) steelmaking in the United States. Nearly all of the taconite mined in the
country is processed on site and turned into pellets that are shipped to steelmaking operations.
2.2.1.1 Mining
Taconite iron ore is mined from the Mesabi Iron Range of northern Minnesota and the
Marquette range in the Upper Peninsula of Michigan. The ore is mined from open pits because
ore lies close to the surface in this region. The process includes overburden removal, drilling,
blasting with explosives, and removal of taconite and excess rock with large trucks. Large holes,
about 50 feet deep and 16 inches wide, are drilled and filled with explosives to break apart large
chunks of rock. The rock that contains crude is then transported by truck or train to an on-site
crushing facility. Further processing is done, explained below in Section 2.2.1.2 and Section
2.2.1.3, to separate iron ore from the crude material. Details of crude material mined and iron ore
extracted are reported in Table 2-1. 2020 (during COVID-19) and 2019 (pre-COVID-19) data are
shown in the table to display the drop in production stemming from the COVID-19 pandemic.
Although detailed 2021 data are not yet available, total ore production nearly rebounded fully to
pre-pandemic levels in 2021 to 46 million metric tons.
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Table 2-1: Iron Ore Mined and Pelletized in the United States (metric tons)
Year Region and State Number of Mines Crude Ore Iron Ore
2020 Lake Superior
Minnesota
6
107.000
31.700
Michigan
1
19.000
6.400
Total
7
126,000
38,100
Lake Superior
Minnesota
6
135,000
39,100
Michigan
1
22,700
7,800
Total
7
158,000
46,900
Source: Tuck (2021). Iron Ore [tables only release], USGS Minerals Yearbook 2020. Available at:
https://www.usgs.gov/centers/national-minerals-information-center/iron-ore-statistics-and-information.
2.2.1.2 Beneficiation
The iron ore is beneficiated to remove impurities, increase the iron content, and improve
the final product generally to meet the needs of steel producers. Beneficiation is achieved by
crushing and grinding the rock, screening, sifting, washing, and otherwise separating impurities
from the ore minerals. Once milled, the resulting slurry is passed through a process of magnetic
separation to isolate iron ore from unwanted rock. Material that is not collected by the magnetic
processing is called gangue or tailings, which are then reground and reprocessed to extract as
much usable ore as possible. Water is removed from the iron slurry, and chemicals are added to
upgrade the iron concentrates by removing impurities. The resulting concentrate is the primary
input of taconite pellets.
2.2.1.3 Agglomeration
Agglomeration is the process that turns the iron-rich concentrate material into pellets by
combining it with clay. This product is then rolled into marble-sized balls and heated at a high
temperature by an indurating furnace. As the balls cool, they harden into the final product:
taconite pellets. Taconite pellets are the primary product of iron ore facilities in the United
States. An example of the pelletizing process is shown in Figure 2-1.
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Figure 2-1: The Taconite Iron Ore Pelletizing Process
Feed to
concentrating
plant
Concentrating Plant
Mill
Hydro-
cyclone
Additives - 4.v
Additive
tank
13
Primary Secondary <
milling Magnetic milling Magnetic
separation separation Flotation
Waste
Waste
Waste I
Pelletizing Plant
Balling drum
Grate
Cooling
Slurry
tank
Filtration
Kiln
I I I I
vvwv
9
Storage silo for final product
Delivery to
customer
Source: Engstrom, K., & Esbensen, K. H. (2018), Evaluation of sampling systems in iron ore concentrating and pelletizing
processes - Quantification of total sampling error (TSE) vs. process variation. Minerals Engineering, 116,203-208.
https://d0i.0rg/l 0.1016/j .mineng.2017.07.008.
2.2.2 Products
Virtually all of domestically produced iron ore is pelletized before shipment. Pellets can
take the form of standard "acid" pellets or "fluxed/partially fluxed" pellets. Standard taconite
pellets are made of iron ore, oxygen, and silica and held together by clay. Fluxed pellets are
simply taconite pellets with additional limestone or other basic flux additive.1 Fluxed pellets
eliminate the need to incorporate limestone in the blast furnace later in the process, improving
productivity and adding value to the pellet. Pellets are considered fluxed if they contain more
than 2% limestone or other flux additive, and pellets with flux values above 0% but below 2%
are considered partially fluxed (Minnesota Department of Revenue, 2022). Pellets produced in
Minnesota (83 percent of U.S. production) mostly contain some fluxonly 2 percent are
considered acid pellets, 43 percent are fully fluxed, and 55 percent (Tuck, 2022a) are partially
fluxed.
1 "Flux" is a name for any substance introduced in the blast furnace to reduce impurities in the molten. The flux materials
decompose into slag and C02 that reacts with coke in the blast furnace to reduce the iron ore to molten iron.
2-4
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2.2.2.1 By-products
During the beneficiation process detailed above, iron ore, specifically magnetite, is
separated from the crushed taconite using magnets. The iron content of the taconite is low, and
much of the rock is left behind during magnetic separation. The leftover content is referred to as
"tailings," and over 125 million metric tons of tailings are produced annually in Minnesota alone
(Oreskovich, Patelke, & Zanko, 2007). The tailings are used as fill materials for pavement in
road construction in areas near taconite mines and have been used in at least 1,120 miles of
roadway in northeastern Minnesota (Oreskovich, Patelke, & Zanko, 2007). The supply of
taconite tailings far outpaces the demand; however, because transportation costs are prohibitive
for replacing gravel or other materials typically used in pavement, excess tailings are stockpiled
at the mining site. Recent technological advances allow for additional iron particles to be
recovered from tailings basins and pelletized (Tuck, 2022c).
2.2.3 Costs of Production
Table 2-2 presents the production costs for the iron ore industry from the annual
Minnesota Department of Revenue Mining Tax Guide (Minnesota Department of Revenue,
2022), which is the same source that the USGS uses for the annual Minerals Yearbook reports.
Minnesota produces 83 percent of the nation's iron ore and has six of the seven mining and
pelletizing operations with the other being in Michigan. The costs per metric ton from Minnesota
are assumed to be representative of the industry, including the operation in Michigan, and were
thus applied to total national production for the purpose of this industry profile.
Table 2-2: Total Production Costs for Iron Ore Mining, 2019-2021
2019
2020
2021
Total cost of production (per metric ton)
$45.81
$49.05
$46.22
Total production (thousand metric tons)
46,900
38,100
46,000
Total cost (1,000 USD)
$2,148,489
$1,868,805
$2,126,120
Source:
Minnesota Department of Revenue. (2022). Mining Tax Guide, https://www.revenue.state.mn.us/sites/default/files/2022-
10/2022_mining_guide_0 .pdf
Tuck (2022c). Iron Ore. USGS Mineral Commodity Summaries https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-iron-
ore.pdf.
For U.S. mining operations, labor, supplies, miscellaneous beneficiation costs, and
depreciation make up the total costs. Total costs in Table 2-2 were calculated by multiplying the
cost of production per metric ton by total production reported by the USGS in thq Mineral
2-5
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Commodity Summary 2022 (Tuck, 2022c). We estimate total costs from the iron ore industry in
the United States to be $2.15 billion in 2019, $1.87 billion in 2020, and $2.13 billion in 2021.
Costs fell due to a slump in global demand, and thus production, from the COVID-19 pandemic
but nearly fully rebounded in 2021. As shown in Table 2-3, the cost of supplies for mining
operations makes up the bulk of total costs, representing 57 percent, 57 percent, and 58 percent
in 2019, 2020, and 2021, respectively. Supplies include minerals received, explosives, fuels,
electricity, and machinery, among other inputs. Miscellaneous beneficiation costs make up
approximately 17 percent of total costs in a typical year. Labor costs typically make up
approximately 17 percent of total costs of production, and depreciation hovers around 10
percent. Overall, beneficiation costs far outweigh the costs of mining. In 2021, mining costs were
$14.15/ton, while the beneficiation cost totaled $32.06/ton, or 30 percent and 70 percent of total
costs, respectively.
Table 2-3: Breakdown of Cost per Metric Ton for Iron Ore Mining, 2019-2021
2019
2020
2021
Costs per metric ton:a
Total labor expenditures
$7.90
17%
$7.80
16%
$7.75
17%
Beneficiation labor
$4.08
9%
$3.84
8%
$3.81
8%
Mining labor
$3.82
8%
$3.96
8%
$3.94
9%
Total cost of supplies
$26.04
57%
$27.88
57%
$26.77
58%
Beneficiation supplies
$18.33
40%
$19.95
41%
$18.39
40%
Mining supplies
$7.71
17%
$7.93
16%
$8.38
18%
Total depreciation
$4.54
10%
$6.12
12%
$3.97
9%
Beneficiation depreciation
$2.97
6%
$4.02
8%
$2.14
5%
Mining depreciation
$1.57
3%
$2.10
4%
$1.83
4%
Misc. beneficiation
$7.33
16%
$7.25
15%
$7.73
17%
a Costs per ton gathered from Minnesota tax guide. Data on cost per ton for the single Michigan mine not available.
Source: Minnesota Department of Revenue, (2022). Mining Tax Guide, https://www.revenue.state.mn.us/sites/default/files/2022-
10/2022_mining_guide_0 .pdf
2.3 Demand Side
2.3.1 Product Characteristics
Taconite pellets are the primary form of iron ore produced for blast furnaces at integrated
iron and steel mills in the United States. Pellets measure from 3/8 to 5/8 inches in diameter and
contain 60 percent to 66 percent iron. In addition to iron, pellets typically contain silica, alumina,
magnesia, manganese, phosphorous, sulfur, and moisture. It is estimated that it takes
2-6
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approximately 1.3 metric tons of pellets along with 0.4 metric tons of coking coal and 0.3 metric
tons of steel scrap in a BF to produce 1 metric ton of steel (Tuck, 2019).
2.3.2 Uses and Consumers
2.3.2.1 Uses
Most iron ore is consumed at integrated iron and steel mills. There are two primary routes
for steel production, which use different raw inputs. The two processes are integrated steel
making, relying on traditional blast furnace and basic oxygen furnace processes (BF/BOPF), and
the electric arc furnace (EAF) process. The BF/BOPF process consumes iron ore (taconite
pellets) along with coal, limestone, and some steel scrap. In the United States, more than 98
percent of pellets are smelted in blast furnaces to remove residual oxygen and produce molten
iron, commonly known as pig iron. Pig iron is then transferred to BOPFs, in combination with
scrap steel and other materials, to create steel. Nearly all of the iron ore consumed in the United
States was used for iron and steelmaking from 2017 through 2020, as shown in Table 2-4, either
in BFs (which create pig iron) or steelmaking furnaces (both BOPFs and EAFs use some iron ore
products). Other potential applications for iron ore include ballasts, cement production, road
material, and fertilizer, but the USGS does not collect data on these uses because the vast
majority of iron ore is used for steelmaking.
Table 2-4: U.S. Consumption of Iron Ore by End Use, 2017-2020 (thousand metric tons)
End Use/Year
2017
2018
2019
2020
Blast furnaces:
Pellets
28,900
30,800
29,300
26,200
Sinter3
4,190
4,530
4,380
3,920
Total
33,100
35,300
33,600
30,100
Electric arc furnaces:
Direct-shipping oreb
1,160
1,160
1,160
1,040
Sinter
159
159
--
--
Total
1,320
1,320
1,160
1,040
Grand total
34,400
36,600
34,800
31,100
a Sinter is another form of agglomerated iron ore and includes briquettes, nodules, and other forms.
b Direct-shipping ore is iron ore with high iron content that is not concentrated or beneficiated beyond crushing and screening.
Source: Tuck (2022a). Iron Ore. USGS Minerals Yearbook 2020. Available at: https://www.usgs.gov/centers/national-minerals-
information-center/iron-ore-statistics-and-information.
Tuck (2019). Iron Ore. USGS Minerals Yearbook 2018. https://pubs.usgs.gov/myb/voll/2018/mybl-2018-iron-ore.pdf.
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The EAF process has been gaining prevalence, especially domestically, and it uses
primarily recycled scrap steel and some direct-reduced iron2 or other hot metal and electricity. In
2021, the United States relied on EAFs for 71 percent of domestic steel production and on
integrated processes for 29 percent of domestic production (Tuck, 2022d). EAFs produce fewer
emissions, have lower initial costs, use generally smaller operations, and are more efficient than
the traditional process. Compared to the integrated steelmaking process, EAFs are quite energy
efficient, using 2 gigajoules (GJ) of final energy per metric ton, compared to 15 GJ used by the
integrated process (TEA, 2022). The EAF process relies primarily on electricity as an energy
source, while the integrated process relies primarily on coal, resulting in vastly different
emission intensities. Scrap-based EAFs, like those used in the United States, emit about 0.3 t
C02/t of steel produced, while integrated operations emit 2.2 t CCh/t of steel (TEA, 2020).
However, EAFs typically face higher material costs than integrated steel mills because steel
scrap is more expensive than iron ore. Considering raw material costs along with fuel, fixed
costs, and capital costs, though, EAFs and integrated mills have similar levelized costs,
according to the International Energy Agency (IEA) (2020). The United States has a long history
of steelmaking and steel consumption and, thus, a mature stock of steel and steel scrap that has
supported the transition to EAF production. Developing regions (China and India, for instance)
tend to have newer infrastructure and less steel recycling, often along with a greater supply of
iron ore or cheap coal, which favors the continued investment in integrated steelmaking. The
integrated process is still the dominant steelmaking process globally, accounting for 70 percent
of global production (World Steel Association, 2022). Although EAFs will continue to gain
market share of steel production under a business-as-usual scenario, considering announced and
existing steelmaking policies, the IEA projects that by 2050 EAFs will make up just under 50
percent of global steel production. As the industry has shifted toward EAF steelmaking, the
domestic demand for iron ore has decreased over the past several decades (Figure 2-2 shows the
share of EAF steelmaking over time). Section 2.5.2.4 describes the global export market for iron
ore.
2 Direct-reduced iron (DRI) is produced by removing the oxygen in iron ore in a solid state (without melting) by reacting the ore
with carbon monoxide and hydrogen (typically from natural gas or goal) rather than in a blast furnace.
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Figure 2-2: Share of BF/BOPF and EAF Steel in the U.S., 2001-2021
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
o
!
-------
Table 2-5: Integrated Iron and Steel Mills in the United States
Facility
Location
Owner
Raw Steel Capacity (million
metric tons/year)
Gary Works
Gary, Indiana
U.S. Steel
7.5
Great Lakes Works
Ecorse, Michigan
U.S. Steel
Idled in 2019
Mon Valley Works3
Braddock, Pennsylvania
U.S. Steel
2.9
Granite City Works
Granite City, Illinois
U.S. Steel
2.8
Indiana Harbor Works
East Chicago, Indiana
Cleveland-Cliffs Inc.
5.5
Burns Harbor Works
Burns Harbor, Indiana
Cleveland-Cliffs Inc.
5
Middletown Works
Middletown, Ohio
Cleveland-Cliffs Inc.
3
Cleveland Works
Cleveland, Ohio
Cleveland-Cliffs Inc.
3
Dearborn Works'3
Dearborn, Michigan
Cleveland-Cliffs Inc.
2.5
a Mon Valley comprises four facilities and could be considered four separate plants.
b Hot strip mill, anneal, and temper operation permanently idled in 2020.
Sources: US Steel and Cleveland-Cliffs websites, https://www.clevelandcliffs.com/operations/steelmaking and
https://www.ussteel.com/about-us/locations.
2.3.3 Substitution Possibilities in Consumption
Domestic iron ore production has decreased over the past few decades as EAF
steelmaking has become the dominant steelmaking process in the United States. Contributing to
less than 30 percent of all steel produced domestically, integrated steel mills are the primary
consumers of taconite pellets. Because EAFs will continue to benefit from a steady supply of
recycled steel and have lower carbon emissions, the shift away from integrated steel production
is likely to continue: from 2015 to 2021, the share of steel made through the BF/BOPF process
dropped from 38 percent to 28 percent (Tuck, 2022d).
The only true substitute for domestic taconite ore in blast furnaces is imported iron ore. In
2021, 3,900 tons of iron ore were imported, but 13,000 tons were exported, making the United
States a net exporter. Imports of pig iron also substitute for domestically produced pig iron,
which lowers the demand for taconite pellets.
Imports of semi-finished, finished, or raw steel substitutes for domestically produced
steel also lowers the demand for domestic taconite. Imports of semi-finished steel include
blooms, slabs, sheets, billets, bars, and plates. The United States imported 25 million tons of
steel products and 5 million tons of pig iron in 2019 (Tuck, 2022a).
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2.4 Industry Organization
2.4.1 Industry Structure
Table 2-6 lists the seven active taconite mining and pelletizing operations in the United
States as of 2021. The taconite industry is geographically concentrated on iron ranges along the
coast of Lake Superior. Six of the operations mine in the Mesabi Iron Range of northern
Minnesota: Minorca Mine, Hibbing Taconite Mine, Northshore Mining, United Taconite Mine,
Keetac Mine, and Minntac Mine. The only remaining taconite mine outside of Minnesota is in
Michigan's Upper Peninsula: Tilden Mine. U.S. Steel owns the Keetac and Minntac facilities.
Cleveland-Cliffs Inc. owns the remaining five facilities.
Table 2-6: Taconite Iron Ore Facility Ownership, Capacity, Production (million metric
tons), and Employment3
State
Facility Name
Parent Company
Annual
Capacity
Production
2020
Production
2019
Employment
Minorca Mine
Cleveland-Cliffs Inc.
2.9
2.8
2.8
359
Hibbing Taconite Mine
Cleveland-Cliffs Inc.
8.1
2.5
7.6
746
MN
Northshore Mining
United Taconite Mine
Cleveland-Cliffs Inc.
Cleveland-Cliffs Inc.
6.1
5.5
3.9
5.3
5.3
5.4
559
529
Keetac Mine
U.S. Steel
5.5
2
5.3
403
Minntac Mine
U.S. Steel
14.8
12.8
13.1
1,727
MI
Tilden Mine
Cleveland-Cliffs Inc.
8.1
6.4
7.8
838
Total
51
35.7
47.3
5,161
Source: Minnesota Department of Revenue, (2022). Mining Tax Guide, https://www.revenue.state.mn.us/sites/default/files/2022-
10/2022_mining_guide_0 .pdf
Source Tuck (2022a). Iron Ore. USGS Minerals Yearbook 2020. Available at: https://www.usgs.gov/centers/national-minerals-
information-center/iron-ore-stati sties-and-information.
a Totals may not add to total production cited earlier because of rounding and minimal production from other sites.
Estimated employment across the seven mining operations is 5,161. The size of
operations varies widely, with the largest mine, Minntac, employing over 1,700 people with an
annual production capacity of nearly 15 million metric tons. The smallest mine, Minorca,
employs 359 people and has an annual production capacity of 2.9 million metric tons. Data on
employment for the Minnesota mines were obtained from the state's Department of Revenue
Annual Mining Tax Guide (Minnesota Department of Revenue, 2022), and because there is only
one mine in Michigan the USGS's statewide employment estimates in the Minerals Yearbook
2020 (Tuck, 2022a) were used. The USGS Minerals Yearbook for 2020 estimates total
employment at facilities in Michigan and Minnesota combined at ">4,295" people, fewer than
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the totals from Table 2-6 using facility-level data. The reporting for employment at the state level
that the USGS cites comes from the Mining Safety and Health Administration, while the
Minnesota Tax Guide gathers annual data from individual mining companies. The USGS figure
is a lower bound estimate.
The industry has consolidated over the last few decades, leaving only two companies
with full ownership of iron ore mining operations in the United States. In 2002, five companies
owned the mines across Minnesota and Michigan, and there were four until the purchases by
Cleveland-Cliffs Inc. of AK Steel in March 2020 and ArcelorMittal USA in December 2020.
Now, all taconite mines and pelletizing operations are owned by either Cleveland-Cliffs Inc. or
U.S. Steel. Most mining operations are wholly owned by one of the corporations, but the
Hibbing Mine, located in Minnesota, is owned jointly by Cleveland-Cliffs and US Steel. When
Cleveland-Cliffs Inc. bought ArcelorMittal USA in 2020, they became the majority owner and
mine manager, owning 85.3 percent of the operation to U.S. Steel's 14.7 percent stake.3
2.4.1.1 Horizontal and Vertical Integration
Whether a firm is vertically or horizontally integrated depends on the business activity of
the parent company and the businesses that the facilities or subsidiaries owned by that company
engage in. Vertically integrated companies may own the production process of inputs that are
used in other production processes within the company. In the taconite mining industry, a
company that operates the mining and pelletizing facility might also own the integrated steel mill
facility which uses the pellets produced at the mine. Horizontal integration occurs if a firm
increases production of a good at the same point in the supply chain, through growth or
acquisitions and mergers. Because the two companies that own taconite mines also operate
integrated iron and steel mills that consume the taconite pellets, they can be considered vertically
integrated (see Table 2-5 to view ownership of integrated steel mills in the United States).
Cleveland-Cliffs also owns four EAF facilities. Both companies hold full or partial ownership in
facilities that produce coke, with U.S. Steel owning the largest facility in the country (Clairton,
located at the Mon Valley Works) (see Table 2-7). Finally, Cleveland-Cliffs owns a facility that
produces hot-briquetted iron, a lower-carbon iron feedstock used primarily as a substitute for
3 https://www.mesabitribune.com/news/local/cliffs-buys-arcelonnittal-usa-in-blockbuster-deal/article_4d8e4dfD-01e8-lleb-
b846-67bb0579c299.html. Accessed 1/27/2023.
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scrap metal in EAFs.4 Cleveland-U.S. Steel and Cleveland-Cliffs Inc. could also be considered
horizontally integrated at the taconite mining stage of production because they represent large
portions of the industry. In 2019, Cleveland-Cliffs produced 61 percent of the domestic taconite
ore and US Steel produced 39 percent (see Table 2-6).
Table 2-7: U.S. Coking Facility Ownership and Capacity
Parent Company
Facility
Capacity (million
short tons)
Status
Cleveland-Cliffs Inc.
Burns Harbor, IN
Follansbee, WV
Monessen, PA
Middletown, OH
Warren, OH
1.4
N/A
0.35
0.35
0.55
Active
Closing
Active
Idle
Active
DTE Energy Company
EES-River Rouge, MI
0.8
Active
Drummond Company
ABC-Tarrant, AL
0.73
Active
James C. Justice Companies Inc.
Bluestone-Birmingham, AL
0.35
Idle
East Chicago, IN
1.22
Active
Suncoke Energy, Inc.
Franklin Furnace, OH
Granite City, IL
1.1
0.65
Active
Active
Middletown, OH
0.55
Active
Vansant, VA
0.72
Active
U.S. Steel
Clairton, PA
4.3
Active
Source: Firm websites.
Note: Highlighted firms also own taconite facilities.
2.4.1.2 Firm Characteristics
Table 2-8 reports 2021 sales and employment data for U.S. Steel and Cleveland-Cliffs
Inc. The data provided in the table were collected from the corporations' Forms 10-K submitted
to the U.S. Securities and Exchange Commission. Each company is headquartered in a traditional
steel-producing city in the Midwest: Pittsburgh (U.S. Steel) and Cleveland (Cleveland-Cliffs
4 https://www.clevelandcliffs.com/operations/steelmaking/toledo-dr-plant. Accessed 1/27/2023.
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Inc.). Both companies reported similar sales revenue, both above $20 billion and both with
approximately 25,000 employees worldwide.
Table 2-8: Taconite Iron Ore Facility Owner Sales and Employment, 2021
Parent Company
HQ Location
Legal Form
Sales (million USD)
Employment
U.S. Steel
Pittsburgh, PA
Public
$20,275
24,500
Cleveland-Cliffs Inc.
Cleveland, OH
Public
$20,444
26,000
Total
$40,719
50,500
Sources: U.S. Steel Corporation Form 10-K 2022 and Cleveland-Cliffs Inc. Form 10-K 2022
2.5 Markets
2.5.1 Market Structure
Market structure is important because it influences the behavior of producers and
consumers within an industry and affects the incidence of costs associated with a regulation that
is imposed on an industry. In a perfectly competitive industry, producers are price takers and
unable to influence the price of both outputs and inputs they purchase. Perfectly competitive
industries typically have many firms that sell undifferentiated products, and the entry and exit of
firms are unrestricted. In contrast, a noncompetitive market typically contains few firms or even
a single firm, more differentiation, and limited entry and exit. In a more concentrated market,
firms have the ability to influence price through exerting market power. The most extreme
example of market concentration is a monopoly, where a single firm supplies the entire market
and can set the price of the product. The market structure of the U.S. iron ore market is examined
in the following sections.
There are indices that measure market concentration of certain industries, but little
economic literature focuses on the concentration of the domestic iron ore industry.
Germeshausen et al. (2015) analyzed the extent of several firms' market power on a global scale
and found that price setting, or markups, is likely. Kiiblbock et al. (2022) also noted that the
industry is concentrated at a global scale, with four companies controlling more than 70 percent
of the iron ore export market. Domestically, as noted above in Table 2-6, only two companies
control all of the taconite mining and pelletizing process and integrated steelmaking that
consumes taconite pellets. With two vertically integrated companies controlling extraction and
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consumption of taconite and significant barriers to entry to mining a mineral that only has
economically viable deposits in a few locations, the taconite industry is concentrated.
2.5.2 Market Volumes and Prices
2.5.2.1 Domestic Production and Consumption
Table 2-9 provides domestic production of usable iron ore, consumption, and prices from
2010 through 2021. Production hit a low in 2020 of 38 million metric tons because of the drop in
demand caused by the Covid-19 pandemic. Ignoring the outlier pandemic year, domestic
production has been dropping over the time frame shown, besides 2010, and also has dropped
significantly from the 1990s, when production floated between 55 million and 62 million metric
tons (U.S. EPA, 2003b). Production also surpassed consumption in each year shown in Table
2-9, a deviation from past decades as demand for iron ore dropped domestically due to the surge
in EAF steelmaking. In the 1990s, for instance, consumption was typically 10 to 25 million
metric tons greater than domestic production and the United States relied on imports of iron ore
to meet higher demand.
Table 2-9: Domestic Production, Consumption, and Prices, 2010-2021
Year
Ore Production
(thousand
metric tons)
Shipment Quantity
(thousand metric
tons)
Consumption
(thousand
metric tons)
Unit Value (Price
$/ton)
Unit Value (Price $/ton,
2021$)a
2010
49,900
50,600
48,000
$98.79
$117.89
2011
56,200
56,900
47,500
$104.10
$110.39
2012
54,700
53,900
47,100
$116.48
$113.09
2013
52,800
53,400
47,600
$87.42
$120.75
2014
56,100
55,000
47,900
$84.43
$109.37
2015
46,100
43,500
42,100
$81.19
$107.97
2016
41,800
46,600
37,900
$73.11
$103.26
2017
47,900
46,900
40,100
$78.54
$104.58
2018
49,500
50,400
41,400
$93.00
$119.38
2019
46,900
47,000
39,100
$92.94
$112.11
2020
38,100
38,000
31,100
$91.27
$107.76
2021
46,000
44,000
36,000
$94.00
$94.00
a Inflation adjustments made using U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Iron Ore Mining
[PCU2122121221],
Sources: USGS, Minerals Yearbook 2010-2020; USGS Minerals Commodities Summary - 2022.
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2.5.2.2 Prices
Prices are shown as unit values in Table 2-9, or total value of production divided by
metric tons produced. Note that the iron ore prices are the values of the usable ore at mines,
which do not include mine-to-market transportation costs. Prices adjusted for inflation are shown
in 2021 dollars using the Producer Price Index for iron ore mining. Prices in 2021 dollars are
relatively steady across the 2010s, ranging between $103/ton in 2015 and $120/ton in 2013.
2.5.2.3 Supply and Demand Elasticities
Elasticities are measures of how responsive demand and supply are to the price of a good.
If the price increases for iron ore, for example, how much demand decreases is the elasticity of
demand for iron ore. A consistent finding in the economics literature is that the demand for iron
ore is likely price inelastic, or nonresponsive to changes in price. An estimate of-0.3 for iron ore
means that if price increases by 1%, the demand for iron ore falls 0.3%. If the absolute value of
an elasticity is greater than 1, that good is considered price elastic. Table 2-10 provides supply
and demand elasticities for domestic and foreign taconite pellets and steel mill products that have
been used in past EPA analyses of the iron and steel industry, along with more recent values
found in the economics literature when available.
Table 2-10: Supply and Demand Elasticities of Iron Ore and Steel Mill Products
Supply Elasticity
Demand Elasticity
Iron ore
0.5a
-0.241b
0.45b
-0.303
1.08°
Foreign
1.08°
-0.92°
Steel
0.7-1.2d
-0.079e
3.5°
-0.59°
Foreign
3-6 (Mexico or Canadian imports)
10-20 (all other imports)f
15°
-1.25°
a Fisher, B. S., Beare, S., Matysek, A. L., & Fisher, A. (2015). The impacts of potential iron ore supply restrictions on producer
country welfare. BAE Economics. Available at: http://www.baeconomics.com.au/wp-content/uploads/2015/08/Iron-Ore-
Spatial-Equilibrium-Model-8Aug 15 .pdf.
b Zhu, Z. (2012). Identifying supply and demand elasticities of iron ore. Duke University, Durham, NC. Available at:
https://sites.duke.edu/econhonors/files/2013/09/thesis_final_zhirui_zhuv21.pdf.
c Environmental Protection Agency. (2003). Taconite iron ore NESE1AP economic impact analysis. Environmental Protection
Agency. Available at: https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100D5QR.pdf.
d Mathiesen, L., & Maestad, O. (2004). Climate policy and the steel industry: Achieving global emission reductions by an
incomplete climate agreement. The Energy Journal, 25, 91-114. Available at: https://doi.org/10.2307/41323359
eFernandez, V. (2018). Price and income elasticity of demand for mineral commodities. Resources Policy, 59,160-183.
Available at: https://doi.Org/10.1016/j.resourpol.2018.06.013.
fFetzer. J. J. (2005). A partial equilibrium approach to modeling vertical linkages in the U.S. flat rolled steel market. U.S.
International Trade Commission. Office of Economics Working Paper No. 2005-01-A. Available at:
https://www.usitc.gOv/publications/3 32/ec200501 a. pdf.
2-16
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2.5.2.4 Foreign Trade
Table 2-11 provides data on the total quantity and value of iron ore imports for each year
from 2010 through 2020, with quantity also reported for 2021. The quantity of imports ranged
from approximately 3 million metric tons in 2013 to 6.4 million metric tons in 2010, and the
average annual imports over this decade totaled 4.2 million metric tons. The value of imports
adjusted to 2021 dollars ranged from $340 million in 2016 to $891 million in 2011. The overall
trend is apparent: imports of iron ore are dropping as demand decreases. From 1990 to 2001, the
United States imported over 3 times as much iron ore as the most recent decade, 15 million
metric tons a year on average. Table 2-12 shows which countries the United States imported
from and the kinds of products imported. Pellets made up 90 percent of the iron ore products
imported, and Brazil, Canada, and Sweden were responsible for 55 percent, 20 percent, and 9
percent, respectively, of iron ore imported to the United States.
Table 2-13 provides data on both quantity and value of exports from the United States
between 2010 and 2020, with quantity only updated so far for 2021. The export trend is the
opposite of the import story told above. From 1990 to 2002, the average volume of iron ore
exports was about 5 million metric tons, and from 2010 to 2021, the average volume was double
that, at 10.8 million metric tons. There is no glaring trend from 2010 to 2021 in terms of quantity
of ore exported, but it has remained relatively steady. Table 2-14 shows where the United States
sent iron ore and the most common exports. Canada, China, and Japan consumed 60 percent, 19
percent, and 7 percent of the United States' exports, respectively. Pellets made up 77 percent of
exported products, while iron ore concentrates (non-pelletized) made up 21 percent. The United
States has been a net exporter of iron ore since 2007.
2-17
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Table 2-11: Iron Ore Imports and Value of Imports, 2010-2021
Year
Imports (1,000
metric tons)
Total Value
(1,000 USD)
Total Value
($2021; 1,000
USD) 1
Value
'$/mctric ton)
Value
(2021$; $/metric
ton)
2010
6,420
$703,000
$838,902
$109.50
$130.67
2011
5,270
$841,000
$891,835
$159.58
$169.23
2012
5,160
$759,000
$736,893
$147.09
$142.81
2013
3,250
$426,000
$588,398
$131.08
$181.05
2014
5,140
$676,000
$875,648
$131.52
$170.36
2015
4,550
$455,000
$605,053
$100.00
$132.98
2016
3,010
$241,000
$340,395
$80.07
$113.09
2017
3,710
$356,000
$474,035
$95.96
$127.77
2018
3,810
$388,000
$498,074
$101.84
$130.73
2019
3,980
$499,000
$601,930
$125.38
$151.24
2020
3,240
$389,000
$459,268
$120.06
$141.75
2021
3,900
NA
NA
NA
NA
Sources: U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Iron Ore Mining [PCU2122121221],
USGS, Minerals Yearbook 2010-2020.
USGS Mineral Commodities Summary 2022.
Table 2-12: Iron Import Value by Country and Product, 2021
Value (1,000 USD) Share (%)
Imports from:
Brazil $410,000
Canada $153,000
Sweden $69,400
Other $117,000
Total $750,000
Type of Import:
Concentrates $35,300 5%
Fine ores $37,900 5%
Pellets $673,000 90%
Other $3,960 1%
Total $750,000 100%
Source: USGS (2022). Iron Ore. Mineral Industry Surveys - Dec. 2021. Available at https://www.usgs.gov/centers/national-
minerals-information-center/iron-ore-statistics-and-information.
55%
20%
9%
16%
100%
2-18
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Table 2-13: Iron Ore Exports by Value, 2010-2021
Year
Exports (1,000
metric tons)
Total Value
(1,000 USD)
Total Value
($2021; 1,000
USD)
Value
($/metric ton)
Value
(2021$; $/metric
ton)
2010
9,950
$1,090,000
$1,300,716
$110.00
$131.00
2011
11,100
$1,330,000
$1,410,392
$120.00
$127.00
2012
11,200
$1,440,000
$1,398,058
$129.00
$125.00
2013
11,000
$1,480,000
$2,044,199
$135.00
$186.00
2014
12,100
$1,320,000
$1,709,845
$109.00
$141.00
2015
7,510
$611,000
$812,500
$81.00
$108.00
2016
8,710
$574,000
$810,734
$66.00
$93.00
2017
10,600
$766,000
$1,019,973
$72.00
$96.00
2018
12,700
$972,000
$1,247,754
$77.00
$98.00
2019
11,400
$982,000
$1,184,560
$86.00
$104.00
2020
10,400
$839,000
$990,555
$81.00
$95.00
2021
13,000
NA
NA
NA
NA
Sources: U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Iron Ore Mining [PCU2122121221],
USGS, Minerals Yearbook 2010-2020. Available at: https://www.usgs.gov/centers/national-minerals-information-center/iron-
ore-statistics-and-information.
USGS Minerals Commodities Summary 2022. Available at: https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-iron-ore.pdf.
Table 2-14: Iron Export Value by Country and Product, 2021
Value (1,000 USD)
Share (%)
Exports to:
Canada
$767,000
60%
China
$240,000
19%
France
$7,700
1%
Japan
$89,500
7%
Netherland
$23,800
2%
Spain
$41,900
3%
Other
$117,000
9%
Total
$1,290,000
100%
Type of Export:
Concentrates
$265,000
21%
Fine ores
$532
0%
Pellets
$995,000
77%
Other
$27,300
2%
Total
$1,290,000
100%
Sources: USGS (2022). Iron Ore. Mineral Industry Surveys - Dec. 2021. Available at: https://www.usgs.gov/centers/national-
minerals-information-center/iron-ore-stati sties- and-information.
2.5.3 Market Forecasts
Iron ore remains one of the most important commodities globally because steel is vital to
the global economy. The United States has considerable iron resources remaining, estimated to
be approximately 110 billion metric tons of iron ore containing about 27 billion metric tons of
2-19
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iron (Tuck, 2022c). Yet, as mentioned previously, the share of steel produced in the United
States using the BF/BOPF production process (which uses taconite iron ore) continues to
decrease as a result of growth in production by EAFs, which offer a more energy-efficient and
environmentally-friendly option. The BF/BOF steel production route has declined from 85
percent in 1970 to about 50 percent in 2000 and more recently from 37 percent in 2015 to 28
percent in 2021. This trend is likely to continue in the United States as investment in EAFs
(sometimes called mini-mills) continues to grow. Canada, the United States' primary export
market for iron ore, has also seen declining rates of steel production at integrated steel mills
(over 21 percent in the last 20 years (Cheminfo Services Inc., 2019)). The outlook for integrated
steel production in Canada is not promising. Production will likely continue to decline in the face
of reduced manufacturing in-country and increased reliance on imported steel.
As detailed in the Organisation for Economic Co-operation and Development's recent
report Latest Developments in Steelmaking Capacity 2021 (2021), companies invested in 11 new
steelmaking facilities in the United States to start production in 2020 or later, all of which are
EAFs. Although BF/BOF facilities are still being constructed in India, China, and parts of Africa
and Asia, it appears unlikely that BF/BOPF capacity will increase in the United States in the near
future. As shown in Table 2-5, two integrated iron and steel facilities have idled over the past 3
years, and another one closed in 2015 that now houses an EAF. As the United States, as well as
other countries, attempts to reduce carbon emissions to meet climate policy targets, EAFs may
become more cost competitive because they produce 0.3 t CO2 per metric ton of steel compared
with 2.2 t CO2 per metric ton of steel emitted by a BOPF (IEA, 2020). A 2021 IEA report
projects that, by 2050, EAFs in the United States will make up about 90% of steel production
(IEA, 2020).
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3 EMISSIONS AND ENGINEERING COSTS ANALYSIS
3.1 Introduction
In this chapter, we present estimates of the projected emissions reductions and
engineering compliance costs associated with the final NESHAP amendments for the 2027 to
2036 period. The projected costs and emissions impacts are based on facility-level estimates of
the costs of meeting the final emission limits and the expected emission reductions resulting
from installing the necessary controls. The baseline emissions and emission reduction estimates
are based on the number and type of indurating furnaces at each facility, stack testing data, and
information and assumptions about current installed controls.
3.2 Facilities and Emissions Points
3.2.1 Taconite Iron Ore Processing Facilities
The NESHAP for taconite iron ore processing facilities covers eight facilities: six in
Minnesota and two in Michigan. One of the eight facilities, Empire, has been idled since 2016
and does not have plans to resume operation. Cleveland-Cliffs Inc. owns six of these facilities
(including Empire), and U.S. Steel owns two. Table 3-1 below lists these facilities.
Table 3-1: Taconite Iron Ore Processing Facilities
Ultimate Parent Company Facility State
Minnesota
Minnesota
Minnesota
Minnesota
Michigan
Michigan
Keetac Minnesota
U.S. Steel
Minntac Minnesota
a The Empire facility is currently idled and not expected to resume operations.
Taconite iron ore processing facilities engage in the following activities: mining, crushing
and handling crude ore; concentrating, agglomerating, and indurating taconite pellets; and
handling finished taconite pellets. While the NESHAP covers iron ore crushing and handling
operations, ore dryers, indurating furnaces, and finished pellet handling within each facility, the
final amendments only affect indurating furnaces.
Hibbing
Minorca
r,, , , r,, rr T Northshore
Cleveland-Cliffs Inc.
United
Empire3
Tilden
3-1
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3.2.2 Indurating Furnaces, Emissions, and Current Controls
During the indurating process, taconite pellets are hardened and oxidized in the
indurating furnace at a temperature between 2,290- and 2,550-degrees Fahrenheit. Two types of
indurating furnaces are in use at taconite processing facilities: straight grate furnaces and grate
kiln furnaces. The main difference between a straight grate and grate kiln furnace is that a
straight grate furnace performs the entire indurating process on a single piece of equipment,
whereas a grate kiln furnace uses three distinct pieces of equipment: a preheat grate, a rotary
kiln, and an annular cooler. There are also various technical differences that impact pellet cost
and quality. Worldwide, 61 percent of installed taconite indurating capacity uses a straight grate
furnace vs. 33 percent using grate kiln (in the US, the split is 44-56). For a discussion of the
differences between the two types of furnaces, see Kordazadeh et al (2017).
Indurating furnaces are by far the most significant source of HAP emissions from the
taconite iron ore processing source category.5 They emit three types of HAP: metallic HAP,
organic HAP, and acid gases. Metallic HAP makes up a portion of particulate emission released
by the taconite ore and fuel (typically natural gas or coal) fed into the furnace. Organic HAP,
primarily formaldehyde, is released due to incomplete combustion. Acid gases (HC1 and HF) are
formed when chlorine and fluorine present in taconite raw materials fed into the furnace are
released and combine with moisture in the furnace exhaust. Each facility has installed controls to
limit PM emissions. Five facilities (Hibbing, Minorca, United, Keetac, and Minntac) use wet
scrubbers, Northshore uses wet electrostatic precipitators (ESP), and Tilden and Empire use dry
ESP. However, as stated above, the Empire facility has been long-term idled since 2016 and is
not expected to resume operations. The final amendments, discussed in Section 3.3 below, would
require additional controls at some facilities to increase control of Hg (a metallic HAP) and acid
gases. Table 3-2 describes the type of indurating furnaces and the current controls present at each
facility.
5 This paragraph is based on information from the original NESHAP proposal (U.S. EPA, 2003a).
3-2
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Table 3-2: Indurating Furnaces at Taconite Iron Ore Processing Facilities
Facility
Number of Furnaces
Type
Current Control
Hibbing
3
Straight grate
Multiclone followed by Venturi Rod Deck
Wet Scrubber
Minorca
1
Straight grate
Recirculating Wet Venturi Type Scrubber
Northshore
4
Straight grate
Wet Electrostatic Precipitator
United
2
Grate kiln
Wet Scrubber
Tilden
2
Grate kiln
Dry Electrostatic Precipitator
Keetac
1
Grate kiln
Wet Scrubber
Minntac
5
Grate kiln
Once Through Wet Venturi Type Scrubber
Note: This table does not include information for Empire, because that facility did not respond to the 2022 CAA section 114
information request since the facility is idle and not expected to resume operations.
3.2.3 Facility Projections and the Baseline
The impacts of regulatory actions are evaluated relative to a baseline that represents the
world without the regulatory action. In this EIA, we present results for the final amendments to
NESHAP 40 CFR part 63, subpart RRRRR for taconite iron ore processing facilities.
Throughout this document, we focus the analysis on the requirements that result in quantifiable
compliance cost or emissions changes compared to the baseline.
For each facility, the EPA used survey response and testing data collected from each
taconite facility in a CAA section 114 information request to inform the estimates of baseline
emissions at each facility. Information used in constructing this estimate includes the number and
type of indurating furnaces at each facility, the controls installed on each indurating furnace, and
assumptions about the current level of emissions control achieved by the controls on each
furnace. For information on the emissions data collected to support the final rule, see the
memorandum Final Rule: Revised Emissions Data Collected in 2022for Indurating Furnaces
Located at Taconite Iron Ore Processing Plants, available in Docket ID No. EPA-HQ-OAR-
2017-0664 (Putney, 2023a). For detailed information on the cost and emissions impact estimates
for the environmental controls analyzed, see the technical memorandums for the final rule Final
Revised Technology Review of Acid Gas Controls for Indurating Furnaces in the Taconite Iron
Ore Processing Source Category and Development of Impacts for the Final Amendments to the
NESHAP for Taconite Iron Ore Processing, both also available in Docket ID No. EPA-HQ-
3-3
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OAR-2017-0664 (Putney, 2023b and Putney, 2023c). These memos will be referred to as the
Technical Memos in subsequent sections.
For the analysis, we calculate the cost and emissions impacts of the final NESHAP
amendments from 2027 to 2036. The initial analysis year is 2027 since the action is being
finalized at the beginning of 2024. We assume full compliance with the final amendments to 40
CFR part 63, subpart RRRRR will take effect within three years by late-2026, which is
consistent with the requirements in Section 112 of the CAA for HAP standards. The final
analysis year is 2036, which allows us to provide 10 years of potential regulatory impacts after
the final amendments are assumed to fully take effect. We assume the number of facilities active
in the source category remains constant during the analysis period. The main uncertainty in this
assumption is the status of the Empire facility. The Empire facility is currently idled long-term
and does not have plans to resume operation.
3.3 Description of Regulatory Options
This EIA analyzes less and more stringent alternative regulatory options in addition to the
final amendments to 40 CFR part 63, subpart RRRRR. This section details the regulatory options
examined for both Hg and acid gases. In addition to the emission limits discussed in each
section, EPA is also finalizing compliance testing requirements and monitoring, recordkeeping,
and reporting requirements.
3.3.1 Mercury (Hg)
Hg is a metallic HAP released as a portion of PM emitted by the indurating furnace from
the taconite iron ore and fuel fed into it. The amount of Hg emitted by furnace is determined
largely by the Hg content of the ore processed by a furnace, and can thus vary over time for a
particular furnace. There is no current emissions limit for Hg from taconite indurating furnaces.
The EPA is finalizing a production-based MACT floor emissions limit for Hg for existing
furnaces based on the upper prediction limit (UPL) of the five lowest-emitting furnaces (based
on available stack testing data) that would apply to each furnace at a facility. The five lowest-
emitting furnaces for which we have stack test data include Furnace 12 at the Northshore facility,
Kiln 1 at the Tilden facility, and the furnaces for Lines 3, 4, and 5 at the Minntac facility. Based
on emissions from these furnaces, the UPL is 1.4 x 10"5 lb Hg/long ton pellets produced for
3-4
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existing sources. The MACT floor emissions limit for new furnaces is based on the emissions of
the lowest-emitting furnace (i.e., Furnace 12 at the Northshore facility). However, since the UPL
of those emissions is below a value of three times the representative detection level (i.e., 3 x
RDL), we set the MACT floor standard for new furnaces equal to 3xRDL for mercury, 2.6 x 10"6
lb Hg/long ton of pellets produced. For more details on how the MACT floor standards for
mercury were developed, refer to the memorandum Final Maximum Achievable Control
Technology (MACT) Analysis for Proposed Mercury Standards for Taconite Iron Ore Indurating
Furnaces (available in the docket for this rulemaking) (Putney, 2023d). For existing furnaces, the
EPA allows emissions averaging at each facility to comply with an emission limit that is 7
percent more stringent than the MACT floor as a compliance alternative. That is, a facility that
has more than one existing furnace has the option to comply with an emission limit of 1.3 x 10"5
lb Hg/long ton of pellets produced for the average of emissions from all existing furnaces at that
facility. These emission limits would require additional Hg control at the Hibbing (two of three
furnaces), Minorca (one of one furnace), United Taconite (two of two furnaces), Keetac (one of
one furnace), and Minntac (two of five furnaces) facilities. We assume in constructing the cost
estimates that controlling Hg at a given furnace will require installing a new, higher-efficiency
wet scrubber along with an activated carbon injection (ACI) system. For details on the cost
estimates, see the technical memorandum Development of Impacts for the Proposed Amendments
to the NESHAP for Taconite Iron Ore Processing, available in the docket for this rulemaking)
(Putney, 2023c).6
This EIA also analyzes less and more stringent regulatory options for Hg. The MACT
floor limit could be set with respect to each individual indurating furnace, without the emissions
averaging compliance alternative. Because furnace emissions are largely driven by the Hg
content of the processed iron ore, this would require a facility to install controls for each furnace
to ensure no furnace violates the standard. Based on stack testing data, EPA projects that
removing the emissions averaging compliance alternative for Hg would require additional
control from the Hibbing (one additional furnace) and Minntac (two additional furnaces). Under
this option, the MACT floor limit would be set at the UPL of the five lowest-emitting furnaces.
Although this option requires additional cost and achieves additional PM reduction relative to the
6 In particular, Section 4.0 of the memorandum explains the justification for revised, relative to the proposed rule, assumptions of
the number of controls that would be installed at the United Taconite and Minntac facilities, based on industry comments.
3-5
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alternative compliance option, it results in less Hg reduction and is therefore considered less
stringent than the alternative compliance option.
This EIA also analyzes a more stringent option for Hg: a BTF MACT limit 10 percent
more restrictive than the UPL of the 5 lowest-emitting furnaces that applies to each individual
indurating furnace, without the alternative compliance option. This option would require
additional controls on the same furnaces as the less stringent alternative, but would require
greater capital and total annualized cost. Throughout this EIA, facilities are assumed to meet the
alternative compliance standard. In tables, the "Final" standards include the alternative
compliance option, the "Less Stringent" standards refer to the main compliance option that
applies to each furnace without the alternative compliance option, and the "More Stringent"
standards refer to the BTF limit that applies to each furnace. For a summary of the regulatory
options for Hg presented in this EIA, see Table 3-3.
3.3.2 Acid Gases (HCl/HF)
Acid gases (HC1 and HF) are formed when chlorine and fluorine present in taconite raw
materials fed into the furnace are released and combine with moisture in the furnace exhaust.
Acid gas emissions from indurating furnaces are currently subject to MACT using a PM
surrogate standard. The EPA is finalizing replacing the PM surrogate standard with revised limits
for acid gases (HC1 and HF) that would apply to each indurating furnace. The revised limits for
HC1 are 4.4 x 10"4 lb HCl/long ton of pellets produced for new sources and 4.6 x 10"2 lb HCl/long
ton of pellets produced for existing sources. The revised limits for HF are 3.3 x 10"4 lb HF/long
ton of pellets produced for new sources and 1.2 x 10"2 lb HF/long ton for existing sources. We
project that all facilities can meet the revised HF standard for existing furnaces without installing
additional control devices. We project that all facilities except for Tilden can meet the revised
HC1 standard without installing additional control devices. Tilden is expected to meet the revised
HC1 limit by using dry sorbent injection (using hydrated lime) (DSI) with their existing dry ESP.
For more details on development of the revised limits for HC1 and HF, refer to the technical
memorandum Final Revised Technology Review of Acid Gas Controls for Indurating Furnaces
in the Taconite Iron Ore Processing Source Category, which is available in Docket ID No. EPA-
HQ-OAR-2017-0664 (Putney, 2023b).
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This EIA also analyzes a less stringent regulatory option for acid gases. A less stringent
regulatory option would maintain the PM surrogate standard for acid gases. This option would
simply maintain the status quo and not require facilities to incur incremental cost. This EIA does
not analyze a more stringent regulatory option for acid gases. For a summary of the regulatory
options for acid gases presented in this EIA, see Table 3-3.
3.3.3 Summary of Regulatory Options
This EIA analyzes three sets of regulatory alternatives in the emissions and engineering
cost analysis presented in Sections 3.4 and 3.5: the final NESHAP amendments, along with less
and more stringent alternative options. The three sets of alternatives are presented below in Table
3-3.
Table 3-3: Regulatory Options Examined in this EIA
Regulated Pollutant
Regulatory Option
Requirement
Less Stringent Final
More
Stringent
Hg
Numerical MACT floor limit that
applies to each furnace
Numerical MACT floor limit
with emissions averaging
compliance alternative
10% beyond-the-floor limit that
applies to each furnace
X
X
X
Acid Gases (HC1/HF)
Maintain PM surrogate standard
for acid gases
Revised numerical limits that
apply to each furnace
X
X
X
3.4 Emissions Reduction Analysis
3.4.1 Baseline Emissions Estimates
The baseline emissions estimates for the taconite iron ore processing source category are
presented in Table 3-4 below. Estimates are presented both as emitted tons per year and over the
entire analysis period 2027-2036. Note that, since the number of facilities active in the sector is
assumed constant over the period, and EPA lacks data to project year to year changes in
production by each facility, projected emissions for each pollutant are assumed constant for each
year in the analysis period. Baseline emissions estimates are based on indurating furnace stack
3-7
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testing data for each facility. The figures presented for Hg equate to approximately 750 lbs per
year and 7,500 lbs from 2027-2036. "Other HAP" emissions include arsenic, selenium, and
nickel. About 86 percent of the emissions in this category are arsenic. The final standards are
also projected to reduce emissions of PM, some of which is expected to be PM2.5 (PM less than
two and a half microns in diameter).
Table 3-4: Baseline Emissions from Indurating Furnaces for Taconite Iron Ore Processing
Source Category
Pollutant
Hg
0.38
HC1
940
HF
130
Tons per Year
Other HAP
5.1
PM
1,500
PM2.5
260
S02
4,900
Hg
3.8
HC1
9,400
HF
1,300
2027-2036
Other HAP
51
PM
15,000
PM2.5
2,600
S02
49,000
Note: Numbers rounded to two significant digits unless otherwise noted.
3.4.2 Projected Emissions Reduction
Projected emissions reductions for each pollutant are present in Table 3-5 below. The
final NESHAP amendments are expected to reduce Hg emissions by about 33 percent, HC1
emissions by about 72 percent, HF emissions by about 29 percent and PM/PM2.5 emissions about
35 percent relative to baseline. These reductions are based on an assumption that a newly
installed venturi wet scrubber and ACI system, replacing existing PM controls that are assumed
to achieve 95 percent PM control, can achieve up to 99 percent reduction in PM and between 80
and 90 percent reduction in mercury. EPA also anticipates small reductions in SO2, from acid gas
controls at Tilden and small reductions in arsenic, selenium, and nickel from newly-installed PM
controls at facilities controlling mercury.
The less stringent Hg option achieves less emission reduction because even though the
standard applies to each individual furnace and requires additional pollution controls, the MACT
3-8
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floor is less strict under this option though the difference is not observable in Table 3-5 due to
rounding. The BTF limit for Hg achieves additional Hg reductions relative to the final options by
requiring each furnace to meet the more stringent BTF limit. Note that PM and other HAP
reductions are smallest under the final option because fewer furnaces require new PM controls
when facilities are allowed to meet the standard through furnace emissions averaging. For
additional information on the methods and assumptions used to estimate emissions reductions,
see the technical memo Development of Impacts for the Final Amendments to the NESHAP for
Taconite Iron Ore Processing, which is available in the docket for this action.
Table 3-5: Projected Emissions Reductions for Regulatory Options
Less Stringent
Final
More Stringent
Hg
0.12
0.12
0.14
HC1
0
680
680
HF
0
36
36
Tons per Year
Other HAP
2.6
2.1
2.6
PM
850
530
850
FM2.5
140
91
140
S02
0
32
32
Hg
1.2
1.2
1.4
HC1
0
6,800
6,800
HF
0
360
360
2027-2036
Other HAP
26
21
26
PM
8,500
5,300
8,500
FM2.5
1,400
910
1,400
S02
0
320
320
Note: Numbers rounded to two significant digits unless otherwise noted.
3.4.3 Secondary Emissions Impacts
The final amendments are expected to require the installation and operation of
environmental control devices which consume electricity. Air quality impacts arise from the
pollutants emitted to generate the electricity needed to power the control devices. Pollutants
emitted by power plants include carbon monoxide (CO), carbon dioxide (CO2), nitrogen dioxide
(NO2), sulfur dioxide (SO2), methane (CH4), and PM/PM2.5. For estimates of the secondary
emissions impacts of the final standards, see Table 3-6 below. These estimates assume facilities
meet the alternative compliance option that applies to average furnace emissions. Details of the
estimates of energy usage by control devices and emissions increases from electricity generation
3-9
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are contained in the technical memo Development of Impacts for the Final Amendments to the
NESHAP for Taconite Iron Ore Processing, which is available in the docket for this action.
Table 3-6: Projected Secondary Emissions Impacts of the Final Amendments
Enerev Secondary Emissions Increases (tpy)
HAP Controlled Impacts
(kWh/year)
CO
no2
PM
pm25
so2
C02
ch4
n2o
Hg
1.2 xlO8
14
43
5.9
1.9
57
57,000
6.2
0.86
HC1
4.3 x 106
0.50
2.00
0.22
0.07
0.85
3,400
0.32
0.05
Total
1.2 xlO8
15
45
6.1
2.0
57
61,000
6.5
0.91
Note: Numbers rounded to two significant digits unless otherwise noted.
3.5 Engineering Cost Analysis
3.5.1 Facility-Level Impacts Tables
This section presents facility-level impacts tables for each regulated pollutant. All tables
contain per-year figures with the exception of total capital investment. Total annualized costs
include capital cost annualized using the bank prime rate in accord with the guidance of the EPA
Air Pollution Control Cost Manual (U.S. EPA, 2017), operating and maintenance costs,
annualized costs of increased compliance testing, and costs of R&R. Compliance testing for Hg
and acid gases occurs initially and every 2.5 years thereafter, and is annualized over a 2.5-year
period in calculating annualized costs. To estimate these annualized costs, the EPA uses a
conventional and widely accepted approach, called equivalent uniform annual cost (EUAC) that
applies a capital recovery factor (CRF) multiplier to capital investments and adds that to the
annual incremental operating expenses to estimate annual costs. This cost estimation approach is
described in the EPA Air Pollution Control Cost Manual (U.S. EPA, 2017). These annualized
costs are the costs to directly affected firms and facilities (or "private investment"), and thus are
not true social costs. Estimated costs include estimated costs associated with iron product
revenue loss associated with operating control devices and estimated costs associated with
control device waste disposal. Detailed discussion of these costs, including all calculations and
assumptions made in conducting estimates of total capital investment, annual O&M, and
compliance testing/R&R costs, can be found in the technical memo Development of Impacts for
the Final Amendments to the NESHAP for Taconite Iron Ore Processing, which is available in
3-10
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the docket for this action. The bank prime rate was 8.5 percent at the time of the analysis. All
cost figures are in 2023$.7
3.5.1.1 Facility-Level Impacts of Hg Regulatory Options
Facility-level impacts of the final, less stringent, and more stringent regulatory
alternatives for Hg are presented in Table 3-7, Table 3-8, and Table 3-9 below. Costs are
presented at the facility level, the firm level, and the industry level. Annualized costs include
annualized costs of compliance testing every 2.5 years and R&R.
The alternative compliance option for Hg analyzed in this EIA sets a numerical MACT
limit for Hg that applies to average emissions from existing indurating furnaces at a facility. The
MACT floor limit is based on the emissions from indurating furnaces at the Northshore and
Tilden facilities; all other facilities are expected to require additional controls to meet the limit
(see Section 3.3.1). This EIA assumes that facilities will meet the Hg standard by using the
alternative compliance of meeting the limit for average furnace emissions. There is uncertainty
associated with how each facility will achieve the necessary emissions reductions for each
compliance option. The analysis presented in this EIA assumes that each facility will meet the
Hg emissions limits by replacing their existing controls with a high efficiency Venturi wet
scrubber equipped with an activated carbon injection (ACI) system designed to control Hg. The
costs of the system vary by the number of furnaces present at a facility and the exhaust gas flow
rate of each furnace. For details, see the Technical Memos.
7 When necessary, dollar figures in this RIA have been converted to 2023$ using the annual GDP Implicit Price Deflator values
in the U.S. Bureau of Economic Analysis' (BEA)NIPA Table 1.1.9 found at found at
. 2023$ reflect all inflation though Q2, the most recent quarter
posted at the time of the analysis.
3-11
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Table 3-7: Facility-Level Impacts of the Final Hg Standards (2023$)
Ultimate Parent Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$44,000,000
$22,000,000
$27,000,000
Minorca
$21,000,000
$9,200,000
$11,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$180,000
United
$19,000,000
$11,000,000
$13,000,000
Tilden
$0
$0
$46,000
Firm Total
$84,000,000
$43,000,000
$52,000,000
U.S. Steel
Keetac
Minntac
$7,700,000
$13,000,000
$4,200,000
$7,800,000
$5,000,000
$9,200,000
Firm Total
$21,000,000
$12,000,000
$14,000,000
Industry
Total
$100,000,000
$55,000,000
$66,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
The less stringent standards considered for Hg assume all furnaces at a facility meet the
final MACT floor standard. This is equivalent to removing the alternative compliance option
from the final amendments. EPA projects this would require the Hibbing, United, and Minntac
facilities to install additional controls relative to the alternative compliance option to meet the
standard. This would likely happen because the Hg emissions from a furnace depend on the Hg
content of the iron ore processed in a furnace, which is a function of mine location and is not
known in advance. If processing the iron ore in a particular location would sometimes violate the
MACT floor limit, a facility would need to control all furnaces to meet the limit at all times. This
option increases compliance cost but leads to less Hg reduction. Applying the MACT floor limit
to individual furnaces increases total capital investment by about $37 million and total
annualized cost by about $31 million industry-wide relative to allowing the alternative
compliance option.
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Table 3-8: Facility-Level Impacts of the Less Stringent Alternative Hg Standards (2023$)
Ultimate Parent Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$62,000,000
$31,000,000
$38,000,000
Minorca
$21,000,000
$9,200,000
$11,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$180,000
United
$19,000,000
$11,000,000
$13,000,000
Tilden
$0
$0
$46,000
Firm Total
$100,000,000
$51,000,000
$62,000,000
U.S. Steel
Keetac
Minntac
$7,700,000
$0
$4,200,000
$0
$5,000,000
$23,000,000
Firm Total
$32,000,000
$24,000,000
$28,000,000
Industry
Total
$130,000,000
$75,000,000
$90,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
The more stringent alternative standard considered for Hg is a 10 percent BTF limit to
each individual furnace at a facility. EPA projects this would not require additional controls
relative to the MACT floor limit applied to each furnace, but would lead to higher compliance
costs due to additional ACI requirements. Applying the BTF limit to each increases total capital
investment by about $47 million and total annualized cost by about $34 million industry-wide.
Table 3-9: Facility-Level Impacts of the More Stringent Alternative Hg Standards (2023$)
Ultimate Parent Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$63,000,000
$34,000,000
$38,000,000
Minorca
$22,000,000
$10,000,000
$12,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$180,000
United
$19,000,000
$12,000,000
$14,000,000
Tilden
$0
$0
$46,000
Firm Total
$100,000,000
$57,000,000
$64,000,000
U.S. Steel
Keetac
Minntac
$7,800,000
$26,000,000
$4,700,000
$21,000,000
$5,200,000
$24,000,000
Firm Total
$33,000,000
$26,000,000
$29,000,000
Industry
Total
$140,000,000
$83,000,000
$93,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
3.5.1.2 Facility-Level of Acid Gas Regulatory Options
Facility-level impacts of the final regulatory option for acid gases are presented in Table
3-10 below. The less stringent alternative acid gas standard maintains the PM surrogate standard
for acid gas emissions. This option maintains the status quo and does not require additional cost.
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Costs are presented at the facility level, the firm level, and the industry level. Annualized costs
include annualized costs of compliance testing every 2.5 years and R&R.
The final standards for acid gas set a revised numerical limit for both HC1 and HF that
apply to each individual indurating furnace. EPA estimates that the Tilden facility would meet
the limit by using DSI with hydrated lime in its dry ESP. All other facilities are expected to meet
the limit without additional emission control. The annualized costs for the other six facilities
include compliance testing and R&R associated with the new standards.
Table 3-10: Facility-Level Impacts of the Final Acid Gas Standards (2023$)
Ultimate Parent
Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$0
$0
$140,000
Minorca
$0
$0
$45,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$180,000
United
$0
$0
$35,000
Tilden
$1,100,000
$1,300,000
$1,400,000
Firm Total
$1,100,000
$1,300,000
$1,800,000
U.S. Steel
Keetac
Minntac
o o
o o
$12,000
$59,000
Firm Total
$0
$0
$71,000
Industry
Total
$1,100,000
$1,300,000
$1,900,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
3.5.1.3 Summary of Facility-Level Impacts
This section contains summary tables for each set of regulatory alternatives that contain
impacts of the Hg and acid gas standards cumulatively. They are presented in Table 3-11, Table
3-12, and Table 3-13 below. The tables include sums of the values of the corresponding tables in
the Section 3.5.1.1 and 3.5.1.2, but are included here for completeness and comparison. Costs are
presented at the facility level, the firm level, and the industry level.
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Table 3-11: Summary of Facility-Level Impacts of Final Hg and Acid Gas Standards
(2023$$)
Ultimate Parent
Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$44,000,000
$22,000,000
$27,000,000
Minorca
$21,000,000
$9,200,000
$12,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$360,000
United
$19,000,000
$11,000,000
$13,000,000
Tilden
$1,100,000
$1,300,000
$1,500,000
Firm Total
$85,000,000
$44,000,000
$54,000,000
U.S. Steel
Keetac
Minntac
$7,700,000
$13,000,000
$4,200,000
$7,800,000
$5,100,000
$9,300,000
Firm Total
$21,000,000
$12,000,000
$14,000,000
Industry
Total
$110,000,000
$56,000,000
$68,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
Table 3-12: Summary of Facility-Level Impacts of the Less Stringent Alternative Hg and
Acid Gas Standards (2023$$)
Ultimate Parent
Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$62,000,000
$31,000,000
$38,000,000
Minorca
$21,000,000
$9,200,000
$11,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$180,000
United
$19,000,000
$11,000,000
$13,000,000
Tilden
$0
$0
$46,000
Firm Total
$100,000,000
$51,000,000
$62,000,000
U.S. Steel
Keetac
Minntac
$7,700,000
$0
$4,200,000
$0
$5,000,000
$23,000,000
Firm Total
$32,000,000
$24,000,000
$28,000,000
Industry
Total
$130,000,000
$75,000,000
$90,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
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Table 3-13: Summary of Facility-Level Impacts of the More Stringent Alternative Hg and
Acid Gas Standards (2023$)
Ultimate Parent
Company
Facility
Total Capital
Investment
Annual O&M
Annualized Cost
Hibbing
$63,000,000
$34,000,000
$39,000,000
Minorca
$22,000,000
$10,000,000
$12,000,000
Cleveland-Cliffs Inc.
Northshore
$0
$0
$360,000
United
$19,000,000
$12,000,000
$14,000,000
Tilden
$1,100,000
$1,300,000
$1,500,000
Firm Total
$100,000,000
$58,000,000
$66,000,000
U.S. Steel
Keetac
$7,800,000
$4,700,000
$5,300,000
Minntac
$26,000,000
$21,000,000
$24,000,000
Firm Total
$33,000,000
$26,000,000
$29,000,000
Industry
Total
$140,000,000
$84,000,000
$95,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
3.5.2 Summary Cost Tables for the Final Regulatory Options
This section presents summary cost tables for the final regulatory options. Table 3-14
presents total capital investment and various annualized costs for the final options for Hg and
acid gases separately and cumulatively. The vast majority of projected total capital investment
and total annualized cost occurs as a result of the Hg requirements. The tables in this section
assume that facilities meet the alternative compliance standard for Hg that applies to average
existing furnace emissions at a facility.
Table 3-14: Summary of Total Capital Investment and Annual Costs per Year of the Final
Option by Pollutant (2023$)
Hg
Acid Gases
Total
Total Capital Investment
$100,000,000
$1,100,000
$110,000,000
Annual O&M
$55,000,000
$1,300,000
$56,000,000
Annualized Capital
$11,000,000
$110,000
$11,000,000
Annualized Testing/R&R
$520,000
$500,000
$1,000,000
Total Annualized Cost
$66,000,000
$1,900,000
$68,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
Table 3-15 presents estimated costs by year based on when costs are likely to be incurred.
Although firms may spread capital investment across the three years prior to full implementation
of the final standards, we conservatively assume that all capital investment occurs in the first
year of full implementation to represent a highest-cost scenario. Compliance testing occurs
initially and once every 2.5 years thereafter. Since compliance must occur within 3 years of the
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effective date of the final amendments, these costs are assumed to occur in 2027 (the first year of
full implementation). Firms may spread these costs across the years between the effective date of
the amendments and 2027. Table 3-16 presents total costs for each year discounted to 2023,
along with the present-value (PV) and equivalent annualized value (EAV) over the analysis
period, using both a 3 percent and 7 percent social discount rate. The EAV represents a flow of
constant annual values that would yield a sum equivalent to the PV. The estimated present-value
of compliance costs in 2023 is about $540 million ($63 million EAV) using a 3% social discount
rate and about $410 million ($58 million EAV) using a 7% social discount rate from 2027-2036.
Table 3-15: Costs by Year for the Final Options (2023$)
Year
Capital
Annual O&M
Testing/R&R
Total
2027
$110,000,000
$56,000,000
$2,200,000
$160,000,000
2028
$0
$56,000,000
$24,000
$56,000,000
2029
$0
$56,000,000
$24,000
$56,000,000
2030
$0
$56,000,000
$24,000
$56,000,000
2031
$0
$56,000,000
$24,000
$56,000,000
2032
$0
$56,000,000
$2,200,000
$58,000,000
2033
$0
$56,000,000
$24,000
$56,000,000
2034
$0
$56,000,000
$24,000
$56,000,000
2035
$0
$56,000,000
$24,000
$56,000,000
2036
$0
$56,000,000
$24,000
$56,000,000
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
Table 3-16: Present-Value, Equivalent Annualized Value, and Discounted Costs for Final
Options, 2027-2036 (million 2023$)
Vpof
Discount Rate (Discounted to 2023)
i Cai
3%
7%
2027
$150
$130
2028
$48
$40
2029
$47
$37
2030
$46
$35
2031
$44
$33
2032
$45
$32
2033
$42
$29
2034
$41
$27
2035
$39
$25
2036
$38
$23
PV
$540
$410
EAV
$63
$58
Note: Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise noted.
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3.6 Uncertainties and Limitations
Throughout the EIA, we considered a number of sources of uncertainty, both
quantitatively and qualitatively, regarding the costs and emissions impacts of the final NESHAP
amendments. We summarize the key elements of our discussions of uncertainty here:
Projection methods and assumptions: The number of facilities in operation is
assumed to be constant over the course of the analysis period. This is a particular
source of uncertainty with respect to the Empire taconite mine, which is currently
idled long-term. If the Empire facility were to resume operation, that could increase
the projected costs and emissions impacts of the final amendments. Further, costs and
emissions impacts at other affected facilities could change as the indurating furnaces
in operation are modified or replaced. Unexpected facility closure or idling affects the
number of facilities subject to the final amendments. We also assume 100 percent
compliance with this final rule and existing rules, starting from when the source
becomes affected. If sources do not comply with these rules, at all or as written, the
cost impacts and emission reductions may be overestimated. Additionally, new
control technology may become available in the future at lower cost, and we are
unable to predict exactly how industry will comply with the final rule in the future.
Years of analysis: The years of the cost analysis are 2027, to represent the first-year
facilities are fully compliant with the amendments to Subpart RRRRR, through 2036,
to present 10 years of potential regulatory impacts, as discussed in Chapter 3.
Extending the analysis beyond 2036 would introduce substantial and increasing
uncertainties in the projected impacts of the final regulations.
Compliance Costs: There is uncertainty associated with the costs required to install
and operate the equipment necessary to meet the final emissions limits. There is also
uncertainty associated with the exact controls a facility may install to comply with the
requirements, and the interest rate they are able to obtain if financing capital
purchases. There may be an opportunity cost associated with the installation of
environmental controls (for purposes of mitigating the emission of pollutants) that is
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not reflected in the compliance costs included in Chapter 3. If environmental
investment displaces investment in productive capital, the difference between the rate
of return on the marginal investment (which is discretionary in nature) displaced by
the mandatory environmental investment is a measure of the opportunity cost of the
environmental requirement to the regulated entity. To the extent that any opportunity
costs are not included in the control costs, the compliance costs presented above for
this final action may be underestimated.
Emissions Reductions: Baseline emissions and projected emissions reductions are
based on AP-42 emissions factors, assumptions about current emissions controls, and
facility stack testing. To the extent that any of these data or assumptions are
unrepresentative or outdated, the emissions reductions associated with the final
amendments could be over or underestimated.
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4 ECONOMIC IMPACT ANALYSIS AND DISTRIBUTIONAL ASSESSMENTS
4.1 Introduction
The final amendments to the NESHAP for Taconite Iron Ore are projected to result in
total capital investment greater than $100 million, total annualized costs greater than $65 million
per year, and are likely to have downstream impacts on the steel manufacturing industry due to
the use of iron ore as an essential input at integrated iron and steel facilities.
While the national-level impacts demonstrate the final action is likely to lead to
substantial costs, the engineering cost analysis does not speak fully to potential economic and
distributional impacts of the final amendments, which may be important consequences of the
action. This section includes economic impact and distributional analyses directed toward
complementing the engineering cost analysis and includes a partial equilibrium analysis of
market impacts.
As discussed in Chapter 2, two ultimate parent companies collectively own the seven
active taconite iron ore processing facilities: Cleveland-Cliffs Inc. (Hibbing, Minorca,
Northshore, United, and Tilden) and U.S. Steel (Keetac and Minntac). Cleveland-Cliffs Inc. also
owns the Empire facility, which is idled long-term and does not currently have plans to resume
operations.
Cleveland-Cliffs and U.S. Steel each reported greater than $20 billion in revenue in 2021.
Table 4-1 and Table 4-2 present total annualized cost and total capital investment relative to
sales for each set of regulatory alternatives (for a breakdown of facility-level costs, see Section
3.5.1). As shown in the tables, both total annualized cost and total capital investment (which
could potentially be incurred by each firm in a single year) are small compared to total revenue
for each firm (less than 0.50 percent for the final option). The total annualized cost per sales for a
company represents the maximum price increase in the affected product or service needed to
completely recover the annualized costs imposed by the regulation. Based on this estimate, the
maximum necessary price increase caused by the final regulation is small relative to the size of
the industry.
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Table 4-1: Total Annualized Cost-to-Sales Ratios for Taconite Facility Owners by
Regulatory Alternative
Ultimate Parent Company
2021 Revenue Total Annualized
Regulatory Alternative (million Cost (million
2023$) 2023$)
TAC-Sales
Ratio
Cleveland-Cliffs Inc.
Less Stringent
Final
$21,742
$62
$54
0.28%
0.24%
More Stringent
$66
0.29%
Less Stringent
$28
0..12%
U.S. Steel
Final
$21,562
$14
0.06%
More Stringent
$29
0.13%
Table 4-2: Total Capital Investment-to-Sales Ratios for Taconite Facility Owners by
Regulatory Alternative
Ultimate Parent Company
Regulatory Alternative
2021 Revenue
(million 2023$)
Total Capital
Investment (million
2023$)
TCI-to-Sales
Ratio
Less Stringent
$100
0.45%
Cleveland-Cliffs Inc.
Final
$21,742
$85
0.38%
More Stringent
$110
0.47%
Less Stringent
$32
0.14%
U.S. Steel
Final
$21,562
$21
0.09%
More Stringent
$33
0.15%
However, as discussed in Chapter 2, taconite is primarily an input used to manufacture
steel products, and both Cleveland-Cliffs Inc. and U.S. Steel are vertically integrated along the
steel supply chain. Impacts caused by the regulation are likely to have secondary impacts in
related sectors. The next section introduces a partial equilibrium economic model that analyzes
the interaction of the taconite sector with the steel sector and attempts to evaluate how producers
and consumers may react and respond to increased regulatory costs. For example, producers may
choose to reduce output in response to increased taconite processing costs, reducing market
supply. Reduced market supply of taconite pellets increases their price, which causes cost
increases and reduced production in the steel sector. The costs may also be passed along to
consumers through price increases, who may respond by reducing steel consumption. The
purpose of the next section is to measure and track these effects as they are distributed across
stakeholders in the economy.
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To evaluate the impact of the final amendments on the iron ore and steel mill products
markets, the EPA developed two national competitive partial equilibrium models (for taconite
and steel mill products) to estimate the economic impacts on society resulting from the
regulation. These models were originally used to analyze the impacts of the original NESHAP
for Taconite Iron Ore, and the model and its description in this chapter are adapted from the
original Taconite Iron Ore NESHAP Economic Impact Analysis (U.S. EPA, 2003b).
We assume that, within each industry, the commodities of interest are homogeneous (e.g.,
perfectly substitutable) and that the number of buyers and sellers is large enough that no
individual buyer or seller has market power (i.e., influence on market prices). As a result of these
conditions, producers and consumers take the market price as a given when making their
production and consumption choices. As discussed in Chapter 2 and earlier in this chapter, there
are only two firms in the United States producing taconite iron ore for sale. This is a departure
from the assumptions of the model, and the extent to which this impacts the results of the model
is uncertain. Even so, we expect this model provides a useful illustration of the linkages between
the taconite and steel sectors and as such provides a guide to the broad magnitude of the impacts
we can expect from the finalized regulation. We present the results for a single representative
year (2019).
4.2 Modeling Approach
The EPA modeled the impacts of increased environmental control costs using two
standard partial equilibrium models: one for taconite iron ore and one for steel mill products. We
have linked these two partial equilibrium models by specifying the interactions between supply
and demand for products in each market and solving for the changes in prices and quantities
across both markets simultaneously. Explicitly modeling these interactions helps better
characterize the distributional impacts on downstream iron and steel producers in the steel mill
products market. The following sections discuss how supply and demand are characterized for
each market.
The model is a static, two-sector model characterized by iso-elastic demand/supply for
each sector and producer. The supply of taconite pellets and steel each come from domestic
producers and imports. Demand for taconite pellets comes from domestic steel producers and
exports, while demand for steel comes from domestic and foreign steel consumers. The supply of
4-3
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domestic taconite is characterized at the individual facility level. The domestic supply of steel is
characterized by two representative domestic producers, each using a separate production
process: one steel producer uses the blast furnace/basic oxygen furnace (BF/BOPF) process, and
the other uses the electric arc furnace process. For background on each production process, see
Chapter 2.
4.2.1 Supply
Market supply is composed of domestic production (d) and imports (m):
Qs = qsd + qSm
The change in quantity supplied by each domestic taconite facility can be approximated as
follows:
Aqsdt = qQdt esdt ¦
Pto
Where qldt is the baseline quantity of taconite pellets, esdt is domestic supply elasticity of
taconite pellets, Apt c is the change in the producer's net price, and pt0 is the baseline price of
taconite pellets. The change in net price is composed of the change in the market price of
taconite pellets resulting from the regulation (Apt) and the shift in the domestic supply function
caused by the regulatory compliance cost per metric ton of pellets (c). Each domestic facility's
supply shift is calculated by dividing estimated total annualized compliance cost by baseline
output.
Domestic steel producers using the BF/BOPF process use taconite pellets as an input to
production. Their supply decision can be approximated as:
Aqsds = q*ds ¦ esds ¦ APs ~ ^
PsO
where qods is the baseline quantity of BF/BOPF steel, esds is the elasticity of domestic steel
supply, Aps aApt is the change in the producer's net price, and ps0 is the baseline price of
steel. The parameter a represents the amount of taconite pellets per unit of steel output
(calibrated to be 1.51 metric tons taconite pellets per metric ton steel from baseline data). The
change in the net price of steel is composed of the change in the baseline price of steel resulting
4-4
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from the regulation and the shift in the domestic supply function of BF/BOPF steel resulting
from the increase in the price of taconite pellets.
The change in quantity supplied by domestic EAF steel producers and foreign iron and
steel producers can be approximated as follows:
a Su _ Su ~Su
nq q0 ¦ e ¦
V o
where q^11 is the relevant baseline output, eSu is the relevant supply elasticity, and p0 is the
relevant baseline price. These producers do not face increased environmental control costs
resulting from regulation and do not use taconite as an input, so their net price change equals the
change in the relevant market price. As a result, these producers increase output in response to
higher prices.
4.2.2 Demand
Market demand is composed of domestic consumption (d) and exports (x):
qD = qDd + qox
The change in quantity demanded by domestic and foreign consumers can be approximated as:
AqDl = 1 " VDl " ~
Po
where qfi is baseline consumption, r/D is the elasticity of demand of the respective consumer (/),
Ap is the change in the relevant market price, and p0 is the relevant baseline price.
4.2.3 Equilibrium
The new with-regulation equilibrium occurs where the change in total market supply
equals the change in total market demand:
AQs = AQd
We use the model equations described above and a solver application from the GAMS software
package to compute the price and quantity changes necessary to achieve equilibrium. The
transition to the new equilibrium can be described as follows.
Both markets begin in the baseline equilibrium.
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Taconite pellet producers receive a compliance cost shock from regulation, which shifts
the supply curve for each taconite producer.
The compliance cost shock shifts the taconite market supply curve and raises the price of
taconite pellets.
The higher price of taconite pellets propagates the compliance cost shock to BF/BOPF
steel, which uses taconite pellets as an input. This shifts the supply curve for BF/BOPF
steel.
This shifts the steel products market supply curve and raises the price of steel products.
The model solves for the equilibrium price changes that balance market supply and
demand in both markets simultaneously.
4.2.4 Baseline Data and Parameters
Running the model requires selecting a baseline year, characterizing supply and demand
in the baseline year for both markets, and selecting elasticity parameters for each
producer/consumer. We selected 2019 as the baseline year for the analysis, as this was the most
recent year of data available after excluding 2020 (which, as described in Chapter 2, is an outlier
year for iron and steel markets due to the Covid-19 pandemic).
The baseline market data for 2019 is in Table 4-3 below. Baseline production for taconite
pellets is characterized at the facility level, while baseline production of steel products is
characterized at the production-process level. Data on all prices and quantities for taconite iron
ore pellets and comes from the USGS Minerals Yearbook 2019 (Tuck, 2020a) (USGS, 2019).
The price of iron ore represents the average value reported at mines. Data on domestic
production, imports, and exports of steel mill products also come from USGS Minerals
Yearbook 2019 (Tuck, 2020b). We divide domestic steel mill production between the BF/BOPF
and EAF production process based on the assumption that 70 percent of U.S. steel output in 2019
comes from EAF (Tuck, 2020b). The baseline price of steel mill products comes from historical
price data for hot-rolled coil steel (the most common steel mill product) collected from
www.focus-economics.com.8 Elasticity parameters for each producer/consumer are in Table 4-4
8 https://www.focus-economics.com/commodities/base-metals/steel-usa. Accessed 1/13/2023.
4-6
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below. Many of the elasticities have been carried over from the original NESHAP, but others
have been updated based on the economic literature when possible. The model incorporates
separate elasticities for BOPF and EAF produced steel, as EAF facilities are more responsive to
price changes due to a more flexible cost structure (Mathiesen & Moestad, 2004). A brief
discussion of the elasticity of supply and demand in the iron ore and steel mill products market
can be found in Section 2.5.2.3.
Table 4-3: Baseline Price and Quantity Data Taconite Pellets and Steel Mill Products, 2019
Market
Domestic
Production
(million metric
tons)
Imports
(million metric tons)
Exports
(million metric
tons)
Price
($/metric
ton)
Taconite Pellets3
47.3
3.98a
11.4"
92.94a
Hibbing
7.6
Minorca
2.8
Northshore
5.3
United
5.4
Tilden
7.8
Keetac
5.3
Minntac
13.1
Steel Mill Products
87.8b
25.3b
6.7b
603.52°
BF/BOPF
26.3
EAF
61.5
a Tuck (2020a) Iron Ore [tables-only release]. USGS Minerals Yearbook 2019 (volume 1) - Metals and Minerals. Available here:
https://www.usgs.gov/centers/national-minerals-information-center/iron-ore-statistics-and-information. Accessed 1/30/2023.
b Tuck (2020b) Iron and Steel [tables-only release]. USGS Minerals Yearbook 2019 (volume 1) - Metals and Minerals. Available
here: https://www.usgs.gov/centers/national-minerals-information-center/iron-and-steel-statistics-and-information. Accessed
1/30/2023.
c https://www.focus-economics.com/commodities/base-metals/steel-usa. Accessed 1/30/2023.
Table 4-4: Elasticity Parameters for Taconite Pellets and Steel Mill Products
Market
Supply
Demand
Taconite Pellets
Domestic
0.5a
derived demand
Foreign
1.08b
-0.92b
Steel Mill Products
Domestic
0.7 (BF/BOPF), 1.2 (EAF)°
-0.59b
Foreign
10d
-1.25b
aFisher, B. S., Beare, S., Matysek, A. L., & Fisher, A. (2015). The impacts of potential iron ore supply restrictions on producer
country welfare. BAE Economics. Available at: http://www.baeconomics.com.au/wp-content/uploads/2015/08/Iron-Ore-
Spatial-Equilibrium-Model-8Aug 15 .pdf.
b Environmental Protection Agency. (2003). Taconite iron ore NESHAP economic impact analysis. Environmental Protection
Agency. Available at: https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100D5QR.pdf
c Mathiesen, L., & Maestad, O. (2004). Climate policy and the steel industry: Achieving global emission reductions by an
incomplete climate agreement. The Energy Journal, 25, 91-114. Available at: https://doi.org/10.2307/41323359^
4-7
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dFetzer. J. J. (2005). A partial equilibrium approach to modeling vertical linkages in the U.S. flat rolled steel market. U.S.
International Trade Commission. Office of Economics Working Paper No. 2005-01-A. Available at:
https://www.usitc.gov/publications/332/ec200501a.pdf
Compliance cost shocks for the final option for each facility are in Table 4-5 below. Cost
shocks are presented in 2019 dollars to match the dollar-year of the baseline prices and the year
of the baseline data. Compliance costs per metric ton are highest at Hibbing and Minorca (over
2.9 percent of the baseline price) and lowest at Northshore and Tilden, which are the two
facilities that are not expected to require additional controls to meet the final MACT floor limit
for Hg emissions.
Table 4-5: Facility-Level Compliance Cost Shocks for Final Options, ($2019)
Facility
$/Metric Ton
% of Baseline Price
Hibbing
3.08
3.32%
Minorca
3.53
3.80%
Northshore
0.06
0.06%
United
2.09
2.25%
Tilden
0.16
0.18%
Keetac
0.82
0.88%
Minntac
0.61
0.65%
4.2.5 Economic Impact Results
4.2.5.1 Market-Level Results
Table 4-6 presents projected approximate price and quantity changes in the taconite pellet
and still mill product market under the final regulatory options, using 2019 as the baseline year.
These results illustrate a variety of dynamics. First, note that while the prices of both taconite
pellets and steel mill products increase, the increase in the price of steel mill products is very
small relative to the increase in the price of taconite pellets. This is for three reasons. First, part
of the decrease in quantity supplied of domestic taconite pellets is offset by an increase in
imports of taconite pellets. Second, the decrease in BF/BOPF steel output is partially offset by an
increase in EAF steel, which does not use taconite as an input and has gained a relative cost
advantage. Third, the compliance cost shock is only propagated to the BF/BOPF production
process, which makes up only 30 percent of steel production in the baseline year. Since it is
expected that since the EAF process will likely continue to grow its share of U.S. steel
4-8
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production in coming years, this will serve to blunt the impact of the regulation on U.S. steel
prices and production. Next, note that, because compliance costs are unevenly distributed over
facilities, the regulation has the effect of shifting taconite output between facilities. Northshore,
Tilden, and Minntac actually increase quantity due to the regulation, because the equilibrium
price of taconite pellets increases more than compliance cost per metric ton at these facilities.
Hibbing, Minorca, United, and Keetac experience declines in production. Table 4-7 and Table
4-8 show analogous results for the less stringent and more stringent alternative regulatory
options for comparison.
Table 4-6: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and
Steel Mill Products under the Final Options
Market
Domestic Production
Imports
Exports
Price
Iron Ore
-0.31%
0.76%
-0.65%
0.70%
Hibbing
-1.31%
Minorca
-1.55%
Northshore
0.32%
United
-0.77%
Tilden
0.26%
Keetac
-0.09%
Minntac
0.02%
Steel Mill Products
-0.03%
0.07%
-0.01%
0.01%
BF/BOPF
-0.11%
EAF
0.01%
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Table 4-7: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and
Steel Mill Products under the Less Stringent Alternative Options
Market
Domestic Production
Imports
Exports
Price
Iron Ore
-0.41%
1.00%
-0.86%
0.93%
Hibbing
-1.81%
Minorca
-1.43%
Northshore
0.45%
United
-0.66%
Tilden
0.46%
Keetac
0.03%
Minntac
-0.34%
Steel Mill Products
-0.04%
0.10%
-0.01%
0.01%
BF/BOPF
-0.15%
EAF
0.01%
Table 4-8: Projected Percentage Changes in Prices and Quantities of Taconite Pellets and
Steel Mill Products under the More Stringent Alternative Options
Market
Domestic Production
Imports
Exports
Price
Iron Ore
-0.43%
1.06%
-0.90%
0.98%
Hibbing
-1.85%
Minorca
-1.43%
Northshore
0.46%
United
-0.67%
Tilden
0.40%
Keetac
0.03%
Minntac
-0.35%
Steel Mill Products
-0.04%
0.10%
-0.01%
0.01%
BF/BOPF
-0.15%
EAF
0.01%
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4.2.5.2 Welfare Change Estimates9'10
Table 4-9 presents the projected welfare impacts under the final options. Welfare impacts
are presented in terms of consumer and producer surplus. Consumer and producer surplus are
standard measures of economic welfare which relate the difference between willingness to pay
(or sell, in the case of producers) for a product or service and its price. Note that consumer
surplus only applies to domestic and foreign consumers of steel mill products, since the
consumers of taconite pellets are the producers of BF/BOPF steel, and their welfare change is
measured by their producer surplus change. Note that these welfare impacts do not include
benefits of pollution abatement or the costs of secondary emission impacts from increased
electricity from operating environmental controls.
Consumers of U.S. steel mill products are unambiguously worse off (excluding the
beneficial impacts of pollution abatement), as both foreign and domestic consumers of steel pay
a higher price. BF/BOPF steel producers are worse off due reduced output, but their losses are
partially offset by gains to EAF steel producers who increase output and receive a higher price
for steel. Finally, note that some taconite facilities gain and some lose due to the regulation. Both
Cleveland-Cliffs Inc. (Hibbing, Minorca, Northshore, United, and Tilden) and U.S. Steel (Keetac
and Minntac) facilities are worse off on net. The model projects total welfare losses of about $49
million (2019$). For context, the U.S. steel market was worth approximately $9.4 billion in
201911, so the projected welfare losses under the final options are about 0.6 percent of the entire
U.S. steel market. Table 4-10 and Table 4-11 present projected welfare impacts under the less
and more stringent alternative regulatory options.
9 Changes in consumer surplus are estimated from changes in prices and quantities using the following linear approximation
formula: ACS = (AP * Qnew) + -5 * AP * AQ.
10 Changes in producer surplus are estimated from changes in prices and quantities using the following linear approximation
formula: APS = (AP) * Qnew .5 * AP * AQ, where AP represents the net price to the producer.
11 https://www.grandviewresearch.com/industry-analysis/us-steel-merchant-rebar-
market#:~:text=Report%200verview,5.2%25%20from%202020%20to%202027. Accessed 1/13/2023.
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Table 4-9: Summary of Projected Consumer and Producer Surplus Changes under the
Final Options
Change in Producer Surplus
Change in Consumer Surplus
Producers Million 2019$
Iron Ore "$^7
Hibbing -$18
Minorca -$8.0
Northshore $3.2
United -$ 7.7
Tilden $3.8
Keetac -$0.9
Minntac $0.6
Market Million 2019$
Domestic -$4.7
Foreign -$0.29
Steel Mill Products -$22
BF/BOPF -$25
EAF $2.7
Change in Producer Surplus -$50
Change in Consumer Surplus -$5.0
Change in Total Welfare -$54
Table 4-10: Summary of Projected Consumer and Producer Surplus Changes under the
Less Stringent Alternative Options
Change in Producer Surplus
Change in Consumer Surplus
Producers Million 2019$
Iron Ore -$36
Hibbing -$25
Minorca -$7.4
Northshore $4.4
United -$6.6
Tilden $6.7
Keetac $0.03
Minntac -$8.1
Market Million 2019$
Domestic -$6.2
Foreign -$0.39
Steel Mill Products -$29
BOPF -$33
EAF 3.6
Change in Producer Surplus -$65
Change in Consumer Surplus -$6.6
Change in Total Welfare -$72
4-12
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Table 4-11: Summary of Projected Consumer and Producer Surplus Changes under the
More Stringent Alternative Options
Change in Producer Surplus
Change in Consumer Surplus
Producers
Million 2019$
Market Million 2019$
Iron Ore
-$38
Domestic -$6.5
Hibbing
-$26
Foreign -$0.41
Minorca
-$7.4
Northshore
$4.5
United
-$6.7
Tilden
$5.8
Keetac
$0.32
Minntac
-$8.6
Steel Mill Products
-$31
BOPF
-$35
EAF
$3.7
Change in Producer Surplus
-$69
Change in Consumer Surplus
-$6.9
Change in Total Welfare
-$76
4.2.5.3 Limitations
Ultimately, the regulatory program will increase the costs of supplying taconite pellets to
U.S. steel producers, and the model is designed to evaluate behavioral responses to this change in
costs within a market equilibrium setting. However, the results should be viewed with the
following limitations in mind. First, the national competitive market assumption is clearly very
strong because there is a geographic relationship between taconite facilities and integrated iron
and steel mills that impacts the distribution of taconite pellets to steel producers. Regional price
and quantity impacts could be different from the average impacts reported below if local market
structures, production and shipping costs, or demand conditions are substantially different from
those used in this analysis. Second, abstracts away from facility ownership and models all
taconite facilities as individual producers. Therefore, it does not address potential strategic
decisions and pricing strategies by Cleveland-Cliffs and U.S. Steel in response to the regulation
allowed by their potential market power and vertically integrated structure. Although directly
modeling the competitive conditions of the taconite market and vertical relationships between
taconite and steel facilities is possible, this type of model requires substantial amounts of detailed
data for individual steel facilities and a level of effort beyond the scope of this analysis.
4-13
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4.3 Employment Impact Analysis
This section presents a qualitative overview of the various ways that environmental
regulation can affect employment. Employment impacts of environmental regulations are
generally composed of a mix of potential declines and gains in different areas of the economy
over time. Regulatory employment impacts can vary across occupations, regions, and industries;
by labor and product demand and supply elasticities; and in response to other labor market
conditions. Isolating such impacts is a challenge, as they are difficult to disentangle from
employment impacts caused by a wide variety of ongoing, concurrent economic changes. The
EPA continues to explore the relevant theoretical and empirical literature and to seek public
comments in order to ensure that the way the EPA characterizes the employment effects of its
regulations is reasonable and informative.
Environmental regulation "typically affects the distribution of employment among
industries rather than the general employment level" (Arrow, et al., 1996). Even if impacts are
small after long-run market adjustments to full employment, many regulatory actions have
transitional effects in the short run (Office of Management and Budget, 2015). These movements
of workers in and out of jobs in response to environmental regulation are potentially important
and of interest to policymakers. Transitional job losses have consequences for workers that
operate in declining industries or occupations, have limited capacity to migrate, or reside in
communities or regions with high unemployment rates.
As indicated by the market analysis presented in Section 4.2, the final requirements are
likely to cause only small shifts in iron and steel consumption and prices. As a result, demand for
labor employed in taconite pellet and steel distribution activities and associated industries, is
unlikely to see large changes. However, these industries might experience adjustments as there
may be increases in compliance-related labor requirements such as labor associated with the
manufacture, installation, and operation of pollution control equipment such as new or upgraded
Venturi wet scrubbers and ACI systems and emissions monitors. In addition, there may be
changes in employment due to effects on output from directly regulated sectors and sectors that
consume iron and steel. If steel prices increase sufficiently as a result of this action, then
revenues of firms directly regulated and those in steel-consuming sectors may fall and their
employment may potentially decline (though such changes should likely be small in light of the
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estimated change in output price mentioned above). For this final rulemaking, we do not have the
data and analysis available to quantify potential labor impacts, although we expect those impacts
to be relatively small.
4.4 Small Business Impacts
To determine the possible impacts of the final NESHAP amendments on small
businesses, parent companies producing taconite are categorized as small or large using the
Small Business Administration's (SBA's) general size standards definitions. ForNAICS 21221,
these guidelines indicate a small business employs 750 or fewer workers.12 Only two ultimate
parent companies, Cleveland-Cliffs Inc. and U.S. Steel, own taconite facilities. Based on the
SBA definition and the company employment shown in Table 2-8, this industry has no small
businesses.
12 U.S. Small Business Administration, Table of Standards, Effective December 19, 2022. Available at:
https://www.sba.gov/document/support-table-size-standards. Accessed January 17, 2023.
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United States Office of Air Quality Planning and Standards Publication No. EPA-452/R-24-008
Environmental Protection Health and Environmental Impacts Division January 2024
Agency Research Triangle Park, NC
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