Vol.36 No.3 JAN‑MAR 2008

J A N U A R Y – M A R C H 2 0 0 8 System infrastructure renewal plan . Iron ore revival . Green Bay’s prosperity . Marketing the system V O L U M E 3 6 N U M B E R 3 G LGREAT LAKER The Interlake Steamship Company Interlake Corporate Center 4199 Kinross Lakes Parkway Richfield, Ohio 44286 Telephone: (330) 659-1400 FAX: (330) 659-1445 ISO Certified E-mail: sales@interlake-steamship.com WE CAN HANDLE IT! Prepared for Tomorrow? At Interlake Steamship, investing in the future is a top priority. Our state-of-the-art electronic charting, positioning and communication systems add up to superior navigational safety. Our electronic load controllers and skewed propeller blades keep Interlake’s diesel propulsion engines running at peak efficiency. Repowering of MV Lee A. Tregurtha ensures her continued reliable operation. These are just a few examples of Interlake’s long-term commitment to its customers. Interlake Steamship – prepared for today, and prepared for tomorrow. GREAT LAKES/SEAWAY REVIEW January-March, 2008 1 A R T I C L E S J A N U A RY-MARCH 2 0 0 8 The international transportation magazine of Midcontinent North America GREAT LAKES/SEAWAY REVIEW GREAT LAKER 221 Water Street Boyne City, Michigan 49712 USA (800) 491-1760 FAX: (866) 906-3392 harbor@harborhouse.com www.greatlakes-seawayreview.com www.greatlaker.com A searchable editorial archive is available at www.greatlakes-seawayreview.com D E P A R T M E N T S Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Lake Carriers’ Association Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 The Administrator’s Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Guest Editorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Naval Architecture & Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Regional Shipyard Activity Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 System infrastructure gets a boost with Asset Renewal Plan. Page 6. Expansion at the Port of Green Bay. Page 40. Maritime heritage is abundant at Detroit. Page 66. Infrastructure PERPETUATING SYSTEM ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 6 President backs 10-year asset renewal plan for Great Lakes/St. Lawrence Seaway system. Commodities AN IRON ORE REVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Price, consolidation, increased foreign ownership shake up the iron ore industry. Economic Development A RISING TIDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Groundbreaking nears for Melford International Terminal’s $300 million facility. Interview “I LOVE THE JOB AND I LOVE THE WORK” . . . . . . . . . . . . . . . . . . . . . 25 Doc Mahoney oversees vessels and cargoes to ensure a safe and successful port call. The Environment RAISING THE BAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Green Marine moves from planning to implementation. Ballast Water Management WHERE IS THE FINISH LINE? . . . . . . . . . . . . . . 35 Looking for meaningful, uniform standards and viable ballast water treatment systems. Port Profile: Green Bay THE HARBOR’S PROSPERITY . . . . . . . . . . . . . . . . . . . 40 Green Bay port is made up of 13 businesses along a three-mile stretch of the Fox River. Marketing the System GETTING GLOBAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Hwy H2O international representatives share approaches to selling the system. Data Management CREATING A THINK TANK . . . . . . . . . . . . . . . . . . . . . . . . . 54 Industry, educators partner in creating a multi-purpose database. Ports DIFFICULT CHOICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Assessing the value of deepwater access ports. Martitime Heritage DETROIT: STEEPED IN MARITIME . . . . . . . . . . . . . . . . . . . 66 One of Michigan’s oldest cities provides historic and modern maritime sites. Challenger MAGNIFICENT OBSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 New book celebrates St. Marys Challenger’s milestone anniversay. Marine Photography DAWN IN DOOR COUNTY . . . . . . . . . . . . . . . . . . . . . . . . 76 Gary Martin captures Door County’s magnificent lighthouses at dawn. Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Meet the Crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Lake Boat News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 G LGREAT LAKER D E P A R T M E N T S Call for information on available property or current services (414) 286-8131, bnowak@milwaukee.gov • Two major railroads: Union Pacific Railroad Canadian Pacific Railway • Direct Interstate Highway • Seaway-depth berths for ocean vessels • Barge service to Illinois and Mississippi Rivers • Site & Terminal development for: Manufacturing Facilities Warehousing & Distribution Service Centers Material/Cargo Handling OFFERING: 2323 S. Lincoln Mem. Dr. Milwaukee, WI 53207 www.milwaukee.gov/port WHERE YOU ARE ALWAYS WELL CONNECTED P U B L I S H E D F O R 3 8 Y E A R S Business and Editorial Office 221 Water Street Boyne City, Michigan 49712 USA (231) 582-2814 (800) 491-1760 FAX: (866) 906-3392 harbor@harborhouse.com www.greatlakes-seawayreview.com www.greatlaker.com EDITORIAL AND BUSINESS STAFF Jacques LesStrang Publisher Emeritus Michelle Cortright Publisher Janenne Irene Pung Editor Rebecca Harris Art Director Lisa Liebgott Production Manager Tina Burch Business Manager David L. Knight Editorial Consultant Roger LeLievre Great Laker Editor Virginia Forrand Circulation Manager ADVERTISING DEPARTMENT Kathy Booth Account Manager James Fish Director of Sales John H. Nikolai Account Manager William W. Wellman Senior Account Manager EDITORIAL ADVISORY BOARD John D. Baker, President, Great Lakes District Council, International Longshoremen’s Association; James H. Hartung, President, Toledo-Lucas Co. Port Authority; Davis Helberg, Executive Director, Seaway Port Authority of Duluth – Retired; Anthony G. Ianello, Executive Director, Illinois International Port District; John Jamian, President, Seaway Great Lakes Trade Association; Peter Kakela, Ph.D., Professor, Department of Community, Agriculture, Recreation and Resource Studies, Michigan State University; Donald N. Morrison, President, Canadian Shipowners Assn.; Rep. James L. Oberstar, Member of Congress, Chair, House Transportation & Infrastructure Committee; John J. Peacock, Executive Vice-President, Fednav Limited; George Ryan, President, Lake Carriers’ Association – Retired; Daniel L. Smith, National Executive Vice President, American Maritime Officers; Rep. Bart Stupak, Member of Con gress, Energy & Commerce Committee; James H.I. Weakley, President, Lake Carriers’ Association, Jerome K. Welsch, Jr., President & CEO, American Steamship Company. SUBSCRIPTIONS -(800) 491-1760 or www.greatlakes-seawayreview.com Published quarterly. One year $30.00; two years $50.00; three years $70.00. Foreign: One year $45.00; two years $65.00; three years $95.00. Payable in U.S. funds. Back issues available. Article reprints are also available. Reprints produced by others not authorized. ISSN 0037-0487 SRDS Classifications: 84, 115C, 148 Great Lakes/Seaway Review and Great Laker are published quarterly in March, June, September and December. Postmaster: Send address changes to Great Lakes/Seaway Review, Great Laker, 221 Water Street, Boyne City, MI 49712 USA. © 2008 Harbor House Publishers, Inc., Boyne City, Michigan. All rights reserved. No article or portion of same may be reproduced without written permission of publisher. JANUARY-MARCH, 2008 THE INTERNATIONAL TRANSPORTATION MAGAZINE O F M I D C O N T I N E N T N O R T H A M E R I C A VOLUME 36 NUMBER 3 Great Lakes/Seaway Review Cover: Winter lock maintenance has been completed on the Seaway locks and the 2008 season opens. Photo courtesy of SLSDC. Great Laker Cover: Dawn in Door County, Wisconsin. Photos by Gary Martin. 2 www.greatlakes-seawayreview.com GREAT LAKES/SEAWAY REVIEW January-March, 2008 3 G R E A T L A K E S / S T . L A W R E N C E S E A W A Y New tolls, incentives released A three-year toll freeze, together with a revised tariff structure, will provide a significant boost to potential new business growth, according to the St. Lawrence Seaway Management Corporation (SLSMC). With the goal of maximizing the volume of existing commodities, while also attracting new cargoes, the new tolls structure underscores the commitment of the SLSMC and Transport Canada to increased use of the Seaway. “By maintaining stable rates through the 2008, 2009 and 2010 seasons and by introducing targeted incentives, we are setting the stage for our stakeholders to aggressively seek new business in an era of escalating costs and to advance their business plans with a greater degree of certainty,” said Dick Corfe, SLSMC President and CEO. A New Business Incentive Program targeted at carriers and shippers will allow for a 20 percent discount on cargo tolls over three years for commodity/origin/destination combinations approved by the corporation as new business. To be eligible, a carrier must submit an application for the proposed cargo/origin/destination combination. All containerized cargo movements are eligible for the discount from 2008 to 2012. A Volume Rebate Incentive Program targeted at shippers offers a 10 percent reduction on cargo tolls applicable to incremental volumes meeting a set of criteria. This program is designed to stimulate movement of the Seaway’s staple cargoes. To encourage smaller cargo vessels and shipments to come into the system, the Welland Canal lockage fees have been restructured. The fixed charges per lock transit have been replaced with charges proportional to a vessel’s GRT, benefiting small- and medium-sized vessels. Larger vessels will benefit from a cap placed on the maximum charge per vessel. To promote short sea shipping within the system, the definition of domestic cargo now includes all movements between any combination of Canadian and American points within the system. This will allow intra-system movements to be subject to bulk rates. Commandant attends Marine Community Day U.S. Coast Guard Commandant Adm. Thad Allen served as keynote speaker for the Admirals Dinner and participated in the annual Great Lakes Marine Community Day recently in Cleveland. “America’s maritime transportation system is one of the safest and most efficient in the world,” Adm. Allen said. “Working with our marine industry partners in the region, we can make it even safer and more efficient.” Allen participated in an executive session with more than 25 leaders of the Great Lakes/St. Lawrence Seaway industry to discuss issues surrounding maritime transportation safety, security and protection of the environment. During the session, Adm. Allen reiterated his commitment to enhance the Coast Guard’s marine safety program. The President’s FY09 budget request, if approved, would add nearly 300 new marine safety positions, open new maritime centers of excellence and make other program enhancements to improve customer service and restore balance in the Coast Guard’s marine safety program. Marine Community Day is the largest annual event in the Great Lakes region which brings together maritime industry leaders and regulating authorities from both the U.S. and Canada. The event’s objective is to enhance communication among the marine community and regulatory agencies and to discuss issues concerning marine safety, maritime security, waterways management and the marine transportation system. Participants included: U.S. Coast Guard, U.S. Army Corps of Engineers, Saint Lawrence Seaway Development Corporation, St. Lawrence Seaway Management Corporation, U.S. Maritime Administration, as well as representatives of U.S. and Canadian Great Lakes fleets, ports, labor organizations and industries served by Great Lakes/Seaway vessels. . To assist customers in qualifying for incentives, SLSMC has established the tariff@seaway.ca e-mail address. For more information, consult the www.greatlakesseaway. com website. . 2007 season closes well The system closed in December after 283 days, the second consecutive record-length season. Total cargo volume is estimated at 42.7 million metric tons, according to the St. Lawrence Seaway Management Corporation. Although lower than the 2006 total of 47 million metric tons, due principally to lower ocean vessel traffic and steel imports into the system, the volume demonstrates the resilience of the system through the complete economic cycle. A noteworthy increase in 2007 is the shipment of wind turbine components, up 30 percent over 2006. (See the upcoming April-June, 2008 issue of Great Lakes/Seaway Review for full details of the season.) . Seaway website transformed The bi-national Seaway website, www.greatlakes-seaway.com, has been overhauled based on comments and suggestions received from clients and stakeholders. The changes are designed to provide an effective means of conveying the Seaway’s integral role in serving Canadian- U.S. transportation needs and promoting marine transportation. The website was originally launched in 2001 and has registered nearly 12 million page hits from viewers in more than 150 countries. The bilingual content is now divided according to interests of each user group frequenting the site. A clear delineation exists between information pertinent to commercial navigation and recreational navigation of the system. Special sections also exist to meet the needs of business and industry, students and educators, communities bordering the Seaway and the media. Integrated into the changes is an upgraded Seaway map that employs Google Maps™ technology. Users may view a map of the system and add layers that show vessels navigating the system, ports and the locks. . DATELINE U.S. Coast Guard Rear Adm. John E. Crowley Jr. (left) and Commandant Admiral Thad Allen engage with maritime stakeholders during the executive session in Cleveland. U.S. Coast Guard Commandant Admiral Thad Allen gives the keynote at the Admirals Dinner. 4 www.greatlakes-seawayreview.com D A T E L I N E ernment, policy and regulatory issues. Kennedy succeeds former Quebec Cartier Mining Corporation President and CEO, Guy Dufresne, who was presented with a lifetime Honorary Director certificate by President Raymond Johnston on behalf of CMC’s Board. . Transport Desgagnes purchases new vessel Transport Desgagnes has purchased a new double-hulled oil and chemical tanker of 18,000 metric tons deadweight. At more than 147 meters long and 22.4 meters wide, the ship has a draft of 9.49 meters. The ship was launched a few months ago from Gisan Shipyard in Tuzla, Turkey, where she was built as an Ice Class 1A and fitted with a MAK-7M43, 7,000 kilowatt engine, enabling her to reach 15 knots, with a bow thruster. She will be named M/T Sarah Desgagnes and will trade internationally after being delivered in Europe in April. With 14 tanks and two slop tanks, the ship can take up to 14 different products with a loading capacity reaching 3,600 m3/h. This is Transport Desgagnes’ second new ship in a year. . Rand purchases ships, repowers Saginaw Grand River Navigation, a Rand Logistics subsidiary, has purchased three vessels from Wisconsin & Michigan Steamship (WMS), the David Z., Earl W. and Wolverine, for about $20 million in cash. The Wolverine was then sold to Lower Lakes Towing for Canadian registry and renamed Robert S. Pierson. Lower Lakes Transportation had been operating the vessels under a long-term charter agreement with WMS since 2006. The time agreement provided the option of purchasing the vessels at any time during the charter period. “By purchasing the three vessels, we will be able to eliminate the operating and accounting complexities associated with the time charter,” said Laurence Levy, Rand Chairman and CEO, noting that the acquisition is an opportunity for future profit growth by eliminating duplicate overhead and integrating the vessels into Rand’s fleet. In addition, Rand is repowering the Saginaw with an automated emissions compliant power plant. The project, estimated at $13 million, is expected to be completed in April. The repowering is expected to improve operating margins due to an increase in speed and a reduction in fuel consumption, labor, maintenance and other operating costs. In another strategic decision, Rand is retiring the Calumet, the oldest and smallest vessel in its fleet. Removal of the Calumet from the U.S. market, combined with the acquired WMS vessels to Canadian registry, is estimated to reduce U.S. Great Lakes shipping capacity by three million tons. . Chamber of Marine Commerce gets new chair ArcelorMittal Dofasco Manager of Purchasing & Logistics, Michael Kennedy, has been appointed chairman of the Chamber of Marine Commerce (CMC). “As one of the largest shippers on the Great Lakes/St. Lawrence waterway, our company clearly understands the importance of marine transportation to the future of our company and the overall economy,” Kennedy said, noting that ArcelorMittal is the organization’s only member that represents all four sectors of the system’s stakeholders: shipowners, port, terminal and large shippers. “I’ve worked closely with the CMC for a number of years,” he said. “The CMC continues to be the leading advocate for marine industry stakeholders to speak with one voice on gov- Michael Kennedy Handysize Tug Construction Work Boat Construction Custom & Standard Barge Construction Floating Dock Construction Marine Repairs (on and off-site) Ship Docking & Harbor Services Cargo & Heavy Lift Transportation Special Projects Salvage & Emergency Assistance Ice Breaking CONTACT US: local: 216.621.4854 toll free: 800.321.3663 fax: 216.621.7616 www.thegreatlakesgroup.com TUG & BARGE BUILDER AND REPAIRER TUG & BARGE OWNER, OPERATOR, MANAGER AND CHARTER AND QUALIT Y INNOVATION YEAR AF TER YEAR FOR 109 YEARS New “Handysize” Tu g GREAT LAKES/SEAWAY REVIEW January-March, 2008 5 IMAX movie premiers An IMAX movie including a story line on Great Lakes/Seaway commercial shipping, “Wonders of the Great Lakes,” will premier on giant screens throughout the system in May, including the Great Lakes Science Center in Cleveland and the Ontario Science Center in Toronto. Major funding partners of the film include FedNav, the St. Lawrence Seaway Management Corporation and the Saint Lawrence Seaway Development Corporation. The Port Authorities of Hamilton, Toronto, Quebec and Thunder Bay, along with the Ports of Indiana are also supporting the film. By the time the film’s final credits roll, people will have visited many of the wonders of the Great Lakes, a voyage of discovery—one that will help lead to a greater appreciation and commitment to preserving the system. . Fraser Shipyards names new management team Fraser Shipyards Inc. of Superior, Wisconsin has restructured its management team. James Korthals has been hired as President and Chief Operating Officer, Gene Walroos has been promoted to Shipyard General Manager and Kevin Jones has been hired as Director of Operations of Northern Engineering Co. Korthals came to Fraser in December after serving as President and Chief Executive Officer of Cutler Magner Co., lime and salt products manufacturer in Duluth, Minnesota. Korthals has 25 years of experience managing large manufacturing facilities and mining companies, including Great Lakes Port Facility in Michigan. Walroos was Fraser’s Shipyard Superintendent prior to his promotion in December. He joined the company in 2003. His nearly 30-year career in the marine industry includes overseeing maintenance and repair operations for both deep-sea and inland-waters ships. Jones came to Northern Engineering in January. He was previously with Cutler Magner Co., where he was plant manager of the lime manufacturing facility in Duluth. There he improved production line output and managed a $36 million capital expansion project. . REGIONAL CALENDAR APRIL 1 Great Lakes Maritime Task Force Rayburn House Office Building, Washington, D.C. Glen Nekvasil, (216) 861-0592 24 51st Annual Windsor Marine Night Windsor, Ontario – Kathy McPhee, (519) 258-5741, wpa@portwindsor.com MAY 7-9 MariTech 2008, Lonsdale Quay Hotel North Vancouver, www.cimare.org/maritech/ 27-29 Breakbulk Europe Transportation Conference and Exhibition, Antwerp, Belgium Renee Jacobs, (760) 294-5563, rjacob@joc.com JUNE 1-4 WindPower Conference and Exhibition Houston, Texas – Marissa Bundy (202) 383-2512, mbundy@awea.org 19-23 51st Annual Conference on Great Lakes Research Trent University, Peterborough, Ontario Chris Metcalfe, (705) 748-1011, x7272 www.iaglr.org/conference 24-26 World Wind Energy Conference Kingston, Ohio, www.wwindea.org James Korthals Gene Walroos Kevin Jones D A T E L I N E Duluth Seaway Port Authority 1200 Port Terminal Drive / Duluth, MN USA 55802 Phone: (218) 727-8525 / (800) 232-0703 / Fax: (218) 727-6888 E-mail: admin@duluthport.com Say that three times fast. Short sea shipping is a tongue twister, but its benefits can be articulated clearly. Moving domestic cargo through the Great Lakes and St. Lawrence Seaway is an efficient, cost-effective, and environmentally sound alternative to road and rail transportation. The Port of Duluth is ready for your business. We have the capacity to handle your all of your cargo needs. Contact us today. Our advantages may leave you tongue-tied. “short sea shipping short sea shipping short sea shipping…” 6 www.greatlakes-seawayreview.com I N F R A S T R U C T U R E The Saint Lawrence Seaway Development Corporation (SLSDC) has released a 10-year Asset Renewal Program & Capital Investment Plan that will optimize the United States portion of the system through 50 projects, including improvements to the two U.S. Seaway locks, maintenance dredging and upgrades to facilities. As a result of the plan, President George W. Bush has requested that $31.8 million be appropriated to SLSDC in fiscal year 2009, which begins October 1. The budget request is unprecedented in the system’s nearly 50-year history. “It’s a leap to go from about $2 million a year to eight times that amount,” said SLSDC Administrator Collister “Terry” Johnson, who has led his team through more than a year of research to determine the extent of the system’s and the corporation’s physical property needs. The team then prioritized the proposed projects by need. The SLSDC is responsible for the operation and maintenance of the U.S. portion of the system, between Montreal and Lake Erie. It manages vessel traffic control, maintains and operates the two U.S. locks in Massena, New York and works to develop trade for the system. In his first six months in office, Johnson began spearheading a communications effort that reached throughout the industry and into governmental positions influential in potential infrastructure funding. For more than a year, he has been emphasizing that a perpetual infrastructure asset—such as a lock, bridge or tunnel—needs a capital investment equivalent to its original cost over its design life in order to be sustained. “I have to commend Terry Johnson for getting the proper funds requested,” said Paul Gourdeau, Vice President of Operations, Fednav Limited. “It’s vitally important that asset renewal be taken care of. And Perpetuating system assets President backs 10-year asset renewal plan for Great Lakes/St. Lawrence Seaway system SOURCE: SLSDC with the Canadian Seaway’s spending quite a bit of money renewing its section of the Seaway. Over the next five to 10 years, the entire system will have new life. For users of the system, it means that it’s here to stay.” The U.S. portion of the Great Lakes/St. Lawrence Seaway was completed in the late 1950s for $130 million. Since that time, just $47 million in capital expenditures have been invested in the U.S. locks, which opened in 1959. The asset renewal plan addresses maintenance and upgrades on sections of the system that are approaching the end of their 50-year design life. (See the related chart on page 9 for a breakdown of projects.) During fiscal year 2007, lock equipment malfunction delays totaled 44 minutes, representing .001 percent of the total navigation time during the year. Without reinvestment, future reliability of the U.S. section of the system could be in jeopardy. In 1985, a lock failure at the Canadian Welland Canal caused 53 commercial ships to be trapped in the system for 24 days, costing shippers more than $24 million. A recent analysis concluded that the economic impact of a shutdown of either of the two U.S. locks would range from $1.3- $2.3 million per day. “What the Administration has proposed for the fiscal year 2009 budget is different from anything we have undertaken before,” Johnson said. “The asset renewal plan calls for renewing the infrastructure so that when the program is complete, the locks, channels, machinery and other transportation assets entrusted to the SLSDC will be as good as new.” The President’s budget request is the first of a 10-year commitment to reinvest in the Seaway’s infrastructure. The plan’s first five years outlines 43 projects costing an estimated $86 million, with a breakdown as follows: (2009) $17.535 million, (2010) $16.235 million, (2011) $17.825 million, (2012) $19.055 million and (2013) $14.975 million. “Our feedback on the plan has been very favorable,” Johnson said. “I think anybody you talk to that’s involved with commerce on the Great Lakes and the Seaway is excited about this. They are pleased to see the Administration taking this step forward.” Supported by recent findings. SLSDC’s asset renewal plan supports the engineering findings of the Great Lakes St. Lawrence Seaway Study released last November. The bi-national effort involved a cooperative study by the U.S. Army Corps of Engineers, Transport Canada, the U.S. Department of Transportation, SLSDC and the U.S. Maritime Administration. The study assesses the economic, environmental and engineering aspects of the system as they pertain to commercial navigation. (Review the study at www.glsls-study.com) The study also includes an economic analysis of the costs and benefits associated with maintaining the system’s infrastructure at its current level of reliability. The SLSDC analysis was done concurrently with the study’s final phase. As part of the asset renewal plan, the SLSDC will work closely with the U.S. Army Corps of Engineers to take advantage of its expertise. “The Great Lakes St. Lawrence Seaway Study dovetails with our asset renewal plan very well,” Johnson said. “The main difference is that our analysis focused on everything from paving to equipment to cranes.” The bi-national study is providing SLSDC with comparable evidence of the system’s infrastructure needs and the crucial role it plays in transporting goods into and providing jobs in North America’s heartland. Canadian investment. The Canadian government has begun rehabilitating its portion of the system, which includes 13 Seaway locks. The eight locks at the Welland Canal are 75 years old. Canada uses com- The President’s budget request is the first of a 10-year commitment to reinvest in the Seaway’s infrastructure. The plan’s first five years outline 43 projects costing an estimated $86 million, with a breakdown as follows: (2009) $17.535 million, (2010) $16.235 million, (2011) $17.825 million, (2012) $19.055 million and (2013) $14.975 million. GREAT LAKES/SEAWAY REVIEW January-March, 2008 7 I N F R A S T R U C T U R E GREAT LAKES/SEAWAY REVIEW January-March, 2008 9 I N F R A S T R U C T U R E U.S. Seaway Asset Renewal Program Project 2009 Request5-Year Total System Statistics • Two-and-a-half billion metric tons— valued at more than $400 billion—of cargo has moved through the system since opening in 1959. • Maritime commerce on the system provides shippers $2.7 billion in annual cost savings over other modes of transportation. • The Seaway accounts for 29 percent of the U.S. gross domestic product, 60 percent of the Canadian GDP and 55 percent of North America’s manufacturing and services industries. • Maritime commerce on the system impacts 150,000 jobs, $12 million per day in wages and $9 million per day in business revenues by firms engaged in trade in the U.S. alone. BOTH LOCKS Rehabilitate downstream miter gates $1,500,000 $3,000,000 Rehabilitate mooring buttons, pins and concrete along guidewalls & guardwalls 250,000 750,000 Culvert valve machinery, upgrade to hydraulic operation 2,000,000 4,000,000 Rehabilitate and insulate winter maintenance lock covers 250,000 500,000 Culvert valves, replace with single skin valves 600,000 2,400,000 Upgrade power supply infrastructure from Moses-Saunders Dam to both locks and adjacent facilities 75,000 265,000 Upgrade lock status, controls 0 300,000 Compressed air systems, upgrade, replace 0 3,000,000 Install vessel self-spotting equipment 0 500,000 Install vessel vacuum mooring systems 0 3,300,000 Structural repair, grout leaks in galleries and recesses 400,000 Rehabilitate upstream miter gates 0 2,000,000 Upgrade drainage infrastructure in galleries and recesses 0 450,000 Improve ice control 0 550,000 Upgrade/Replace emergency generators 0 1,000,000 Dewatering pumps, upgrade outdated equipment 0 400,000 Extend guidewalls in pool 0 3,000,000 Miter gates, structural rehabilitation 0 1,500,000 Miter gate machinery, upgrade, replace 0 1,600,000 CORPORATION EQUIPMENT Replace heavy and light equipment, maintenance vehicles and shop equipment 1,750,000 2,750,000 Upgrade/replace floating plant 2,000,000 4,500,000 Replace roofs 50,000 360,000 CORPORATION FACILITIES Replace paving and drainage infrastructure 950,000 3,950,000 Upgrade electrical distribution equipment 0 300,000 Upgrade, replace fire alarm protection systems 0 200,000 Upgrade storage for lock spare parts 0 400,000 Replace windows and doors and repair building facades 0 400,000 EISENHOWER LOCK Highway tunnel rehabilitation 250,000 750,000 Vertical lift gate replace wire ropes 0 500,000 Walls, sills and culverts, rehabilitate concrete 0 4,000,000 Ice flushing system upgrade 0 200,000 Diffusers, replace 0 3,000,000 Construct drydock for vessel maintenance 0 750,000 ENGINEERING DESIGN Construction Inspection and Contracting Support 300,000 1,500,000 FIXED NAVIGATIONAL AIDS Rehabilitate 100,000 900,000 FLOATING NAVIGATIONAL AIDS Replace 60,000 300,000 NAVIGATION CHANNELS Dredge U.S. sectors to maintain design grade and dispose of sediments 500,000 500,000 SEAWAY INTERNATIONAL BRIDGE Perform structural rehabilitation and corrosion prevention 2,000,000 10,600,000 SEAWAY SYSTEM Upgrade GPS/AIS/TMS technologies 100,000 300,000 SNELL LOCK Replace fendering downstream guidewall extension 300,000 $300,000 Walls, sills and culverts, rehabilitate concrete 0 4,000,000 Install ice flushing system technologies 0 10,000,000 SNUG HARBOR Rehabilitate spare gate storage and assembly area 0 750,000 VESSEL MOORING CELLS Rehabilitate and extend 0 1,000,000 TOTAL $17,535,000 $85,625,000 SOURCE: SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION mercial tolls to cover the costs of general operations and maintenance. The Canadian government provides treasury funds to the St. Lawrence Seaway Management Corporation (SLSMC) for its capital improvement projects. Its increased concentration on asset renewal has more than doubled SLSMC’s capital and maintenance funding. In the next three years, the increased funding is expected to increase by yet another third, making its annual capital funding equal to its annual general operating expenses. Each year, SLSDC’s asset renewal plan will be part of the President’s and Congress’ consideration as budgets are prepared. Each year, the plan will need ongoing appropriations. With a Presidential election pending, Johnson said he hopes finalization of the next budget will be handled in a timely manner. “We’ve been spending quite a bit of time thinking through the steps we need to take next,” Johnson said, noting that, with the 2010 funding process beginning in two months, his team will have more opportunities to explain the need for asset renewal with elected officials. “This is an historic time for the St. Lawrence Seaway, the SLSDC and its stakeholders,” Johnson added. “The Administration has determined that reinvesting in the Seaway is money well spent. We trust that Congress will agree, and we will increase our efforts to ensure that such an investment will prove to be a wise decision.” Janenne Irene Pung . HEAD OFFICE Plac Rodla 8, 70-419 Szczecin, Poland tel. (+48 91) 359 43 33, 359 40 81 fax (+48 91) 359 42 88 email: pzmmanagement@polsteam.com.pl www.polsteam.com.pl GREAT LAKES/SEAWAY REVIEW January-March, 2008 11 I N F R A S T R U C T U R E aspects ranging from jobs and wages to business and tax revenues. Of the 8,397,301 Americans working for ports and port-related industries in 2006, nearly seven million were employed by firms involved in handling imports and exports, such as retailers, wholesalers, manufacturers, distributors and logistics companies. “The tremendous growth in overseas trade volumes moving through our ports in the past decade has been a huge boon to the American economy,” said Kurt Nagle, President and Chief Executive Officer for the Last year, U.S. deep-draft seaports and seaport-related businesses generated about 8.4 million American jobs and added nearly $2 trillion to the economy, according to a study by a Lancaster, Pennsylvaniabased business consulting service that specializes in port-sector economic impact studies. Based upon 2006 U.S. port cargo statistics and thousands of recent port-sector interviews, Martin Associates completed an in-depth study of the economic impacts of coastal and Great Lakes ports, examining American Association of Port Authorities. “The jobs these imports and exports create are spread throughout the country, not just in port cities, making them a vital part of our nation’s economic fabric.” In addition to citing employment numbers, the study also shows that businesses providing goods and services to U.S. seaports directly and indirectly paid $314.5 billion in total wages and salaries. Of this total, $207.4 billion came directly from businesses involved in handling international waterborne commerce. Moreover, port-sector businesses generated a high rate of economic output, with business revenues and the value of the goods and services they provided totaled $1,976.4 billion, or nearly $2 trillion. In addition, port-sector businesses paid more than $102 billion in federal, state and local taxes in 2006. “Compared to the last study we developed in 2000 (based upon 1999 data), these figures indicate a significant increase in the financial benefits that the port industry provides the American economy,” said Dr. John C. Martin, President of Martin Associates. “This new report shows that port-related activities are contributing to the economy in record numbers.” Looking specifically at employment in the nation’s seaports, the study shows that 507,448 Americans held jobs such as terminal operators, longshoremen, freight forwarders, steamship agents, ship pilots, tug and towboat operators, chandlers, warehousemen, as well as jobs in the dredging, marine construction, ship repair, trucking and railroad industries. These direct port-sector jobs supported another 630,913 induced jobs due to purchases of food, housing, transportation, apparel, medical and entertainment services. Also included as induced jobs were those with local, state and federal agencies providing support functions such as education and municipal services. The portsector firms providing direct services to the cargo and vessel activity at the nation’s seaports made $26.3 billion in purchases to support their direct activity, supporting another 306,289 indirect jobs. These include jobs with suppliers of parts and equipment, firms providing maintenance and repair services to the businesses dependent on port operations, utilities providing services to marine terminals and office supply firms. “One thing that isn’t obvious in the new report is that port-sector jobs tend to pay above-average wages, which is important to ensuring America remain a strong economic force in the global community,” Martin said. In his 2006 report, Martin found that the number of direct, induced and indirect jobs from business activities at ports stood at 1,444,650 and the earnings and consumption dollars from those jobs came to $107.1 billion. Overall, he said port-sector workers today earn, on average, about $50,000 a year, which is $13,000 more per year than the National Average Wage Index, as computed by the Social Security Administration. Not included in the analysis are the significant financial benefits of cruise operations at U.S. ports (see http://www.cruising.org/ for details) as well as the economic impacts of inland, shallow-draft ports and the shipping activity they generated (see http://www.irpt.net/ for details). . Seaports economic benefits Study reveals port-sector activities responsible for nearly $2 trillion in economic output SOURCE: SLSDC The Port of Cleveland… More Than a Working Waterfront Stephen Pfeiffer spfeiffer@portofcleveland.com 216.241.8004 phone 216.241.8016 fax www.portofcleveland.com Businesses around the world rely on the Port of Cleveland to transport 13.1 million tons of cargo annually. You, too, can give your business a lift with the Port of Cleveland’s maritime services including: • 9 berths and 6,500 linear feet of dock space maintained at full seaway depth of 27 feet. • Heavy-lift crane capacity of 150 tons. • More than 350,000 square feet of warehouse space and one-million square feet of open storage. • Connectivity at the gate to all major interstates and direct access to two major railroads (CSX and Norfolk Southern). Contact us today for more information on how we can help your business boom. BOOMING at the Port of Cleveland Business is GREAT LAKES/SEAWAY REVIEW January-March, 2008 13 C O M M O D I T I E S PETER J. KAKELA Professor Department of Community, Agriculture, Recreation and Resources Studies – CARRS Michigan State University Iron ore is booming, along with other commodities. This is in sharp contrast to the current near-recession doldrums with which most major economies are struggling. This is no longer your father’s iron ore industry. Unlike past recessions where iron ore and other commodities suffered along with manufacturing and retail sales, today’s slowdown seems to be bolstering commodity prices. Iron ore prices on the world market, for example, have increased 150 percent in the last five years and early settlements for 2008 show a 65 percent increase in the world price. For two-and-ahalf decades before this, the price for iron ore pellets at the port of export hovered right around $30/long ton. The run-up began in 2003 and pushed prices to more than $75/long ton in 2007. The 2008 prices will apparently approach $130/LTP. The iron ore mining that started in Michigan over 150 years ago, and in Minnesota over 100 years ago, is still going strong, with the annual tonnage outputs today close to the long-term average outputs. The quality of the ore that is shipped today is even better than it was 50 or 100 years ago. In the last five years, however, there have been earth-shattering changes. Three major changes. Like the lift bridge rising in Duluth Harbor, iron ore prices have gone up and are likely to go even higher. This is the biggest change for the iron ore industry over the last five years, but there are two more. Consolidation is the second big change and increased foreign ownership of the North American mines is number three. World steel demand is rising and steel is virtually the only reason to mine iron ore. An iron ore revival Price, consolidation, increased foreign ownership shake up the iron ore industry About 98 percent of all the iron ore mined today, or ever, goes into making steel. To keep pace with the rising demand, steel production has been rising sharply around the world. China’s demand is a major factor driving the growth of steel production, but demand in other developing countries is growing as well. These fast growing, developing countries are what have been called the BRICS, Brazil, Russia, India, China and Southeast Asia. Crude steel production in China, for example, grew by about 16.7 percent in 2007 compared to 2006. Production for 2007 is estimated at 487.5 million metric tons in China, up 64.3 million metric tons over 2006 production. The exploding demand for more steel by the BRICS has meant the demand for iron ore has also exploded. In fact, iron ore demand is growing so fast that it is exceeding the opening up of more mining capacity. Therefore, the availability of iron ore in the world market has become very tight. No. 1: Rising prices. After more than two decades of stagnation, iron ore prices are now rising sharply. There are six reasons why iron ore prices will continue to grow or at least remain at their current high plateau. They are: • First, current prices have finally caught up with inflation and so they are actually reasonable when adjusted by the U.S. Producer Price Index. • Second, the world iron ore industry has become concentrated, with the three largest exporters controlling about 77 percent of the sales. • Third, the big buyers of iron are low on the development curve and will continue to have high demand for various raw materials that are necessary to build their infrastructure, especially steel made from iron ore, for many years to come. • Fourth, the prices for steel scrap, the main competitor of iron ore, are extremely high and reflect its growing scarcity. • Fifth, the U.S. dollar remains weak and since iron ore is priced in U.S. dollars on the world market, the weaker dollar eases the price of ore in other countries. • Sixth, iron ore is a small part of the price of steel. In the end, it is steel that the developing countries are demanding so they can build their infrastructure. Iron ore on average makes up only about 12 percent of the cost of finished hot-rolled band steel. No. 2: Industry concentration. The world iron ore industry has become very concentrated. The three biggest producers control approximately 77 percent of the seaborne (or export) market. Brazil’s Vale (formerly Cia. Vale do Rio Doce, or CVRD) is the largest with approximately 275 million metric tons of capacity in 2007. The two major Australian mining companies are close behind, with Rio Tinto holding approximately 150 million metric tons of capacity and BHP Billiton with 125 million tons in 2007. This totals 550 million metric tons of capacity. Almost all of the production from these mines is exported in seaborne trade. Total seaborne trade in 2007 was ap- 0 25 50 75 100 130 1995 2000 2005 2008 World Iron Ore Pellet Prices (CVRD Pellets, FOB Tubarao) US $/Long Ton) SOURCE: KAKELA Centerpointe Corporate Park • 500 Essjay Road • Williamsville, NY 14221• 716-635-0222• ascinfo@gatx.com• www.americansteamship.com 100 years of experience – positioned for the next century Performance Based Service Oriented Customer Focused American Steamship Company GREAT LAKES/SEAWAY REVIEW January-March, 2008 15 Steel of Japan with just 31 million net tons of capacity and South Korean steelmaker POSCO with 30 million tons of capacity, followed by JFE Steel of Japan with 27 million tons of capacity. Again, these four are the largest steelmakers in the world, but together they control only 18.8 percent of the world’s 1,120 million tons capacity. Therefore, there is low concentration of ownership in steelmaking, but a very high concentration for the export oriented iron ore mines. This high concentration of export capacity by the Big Three iron ore producers does not ensure price manipulation, but it could facilitate it. The strong increase in demand for steel in China and the other BRICS is the pull for more iron ore. However, the push of increased mining capacity is significantly constrained. High demand and constrained supply has lead to the rising prices. No. 3: Rise of foreign ownership. The third big change is increase in foreign ownership of iron ore mines around the world. For many years just after World War II, the U.S. led the way in exploring for iron ore in other countries. American geologists were successful in discovering vast deposits in eastern Canada, Venezuela, Brazil, Liberia and elsewhere. U.S. steelmakers, and especially U.S. Steel Corp. as the largest American steelmaker, were quick to start mines and export ores from these foreign countries. This arrangement worked for many years, but eventually most of these countries nationalized the mines. Today, the tide of foreign ownership has been reversed. The United States and many other developed countries have experienced a sudden wave of foreign ownership in everything from mines to mills to manufacturing and more. In the early 1970s, it was common among the Minnesota iron ore miners to look down upon foreign ownership. They thought it could eliminate jobs at U.S. mines. There was a movement to try to prevent foreign cars from parking in some of the miners’ parking lots. Tension over foreign ownership was strong during the early 1980s, especially after the devastating 1982 recession, when effective U.S. iron ore pellet capacity dropped 38.5 percent, going from 90.4 million long tons in 1982 to just 55.6 million long tons in 1987. However, foreign ownership had already crept into the iron ore and steel industries. One of the first in recent times was Nippon Steel of Japan forming several joint ventures in the late 1970s with what was Inland Steel to form IN/Tek and I/N Kote. Inland Steel was founded in 1893 in East Chicago and it was the sole owner of the Minorca iron ore mine, located just north of Virginia, Minnesota, on the Mesabi Range. In 1984, the Japanese Nippon Steel company bought 50 percent of what was National Steel. National Steel was the sole owner of the National Steel Pellet Plant in Keewatin, Minnesota, on the western end of the Mesabi Range. By this time, it was getting harder to tell what a foreign car was. We had Hondas and Toyotas made in this country, whereas many Fords and Chevys contained parts or whole systems made in foreign countries. Cars and parts from Canada and Mexico began flowing in even more freely under the North American Free Trade Agreement, NAFTA, which was approved January 1, 1994. Globalization had taken shape. The economic downturn of 2001-2002 and into the first half of 2003 hit the American steel companies hard. Two major changes in ownership occurred during this downturn: 1) America steel companies, in trying to stay out of bankruptcy, sold or gave away most of their non-core assets which included steel company-owned iron ore mines, and 2) most of the American steel companies that did go bankrupt were bought by Lakshmi Mittal to make Mittal Steel, which later became ArcelorMittal Steel, the largest steel company in the U.S. Cleveland-Cliffs was the key mining company to benefit from the sell-off of American iron ore capacity during this economic downturn. Cliffs is now North America’s largest merchant supplier. It grew to proximately 685 million metric tons. Therefore even if 20 million tons stayed local, the Big Three iron ore producers captured about 77 percent of seaborne trade in 2007. These three are also expanding their existing capacity enormously over any of the other mining companies. By 2010, they will add a total of 175 to 200 million new tons of capacity. These three are first and foremost mining companies and are leaders in negotiating the world price. In contrast, the fourth largest iron ore producer is first and foremost a steel making company. It is the ArcelorMittal Steel Company, the world’s largest steel maker, which holds approximately 50 million metric tons of iron ore capacity in the world. It has announced a goal to expand its iron ore holding to about 80 million tons by 2010. ArcelorMittal, however, uses most, if not all, of its ore in its own blast furnaces and steelmaking facilities. Therefore, Arcelor Mittal has little influence on setting the world price of iron ore. Cleveland-Cliffs Inc. is the fifth largest iron ore producer, with management control over about 40 million tons of capacity and complete ownership control over approximately 30 million tons of that. Most of Cliffs’ holdings feed the insular North American steel market and therefore they, too, have almost no influence on setting world iron ore prices. Therefore, with the Big Three producers controlling more than three-quarters of the supply, they have the ability to regulate production volumes to maintain prices. Despite the illegality that monopolies and oligopolies pose for American or European companies, there are examples from other parts of the world of synchronized suppliers and buyers. The Organization of Petroleum Exporting Countries (OPEC) is a coordinating group of oil suppliers that formally attempts to regulate crude oil production volumes. In Japan, there is a government sanctioned consortium of steelmakers which is in charge of negotiating and coordinating the purchasing of iron ore and other raw materials. The concentration of producers in the iron ore industry is much greater than the concentration of steelmakers in the world. ArcelorMittal’s recent growth to become the world’s largest steelmaker involved Mittal Steel, then the largest, buying the second largest steelmaker, Arcelor, in 2006 to create one super company. ArcelorMittal now controls approximately 122 million net tons of world’s steelmaking capacity. However, this is only about 11 percent of the world’s steelmaking capacity. The next largest steelmaker is Nippon 0 20 40 60 80 100 120 140 160 180 1996 2000 2005 2010 2015 World Iron Ore Pellet Prices (with forecast) US $ per metric ton pellets SOURCE: KAKELA Kakela World Steel Dynamics Forecast C O M M O D I T I E S I t ’s not just a statement, it’s a question. Doesn’t it make sense to locate where you can avoid congested highways and crowded population centres? Get your goods to market faster using our hasslefree road, rail and water connections to and from Ontario’s fastest growing commercial and industrial heartland. Enjoy a lifestyle centred on one of Canada’s greatest natural harbours. It all adds up to a great opportunity. In Hamilton. It’s all right here. 605 James Street North Hamilton, Ontario, Canada L8L 1K1 www.hamiltonport.ca 16 www.greatlakes-seawayreview.com become the key merchant owner/seller of ore as it took on massive capacity when U.S. and Canadian steel companies shed their iron ore mines and other peripheral operations to fight off bankruptcy. This turned fortuitous for Cliffs in the last four years, as the Chinese demand for imported iron ore grew strong and domestic demand rebounded. Today, Cliffs manages approximately 33.7 million long tons of iron ore pellet capacity in North America, or about 36 percent of the North American total, and owns 23.1 million long tons of that, or 25 percent of the total capacity. Its route to ownership of more mining capacity was: • In 1990, Cliffs owned 7.7 million long tons of annual capacity, managing 39.2 million • In 2000, Cliffs owned 12.1 million long tons, managing 43.0 million • By 2005, it doubled its equity ownership again, to 24.6 million long tons, managing 37.4 million • In 2008, Cliffs owns 23.1 million long tons of pellets, managing 33.7 million On the steel side, bankrupt American companies were being bought by Mittal Steel on an amazing basis. In May of 2005, Mittal Steel bought the International Steel Group of Cleveland, Ohio, which had been formed mostly out of purchases in bankruptcy court of: • LTV Corporation, Cleveland, Ohio, in April 2002 • Acme Steel Incorporated, Riverdale, Illinois, in October 2002 • Bethlehem Steel Corporation, Bethlehem, Pennsylvania, in May 2003 • U.S. Steel Corp’s Plate Works, Gary, Indiana, in November 2003 • Weirton Steel Corporation, Weirton, West Virginia, in May 2004 • Georgetown Steel Co., Georgetown, South Carolina, in June 2004 • Cliffs HBI facility, Trinidad & Tobago, in July 2004 In December of 2005, Mittal Steel added Ispat-Inland Steel Company to its U.S. holdings. This clearly made Mittal Steel the largest steel maker in America. U.S. Steel Corp. became a distant second. On the iron ore side, two North American steelmakers have increased their ownership of iron ore capacity. One is American based and the other is foreign. • U.S. Steel increased its ore ownership earlier with acquisition of National Steel and their National Steel Pellet Plant (now Keewatin Taconite). Recently, U.S. Steel bought Stelco in Canada. With these acquisitions, U.S. Steel moved from 16 million long tons of annual capacity in 2002 to 24.4 million now, and is refurbishing another 3.5 million long tons of pellet capacity that had been moth-balled at Keewatin Taconite. • ArcelorMittal’s Steel has increased its iron ore holdings in North America. In 2003, ArcelorMittal, then Ispat-Inland Steel Company, held about 4.2 million long tons of annual pellet capacity in North America. Today, as ArcelorMittal, it holds approximately 28.3 million long tons of capacity. ArcelorMittal’s sudden rise to become the world’s largest steel company is well known, but not many people outside of the iron ore industry think about this company’s sudden rise to become the world’s fourth largest iron ore mining company. ArcelorMittal pushed Cliffs out of fourth place, and now with a recent iron ore acquisition in the Ukraine and Liberia plus expansions in Bosnia, Mexico, Kazakhstan and elsewhere, it could boost its annual capacity from about 50 million metric tons per year to about 78 million. By 2004, a foreign company buying an American steel mill barely made a negative ripple. The Severstal Company of Russia and its U.S. affiliate, Severstal of North C O M M O D I T I E S GREAT LAKES/SEAWAY REVIEW January-March, 2008 17 mine with Cliffs to act as mine manager. Cliffs paid less than $1 per long ton of annual capacity for EVTAC/United Taconite. Two years later it would pay more than $100 per long ton of capacity for another iron ore mine. At 30 percent, however, the Chinese became significant owners of a mine in Minnesota. The attutude toward foreign encroachment into American iron ore mines has changed. Evelyn Iritani, of the Los Angeles Times, visited Eveleth and the Mesabi Range recently and wrote: “Many Americans fear the loss of jobs— and entire industries—to China. But people in this small town south of the Canadian border say they owe their livelihoods to the Asian nation. “In just two years, Minnesota’s Iron Range, where the year’s biggest holiday is opening day of deer hunting season, has gone from bust to boom, propelled by automakers and construction companies in Beijing, Shanghai and Laiwu City, the home of Eveleth’s corporate savior.” Foreign ownership stretches well beyond America. ArcelorMittal Steel has been pursuing options around the world. It now has holdings in more that 50 countries. Despite ArcelorMittal’s clear dominance as the biggest steel company in the world, they control only about 11 percent of the world’s steel making capacity. Concentrated ownership in iron ore, however, is huge. As mentioned, the three largest iron ore mining companies control about 77 percent of the world’s export trade. It has been called “discipline” in the market when large companies are in a position to control volume output in order to maintain high prices and the Big Three iron ore producers may exercise it. Currently, BHP Billiton, which accounts for around 15 percent of the world’s sales, has made an offer to acquire Rio Tinto, which is responsible for about 25 percent of world sales. If the number three is able to buy the number two, or visa versa, it would mean that just two iron ore mining companies would control three-quarters of the seaborne sales worldwide. Still, as the Big Three or the Big Two, it is clear that these major companies are expanding their existing capacity more than any of the other mining companies. In 2007 alone, the Big Three collectively increased their capacity by about 75 million metric tons. By 2010, they will have added a total of 175 to 200 million new tons of capacity. This truly is no longer your father’s iron ore industry. . C O M M O D I T I E S America, bought the major portion of the Rouge Steel Company in Dearborn, Michigan on January 30, 2004. Previously, Rouge Steel owned 31.7 percent of the Eveleth Mine, in Eveleth, Minnesota, on the Mesabi Range, but this mine had just declared bankruptcy in mid-2003 and was closed. All jobs at Eveleth Mine had been eliminated since mid-summer of 2003 except the manager and a skeleton crew in the process of shutting down equipment. As it turned out, instead of the Russians owning part of Eveleth Mines, it was the Chinese. On November 25, 2003, a Chinese company bought 30 percent of the bankrupt Eveleth Mine (or EVTAC) with Cleveland- Cliffs acquiring the other 70 percent. Together they quickly renamed it United Taconite and were able to reopen and start producing pellets before the end of the year. Laiwu Steel of China was courted by what remained of the management at EVTAC as well as the U.S. Congressman representing the Iron Range. The Chinese ownership set off a whole new signal that must have indicated foreign ownership was here to stay and that might be okay. Cleveland-Cliffs apparently did not want this deal to slip by and eventually became the major owner with 70 percent of the American Maritime Officers is a national labor organization representing U.S. licensed merchant marine officers employed aboard U.S.-flagged commercial, government and military sealift vessels operating on the world’s oceans, in U.S. coastal waters, on the Great Lakes, on U.S. inland waterways, and in major harbors. AMO is committed to building and maintaining a strong, versatile American merchant marine, fully capable of meeting U.S. commercial and defense requirements. American Maritime Officers 2 West Dixie Highway Dania Beach, FL 33004 (954) 921-2221 One Maritime Plaza Toledo, Ohio 43604 (419) 255-3940 Thomas J. Bethel President José E. Leonard Secretary-Treasurer Daniel L. Smith Executive Vice President GREAT LAKES/SEAWAY REVIEW January-March, 2008 19 T H E L A K E C A R R I E R S ’ A S S O C I A T I O N V I E W P O I N T a problem that affects every vessel and every trade. It does matter when a 635-foot-long River Class vessel lightloads by 1,000 tons. It does hurt when a 530-foot-long cement carrier arrives short by 600 tons. The raw materials that move on the Great Lakes are the foundation of both our region’s economy and our nation’s way of life. It is for that simple reason that we must begin anew an effort to ensure that the Lakes’ FY09 dredging budget continues to provide enough funds to further clear the backlog. If we do not restore the Great Lakes Navigation System to project dimensions, our steel industry will find it more difficult to compete with foreign producers. If we don’t maintain our ports and waterways, the region’s utility rates will disadvantage basin industries. If we don’t maximize the use of Great Lakes shipping, our environment will suffer the increased fuel consumption and emissions inherent with the land-based modes of transportation. These messages resonated with Congress in 2007. With the help and support of all who depend on Great Lakes shipping, they will again in 2008. We’ve started to “take back the Lakes.” Let’s never stop. . For more than two years now, I have, at every opportunity, emphasized that the U.S. Army Corps of Engineers’ dredging budget for the Great Lakes has been inadequate for decades. It is then with great pleasure that I can announce that the tide will begin to turn in 2008. Thanks to a determined Great Lakes delegation, the U.S. Army Corps of Engineers dredging budget for FY08 has been increased to nearly $140 million. That’s a 30 percent increase over what the Administration proposed and the highest level of funding in recent memory. While I must stress that the dredging crisis won’t be solved in one year, I do want to pause to thank our legislators for this historic achievement. I wish space permitted a complete publishing of our “Honor Role,” but at a minimum, I must publically acknowledge the efforts of Representatives Obey (D-WI), Oberstar (D-MN), Visclosky (D-IN), LaTourette (R-OH), Kaptur (D-OH), Stupak (D-MI), Kildee (D-MI), Slaughter (D-NY), and Kagen (D-WI), and Senators Levin (D-MI), Voinovich (R-OH), Stabenow (D-MI), Kohl (D-WI) and Schumer (D-NY). They made the dredging crisis a top priority and ensured that a more equitable share of federal dollars will go to the Lakes in 2008. And they did this despite a one percent decrease in funding for dredging nat

Maritime Editorial