Vol.39 No.1 JUL‑SEP 2010

V O L U M E 3 9 J U L Y – S E P T E M B E R 2 0 1 0 N U M B E R 1 G LGREAT LAKER The Chicago lock dilemma  Shake-up in iron ore pricing  A strong job outlook  Expanding beneficial reuse Interlake Steamship 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 Precious Cargo? WE CAN HANDLE IT! At Interlake Steamship we treat each and every shipment as if it were priceless. Whether it’s coal, grain, taconite pellets or limestone we know how important that cargo is to our customers… and to their customers. And, we know how important it is that it be delivered in a timely manner with the utmost care. With self-unloading vessel capacities ranging from 17,000 to 68,000 tons, you can trust Interlake Steamship with all your dry bulk cargo needs on the Great Lakes. Call Interlake Steamship – where all cargo is precious cargo. www.greatlakes-seawayreview.com Great Lakes/Seaway Review 221 Water Street, Boyne City, Michigan 49712 USA (800) 491-1760 FAX: (866) 906-3392 harbor@harborhouse.com The international transportation magazine of Midcontinent North America G L A R T I C L E S J U LY- S E P T E M B E R 2 0 1 0 Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Administrator’s Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Naval Architecture & Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Guardian of the Lakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Regional Shipyard Activity Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Infrastructure THE CHICAGO LOCK DILEMMA . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Reaction to Asian carp prompts attempt to permanently sever the Great Lakes from the inland waterways. Legislation TRACKING CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 A look at industry-related bills and litigation. Iron Ore A BIG SHAKE-UP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 The downturn in iron ore prices was short-lived. Ballast Water Management FUNDING INNOVATION . . . . . . . . . . . . . . . . . . 25 Great Lakes Restoration Initiative funds testing existing treatment systems and research to improve methods. Infrastructure PORT ASSET VALUES AND ECONOMIC IMPACTS . . . . . . . . . . . 31 New tools for estimating risks of water level changes, failing infrastructure. Training & Recruitment JOB OUTLOOK STRONG . . . . . . . . . . . . . . . . . . . . . . 36 As shortages loom, maritime schools are on task to fill the need. Emissions DIFFERING VIEWPOINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Canada’s Great Lakes carriers contest EPA ‘unilateral’ emission rules. Dredging BENEFICIAL REUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Erie Pier project exhibits Corps plans for sustainable dredged material management model. Green Marine GETTING RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Third-party verification used in Green Marine environmental program. Great Lakes People PASSIONATE ABOUT MARQUETTE . . . . . . . . . . . . . . . . . 63 Author Fred Stonehouse helping shift port toward maritime tourism. Marine Photography A DAY ON THE ST. LAWRENCE . . . . . . . . . . . . . . . . . . . . 68 Discovering lights in American waters. Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 GREAT LAKER D E P A R T M E N T S GREAT LAKES/SEAWAY REVIEW July-September, 2010 1 Chicago Sanitary & Ship Canal Little Calumet River North Lake Calumet South Fork South Branch Calumet-Sag Channel Chicago River esPlaines River k North Branch Calumet River Chicago River South Branch Chicago River North Shore Channel SC     Locks Calumet Harbor Chicago Lock Electric shock hazard area Illinois Indiana City of Chicago O’Brien Lock and Dam Lockport Lock Impacts of the potential closure of the O’Brien Lock at Chicago. Page 7. Downturn in iron ore prices was short-lived. Page 18. Job outlook is strong for licensed mariners in the Great Lakes. Page 36. Great Lakes Maritime Research Institute The Port of Milwaukee 2 www.greatlakes-seawayreview.com Business and Editorial Office 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 EDITORIAL AND BUSINESS STAFF Jacques LesStrang Publisher Emeritus Michelle Cortright Publisher Janenne Irene Pung Editor Rebecca Harris Art Director Lisa Liebgott Production Manager Tina Felton Business Manager Amanda Korthase Circulation Manager ADVERTISING DEPARTMENT Kathy Booth Account Manager Rex Cassidy Account Manager James Fish Director of Sales John H. Nikolai Account Manager Patricia A. Rumpler Account Manager William W. Wellman Senior Account Manager EDITORIAL ADVISORY BOARD John D. Baker, President, Great Lakes District Council, International Longshoremen’s Association; Bruce Bowie, President, Canadian Shipowners Association; Joe Cappel, Director of Cargo Development, Toledo-Lucas County Port Authority; Steven A. Fisher, Executive Director, American Great Lakes Ports Association; Anthony G. Ianello, Executive Director, Illinois International Port District; Ray Johnston, President, Chamber of Marine Commerce; Peter Kakela, Ph.D., Professor, Department of Community, Agriculture, Recreation and Resource Studies, Michigan State University; Rep. James L. Oberstar, Member of Congress, Chair, House Transportation & Infrastructure Committee; Mark Pathy, Executive Vice-President, Fednav Limited; Daniel L. Smith, Former National Executive Vice President, American Maritime Officers; John Vickerman, Founding Principal, Vickerman & Associates, LLC; James H.I. Weakley, President, Lake Carriers’ Association. SUBSCRIPTIONS – (800) 491-1760 or www.greatlakes-seawayreview.com www.greatlaker.com Published quarterly. One year $32.00; two years $53.00; three years $75.00. Foreign: One year $47.00; two years $68.00; three years $100.00. One year digital edition $20. Payable in U.S. funds. Back issues available for $7.50. Article reprints are also available. Reprints and scans 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, Michigan 49712 USA. © 2010 Harbor House Publishers, Inc., Boyne City, Michigan. All rights reserved. No article or portion of same may be reproduced without written permission of publisher. Great Lakes/Seaway Review Cover: A pilot boat moves past a Polsteam vessel near Port Huron. Photo by Roger LeLievre. Great Laker Cover: Boldt Castle on Heart Island in the St. Lawrence River. Photo by Gary Martin. 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 39 JULY-SEPTEMBER, 2010 NUMBER 1 Celebrating 40 years of serving the Great Lakes/St. Lawrence Seaway system. The Great Lakes Maritime Research Institute brings together the strengths of the two host universities, along with the research capabilities of other Great Lakes Universities. Established in 2004, the Institute has been designated by the U.S. Department of Transportation’s Maritime Administration as the National Maritime Enhancement Institute for the Great Lakes. 229 Voss Kovach Hall 1305 Ordean Court Duluth, MN 55812 (218) 726-7446 A University of Wisconsin – Superior and University of Minnesota Duluth Consortium Research Institute Great Lakes Maritime Photo by Chris Benson Learn more about us at: www.glmri.org UNIVERSITY of WISCONSIN Wisconsin’s Leading Public Liberal Arts College Supporting Sustainable Maritime Commerce on the Great Lakes University of Minnesota Duluth • Seaway size ocean vessels • Interlake commerce • Inland river barges • Pipeline facilities • Canadian Pacific Railway Comes with a view! 5 Acre Parcels Available Now 2323 S. Lincoln Memorial Dr., Milwaukee, Wisconsin 53207 www.milwaukee.gov/port • Union Pacific Railroad • Immediate access to ALL transportation modes • Call for information • (414) 286-8131 • bnowak@milwaukee.gov There’s room for you GREAT LAKES/SEAWAY REVIEW July-September, 2010 3 Great Lakes/Seaway Review introduces Digital Dateline Great Lakes/Seaway Review has launched Digital Dateline, an electronic news service that allows the magazine to post and circulate news on a frequent basis. The feature appears on the greatlakes-seawayreview. com homepage, with email notices being sent to stakeholders each time updates are made. “Digital Dateline provides industry stakeholders with a forum for quickly accessing information and making business announcements,” said Publisher Michelle Cortright. “We are responding to the need for frequent updates on key issues while also remaining true to the indepth reports and analysis we publish in our quarterly trade magazine.” To subscribe or submit information for Digital Dateline, email Janenne Irene Pung at jpung@ harborhouse.com. Please provide your name, company/organization name and email address. Photos may also be submitted. . Great Lakes Maritime Academy hires new superintendent Gerard “Jerry” Achenbach has been named Superintendent of the Great Lakes Maritime Academy in Traverse City, Michigan. A U.S. Coast Guard officer from Texas, he replaces Rear Adm. John Tanner who retired in June after 15 years with the academy. Achenbach, a New York native, is retiring from the Coast Guard and will assume the lead position at the academy October 1, 2010. Northwestern Michigan College officials launched a nationwide search to replace Tanner that attracted nearly 50 applications. Achenbach plans to be part of developing a community college baccalaureate once the state provides authorization. The academy occupies a modern $18.1 million facility on Grand Traverse Bay, operates the 225-foot State of Michigan and complementary vessel fleet and offers training on state-of-the-art radar and shiphandling simulators . Seaway firms up trade mission Seaway stakeholders are preparing to travel to Europe for the 2010 bi-national trade mission. The November trip is being led by the U.S. Saint Lawrence Seaway Development Corporation (SLSDC) and Canadian St. Lawrence Seaway Management Corporation (SLSMC). Seaway leadership traveled the same route last fall to prepare the way for stakeholders who will now promote their ports, businesses and the system to European counterparts. “The trade mission will provide Great Lakes/St. Lawrence Seaway system stakeholders with the opportunity to work with industry leaders proficient in conducting short sea shipping on a daily basis, as well as reconnecting with current users and prospective transatlantic customers,” according to Collister Johnson and Richard Corfe, Administrator for SLSDC and President & CEO of SLSMC. The trade mission marks the system’s 32nd, with seven of them involving England and six visiting Belgium. The team will arrive in Amsterdam early Saturday, November 6 and will attend Trade Development Symposiums with the ports of Amsterdam and Rotterdam before hosting a reception to engage with current and potential system users. A similar format will be followed while in Antwerp, Belgium midweek. The trade mission will conclude in London, England Friday, November 12. . . Martin Associates conducting economic impact study A bi-national study on the commercial shipping industry’s impact on the Great Lakes region’s economy is commencing. The six- to eight-month study is being done by Martin Associates and will include information on ports, jobs, direct and indirect spending and more. The comprehensive study is being done at the request of the Seaway entities and is being funded by a variety of industry stakeholders. . DATELINE Toledo dedicates two new cranes The Toledo-Lucas County Port Authority has two new Liebherr Mobile Harbor Cranes on the job at the Seaport. The cranes can be operated manually from the cab located 68 feet above ground, or from the ground via remote control. Each crane stands more than 140 feet and weighs more than 240 tons. The total footprint is close to 1,300 square feet and each crane has a reach of up to 130 feet. Maximum crane capacity is 84 tons per swing and each crane can turn up to 1,000 tons per hour. Both cranes can work in tandem to increase maximum lift capacity in handling bulk, breakbulk, project cargo and containers. According to the port, these cranes are the only twin cranes of this type in operation at any U.S. Great Lakes port. The Liebherr LHM 280 cranes arrived at Midwest Terminals of Toledo International from Austria aboard the M/V Serena. Funding for the purchase of the cranes came from American Recovery and Reinvestment Act resources, administered by the Ohio Department of Transportation. Though regular container service does not currently exist in any port on the Great Lakes, the cranes were selected due to their ability to handle diverse types of cargo including containers. They also use only 25 percent of the fuel expended by the existing cranes. . Interlake receives clean diesel leadership award Interlake Steamship Company has received the Midwest Clean Diesel Initiative Leadership Award. President Mark Barker accepted the award, which recognizes innovative individuals and organizations that serve as role models in reducing diesel emissions through partnership-based projects. The company received the award “for demonstrating outstanding leadership by making significant measurable improvements in air quality through the development and implementation of clean diesel.” During the 2009-10 winter, Interlake repowered the main propulsion engines of Paul R. Tregurtha. The new engines and energy-efficiency improvements are significantly reducing the ship’s emissions of nitrogen oxides, particulate matter and carbon dioxide. The ship has been sailing under the new propulsion since April. The Midwest Clean Diesel Initiative is a collaboration of federal, state and local agencies, along with communities, non-profit organizations and private companies working together to reduce diesel emissions in U.S. Environmental Project Agency Region 5. . 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 Two new Liebherr mobile cranes being used at the Port of Toledo have a capacity of 84 tons per swing. The Great Lakes Group Great Lakes Towing D A T E L I N E 4 www.greatlakes-seawayreview.com North America and emerging Asian markets, through on-dock rail access to markets throughout Canada and the United States. When phase one of the project is complete, the $350 million terminal will comprise two berths with initial projected capacity of 1.5 million 20-foot equivalent units (TEUs) per year. The parties intend to commence commercial operations by 2013, or as required by market demand. . Two ports earn Pacesetter awards The Duluth Seaway Port Authority and the Port of Milwaukee each earned a Robert J. Lewis Pacesetter Award from the Saint Lawrence Seaway Development Corporation for standout performances during the 2009 season. Duluth was given the Pacesetter for increased international tonnage, posting 1.9 million short tons, a 16 percent increase over its 2008 total and a 32 percent increase in grain shipments in 2009. This is the tenth time Duluth has received a Pacesetter. The Port of Milwaukee received the award for a 22 percent increase—350,535 short tons— in overall tonnage from its 2008 numbers. In 2009, the port saw a 75 percent increase in grain shipments and handled an 800-ton transformer, the heaviest piece of project cargo to move through the port. The transformer arrived at the port via the Seaway and was transferred to rail for the final leg of its journey. This year’s award marks the ninth time the Port of Milwaukee has won the Pacesetter, which is presented annually to U.S. Great Lakes Seaway ports that register an increase in international tonnage shipped through the Seaway when compared to the previous navigation season. Originally known simply as the Pacesetter Award, a 2002 name change honors longtime Seaway trade analyst Bob Lewis. . Freight bill would shift U.S. transportation policy The Focusing Resources, Economic Investment and Guidance to Help Transportation Act of 2010 (Freight Act/H.R. 5976) mirrors Senate bill (S. 3629) and complements freight improvement provisions in the transportation authorization bill introduced in 2009 by House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.). The legislation would direct the federal government to develop and implement a strategic plan to improve the nation’s freight transportation system and provide investment in freight transportation projects. The goals include reducing congestion and delays, increasing the timely delivery of goods and services, reducing freight-related transportation fatalities and making freight transportation more efficient and better for the environment. The Freight Act would establish America’s first comprehensive national freight policy and Melford, Maher Terminals to partner Melford International Terminal (MIT) and Maher Terminals, the operator of one of the largest marine container terminals in North America, have entered into a shareholder/service agreement. Maher will provide services for the forthcoming container terminal in Melford, Nova Scotia. The terminal will be called Maher Melford Terminal. Maher Terminals, headquartered in New Jersey, operates marine container terminals in Prince Rupert, British Columbia and Port Elizabeth, New Jersey. MIT, a privately-owned Nova Scotia company, is developing a 315-acre container terminal, an intermodal on-dock rail facility and a 1,500-acre logistics park on the mainland side of the Strait of Canso in Nova Scotia. The new Maher Melford Terminal will feature deepwater berths of 60 feet at mean low water, an icefree 100-foot deep channel and no air draft restrictions. The terminal will enable the most direct service for intermodal trade between Port of Duluth Duluth Seaway Port Authority create a new Office of Freight Planning and Development within the U.S. Department of Transportation. The specific goals established by the Freight Act are: • Reduce delays of goods and commodities entering into and out of intermodal connectors that serve international points of entry on an annual basis. • Increase travel time reliability on major freight corridors that connect major population centers with freight generators and international gateways on an annual basis. • Reduce the number of freight transportation- related fatalities by 10 percent by 2015. • Reduce national freight transportationrelated carbon dioxide levels by 40 percent by 2030. • Reduce freight transportation-related air, water, and noise pollution and impacts on ecosystems and communities on an annual basis. (For additional updates on legislative issues, see page 15.) . Parrish & Heimbecker to build grain center in Hamilton The Hamilton Port Authority (HPA) is leasing more than 380,000 square feet of space at Pier 10 to Parrish and Heimbecker, Limited (P&H). With the lease agreement come plans for significant infrastructure investment over the next 10 years. P&H is involved in the trading and movement of grains as well as milling, poultry farming and food processing. The new facility will be a multi-modal hub for grain and other agricultural products, allowing for seamless cargo transfer between marine, rail and truck and enhances P&H’s shipping capability in the system. P&H’s Canada-wide network of primary and terminal elevators combined with its merchandising and transportation groups provide procurement and supply chain management to agri-food processors in Canada and around the world. . George Steinbrenner passes Although best known as former owner of the New York Yankees, George Steinbrenner’s passing is being honored in the shipping industry. He was born in Rocky River, Ohio and received a bachelor’s degree from Williams College in Massachusetts. He joined the U.S. Air Force and later received his graduate degree from Ohio State University. Steinbrenner became an executive in the shipping industry in 1957 when he joined Kinsman Marine Transit, his father Henry’s Great Lakes shipping company. He later became chairman of the Cleveland-based American Shipbuilding Company (ASC). While with ASC, Steinbrenner was part of the team that constructed the Lakes first ship in the near- 1,000 foot class, the Roger Blough. The 858-foot ship was launched in 1972. . OCTOBER 12-14 21st Breakbulk Americas Transportation Conference & Exhibition, Hilton Americas Houston & George R. Brown Center Houston, Texas, www.breakbulk.com 27-28 Hwy H2O Conference Toronto Marriott Airport Hotel Toronto, Ontario, www.hwyh2o.com The Port of Duluth never rests on success. We continually grow and advance our capacity to meet the changing demands of a global economy. Ranked among the top 10 wind cargo ports across the U.S. and Canada, the Port of Duluth is offering customers a new intermodal option – moving wind turbine components by rail. Rail is a great alternative for most energy-efficient, long distance moves. Combining the efficiencies of water, road and rail transport offers our wind energy customers the best options in the most centrally located, multimodal hub in North America. We’re definitely here for the long haul. Port of Duluth. Here for the long haul. 218.727.8525 • www.duluthport.com NOVEMBER 3-5 SNAME 2010 Annual Meeting & Expo Hyatt Regency Bellevue, Washington snameexpo.com/2010 6-12 32nd Bi-national Seaway Trade Mission Amsterdam, Rotterdam, Antwerp Rebecca McGill, (202) 366-5418 www.greatlakes-seaway.com GREAT LAKES/SEAWAY REVIEW July-September, 2010 5 REGIONAL CALENDAR D A T E L I N E Ports of Indiana HI N IL IN SAS S A M IA SO OLI TH O W VIRGINIA Mississippi River Mississippi River Minneapolis . Chicago . Omaha . . Lincoln Des Moines . . Peoria . Tulsa . Oklahoma City . Topeka Kansas City . St. Louis . Springfield . . Lexington . Cincinnati . Columbus . Pittsburgh . Memphis Evansville. Indianapolis . . Baton Rouge New Orleans . Great Lakes Watershed Mississippi River Watershed GREAT LAKES/SEAWAY REVIEW July-September, 2010 7 I N F R A S T R U C T U R E Some say it’s a matter of environment vs. economy. Others say it’s an emotional reaction. Legislators are responding to constituents’ demands in the form of bills. Reporters are reprinting and repeating numbers without fact-checking. And every day, residents throughout the Great Lakes region are living with threat, fear and frenzy. Regardless of what’s being said about Asian carp and how to best keep them from migrating into the Great Lakes, there’s a movement to permanently sever the Mississippi River and Great Lakes watersheds. The initiative is well-funded and will provide a detailed evaluation of scenarios for ecological separation, including the costs, benefits and impacts. Funding for a $2 million, 18-month study is being anchored by the Joyce Foundation and the Great Lakes Protection Fund. Called “Envisioning a Chicago Area Waterway System for the 21st Century,” the project is being viewed as a way to “modernize the Chicago area waterway system,” according to the Great Lakes Commission. For months, there have been requests to close the locks as a means of keeping Asian carp out of the Great Lakes. As reported by the U.S. Army Corps of Engineers (See Great Lakes/Seaway Review, Volume 38, Number 4, April-June, 2010), the locks at Chicago were not built as barriers for fish migration and constitute only two of the five pathways between the inland waterway and the Great Lakes. In November 2007, the Corps was authorized to undertake a study called the “Great Lakes & Mississippi River Interbasin Study.” However, funding wasn’t appropriated until June 2009, putting the threeto five-year study behind schedule. It, too, is looking at ecological separation, which would entail stopping the exchange of water The Chicago lock dilemma Chicago Sanitary & Ship Canal Little Calumet River North Lake Calumet South Fork South Branch Calumet-Sag Channel Chicago River DesPlaines River West Fork Skokie River North Branch Calumet River Chicago River South Branch Chicago River North Shore Channel Middle Fork Lake Michigan SC     Locks Calumet Harbor Chicago Lock Wilmette Pumping Station Electric shock hazard area Illinois Indiana City of Chicago O’Brien Lock and Dam Lockport Lock Great Lakes-Inland Waterways System Chicago Area Lock Detail Reaction to Asian carp prompts attempt to permanently sever the Great Lakes from the inland waterways Businesses Affected by Lock Closure (A-K) COMPANY FACILITY ON WATERWAY COMMODITIES MOVED American Terminals Barge Terminal Coke, Coal, Pet Coke, Spar, Calcine Pet Coke, Burnt Magnesite Apex Oil Petroleum Terminal Petroleum Products Arcelor Mittal 7 Lake Michigan Blast Furnaces Coke Iron Ore fines Finished Product Domestic/International Shipping Asphalt Operating Services, LLC Liquid Asphalt Storage Terminal Purchase/Construction expected to start in April Bayou Steel Steel Distribution Center Steel Beelman Trucking Barge Terminal Salt Beenmsterboer Slag Corp. Materials Terminal Facility Coke, Mulch Beta Steel Scrap suppliers, steel processors Steel, slabs, scrap on the inland river system BP Refinery Petroleum Products $3.8 Billion Modernization Project Construction Components Domestic/International Shipping Cargill International/domestic shipments via river systems. Corn, soybeans, wheat A major exporter of agricultural commodities Cargill Salt Barge Unloading Salt Carmeuse Lime Manufacturing Plant Limestone Aggregates CCI Manufacturing IL Manufacture Facility Brake Fluid, Antifreeze, Windshield Wiper Fluid Central Salt Salt Chicago Dry Dock Barge Repair Facility Chicago Port and Rail Terminal Pig Iron Citgo Refinery Petroleum Products Corp Dock Cronimet Barge Loading Facility Stainless Steel Scrap Crowley Yacht Yard Yacht Storage Domino Sugar Sugar DTE Coal Services, Inc. Coal Transfer Facility Coal ELG Metals, Inc. Terminal for Metal Scrap Processor Stainless Steel Scrap Emesco Terminal Terminal Steel ExxonMobil Refinery Petroleum Products Federal Marine Terminals International cargoes—imported/exported Project cargo, steel, billets, coils, break bulk, wind machines via river system Frick Services Origination from international markets via river system. Fertilizer, UAN, salt, calcium chloride, sugar Destination greater Northwest Indiana/Chicago market for fertilizer and salt General Iron Barge Loading Facility Scrap Iron Goose Island Boatyard Yacht Storage Hanson Materials Limestone Quarry, Shipyard (Romeoville) Sand and Aggregates Floating Sand Plant (Morris), Distribution Deck (Peoria) Holcim Cement Barge Loading Facility Cement Honeywell Horsehead Resource Development Co. Barge Loading Facility Iron by-product IMTT-Illinois Third-Party Terminal Petroleum Products, Chemicals Jack Gray Transport, Inc. K.A. Steel Steel KCBX Terminal Coke and Coal Products Kinder Morgan Arrow Terminal & Stolt Break Bulk & Alloys 8 www.greatlakes-seawayreview.com I N F R A S T R U C T U R E stantial commitment of resources to investigate and identify alternatives for existing uses of the Chicago Sanitary and Ship Canal, including for stormwater and wastewater control and commercial and recreational navigation,” said Tim Eder, Executive Director of the Great Lakes Commission, when testifying before Congress July 14 before the study commenced. “The best permanent solution to protecting the Great Lakes from damaging aquatic invasive species (ANS) is to sepaing information to use when determining whether permanent separation of two water basins is a feasible solution for the shortand long-term. “The Great Lakes Commission recognizes that the best permanent solution for the health of both the Mississippi River and Great Lakes watersheds is ecological separation, with the goal being preventing the movement of invasive species between the watersheds. The pursuit of this goal must start with a unified, immediate and subbetween the basins. It will also likely entail using physical barriers to prevent the movement of aquatic organisms through canals and waterways between the watersheds. These same barriers would put an end to all recreational or commercial transits between the watersheds. (Please see graph on page 11 for details on annual transits.) Dueling studies? Two studies, two approaches, two budgets and two timelines could produce different results, again leaving the federal government with conflict GREAT LAKES/SEAWAY REVIEW July-September, 2010 9 Businesses Affected by Lock Closure (K-V) COMPANY FACILITY ON WATERWAY COMMODITIES MOVED King Co. Aggregate Koch Industries User of Third-Party Terminals Coke Koppers Inc. Industrial Facility Black Oils Lafarge Cement Cement Processing and Distribution Cement Lake and Rivers Transfer International and domestic shipments of bulk products Salt, grain, coke, scrap steel, bulk cargoes Levy Co. Barge Loading Dock Slag Luhrs Brothers Aggregate LyondellBasell Industries User of Third-Party Terminals Petrochemicals Marine Material Handling Corp. Third-Party Terminal Petroleum Coke, Mulch, Coal Maryland Pig Barge Unloading Facility Pig Iron Metal Management Scrap Recycling Facilities Iron and Steel Scrap (See Simm’s Metal Management) Midwest Generation Will County Station Coal Mid Continent Coal and Coke Major exporter of Coke on the international market Coal, coke Morton Salt Distribution Yard (Salt in by Ships) Salt & Processing Facility (salt in by Barges) National Material L.P. Nidera Grain Elevator Grains Noramco Terminal North American Salt Salt North American Stevedores Terminal Steel Products Olympic Oil Oil Oxbow Midwest Calcining Coke Ozinga Cement Four Terminals Cement, Sand, Aggregates PPG Industries, Inc. Terminal Chemicals, Glass Prairie Materials Cement, Sand, Aggregates Purvis Marine Reserve Marine Terminal Barge Terminal Iron and Steel Products Rowell Chemical Corp. Barge Tank Facility Caustic Soda Safety-Kleen Systems, Inc. Oil Re-refinery Used Oil and Finished Product: Re-Refined Oil, Domestic S.E.E. Terminal Third-Party Terminal Farm Fertilizer Seneca Petroleum Petroleum Products S H Bell 2 Marine Warehouses & Logistic Sites Alloys, Raw Materials For the Steel Mills Simms Metal Mgmt. St. Mary’s Cement Cement Storage Facility Cement Tanco Terminals Domestic shipments of petroleum products Asphalt, oil on the river system Texpar TPC User of Third-Party Terminals Coke Univar U.S. Gypsum Barge unloading dock Gypsum U.S. Steel Steel Mill Steel Ore Fines Domestic/International Shipping Valero Valvoline SOURCE: AMERICAN WATERWAYS OPERATORS I N F R A S T R U C T U R E • Complete a thorough and comprehensive analysis of the gathered data and recommend alternatives to prevent or reduce the risk of ANS transfer between the basins. “The Corps’ study cannot have a predetermined end,” said Corps Project Manager Dave Wethington from the Chicago District. “We need to remain unbiased and to make a fully-educated decision. It’s going to take time to gather the necessary baseline data we need on social, economic and environmental impacts. We unteracts with the basin, extending to Duluth and the Ohio River Basin. The Mississippi basin reaches across the borders of 17 states. The study’s objectives include: • Identify potential hydraulic pathways that may exist between the Great Lakes and Mississippi River basins. • Inventory current and future potential invasive species. • Analyze possible options and technologies to prevent or reduce the risk of ANS transfer. rate the two watersheds by closing the artificial connection in the Chicago area,” said Senator Debbie Stabenow (D-Mich.). She is one of two elected officials who have already presented legislation that supports permanently separating the watersheds. The federal study being done by the Corps is a collaboration of federal, state and local agencies, as well as nongovernmental entities. It has two focuses: the Chicago area and the greater geographic region that in 10 www.greatlakes-seawayreview.com DOCK SITE 100th St. and Calumet River, Chicago, IL 60617 Tel: (773) 375-3700 • FAX: (773) 375-3153 • E-mail: kramert@kochind.com Coal Blending STOCKPILING Transloading The most modern, innovative and customer-oriented transfer terminal in mid-continent North America will save you time and money in the movement, storage and transfer of your dry bulk cargo. With ease and dispatch. Worry free. KCBX will receive your cargo from rail cars, trucks and river barges. We will transfer it to any land or water mode or store it for you. We are ideally positioned to blend Western, Eastern and Illinois Basin coals as well as petroleum coke prior to transloading product to lake vessel, ocean vessel or river barge. We utilize our high speed bottom dump car unloading station or by blending from ground storage while dumping a single commodity from rail cars. Our portable material handling equipment can also provide customized on-site blending and stockpiling services at our 46 acre facility. We offer remarkably quick barge turn-around. If you are moving the products we most usually handle—steam coal, petroleum coke, metallurgical coal, taconite pellets or any other dry bulk commodity—call Tom Kramer’s marketing office at (773) 933-5302. Let us show you how it’s done best! Why a manmade channel? In addition to the two locks that connect the river system to Lake Michigan, there are smaller pathways, the Chicago Sanitary and Ship Canal. The canal was built as a solution to sewage issues when Chicago was originally built on swampy land. The flow of the Chicago River into Lake Michigan was reversed more than 100 years ago to protect the safety of drinking water for the Chicago region and to facilitate navigation and commerce through the locks and canals. The Metropolitan Water Reclamation District of Chicago manages wastewater and stormwater for Chicago and 124 municipalities through a system of sluice gates, tunnels and reservoirs that has taken decades to construct. “The mere suggestion of any Chicago river and Chicago lock closure has negatively impacted the industry along the waterways and tour boat bookings,” according to a City of Chicago resolution passed March 10, noting that the area’s water pathways are necessary to prevent fouling of the Chicago River. In addition, city officials have stated that closing the locks would overwhelm the tunnel system and cause massive flooding, affecting more than three million people and 1.4 million structures in Chicago and 51 surrounding suburbs. Setting a precedent. Within the past five years, there’s been a call to close the Great Lakes/St. Lawrence Seaway to international traffic at it eastern end. There has been, and continues to be, a push for state-by-state ballast water regulations so strict they cannot be verified with current technology. Now, there’s a call to close the system where it meets the Mississippi River basin. Michigan has filed its second lawsuit in an attempt to sever the Great Lakes from the inland waterway. Originally, the state challenged the actions of the State of Illinois. The most recent suit—filed in July— is against the Chicago Area Waterways District and the U.S. Army Corps of Engineers, which includes the Executive Branch of the U.S. Government because the Corps is under the direct authority of President Obama. “Closure of the locks would be a victory,” said Joy Yearout, Spokeswoman for Michigan Attorney General Mike Cox. “The greatest step we can take to address Asian carp is to eliminate any way for them to get into Lake Michigan. Closing the locks is a temporary step to returning the waterways to their natural state by permanently separating them.” do, with the overall study estimated to cost up to $25 million. The Corps is also getting some funds from the U.S. Environmental Protection Agency and the Great Lakes Restoration Initiative. The two studies state they are looking to protect both basins. “The other study is looking at closing off the Great Lakes,” Wethington said. “But zebra mussels have migrated from the Great Lakes and have caused damage in the river system.” derstand the desire to be expeditious, but we need to proceed with due diligence so the alternatives presented from our findings are appropriate.” At this time, the study has received $400,000 for fiscal year 2010 and is scheduled to receive $400,000 for fiscal year 2011. With the study more than a year underway, it’s hoped that recommendations will be ready in two to four years. Wethington said the Corps can only do the amount of work it receives funding to I N F R A S T R U C T U R E GREAT LAKES/SEAWAY REVIEW July-September, 2010 11 I N F R A S T R U C T U R E go Harbor Lock and 7.7 million tons of goods through the O’Brien Lock, according to the American Waterways Organization. Mark Biel, Executive Director of the Chemical Industry Council of Illinois, is a spokesman for the coalition. “As people learn more and more about this issue, the rhetoric calms down,” he said. “All of the sudden, we went from not caring about Asian carp to having a chemical company about to shut down. People don’t realize that communities along the river have co-existed with Asian carp for years, with the recreational fishing and boating industries not decimated.” “Nobody, even those in the barging industry, wants to hurt the environment,” said Don Campbell, Manager of Kindra Lake Towing in Chicago. “We don’t look at this as environment against economy.” “People have a valid concern about the Asian carp,” said Darren Melvin, Manager of Marine Operations for Hanson Material Service. “I just think closing the locks is a pre-emptive strike that isn’t necessary right now.” Costly and premature. Research on the impact of temporarily closing Lake Michigan access points was conducted by Joseph P. Schwieterman, Ph.D., from DePaul University and published in April. He and his researchers found that closures—even on a temporary basis—will negatively impact the region’s economic wellbeing by $1.3 billion annually. “This figure is inclusive of multiplier effects related to waterway use but not inclusive of certain employment-related effects, which can only be measured with further study,” Schwieterman said in the new technology, eDNA, detected the DNA of Asian carp beyond the electronic fish barriers built to halt migration. A sterile Asian carp was then found beyond the barriers, with experts unsure of whether it swam upriver, somehow getting by the barriers, or if it had been moved up the system in minnow buckets or by another means. Fish kills have temporarily closed the locks. In May, a $1.5 million fish poisoning closed two miles of the Lake Calumet River above the electric barriers. Of the 11,000 fish killed, none were Asian carp. Illinois Governor Pat Quinn signed an agreement to send 30 million pounds of Asian carp a year to China, where the fish are considered a delicacy. The state is spending $2 million to upgrade Big River Fisheries where the fish will be processed. Economic uncertainty. Earlier this year, companies doing business along the river system weren’t informed when the locks would be closing. Now, they are receiving 30-day notices for scheduled closures. The pressure has caused investors, shippers and barge companies to question the validity of doing business above the locks. “It’s hard to quantify the impact of the closures on business,” Wilkins said. “But in addition to that, there’s the economic impact caused by the threat to close the locks. The last thing any businesses wants in an economy like this is uncertainty. Investors remain skeptical, wondering why the federal government would interrupt commerce without proof.” The UnLock Our Jobs Coalition provides a voice on behalf of the businesses that transit the locks as part of the 122,000 average annual transits through the Chica- The lawsuit calls for barriers to be installed at all five pathways between the basins. It also calls for: • Acceleration of the government study regarding permanent separation. • A motion for preliminary injunction to immediately close the locks. • A judicial order for the Corps to install nets, use fish poison and close the locks, among other recommendations. “The action being taken is not sufficient,” Yearout said. People who use and sail the waters are uniting to speak out against separation and lock closures whether they live in the Chicago area or along the other coasts or river systems. It’s about setting a precedent that federal navigation channels can be closed as a result of public outcry. “The collateral impacts are much larger than the companies in the area,” said Lynn Muench, Senior Vice President-Regional Advocacy for The American Waterways Operators (AWO). As an example of the interest being shown, AWO—a national trade association for the U.S. tugboat, towboat and barge industry— just took a vote of its national members before getting involved in litigation. When queried about the locks closure, they voted 41-1 to intervene. “Our members see this as a potential precedent-setting issue of closing a Congressionally- authorized waterway, and it’s interesting to see some of the reactions to this within Michigan,” Muench said, noting that their attitudes change when they see this as potentially creating a loophole to close the Great Lakes/St. Lawrence Seaway system. “There has to be a balanced and logical approach to the solution,” said Delbert R. Wilkins, Vice President of Terminal Operations & Business Development for Canal Barge, a 50-year old family business founded in New Orleans and expanded to Chicago with a towing and shipyard business, Illinois Marine Towing. Of the company’s 680 employees, about 150 of them are employed in Illinois. “When Michigan filed its first lawsuit before the Supreme Court in 2009, it all started. We went from years of inaction to overreaction.” The Asian carp panic. Two species of the Asian carp, the silver and the bighead, entered the Mississippi River from southern aquaculture facilities in the early 1990s when flooding created an unexpected pathway for migration. The fish have moved northward, prompting the construction of two electronic barriers at Chicago by the Corps. Near panic resulted in February when a Cargo Tons Commercial Passengers Recreation Vessels YEAR CHICAGO O’BRIEN CHICAGO O’BRIEN CHICAGO O’BRIEN 2000 146,518 8,436,175 818,099 341 42,006 32,981 2001 180,647 6,778,306 677,985 744 39,548 29,790 2002 147,136 7,618,898 693,483 677 40,596 30,314 2003 74,842 6,975,080 615,805 845 33,696 26,934 2004 86,785 9,674,528 605,356 719 30,509 23,922 2005 111,319 9,048,078 728,476 442 29,590 25,653 2006 127,800 9,482,367 686,408 292 25,549 20,744 2007 167,800 7,294,890 775,095 324 30,244 23,170 2008 105,484 6,822,254 732,448 230 27,141 19,208 2009 78,740 4,641,383 685,019 431 26,627 18,100 Average 2000-2009 122,707 7,677,196 701,817 505 32,551 25,082 SOURCE: U.S. ARMY CORPS OF ENGINEERS Chicago and O’Brien Locks Cargo, Commercial Passenger and Recreation Traffic The St. Lawrence Seaway Management Corporation GREAT LAKES/SEAWAY REVIEW July-September, 2010 13 I N F R A S T R U C T U R E guard against carp entering the Great Lakes when floods occur. • Conduct tagged fish research to validate the effectiveness of all primary and secondary barriers. • Employ consistent measures to catch fish, such as electro-fishing, netting and commercial fishing. • Fund research on Asian carp-specific biological control agents. • Sample barges and other vessels for Asian carp or their eggs. • Impose further restrictions on the importation of aquatic invasive species. • Conduct more scientific studies about the ability of carp to survive within the Great Lakes ecosystem. “We fully support robust protections for the Great Lakes from the Asian carp,” Wilkins said. “We must also preserve human health and safety and maintain the free flow of waterborne commodities that are critical to the national and regional economy.” Thomas Allegretti, AWO President and CEO, said: “We hope that all stakeholders will continue to work together in a good faith effort to protect the Great Lakes from invasive species such as Asian carp, while keeping the waterways vital to our economy open and commerce flowing.” Janenne Irene Pung  mental impacts of the three modes concludes that inland waterways transportation generates fewer emissions of particulate matter, hydrocarbons, carbon monoxide and nitrous oxide than rail or truck on a per ton mile basis. Based on data from the Corps, from 2005 to 2009, an average of 7.457 million tons of commodities locked through the O’Brien Lock and an average of 118,000 tons locked through Chicago. The commodities moving through the O’Brien Lock are primary manufactured goods, coal, lignite and coke, crude materials. The commodities moving through the Chicago Lock are all petroleum and petroleum-based products, crude materials, inedible, except fuels, and all chemicals and related products. (Please see table on pages 8-9.) Commodities moving through the two locks were valued at $1.5 billion annually, according to AWO. AWO has presented the following steps to Congress as solutions for keeping Asian carp out of the Great Lakes: • Expedite construction of the third barrier on the Chicago Sanitary and Ship Canal. • Consider other types of fish barriers, such as bubble or acoustic technology barriers. • Immediately complete barriers to final report. “The economic value lost from permanent closure is estimated to be $582 million annually thereafter. The next present value of these costs, over a 20-year planning horizon at a four percent discount rate, is $4.7 billion.” For the first year of closure, the loss of value is as follows: • Added transportation costs (inclusive of social costs) – $125 million. • Losses to recreational boaters ($5 million), river cruises and tours ($20 million), municipal departments providing public protection ($6 million), property owners ($51 million) and regional agencies needing additional funds for flood-abatement systems ($375 million). A Modal Comparison of Freight Transportation Effects on the General Public was conducted by Texas A&M University and cost-shared with the U.S. Maritime Administration. The year-long, peer-reviewed study shows that barges can move a ton of cargo 576 miles with a single gallon of fuel, while trains travel 413 miles and trucks 155 ton miles per gallon. After adjusting for the differences in quantity of cargo moved by each mode, for a single person injured in a barge accident, 125 are injured in rail accidents and 2,172 are injured in truck accidents. A look at the environ- While some react to Asian carp at the system’s southwest corner, others are attempting to close the system to international traffic through a strict state regulation. New York is requiring that all ships traversing its waters be outfitted with ballast water treatment technology by January 1, 2012 in order to receive the necessary permit for passage. At this time, there are no approved ballast systems for use in freshwater or ways in which scientists can test water to prove it meets New York state’s criteria of 100 times the current international standard. In addition, shipowners will not install treatment systems until they are certified by the U.S. Coast Guard. “New York is the first big problem we’re going to run into,” said Steve Fisher, Executive Director of the American Great Lakes Ports Association (AGLP). “We should be aware and we should be watching what’s going on.” With the General Election approaching, New York will have new leadership in 2011, less than a year from implementing the regulation. To date, litigation questioning the legality of one state mandating a regulation that impacts commerce in seven other states and two Canadian provinces has failed, including suits jointly filed against the New York State Department of Environmental Conservation by AGLP, the ports of Oswego and Albany, Canfornav, Polsteam, Federal Marine Transport, the Chamber of Marine Commerce and the Canadian Shipowners Association. The courts are leaving ballast water legislation up to the states, another factor in creating the patchwork of regulations throughout the system. Because of New York’s proximity in the Great Lakes/St. Lawrence Seaway, the regulation will more greatly impact Canadian-flagged vessels, which carry cargo downriver more frequently than U.S.-flagged vessels. All international carriers will also be impacted. “The consequences are so huge, we cannot sit back and let people in New York handle this,” Fisher said. AGLP President Adolf Ojard has traveled to New York on behalf of the organization and its members. He said there’s talk of exempting New York ports as far east as Albany, leaving out ports farther upriver, such as Oswego and Ogdensburg. Even if carriers not docking at New York ports are granted a transit exemption, the New York ports would not benefit. New York is accepting applications for extensions of the 2012 deadline; however, there’s no mechanism in place to assure that extensions will be granted by a specific time, leaving some industry experts leery that the clock could run out on the process, with the extension not having been granted and waterborne transportation and the commerce it supports limited even in interlake trade patterns. Members of the Canadian Shipowners Association have applied for the extension. The system’s Canadian stakeholders have formed a 16-member coalition to help build momentum and properly communicate with Parliament. Communication is being prepared that will reflect the Canadian government’s view of how New York’s regulations will negatively impact its commercial shipping industry. “This is a big issue for our ports,” said Stephen Brooks, Vice President of the Chamber of Marine Commerce. “It’s thorny, difficult and a multi-pronged situation for a foreign government to affect change with a state government.” According to Fisher, there are few options remaining and the best may be Canadian intervention. But like in the Chicago area, extensions, exemptions and lawsuits make for bad business. Shippers want security that carriers can deliver as contracted. Carriers want to know their ships are free to come and go rather than risk getting bottle-necked behind a regulation-based barrier. Janenne Irene Pung  At the other end of the system New York ballast regulations attempt to close St. Lawrence River entrance American Maritime Officers GREAT LAKES/SEAWAY REVIEW July-September, 2010 15 crease in the diesel fuel tax to fund navigation projects. Funding would have to be approved by the Senate Finance Committee and the House Ways and Means Committee; however it is possible the proposed legislation or the congressional funding mechanism will not get through prior to the 111th Congress adjourning. More than 200 industry stakeholders have endorsed the development act, which calls for a $7.6 billion investment program, including $380 million a year for construction projects and $60 million a year for major rehabilitation projects. Dredging funding. WRDA 2010 (H.R. 5892) has another key component: Section 2007 mandates that all tax revenues annually deposited into the Harbor Maintenance Trust Fund (HMTF) be used to dredge the nation’s deepwater ports and waterways. The government does not spend all the tax dollars it collects for dredging, which has resulted in a surplus of more than $5 billion in the HMTF. The WRDA provision was derived from separate legislation (H.R. 4844) advanced by Congressmen Bart Stupak (D-Mich.) and Charles Boustany (R-La.) requiring amounts credited to the HMTF are used for harbor maintenance. The bill has nearly 50 cosponsors. Congressman James L. Oberstar (D-Minn.), Chairman of the House Transportation and Infrastructure Committee, was the key player in ensuring H.R. 4844 was included in WRDA legislation. “We are deeply indebted to Congressman Stupak, Congressman Oberstar and others for their commitment to resolve the dredging crisis once and for all with this historic legislation,” said James H.I. Weakley, President of Great Lakes Maritime Task Force, the largest labor/management coalition ever to promote shipping on America’s Fourth Sea Coast. “Every time a vessel leaves port with its holds less than full, we are denying the American economy the efficiencies for which Great Lakes shipping was designed. Even with the dredging crisis, the Corps has estimated that Great Lakes shipping annually saves its customers $3.6 billion when compared to the next leastcostly mode of transportation.” With dredging underfunded for years, the Great Lakes has about 15 million cubic yards of sediment clogging the navigation system. The Corps estimates it needs $180 million to L E G I S L A T I O N Tracking changes A look at industry-related bills and litigation On both sides of the border, legislation and litigation are being watched closely for their potential impact on the Great Lakes/St. Lawrence Seaway shipping industry. Throughout the region, alliances are being formed to address serious issues that could permanently alter the transportation system. Here is an update on some of the key issues: WRDA funding. The Water Resources Development Act of 2010, authorizing about $6 billion for water resources studies and construction projects by the U.S. Army Corps of Engineers, has been approved by the House Transportation and Infrastructure Committee. The bill (H.R. 5892) contains nearly 300 project-specific provisions that resulted from more than 2,000 requests from both Republican and Democrat members for projects and studies. In December, the Inland Waterways Users Board of industry stakeholders and the Corps completed the Capital Development Plan prioritizing infrastructure improvements for the next 20 years and made recommendations related to project management and funding. The plan includes a recommended in Toledo Lucas County Port Authority Water Act,” to repeal the Jones Act based on accusations that the act was interfering with cleaning up oil leaked into the Gulf of Mexico through a British Petroleum-owned underground pipeline. He said the act favors labor unions over U.S. consumers. Jim Weakley, President of Lake Carriers’ Association, appeared on CSPAN to discuss the Jones Act and the ability for waivers to be granted when U.S.-flagged vessels are not available to complete a task. He added that U.S. vessels were actively involved with clean-up efforts and that only one waiver had been requested by a foreign shipowner. Canadian shipbuilding duty progress. With the average age of Canadian fleet ships at 35, industry stakeholders are continuing to work with Parliament on changes to the country’s 25 percent duty that currently must be paid for each ship built in foreign lands—although there are no Canadian shipbuilding companies in place to construct lakers. Of the $50 million price tag for a new ship, about $13 million of it represents the duty. According to Stephen Brooks, Vice President of the Chamber of Marine Commerce, the Canadian government is amid the process to remove the duty.  L E G I S L A T I O N clear the backlog. In recent years, the Harbor Maintenance Tax has annually generated an average of more than $1.4 billion in revenues for the HMTF, but expenditures have averaged less than $800 million. “It takes 1.5 tons of iron ore, 400 pounds of fluxstone and a quantity of met coal to make a ton of steel,” said John D. Baker, 1st Vice President of GLMTF and President Emeritus of the ILA’s Great Lakes District Council. “The dredging crisis is jeopardizing hundreds of thousands of family- sustaining jobs in our steel mills, our iron ore and coal mines, our limestone quarries and factories throughout the nation. The rebound in steel production has put many men and women back to work. An end to the dredging crisis can only result in more industrial activity and the jobs that it would create.” Legislation to require the HMTF to spend what it takes in each year is also moving forward in the Senate. S. 3213, introduced by Senator Carl Levin (D-Mich.), has 15 co-sponsors. Harbor Maintenance Tax changes. With an election pending, the Great Lakes Short Sea Shipping Enhancement Act of 2007 (H.R. 981), led by Congressman Sander Levin (D-Mich.) and Rep. Dave Camp (R-Mich.), is currently without the bill it needs to get through a vote. If the bill isn’t passed when the 111th Congress convenes, it will again be reintroduced to provide exemptions that are expected to promote increased short sea shipping in the system. Passage of the bill could initiate construction of several freight ferries planned for the Great Lakes: from Cleveland, Ohio to Port Stanley, Ontario; from Erie, Pennsylvania to Nanticoke, Ontario; and from Oswego, New York to Hamilton, Ontario. Asian carp response. Sen. Debbie Stabenow (D-Mich.) and nine other Senators have introduced a bill designed to disconnect the Mississippi River from Lake Michigan. The separation would be done in such a way as to prevent the transfer of aquatic species, namely the Asian carp, from one basin to the other. The bill (S. 3553) would require the Secretary of the Army to study the feasibility of the hydrological separation of the Great Lakes and Mississippi River basins. The 18-month study would include options to address waterway safety operations, as well as barge and recreational vessel traffic alternatives. (See page 7 for a complete report on this topic.) Jones Act repeal. Senator John McCain (R-Ariz.) introduced the “Open America’s Cat Marine Power 18 I R O N O R E A BIG shake-up Downturn in iron ore prices was short-lived PETER J. KAKELA, Ph.D. Professor Dept. of Community, Agriculture, Recreation and Resource Studies – CARRS Michigan State University World iron ore prices have skyrocketed again. After being cut by 48 percent last year, prices have rebounded by as much as 100 to 130 percent this year amid great secrecy. No exact prices have been released as of July, but the new prices are, as one source said, “on the same level as in 2008.” The downturn for iron ore pellets was short lived. The iron ore prices in North America are directly related to the world prices in two ways. First, the eastern Canadian mines, Iron Ore Company of Canada, ArcelorMittal Mines Canada (formerly Quebec Cartier Mining) and Wabush Mines all sell some iron ore pellets in the world market and, thus, have direct benefit from these significant price increases. Second, the merchant iron ore pellets sold from the mines in Michigan and Minnesota tend to have the world price built in as one of the three main components to their domestic prices. In addition, U.S. Producer Price Index-All Commodities and the price of hot rolled band steel in the U.S. market are factors. Therefore, domestic North American iron ore prices are also influenced by rebounding world prices. I R O N O R E 19 0 50 100 150 200 250 1970 1975 1980 1985 1990 1995 2000 2005 2009 2010 forecast World Iron Ore Prices Brazil’s Vale Pellets (FOB-Tubarao) World Prices US $/LT tled “with one of [the] European largest steel mills.” The TEX Report went on to say: “Though further details have not been revealed, LKAB says the prices are annualbased ones.” In more recent communication with LKAB, the company indicated that the 2010 prices are “not official in terms of USc/dmtu… [but] are on the same level as in 2008.” Why world prices went quarterly. Japanese and South Korean steel mills agreed on March 30, 2010 to buy iron ore at prices changing quarterly, as opposed to annually, from two of the world’s largest iron ore exporters, Vale SA and BHP Billiton Ltd. The quarterly pricing system breaks the 40-year-old tradition of annual benchmark prices. Shorter term pricing gives more power to the mining companies versus the steel mills. Also, the push by mining companies for short term pricing suggests that they think New pricing system for 2010. In addition to the return of high prices, there are major changes in how iron ore is being sold this year. Gone is the four-decades-old annual benchmark pricing system for iron ore, which was based on direct negotiations between buyers and sellers. This year, for the first time, a quarterly pricing system is emerging. In addition to the quarterly changes, the prices are no longer negotiated between buyer and seller, but pegged to changes in independent indices. However, not every major international mining company is going to the quarterly system this year. The Swedish state-owned mining company LKAB (Luossavaara Kiirunavaara Aktiebolag) that ships most of its ore to European steelmakers is sticking with the annual pricing system. LKAB announced, as reported in The TEX Report in May that LKAB blast furnace pellets and their

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