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Last Updated: Tuesday, 23 October 2007, 09:28 GMT 10:28 UK
China brings back Minnesota's miners
By Lucy Ash
BBC World Service, Minnesota

Joe Tomacz and Jason Coaler
Joe (left) and Jason are new employees at the mine
China's voracious appetite for steel has put unemployed Americans back to work in the state of Minnesota and revived a depressed economy.

The big sign at the entrance tells me that I've come to the mine on a "Blast Day." Workers are standing by for a controlled explosion which helps to dislodge more taconite, the rock that contains the precious iron ore.

"There's plenty of testosterone when you push that button and see the ground go up," laughs miner Joe Tomacz.

"It's fun. Basically this is the Flintstones; I am Barney Rubble - I am hauling rock for a living. You really can't ask for anything better."

New investments

Mr Tomacz loves his work at the mine in this north-eastern corner of Minnesota known as the Iron Range. So does his colleague Jason Coaler, who used to sell floor-scrubbers in the city.

"There are not that many jobs up here that pay $24 an hour so I guess we are lucky," he says.

James Oberstar
This story is a classic one of international trade shutting down an industry and international trade starting it up again
Congressman James Oberstar
Today the mine is buzzing with activity - but not long ago, it seemed doomed.

In early 2003 it went bankrupt and 450 men were laid off. The Iron Range had been haemorrhaging jobs ever since the 1980s, when demand for iron ore began to shrink - along with the US steel industry.

"There were no prospects at that time for reopening the mine - it looked fairly bleak," recalls Joe Strlekar, president of the local branch of the United Steelworkers union at the time.

"A larger mine than ours had closed two years earlier and put 1,400 people out of work, so there was a lot of bitterness."

But then, almost out of the blue, China came to the rescue. Not long after the mine closure, the receivers got a phone call from agents in Hong Kong representing a Chinese company called Laiwu Steel which was looking for new investments.

They had never heard of Laiwu before, but they contacted their congressman in Washington DC, Jim Oberstar - who was then straight on the phone to his friend, the Chinese ambassador.

Within months, Oberstar had hammered out a three-way deal to get the iron ore to China.

The congressman, who himself comes from a family of miners, was all too aware of the vulnerability of the Iron Range. He had already seen undercutting from Brazil - what he didn't anticipate was today's demand from China.

"This story is a classic one of international trade shutting down an industry and international trade starting it up again," he says.


Now, the mine is producing a million extra tons of taconite pellets a year. It has not only taken back the old workers, but hired new ones like Joe and Jason.

The revival has been felt in the nearby town of Eveleth and across the Iron Range. Support industries, from truck maintenance to railroads and shipping in the lakeside city of Duluth, south of the mine, are also flourishing.

Iron ore plant in Minnesota
China is aggressively pursuing raw materials from around the globe
But many businesses and industries are far from happy about the new economic order. They associate China's extraordinary growth with factory closures and outsourcing.

Robert Scott of the Economic Policy Institute in Washington has calculated that the trade deficit with China has cost nearly two million American jobs over the last six years - 38,000 in Minnesota alone.

"China is being very aggressive about buying up resources all around the world, and I think the US is part of that picture - but it is a double edged sword," he says.

"It has helped industries like copper and iron mining, but it has also hurt dramatically in the way oil prices have been increasingly over last few years as well."

Learning Chinese

Yet Minnesota is exporting more than raw materials to China - now its second trade partner after Canada.

Chinese teacher Betsy Lueth
Chinese lessons are now attracting large numbers of children
Governor Tim Pawlenty recently led a record-breaking trade mission to China, the largest organised by any state from the US. He took nearly 200 Minnesota companies, selling everything from pacemakers and environmental clean-up technologies to organic bread and pastries.

Tony Lorusso, of the Minnesota Trade Office, says the US is at a "historic crossroads" in its relationship with China.

"The question is, do we want to be friends and partners or enemies and competitors?" he asks.

Meanwhile, at the Yinghua Academy - a Mandarin language kindergarten and primary school in the state capital of St Paul - young Minnesotans of all ethnic backgrounds are preparing for a future with China.

"Parents are hoping to give their kids a step up in the marketplace," says head teacher Betsey Lueth.

"They're definitely interested in Chinese because they think it is the business language of tomorrow."

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