A Chronology
of
Reserve Mining Company

 

  1. Ontonogan Pool. The Ontonogan Pool, a group of Michigan and Minnesota entrepreneurs, was organized in 1869 to explore for mineral ores in Minnesota. In particular, the lands to be explored included the present day Peters Lease lands. Peter Mitchell did test pitting in the area and wrote geologic reports for the Pool, which reports were reviewed by N. H. Winchell, Minnesota State Geologist in 1875.
  2. Birth of the Mesaba Iron Company. The Mesaba Iron Company, a Minnesota corporation, (not Mesabi Iron Company) was incorporated in 1882 to acquire the 8,740 acres of Pool lands in exchange for stock. The original stockholders were:
L. Stannard, Rockland, Michigan 27 %
Wm. Harris, Lake Linden, Michigan 15 %
W. W. Spalding, Duluth, Minnesota 7 %
Wm. D. Williams, Marquette, Michigan 27 %
James Mercer, Ontonogan, Michigan 11 %
Henry P. Wieland, Duluth, Minnesota 7 %
L. Stannard, Administrator of Wm. 2 %
WillardAlexander Ramsey, St. Paul, Minnesota 4 %
  1. Mineral Lands for Sale or Lease. Between 1882 and 1905, numerous attempts were made to lease, or sell outright, the mineral lands held by Mesaba Iron Company. Interested parties included John M. Longyear, James H. Bennett, Chester A. Congdon, R. B. Whiteside, E. F. Sutton, John S. Keyes, S. H. W. Eckstein, C. E. Lovett and Co., Mallman, and Belliton Mountain Iron Co.
  2. East Mesaba Iron Company and Dunka River Iron Company. In 1905, George A. St. Clair (a mining prospector), John G. Williams (a prominent Duluth attorney), and Samuel Mitchell (a Michigan mineral landowner) formed two corporations to acquire the mineral holdings of Mesaba Iron Company. Under then existing Minnesota law, two corporations were needed because no corporation could own more than 5,000 acres. The names of the two corporations, formed to acquire the Mesaba Iron Company holdings, were East Mesaba Iron Company and Dunka River Iron Company.
  3. E. W. Davis begins Experiments. In 1914, John G. Williams, then a regent of the University of Minnesota and one of the organizers of the two new Minnesota corporations, interested Professor Edward W. Davis, an electrical engineer on the University staff, in experimenting on and developing a process for concentrating magnetic taconite. This was to be the beginning of a life long involvement in the taconite business by Davis, ‘The Father of Taconite’.
  4. Mesabi Syndicate and Peters Lease. In 1915, East Mesaba Iron Company and Dunka River Iron Company leased their entire holdings to Claude W. Peters (hence the Peters Lease), acting for the Mesabi Syndicate, headed up by Daniel C. Jackling and his associates and Hayden Stone & Co. Jackling became famous for his development and exploitation of the low grade porphyry copper deposits of western United States.
  5. Babbitt. Between 1915 and 1920, the properties were examined for the Syndicate under the supervision of Jackling and Sealy Mudd. Walter G. Swart was in charge in the field. The townsite was named after Judge Kurnal R. Babbitt of New York, an associate of Jackling and Hayden.
  6. Jackling Recommendation. In 1919, Jackling recommended to the Mesabi Syndicate that they proceed with the construction of a commercial plant at an estimated cost of $2.5 million with crushing (4400 tons per day), grinding (1100 tons per day), concentrating and sintering facilities.
  7. Birth of Mesabi Iron Company. The members of the Syndicate accepted Jackling’s recommendation and in 1919, organized the Mesabi Iron Company, a Delaware corporation. They then assigned the Mesabi Syndicate’s Peters Lease to the Mesabi Iron Company.
  8. Construction of First Taconite Plant. Work commenced in January 1920 on railway connections between the Duluth and Iron Range Railway and the mill site. Construction of the mine and mill started about May 1, 1920.
  9. Commencement of First Taconite Operation. Operations began in a limited way in May 1922. Design and construction defects together with alterations found necessary in the fine grinding and separating plants followed by an unusually severe winter, delayed reaching the goal of 200 tons of sinter per day until March 1923.
  10. Insolvency of Mesabi Iron Company. In early May of 1924, operations were suspended because of a drop in the Lake Erie price of ore and higher than anticipated costs of production. Mesabi Iron Company never resumed operations on the Peters Lease at Babbitt.
  11. Birth of Reserve Mining Company. Between 1937 and 1939, Oglebay Norton & Company, American Rolling Mill Company and Cleveland Cliffs Iron Company, showed interest in the Peters Lease properties of Mesabi Iron Company. In 1939, Oglebay Norton & Company incorporated Reserve Mining Company, a Minnesota corporation. The Peters Lease was assigned to Reserve Mining Company by Mesabi Iron Company in exchange for a one third share of the operating profits of Reserve Mining Company.
  12. Change in Reserve Mining Company Ownership. Later in 1939, shares in the newly formed Reserve Mining Company were assigned to successors in the following proportions. The American Rolling Mill Company (Armco Steel) received 33 1/3 %, the Wheeling Steel Corporation received 33 1/3 %, the Cleveland Cliffs Iron Company received 10 % and the Montreal Mining Company, a wholly owned subsidiary of Oglebay Norton & Company, received 23 1/3 %.
  13. Presidents. The presidents of Reserve Mining Company, from start to end, were:

    Crispin Oglebay March 24, 1939 to October 6, 1939
    R. C. Allen October 6, 1939 to January 16, 1948
    Calvin Verity January 16, 1948 to March 2, 1949
    J. A. McFarland March 2, 1949 to October 2, 1950
    Charles M. White October 2, 1950 to September 30, 1954
    July 3, 1958 to May 13, 1960
    William M. Kelley September 30, 1954 to July 3, 1958
    Robert J. Linney May 13, 1960 to December 3, 1963
    J. William Bryant December 3, 1963 to January 1, 1967
    Edward M. Furness January 1, 1967 to June 1, 1975
    Merlyn G. Woodle June 1, 1975 to January 15, 1981
    Matthew R. Banovetz January 16, 1981 to April 30, 1986
  14. Vice Presidents. The Vice Presidents of Reserve Mining Company were:
    R. C. Allen March 24, 1939 to October 6, 1939
    J. C. Miller October 6, 1939 to September 9, 1946
    A. J. McFarland October 6, 1939 to March 2, 1949
    Crispin Oglebay September 16, 1942 to October 23, 1949
    Calvin Verity September 9, 1946 to January 16, 1948
    C. L. Kingsbury June 10, 1948 to December 19, 1956
    William M. Kelley February 7, 1951 to September 30, 1954
    J. William Bryant December 19, 1956 to January 1, 1964
    Robert J. Linney June 27, 1957 to May 3, 1960
    Edward M. Furness February 22, 1961 to January 1, 1967
    Edward C. Lampman July 6, 1966 to July 6, 1970
    Robert A. Lee July 6, 1966 to May 31, 1981
    Merlyn G. Woodle January 1, 1967 to June 1, 1975
    Kenneth M. Haley January 1, 1967 to June 1, 1975
    Matthew R. Banovetz June 1, 1975 to January 15, 1981
    Douglas E. Carlson July 30, 1981 to April 30, 1986
  1. Planning and Development. From 1939 to 1952, the period of World War II and its aftermath, extensive planning and development were undertaken including:
    1. Reconditioning of the Babbitt plant.
    2. Acquisition of additional lands for townsite and other auxiliary purposes.
    3. Experimental work by E. W. Davis at the University of Minnesota Mines Experiment Station on concentration and pelletizing.
    4. Studies of concentrator water supply and tailings disposal problems at Babbitt.
    5. Selection of mill sites, aerial surveys, proposed harbor modeling under contract with the U. S. Army Corps of Engineers at Vicksburg, Mississippi.
  1. Environmental Permits. For its novel approach to processing and tailings disposal, Reserve Mining Company applied for and secured all necessary governmental authorizations. There was some opposition from local fishermen, but that was far outweighed by the desires of the proponents who wanted the economic boost that a new iron ore development would bring to Minnesota.
  2. There were a series of state and federal public hearings held in Duluth, Minnesota, to air all of the known facts surrounding the proposal and its impacts. Despite later allegations of pollution, very few impacts were unanticipated. Among the unanticipated impacts were the growth of the tailings delta and the temporary clouding of the waters of Lake Superior in and around Silver Bay. The public aversion to the deposition of a ‘waste’ into Lake Superior and the never proven charge that the tailings constituted a hazard to public health when present in the water or the air were factors that were never anticipated, as well.

    On August 15, 1947, the Minnesota Department of Conservation (later, Department of Natural Resources) issued its permit to Reserve Mining Company for the construction of docks and harbor breakwaters in Lake Superior near Beaver Bay.

    On December 13, 1947, after nine public hearings, the Department of Conservation issued its permit to Reserve for the appropriation of 130,000 gpm of water from Lake Superior for the taconite concentration plant (subsequently amended to increase the amounts to 260,000 gpm and 502,000 gpm.

    On December 22, 1947, the Minnesota Water Pollution Control Commission (later, the Minnesota Pollution Control Agency) issued its permit to Reserve to deposit taconite tailings in Lake Superior.

    On April 27, 1948, the U. S. Secretary of War (later, Secretary of Defense) granted his permit to Reserve to build the docks and harbor in Lake Superior and to deposit tailings in Lake Superior under federal law.

  3. Change in Reserve Mining Company Ownership Again. On October 24, 1950, the ownership of Reserve Mining Company changed again to 50 % Armco Steel and 50 % Republic Steel. National Steel acquired a 15 % interest in Reserve for a nine-month period, but by January 3, 1952, Armco and Republic were again sole 50 – 50 owners.
  4. Labor Agreement. On October 24, 1952, the first collective bargaining agreement between Reserve Mining Company and the United Steelworkers of America was agreed to and executed.
  5. Financing. The new project at Babbitt and what was to become Silver Bay was financed with shareholders money and loans of $148,000,000 at 4 % interest (Series A Bonds). Borrowed funds represented 80 % of the cost. The money was borrowed from a consortium of insurance companies:
    Metropolitan Life Equitable Life New York Life
    Northwestern Mutual Life Penn Mutual Life Sun Life of Canada
    Massachusetts Mutual Life Provident Mutual Life Teachers Ins & Ann Assn.
  6. Construction in Silver Bay. Construction of railway, dock and harbor and Silver Bay plant were begun in 1951 and completed in February 1956. Hunkin – Arundel – Dixon, joint venturers, were the principal contractors. Capacity was originally set at 3 million tons of pellets. Once in operation, this was quickly raised to 5 million tons. Edwin C. Lampman was Manager of Construction for Reserve Mining Company from 1952 to 1957. Lampman later became the Silver Bay Division Manager and then Vice President of Operations.
  7. Operations in Babbitt. Taconite ore was mined in Babbitt from the Peter Mitchell Mine, beginning in 1952. Pellets were produced in Babbitt during the construction phase from the reconditioned Mesabi plant. The Managers at the Babbitt Division through the years were, successively, August F. Torreano, Floyd Erickson, Merlyn G. Woodle, Sidney C. Howell, Douglas E Carlson and David J. DeLeo.
  8. Operations in Silver Bay. The first pellets were produced at Silver Bay on October 20, 1955. The first pellets were shipped from the new port of Silver Bay on April 6, 1956. The Managers of the Silver Bay Division were successively, Edwin C. Lampman, Matthew R. Banovetz, Kenneth R. Judkins, James A. Reynolds and David L. Dingeman.
  9. Earliest Management. The managers of Reserve Mining Company operations in 1955 were:
    Silver Bay
    Robert J. Linney Manager of Operations
    Floyd W. Erickson General Superintendent of Operations
    Edward M. Furness Superintendent, Crushing & Concentrating
    Kenneth M. Haley Superintendent, Pelletizing
    Babbitt
    August F Torreano Superintendent of Operations
    F. E. McIntire Mine Superintendent
    C. L. Kingsbury, Jr. Superintendent, Crushing & Concentrating
    Matthew R. Banovetz Superintendent, Pelletizing
  10. Management in 1957. The managers of Reserve Mining Company operations in 1957 were:
    Silver Bay
    William M. Kelley President
    Robert J. Linney Vice President, Operations
    J. William Bryant Vice President, Finances
    Edwin C. Lampman Assistant Manager of Operations
    Edward M. Furness Superintendent, Crushing & Concentrating
    Kenneth M. Haley Superintendent, Pelletizing
    Babbitt
    Floyd M. Erickson Division Manager
    F. E. McIntire Mine Superintendent
    C. L. Kingsbury, Jr. Superintendent, Crushing & Concentrating
    Matthew R. Banovetz Superintendent, Pelletizing
  11. Mesabi Iron Company Controversy. In 1939, Mesabi Iron Company had assigned the Peters Lease to Reserve Mining Company in return for a one third share of the net profits. From 1947 on to 1960, there had been attempts to reach an agreement, which would do away with the profit sharing feature of the Lease assignment.

    Mesabi disputed the calculation of net profits by Reserve and the consequent determination of its one-third share of the net. The most important questions in dispute were:
    1. The value to be assigned to the pellets produced,
    2. Reserve’s claim of right to deduct tariff charges for the railroad, dock and harbor operations,
    3. Reserve’s claim of right to charge at commercial rates for electrical power produced,
    4. Reserve’s claim of right to deduct losses on townsite expenses, and
    5. Accounting for finance charges and amortization of certain other losses.
  1. Litigation of the Mesabi Controversy. The dispute lasted from the beginning of operations until final settlement in 1960. Various aspects of the controversy appeared in U. S. District Court in Delaware, U. S. District Court in Minnesota, U. S. Court of Appeals for the Eighth Circuit and Commercial Arbitration. Mesabi appointed Richard C. Klugescheid as its representative (later Francis D. Butler) on the arbitration board. Reserve appointed Harry S. Taylor as its representative (later William K. Montague). Wesley A. Sturges, Dean of Yale Law School, was named as disinterested third party arbitrator.
  2. Settlement of the Mesabi Controversy. During the latter part of 1959, William J. DeLancey, for Reserve, and Arnold Hoffman, for Mesabi, met in frequent private negotiations to seek a settlement of the entire dispute. They were successful in early 1960 and, on February 19, 1960, all controversies were settled and a fixed royalty was substituted for the profit sharing feature of the Peters Lease.
  3. Expansion to 9 Million Tons. Closely following the settlement of the Mesabi controversy, on August 4, 1960, Reserve announced an expansion of its operations in Babbitt and Silver Bay. The operations with an actual 5,000,000-ton capacity (planned capacity was 3,750,000 tons) were proving to a success. The expansion would increase the actual capacity to 9,000,000 tons. John W. Gruner, professor of mineralogy at the University of Minnesota, issued a geologic report on available reserves in the Peters Lease in support of the financing. The same nine insurance companies loaned $90,000,000 to Reserve for its expansion (Series B Bonds).
  4. Birth of Mesabi Trust. Following a favorable tax ruling by the Internal Revenue Service on October 18, 1960, which treated revenues received by the trust as are partnership revenues (taxed only to the shareholders or certificate holders), Mesabi Iron Company sought and obtained approval from its shareholders to dissolve and establish Mesabi Trust to hold its assets. This tax ruling is still in effect in 1999 and Mesabi Trust is still in existence in 1999 with its certificates traded on the NYSE.
  5. Reserve Mining Company Officials in 1964. The Reserve Mining Company officers and superintendents at the end of 1964 were:

    Corporate
    J. William Bryant President E. M. Furness Vice President Operations
    Kenneth M. Haley Manager , R&D Robert A. Lee Controller
    W. K. Montague Counsel W. L. Edwards Dir., Industrial Relations
    Edward Schmid Dir., Public Rel. E. K. Smith Purchasing Agent
    Silver Bay Division Babbitt Division
    Edwin C. Lampman Manager Merlyn G. Woodle Manager
    James A. Reynolds Supt. Crushing & Conc. S. C. Howell Asst to Manager
    Donald E. Cooksey Supt. Pelletizing F. E. McIntire Mine Supt.
    Henry R. Blanchard Supt. Power Plant C. B. Prebich Supt. M. Maint.
    W. A. Stubblefield Supt. Electrical Maint. John Hyvarinen Supt. El. Maint.
    Larry J. Molinaro Supt. Mech. Maint.
  6. The Stoddard Report. In 1968, a U. S. Department of the Interior group, under the direction of Charles Stoddard, conducted a study of Reserve’s disposal of taconite tailings in Lake Superior. An unauthorized report was issued by this group on December 31, 1968. It was highly critical of Reserve’s discharge and alleged massive pollution. This report led to a series of six Lake Superior Enforcement Conferences in Duluth, Minnesota, to investigate pollution problems in the Lake Superior Basin.
  7. Research and Development. In the early 1960s, the Research and Development Division was established with the previous Pelletizer Superintendent, Kenneth M. Haley, named as its Manager. In 1967, Haley was promoted to Vice President and Manager, Research & Development. Arthur H. Samuel was promoted to Assistant Manager, Research & Development. The main reason for creation of the Research and Development Division was to find ways to improve operations and product quality.

    During the lake discharge controversy and litigation, it became of vital assistance in conducting water and air quality research, as well. Research and Development was heavily involved in preparing and providing expert testimony in the trials and hearings to come.

  1. Plant Capacity. After modest plant improvements in 1965, the beneficiation plant reached a capacity of 10,800,000 tons of pellets per year. Fifteen years later, in 1980, this capacity was reduced to 8,400,000 tons, following quality improvements from the addition of dry cobbing, fine screening and flotation to the plant.
  2. Lake Superior Enforcement Conferences. The first of the six conferences held in Duluth was from May 13 - 15, 1969. Follow-up Conferences were held from September 30 - October 1, April 29 – 30, 1970, August 12 – 13, 1970, January 14 – 15, 1971, and the last between April 22 – 23, 1971. The Conferences were for fact finding, did not follow the usual court room rules of evidence, received prepared statements full of emotion and hearsay, and were frequently lacking in scientific study or backing. Delegations from various walks of life attended, made statements and cheered or jeered during the proceedings.
  3. At the conclusion of the Conferences in 1971, the U. S. Environmental Protection Agency recommended to the Department of Justice that it issue to Reserve Mining Company a "180 day notice" that it was in violation of federal pollution control laws. The U. S. Department of Justice accepted this recommendation and, on February 14, 1972, filed suit against Reserve in the U. S. District Court in Minnesota.

  4. New Pollution Control Standard Challenged by Reserve. On December 14, 1969, Reserve brought suit against the State of Minnesota challenging the newly adopted regulation WPC 15 as unreasonable when applied to Reserve’s in lake tailings discharge. Minnesota countered with its own suit against Reserve, alleging pollution by Reserve. The trial began on June 22, 1970 before Judge C. Luther Eckman in the District Court sitting in Two Harbors, Minnesota. Reserve’s lead attorney in this suit was Edward T. Fride.
  5. The trial continued through August 5, 1970. On December 15, 1970, Eckman ruled that WPC 15 was arbitrary and unreasonable in its application to Reserve. He ordered the parties to negotiate a modification to the state discharge permit so as to insure that tailings did not go beyond the Permit area and the bottom of Lake Superior (the "great trough"). The State of Minnesota appealed the decision to the State Supreme Court and lost in a ruling handed down in 1972.

  6. Reserve Mining Company Shipments. According to the Minnesota Mining Directory, as of 1986, total cumulative shipments by Reserve Mining Company were 218,839,191 tons of pellets. Shipments by year were:

    12,861 tons shipped 1952
    245,643 tons shipped 1953
    344,183 tons shipped 1954
    333,352 tons shipped 1955
    3,909,113 tons shipped 1956
    5,421,205 tons shipped 1957
    4,994,174 tons shipped 1958
    3,640,008 tons shipped 1959
    4,941,322 tons shipped 1960
    5,939,307 tons shipped 1961
    5,568,058 tons shipped 1962
    7,697,984 tons shipped 1963
    10,333,600 tons shipped 1964
    9,966,088 tons shipped 1965
    10,636,382 tons shipped 1966
    9,538,538 tons shipped 1967
    9,516,840 tons shipped 1968
    10,649,188 tons shipped 1969
    9,831,794 tons shipped 1970
    9,466,362 tons shipped 1971
    9,480,710 tons shipped 1972
    10,877,754 tons shipped 1973
    10,399,080 tons shipped 1974
    8,971,236 tons shipped 1975
    9,694,028 tons shipped 1976
    4,448,890 tons shipped 1977
    9,609,732 tons shipped 1978
    8,267,357 tons shipped 1979
    4,399,070 tons shipped 1980
    6,350,818 tons shipped 1981
    2,124,266 tons shipped 1982
    2,717,086 tons shipped 1983
    3,628,156 tons shipped 1984
    3,426,100 tons shipped 1985
    1,302,749 tons shipped 1986
  7.  

  8. Reserve Mining Company Officials in 1972. The Reserve Mining Company officers and superintendents at the end of 1972 were:

    Corporate
    E. M. Furness President Merlyn G. Woodle VP Operations
    K. M. Haley VP & Manager, R&D Robert A. Lee VP & Controller
    A. H. Samuel Asst. Manager, R&D Richard C. Bianco Dir., Ind. Rel.
    W. K. Montague Counsel J. C. Fisher Purchasing Agent
    Edward Schmid Director, Public Rel. O. H. Tourje Ch. Ind. Engineer
    Richard L. Reed Chief Engineer
    Silver Bay Division Babbitt Division
    Matthew Banovetz Manager S. C. Howell Manager
    Larry J. Molinaro Genl. Supt. Maint. D. E. Carlson Mine Supt.
    James A. Reynolds Supt. Crushing & Conc. Joseph Pastika Ch Min Engineer
    Donald E. Cooksey Supt. Pelletizing R.N. McIndoo Supt.Auto Maint.
    Henry R. Blanchard Supt. Power Plant John Hyvarinen Supt. El. Maint.
    W. A. Stubblefield Supt. Electrical Maint. D. E. Hyde Supt. Plt & Shp
    William D. Grabow Supt. Mech. Maint. G. J. Sennhauser Supt. Railroad
  9.  

  10. Asbestos. In June 1973, for the first time in the entire controversy, the federal government claimed that Reserve’s taconite tailings contained asbestos. The question of a potential health hazard then became the central issue in the action, superceding all questions of pollution. Reserve was totally unprepared to meet the allegation that its tailings constituted a hazard to public health. The entire iron mining industry hurried to claim that their ore bodies were greatly different from Reserve’s and were not hazardous.
  11. Trial in Federal District Court. The trial began on August 1, 1973, in Minneapolis before U. S. District Judge Miles W. Lord. It extended almost continuously until late April 1974. More than 2,000 exhibits were used, over 140 witnesses testified, and over 20,000 pages of transcript were recorded. Reserve’s lead attorneys in this federal case were Edward T. Fride and Robert Sheran. When Governor Perpich appointed Sheran to become Chief Justice of the Minnesota Supreme Court, MacClay Hyde became co-counsel with Fride. William Egan represented the interests of Republic and G. Alan Cunningham represented Armco in this multi-party litigation.
  12. Shut Down of Reserve Mining Company. On Saturday, April 20, 1974, based upon evidence of a public health hazard, Judge Lord ordered an immediate cessation of Reserve’s taconite tailings discharge into Lake Superior. Operations at both Babbitt and Silver bay were completely shut down by midnight Saturday. Reserve promptly applied to the U. S. Eighth Circuit Court of Appeals for a stay of Judge Lord’s order.
  13. The Re-opening of Reserve Mining Company. Meeting in a resort hotel in the Ozarks, the Eighth Circuit Court took time out from their retreat and heard arguments from hastily gathered counsel for both sides on the question of a stay of Judge Lord’s order of closure. Late Monday night, April 22, 1974, the appellate court granted a temporary stay (later extended to allow Reserve time to prepare an acceptable abatement plan) and on Tuesday, the 23rd, the mine and plant were up and running again.
  14. Seen on Silver Bay’s Mariner Motel marquee that week, "To Hell and Back in Two Days". The Court of Appeals said the plaintiffs had failed to prove a demonstrable health hazard.

    The U. S. Supreme Court, on July 9, 1974, unanimously denied certiorari thus denying plaintiffs attempt to vacate the Eighth Circuit’s stay. On October 11, 1974, for a second time, the U. S. Supreme Court, by a vote of 8 – 1 denied certiorari for plaintiffs’ motion to vacate an extension of the Eighth Circuit’s stay of Judge Lord’s closure order.

  15. Reserve Commits to On-land Disposal. On November 15, 1974, Reserve Mining Company applied to the Minnesota DNR and PCA and to the Corps of Engineers for all permits necessary to implement total on-land tailings disposal at a site named Mile Post 7.
  16. Eighth Circuit Court of Appeals Further Orders. The Eighth Circuit Court of Appeals, on March 14, 1975, unanimously issued an order modifying Judge Lord’s closure order of April 20, 1974, establishing a timetable consideration of Reserve permit applications and a reasonable time within which to construct abatement facilities. Selection of a disposal site was declared to be a state, not a federal, matter.
  17. On January 6, 1976, the Court of Appeals, upon its own motion, unanimously ordered Judge Lord removed from the Reserve case and directed that it be assigned to another district court judge. Chief Judge Edward J. Devitt promptly appointed himself to take Judge Lord’s place in the trial.

  18. U. S. Supreme Court Denies Cert. On March 31, 1975, the U. S. Supreme Court, for a third time denied certiorari, refusing to hear an appeal of the Eighth Circuit’s orders in the Reserve case.
  19. State Rejects Mile Post 7. Wayne Olson, Hearing Officer, on May 26, 1976, recommended to the DNR and the PCA that permits not be granted for a disposal site at Mile Post 7. He recommended a site along the Reserve’s railroad at Mile Post 20 instead. The two agencies, on July 1, 1976, accepted Olson’s recommendations and rejected Reserve’s permit applications. Reserve promptly appealed the denial to the State District Court.
  20. Reserve Liable for Water Filtration. Judge Devitt ruled on February 21, 1976, that Reserve was liable for interim water filtration expenses incurred by the U. S. in providing local citizens with filtered water. On May 4, 1976, Devitt awarded the City of Duluth interim water filtration expenses and imposed fines and penalties against Reserve. On July 7, 1976, in view of the failure by the State and Reserve to agree on a disposal site, Devitt ordered a one-year phase-out period for Reserve’s operations. And a final shut down on July 7, 1977.
  21. Permit Rejection Appealed to State District Court. Trial of Reserve’s appeal from the permit denials by the Minnesota DNR and PCA began on November 3, 1976, before a three judge panel comprised of Judges Donald C. Odden, C. Luther Eckman and Nicholas S. Chanak in Duluth and continued until December 3, 1976. The three judges ruled unanimously, on January 28, 1977, that the permit rejection by the agencies was unlawful, unreasonable and not supported by the evidence. The agencies were ordered to issue all permits forthwith, subject to certain specified conditions. The agencies and the environmental organizations appealed to the Minnesota Supreme Court.
  22. Good Friday Decision. In what has become known locally as the "Good Friday Decision", the Minnesota Supreme Court, on Friday, April 8, 1977, unanimously upheld the State District Court’s January 28th decision. The news spread like a wild fire at the community ecumenical Good Friday church service held at St. Mary’s Catholic Church. This opened the way for Reserve to request a stay of federal Judge Devitt’s closure order beyond July 7, 1977 and request the Corps of Engineers to issue the necessary permits along with the state agencies.
  23. Closure Order Lifted. In view of the State court determinations and upon application by Reserve, on May 26, 1977, Judge Devitt stayed his July 7, 1977 closure order. He ordered Reserve to commence construction of its Mile Post 7 project by June 1, 1977, and to terminate its discharge into Lake Superior on or before April 15, 1980.
  24. Reserve Mining Company Officials in 1978. The Reserve Mining Company officers and superintendents at the end of 1978 were:

    Corporate
    Merlyn G. Woodle President M. R. Banovetz Ex. V P Operations
    Robert A. Lee VP, Finance A. H. Samuel Manager, R&D
    Richard C. Bianco Director, IR Richard L. Reed Chief Engineer
    Edward Schmid Director, PR M. S. Johnson Purchasing Agent
    Silver Bay Division Babbitt Division
    Kenneth R. Judkins Manager D. E. Carlson Manager
    William R. Pearson Supt. Conc. Arthur J. Walz Mine Superintendent
    Jack R. Scott Supt. Pelletizer Joseph Pastika Chief Mining Engineer
    Henry R. Blanchard Supt. Pow. Plt. R. N. McIndoo Supt.Auto Maintenance
    W. A. Stubblefield Supt. El. Maint G. R. Smith Supt. Electrical Maint.
    William D. Grabow Supt. Mech. Mnt. Donald E. Hyde Supt. Plant & Shop Maint.
    K. W. McKnight Supt. Q Control G. J. Sennhauser Supt. Railroad
  25. Issuance of Permits. On August 23, 1977, the Minnesota DNR issued all permits required for Mile Post 7 from that agency. On April 28, 1978, the Minnesota PCA issued its Permit for Construction and Operation of a Disposal System (Mile Post 7). On October 18, 1977, the Corps of Engineers issued its permit to Reserve for the construction of the first of 18 needed from the Corps. They advised Reserve that the Corps July 19, 1977 regulations for Nationwide Permits automatically covered 14 permit activities involved in the Mile Post 7 project.
  1. Land Acquisition. Land acquisition for the Mile Post 7 project was completed in May 1978 with the final agreement on a land exchange with the State of Minnesota. About 7,000 acres of needed additional land was acquired from ten private landowners, the County of Lake and the State of Minnesota.
  2. An interesting sidelight to the land acquisition of private lands was the refusal by at least one owner to sell needed tailings disposal lands to Reserve Mining Company. They indicated that they would challenge the constitutionality of the taconite company’s statutory right of eminent domain in court.

    However, the Minnesota Supreme Court, in a footnote to their "Good Friday Decision", said it would declare that right of eminent domain constitutional, if asked in a court challenge. The opposing landowner took note and the constitutionality was never actually ruled on directly in court. The outcome of a challenge was pretty clearly signaled by this gratuitous footnote.

    The private land acquisition then became simply a matter of how much it would cost Reserve Mining Company. Upon the conclusion of Reserve’s land acquisition, the Minnesota legislature repealed the statute that granted eminent domain rights to the taconite companies.

  3. Construction Contracts. The contract with Kaiser Engineers, Inc. for the construction of the Mile Post 7 project, was executed on May 20, 1975. This agreement provided that Kaiser would do the engineering, procurement and construction for most of the facilities needed in the Mile Post 7 project. Construction work in and around the actual tailings basin was performed by Bay Constructors under a contract executed February 16, 1976. Clarence Nohlochek was named Reserve’s Manager of Construction for the project.
  4. Scope of the Mile Post 7 Project Construction. The construction project included the installation of wet wall electrostatic precipitators in the pelletizer, installation of flotation circuitry and fine screens in the concentrator, installation of dry magnetic cobbing machines in advance of the concentrator, construction of tailings slurry thickeners on the tailings delta, construction of a double pipeline from the delta to the new Mile Post 7 tailings basin, building two major earthen dams out of coarse tailings, digging numerous diversion channels and dikes, building many roads, building a breakwater on the leading edge of the delta, constructing a thermal discharge pipeline for power plant non-contact water discharge into Lake Superior.
  5. Financing for the Mile Post 7 Project. A large part of the money ($117,000,000) needed for the Mile Post 7 project was borrowed from the same life insurance companies as before (Series C bonds). An additional $230,000,000 was borrowed from the public for the project through the sale of pollution control tax exempt bonds (Series D). The Mile Post 7 project had been estimated to cost $370,000,000. By a remarkable combination of skill and luck, it was completed within $1,000,000 of the estimate. This left a total bonded indebtedness by Reserve Mining Company of roughly $400,000,000 in 1980.
  6. Taconite Tailings Discharge Terminated Ahead of Time. On March 15, 1980, construction was essentially complete and all operations, except shipping, were shut down. This enabled the final tailings pipeline hookups and remaining construction to be completed. The court-imposed deadline, of April 15, 1980, was beaten by one month.
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  7. Reserve Mining Company, the Partnership. By agreement dated December 15, 1982, the assets, rights and obligations of Reserve Mining Company, the corporation, were transferred to Reserve Mining Company, the partnership. This change was necessary to retain the ‘cost company’ tax treatment, wherein all profits flowed through to the owners as if the company were a partnership. Reserve Mining Company had enjoyed this status ever since it began operations. The Internal Revenue Service, by rule, abolished cost companies in 1977 but delayed the application of the rule to Reserve Mining Company until Reserve could safely restructure as an actual partnership.
  8. Birth of LTV Steel Corporation. A merger of Republic Steel Corporation and Jones & Laughlin Steel Corporation was announced on September 28, 1983. The new entity was to be called LTV Steel Corporation. Armco Steel and LTV Steel would now own reserve Mining Company.
  9. Reserve Mining Company Officials in 1985. The Reserve Mining Company officers and superintendents at the end of 1985 were:

    Corporate
    Matthew Banovetz President
    Douglas E. Carlson Vice President Operations
    R. C. Hemmersbaugh Counsel & Corporate Secretary
    Duane D. Gustafson Treasurer & Controller
    Richard C. Bianco Director, Industrial Relations
    Richard C. Nelson Purchasing Agent
    Donald C. Wright Director, Public Relations
  10. Silver Bay Division Babbitt Division
    David L. Dingeman Manager David J. DeLeo Manager
    Robert L. Lemire Supt. Env. Contr. R. L. Mitchell Mine Supt.
    C. L. Allie Supt. Concentrating A. J. Walz Supt. Tech. Svcs.
    Dennis F. Koschak Supt. Pelletizing H. W. Hilshorst Supt. Mech. Mnt.
    Robert E. Nikolai Supt. Power Plant John Holm Supt. RR & Crsh
    L. F. Schubert Supt. Electrical Maint.
    Charles W. Williams Supt. Mech. Maintenance
    L. F. Benoit Supt. Quality Control
    W. D. Grabow Supt. Technical Services

     

  11. Mining Industry Depression. A serious depression hit the entire mining industry in 1981 or 1982. It hit the iron and steel industry particularly hard, caused by foreign competition, oversupply and, many say, the growth of costly and inefficient practices. Business Week asked, "Is the mining industry dead?" This sparked a series of cost cutting moves throughout the mining industry as the industry tried to remain competitive or regain a competitive edge.
  12. Beginning of the End. Reserve Mining Company experienced periods of curtailed production, early retirements and lay offs of personnel. The first such curtailment was for 10 weeks in the spring of 1982. The second was for 24 weeks during the summer and fall of 1982. The third was for 37 weeks for the spring, summer and fall of 1983.

    At the same time, the other taconite producers were going through the same or similar painful contractions and curtailments. During 1985, Butler Taconite in Nashwauk, Minnesota, shut down permanently.

    In mid 1985, Reserve cut back production to one large furnace - a rate of less than 50 % - until the middle of 1986. Many of us felt that the very large bonded indebtedness of Reserve, and its owners, insured continued operation. This belief assumed that the owners would continue in operation themselves and, therefore, would continue running Reserve in order to pay off their debts. It did not take into account that the weight of the debt might prove to be too much for the owners to sustain.
  13. The End of Reserve Mining Company. On July 17, 1986, LTV Steel Corporation, one of Reserve’s two owners filed for bankruptcy under Chapter 11 of the federal bankruptcy law. On July 21, 1986, Reserve laid off all hourly employees. On July 22, 1986, Reserve laid off all salaried employees. Armco Steel Corporation was nearly dragged into bankruptcy, itself.

    On August 7, 1986, Reserve Mining Company filed for bankruptcy itself, under Chapter 11. Many easily liquidatable assets were sold by the trustee in bankruptcy and Reserve and never re-opened. Its assets were purchased by Cyprus Minerals 3 years later in competitive bidding and the operation was started up at a reduced rate, with new ownership and management.

     

    Compiled in 1999 from retained corporate records and personal recollections of Richard C. Hemmersbaugh.