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Montana Resources

Montana Resources' mining operation seen from above from two years ago. MR may have to eat increased steel costs when Pres. Donald Trump's steel tariff is expected to go into effect in about two weeks. 

President Donald Trump’s tariff on steel and aluminum imports could impact local industry, say industry insiders.

The tariffs go into effect in about two weeks. Montana Resources, which employs around 350 people and is the second-highest tax provider to the county, could feel the pinch.

MR spends, on average, at least $350,000 a month on steel products to help mill its copper ore, Mike McGivern, MR vice president for human resources, said. A tariff that could increase the price of steel could cut into the mining company’s bottom line.

“We cannot raise the price of copper,” McGivern said. “We’re at the mercy of what the world buys it at.”

So, if the price on steel products goes up, which is currently expected by analysts, MR will have to eat that cost.

Francine Sullivan, REC Silicon’s vice president for business development, said the new tariff on steel could also impact the Norway-based company’s plant, located in the Montana Connections Business Development Park about 10 miles west of Butte. The Butte plant manufactures mostly electronic-grade polysilicon for the electronics industry, but it also manufactures some solar-grade products, she said.

REC Silicon’s Butte plant employs around 200 people.

Sullivan said the tariff on steel could increase the cost of installing solar panels. Solar panels are encased inside a steel frame.

If installation costs go up, that could affect demand for solar panels in a market already competing with other energy sources, Sullivan said. That could have an indirect impact to the company, which has been struggling since 2014. That year a trade war with China over solar products began under the Obama administration. Since then, REC Silicon has laid off more than half of its staff, though most of those layoffs have taken place at the company’s Moses Lake, Washington, operation, which primarily manufacturers solar-grade polysilicon used in the solar panel industry.

So far, Trump’s tariffs on steel and aluminum, announced late last week, have caused controversy.

The domestic steel industry reacted last week with support for the tariff, stating through a news release that the tariff would mean an Illinois-based steel blast furnace that has been dormant since 2015 could start up again. The aluminum industry responded with a more muted reaction, stating through a news release that it would like to see a more “targeted approach” to exempt “key trading partners” and address “chronic Chinese aluminum overcapacity.”

Trump’s tariff moved caused controversy inside the White House. His top economic adviser, Gary Cohn, announced his resignation last week because of it.

Trump has argued that the tariff is necessary to protect the country’s national security and maintained cheaper aluminum and steel imported into the country has destroyed jobs at home.

But Trump later announced that the tariff will not impact Canada or Mexico imports on steel or aluminum. Other countries, including Japan and the European Union, are threatening retaliation if they, too, are not excluded from the tariff.

The exemption on Canada and Mexico helps the Philipsburg Brewing Company, which goes through half a million aluminum cans a year bottling three styles — Philipsburg Otter Water Session Pale Ale, Haybag American Hefeweizen and Tramway Rye Pale Ale.

Nolan Smith, co-owner of the brewery 65 miles west of Butte, said the exemption Trump is giving Mexico and Canada on aluminum imports saved them from possibly seeing “a few thousand dollars a year” in cost increases to “a few hundred dollars.”

He said that as far as the packaging goes, the cost will only go up a penny or two cents a unit.

Sullivan said that while REC Silicon opposes tariffs of any sort, she hopes there will be a silver lining in Trump’s latest tariff move. He placed a tariff on solar product imports, which REC Silicon lobbied against in January when it sent a letter to the White House signed by more than 300 REC Silicon employees, including many in Butte.

The letter asked that Trump not place a tariff on the solar industry. But Trump announced a 30 percent tariff on the solar market in late January. Many analysts fear that could escalate tensions with China. The U.S. International Trade Commission determined last year that China's solar panel imports and the U.S.-China solar trade war is hurting the U.S. solar industry.

Sullivan said she hopes the new tariff on steel and aluminum will enable Trump to use the tariffs as leverage to end the trade war with China on solar products.

So far, the tariff announcement doesn’t appear to have impacted the price of molybdenum. MR mines molybdenum, or “moly,” as well as copper.

"Moly" is used to harden steel.

The price for “moly” is currently $12.95 a pound. The price bumped up over $10 a pound after the New Year and has continued to remain robust, McGivern said.


Nat'l Resources / General Reporter

Environmental and natural resources reporter for the Montana Standard.

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