Essar buys Minnesota Steel: Project is for real

The headline may seem redundant to a business section editor, but on the Iron Range we are so used to getting burned on big economic projects that we don’t start popping bottle tops until the ink is dry. (Or is it that we don’t STOP popping bottle tops until the ink is dry; maybe both).

On Monday, Essar Steel of India officially bought Minnesota Steel, the longtime proposed iron ore to steel project near Nashwauk (and relatively near my home in Itasca County). Full financial close will come in a few months. This means, more than ever, that we’ll be making steel on the Iron Range in the next few years and that there will be a local employment and housing boom starting next year. A taste of Lee Bloomquist’s story from the Duluth News-Tribune is below, though I encourage you to read the whole article.

Indian firm buys Minnesota Steel; will build steel plant
Lee Bloomquist
Duluth News Tribune – 10/23/2007

NASHWAUK — A financial manager in Grand Rapids offered what’s become an often-heard comment about a $1.6 billion steel mill proposed on Minnesota’s Iron Range.

“He was sitting next to me and he said: ‘I didn’t realize that this was going to be such a big project,’ ” said Peter McDermott, president of the Itasca Economic Development Corp. “It’s like a lot of other people. They don’t believe
it until they see it.”

On Monday, the largest industrial project in the history of the Iron Range gave residents one more reason to believe, taking one of its final steps toward completion. Essar Global Limited, a steelmaker based in India, bought Minnesota Steel Industries and its steelmaking facility proposed near Nashwauk.

The project holds potential to transform the region by adding good-paying jobs, creating spinoff businesses, attracting new families to the region and boosting school enrollments.

“I think this is pretty exciting, myself,” said Peter Kakela, a Michigan State University professor who studies the iron ore industry. “We’ve been importing about 10 million tons of steel slabs per year over the last 10 years. It would be great to have a domestic source.”

“I don’t know if people understand what the magnitude of this is,” Marvin Vuicich, president of American Bank in Hibbing, said of the project. “It’s going to have an absolutely huge impact. It’s going to create a huge housing need in several Iron Range cities, increase property values, rental rates and create a huge need for workers. Maybe it’s going to be a way to keep more young people on the Range.”

Minnesota Steel officials would not comment on the sale price. However, the transaction means construction of the mammoth project probably will begin early in 2008.

“Essar Steel is a global conglomerate and is now going to take the project to successful fruition,” said Steve Hicks, Minnesota Steel vice chairman. “Yes, they will be able to construct the project.”

Full financial closure for the steel plant, in which Essar would secure $1.6 billion for construction, is expected by January.