There’s a lot of commotion in the Iron Range economic development world this morning. Mike Jennings, editor of the Hibbing Daily Tribune, has returned from a long medical leave and broken a major story about the Essar Steel project in Nashwauk. Apparently, Essar is having trouble completing the financing package for the project and may be asking for more help from the state.
(State Sen. Tom) Bakk, (DFL-Cook), and Madhu Vuppuluri, president of Essar’s North American operations, said Friday they met about two weeks ago and discussed Essar’s difficulty in convincing banks to lend it money to help cover construction costs for Essar Steel Minnesota. Bakk, the chairman of the Senate Tax Committee, said Sens. David Tomassoni, DFL-Chisholm, and Tom Saxhaug, DFL-Grand Rapids, also took part in that meeting.
Bakk and Vuppuluri said that, so far, Essar has used its own cash to pay for site preparation, which began last October.
“But there is a point in time where they want to stop putting cash in and finance the project, and none of us should be surprised at that,” said Bakk. “We’re going to see if we can find some way to help them secure financing, if there’s anything the state can do.”
I have a suspicion that Bakk, Tomassoni, Saxhaug and Vuppuluri were not the only people in that meeting and that is what I will be looking into over the next week. This is thicker than taffy on a hot summer night. Or stickier … either way, same deal.
And I was going to do a special post welcoming Mike Jennings back to the fold of Iron Range journalism, but he instead scooped that post by scooping everyone on this story. The “welcome back” is, thus, implied.
Essar is a multi billion $ company. If they are unable to get financing, something must be wrong internally (i.e., the banks must not be convinced of something). Is Vuppuluri painting the entire story? There have been many rumors of management shake-ups and this is the last thing Minnesota taxpayers should have to bear the cost of (poor management).