As potential Iron Range economic development projects go, Essar Steel Minnesota is the biggest and most likely to happen. With most permits in place and actual concrete being poured as we speak, the young but rapidly expanding Indian steel giant Essar is on its way to opening up the ore formation near Nashwauk abandoned when Butler Taconite closed in the early 1980s.
The notion of an integrated mining and steel-making operation at this site has existed in some form nearly my whole life. Essar officials say they remain committed to the concept of a mine and steel facility. Up to 2,000 construction jobs and 500 permanent jobs are possible, if all goes to plan.
Recent developments, however, would seem to threaten the rosy relations between Essar and the Iron Range leaders who delivered crucial local and legislative support and more than $70 million in state dollars for site infrastructure. The company has announced that they will be building the plant with steel from India.
Neal St. Anthony pens a column in Sunday’s Star Tribune featuring State Rep. Tom Anzelc (DFL-Balsam Township) who offers skepticism over the foreign steel provisions. (NOTE: I am Anzelc’s campaign manager, though my thoughts here are my own). Essar officials claim that they couldn’t get financing from American banks and that their financing agreements with Indian banks insisted upon Indian steel. That’s clear enough, but a far cry from when the company claimed the ability to self-finance as Essar bought the former Minnesota Steel project as it was known five years ago.
In general, Iron Range leaders continue to be nervous over Essar’s willingness to deliver an actual steel plant. The company recently purchased steel plants in the United States and Canada. The company also said it will first ship pellets before building the steel production facility, adding a layer of economic uncertainty to that final phase. St. Anthony’s column is a good illustration of the potential ups and downs of this project.
The irony abounds in this case. First, I just wrote last week that for the first time Iron Range ore will be shipped to China to make steel. Now Indian steel will be shipped to the Iron Range to build a mine with hopes of building a steel plant. This isn’t just globalization, this is showy globalization.
Second, kudos to the Indian banks for protecting their investment in this project by insisting on economic provisions, such as steel contracts. Minnesota and Range leaders put in our money for rail lines and roads that have no purpose other than serving Essar, without any provisions that steel made from Iron Range ore be used in this massive construction project. The impact on Range jobs is difficult to calculate, but sufficed to say a lot of Range kids could have gone to college on what was lost here.
Steel demand is the almighty power in this equation. If steel companies can ship ore to China and steel from India, we’re in uncharted territory. Anyone offering supply needs to insist upon getting their share of the spoils. The people of the Iron Range live over one of the world’s largest ore bodies, even after 100 years of hard mining. The people of the Iron Range people, by law, sacrifice local property tax revenue to accommodate local mining. Their interests matter, too.
The relationship between Essar and the Iron Range could yet become a strong one, each providing something important to the global steel industry. With $70 million in, and the willing support and labor of the Iron Range at the ready, we’re waiting for our end of the deal.
When you have President Obama stating there is no American exceptionalism and we’re moving towards one world government this is what you get. According to the liberal elites, other countries can protect their interests but it’s wrong for americans to do the same. Open the border and give everyone a piece of the dream (funny that they don’t even believe in the dream). They believe america built itself on the back of the under privileged not only here but abroad, reparations are in order for all the world….. I could get into TARP (started by Bush), giving banks cash for next to nothing, so they are not making loans to companies like Essar, but that’s a rant for another day…… My point is lets get mining, both with Essar and PolyMet, and if the IRRRB/state gives money in the future, it’s up to US to make sure they protect RANGERS because it’s not in our representatives DNA to do it themselves. It’s also up to us to demand permits and effort towards getting us going up here from our elected officials. If they don’t fight for you…. elect someone that will.
What about the cost (not $$, but usage) of diesel to ship this heavy stuff around the world? And the cost in resources to make those ships and the man power and steel to run the ships and load and unload the ships? Where does all that fit into the equation?