Star Tribune pens glowing Essar Steel update

Workers build the pellet plant for Essar Steel Minnesota in this undated company photo.

Workers build the pellet plant for Essar Steel Minnesota in this undated company photo.

Iron Range newsToday’s front page feature in the Minneapolis Star Tribune, Minnesota’s newspaper of record, was a Dee DePass story entitled “After seven years, Essar’s giant Iron Range project finds a groove.” The story is about progress at Essar Steel Minnesota, the spinoff of Essar Global, an Indian company which seeks to build a new taconite plant on the Mesabi Iron Range.

From the story:

The company backed away from the state’s biggest goal, which was to build Minnesota’s only steel mill, a disappointment to local and state officials.

But it is still resuscitating a barren but iron-rich mining site that sprawls across 20,000 acres of scrubby hills to create hundreds of jobs.

“I don’t feel vindicated. I feel tremendous satisfaction,” Madhu Vuppuluri, Essar Steel’s chief executive, said as he stood on a hill overlooking the site, which was dotted with workers earlier in November. “Months ago, we knew very well that we will be finishing this project. This is the largest metals and mining project in North America in terms of scope, scale and investment.”

From 85 workers in October, there are now about 200 people at the site and another 100 expected in December.

“At peak, we will have 800 construction jobs,” Vuppuluri said. “When finished, we will have 350 permanent jobs.”

I live within sight of the cooling tower at Essar, the concrete spire built and then abandoned by contractors twice as the project fumbled its way through attempts to solidify a financing package. It would appear, this time, the company has the money it needs to complete primary construction of the taconite plant at the site of the former Butler Taconite facility near Nashwauk. At this point, the best possible outcome is a working taconite plant. That now appears probable.

That being said, Essar still must reckon with the fact that $65 million-plus in state financing was paid in the form of project infrastructure on the promise that this mine would also be producing value-added iron products, such as low-grade steel. Essar abandoned the steel mill portion of this project years ago. Some of the money the company might think it gets to keep would have to be paid back to the state and Iron Range region. Additionally, the company would be liable for the full taconite production tax, just like other Iron Range mines.

Unless, of course, local officials decide to grin and bear it, underwriting a historic subsidy for a taconite plant. I can’t imagine the other iron mines in the region would forget that kind of gift the next time they need help. This rabbit hole is deep. We best avoid it.


  1. IRRRB forgave over 14M to Chisholm Delta center, unfortunately there is a past history of throwing money away with bad investments (Mesaba Energy). I am excited that they will be hiring 350 miners and the services jobs that will come with it but the price tag is so high. The folks here will again have their money thrown down a hole and be told how successful the IRRRB and state is at creating jobs. Many up here will believe it in 5 yrs when the hurt of giving a company 65M will fade. I still hear how auto bailout saved America when all we did was pay for 2 of the Big 3 auto makers Billions to reorganize in a Chapter 11 format that they would have done without our money……

  2. In November there still aren’t traffic jams in Nashwauk at shift change. If they’re going to get this thing done next year, they have to kick it in gear now.

    As for production taxes, everyone else, including Magnetation who has done one heck of a lot more for economic development of the West Range, has to pay them. Essar should too. There may be justification for iron production being exempt, but there is no justification for pellets or concentrate from being exempt. That better be made known now and loudly. If they get by, blame a sweetheart deal with the Democrats that supposedly look out for our interests.

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