Construction at Essar Steel Minnesota near Nashwauk on Oct. 8, 2015. (Aaron J. Brown)
Essar Steel Minnesota is preparing for bankruptcy.
This morning the Duluth News Tribune shared a Reuters report that the company building a new taconite plant near Nashwauk is close to bankruptcy.
From a John Myers story:
Essar has hired financial and legal advisers to help restructure its debt, several financial news sources reported over the weekend, citing unnamed sources close to the situation.
Reuters reports that Essar has hired investment bank Guggenheim Partners LLC and law firm White & Case LLP as debt restructuring advisers. Essar Steel Minnesota has about $1 billion in debt on the project and no income.
We had just reported on Essar late last week after news that Cliffs Natural Resources was open to buying the beleaguered new iron mine and processing plant.
That possibility may well represent a best case scenario now.
From the Myers story:
State Rep. Tom Anzelc, DFL-Balsam Township, said a representative of major investors in the Nashwauk plant have been on the Iron Range in recent days investigating how the project might proceed without Essar involved.
“I’m actually optimistic that by getting Essar out of the way, we may see good things still happen” at the Nashwauk site, Anzelc said Sunday. “The investors are apparently willing to move ahead, possibly looking for other new partners, and finish the project. They also seem interested in moving toward a DRI (direct-reduced iron) product as well.”
Anzelc said the path to having Essar out of the project remains unclear, with Essar either walking away on its own, a foreclosure of sorts by investors or full-blown bankruptcy reorganization.
Two years ago, during a particularly ugly Northern Minnesota spring, I made a series of political cartoons to entertain readers and keep myself sane. One cartoon related to delays in the Essar project. It’s as apt now as it was then:
“Meantime at the Essar Steel construction site” is an original cartoon by Aaron J. Brown for MinnesotaBrown.com.
(Essar broke open coconuts at the 2007 groundbreaking as part of company tradition).
SURPRISE! It’s not rocket science. These people have shown us who they are in the past. They could pay there bills on time and now who’s left holding the bag? That’s right, you and me, the Minnesota tax payers.
Best case, someone buys the plant, the current company walks away, the plant gets finished as a DRI plant. Everyone except the taxpayer wins!