Mesabi Metallics issued a plan last week to bring the former Essar Steel Minnesota iron ore project in Nashwauk, Minnesota, out of bankruptcy and back into construction.
A judge must now consider whether the newly reorganized company has sufficiently proven its case to keep the state mineral leases along the western Mesabi Iron Range.
“Creditors will receive vastly improved recoveries, the company will be able to complete the project, and the employees and community in which the project is based will greatly benefit,” the company wrote in an 85-page disclosure filing. The Hibbing Daily Tribune and other media outlets reported the news last week.
Mesabi Metallics aims to build a $1.9 billion taconite plant on the site of the old Butler Tac plant that closed in 1985. Mesabi Metallics, like its India-based Essar predecessors, also touts an option to produce value added iron ore products in the future.
The bankruptcy court must now determine if Mesabi Metallics’ plan is the best way for creditors to recover their losses, or if new ownership should be sought.
Last summer, Cliffs Natural Resources announced it would make a bid for the project, promising to open the value-added iron ore plant that was originally promised by Essar. But if Mesabi Metallics falls short for some reason, other bidders could get into the game.
Nevertheless, Mesabi Metallics remains the company of record and, despite doubts last summer (including my own), will be the favorite in this process. New management has given the company a new chance to complete a project that broke ground more than a decade ago.
If successful, you can count on market realignment across the Mesabi to account for the increased production capacity.