UPDATE: Mesabi Metallics claims new partners to restart former Essar iron ore project

Part of the taconite plant under construction at Essar Minnesota’s Nashwauk project in May 2015. (Aaron J. Brown)

UPDATE: I’ve revised the June 6 post with new information and to clarify project ownership.

On Wednesday evening WDIO-Duluth aired a report by Renee Passal about a potential new investors and management structure for Mesabi Metallics. However, on Thursday, the Minnesota Department of Natural Resources rejected the company as lacking credibility.

Mesabi Metallics keeps a tenuous hold on its proposed iron ore mine and direct-reduced iron plant site in Nashwauk.

I say tenuous because a group associated with Essar Steel owns its loan and wants the project. Essar first bought the project in 2007, started construction expensively and haphazardly, and then went bankrupt amid a sprawling global financing drama in 2016. From this cloud emerged Mesabi Metallics. Then, Essar investors reorganized and now seek to reacquire Mesabi Metallics. Earlier this year the state of Minnesota announced it would begin a process to debar Essar from doing business with the state due to its patterns of missed deadlines and unfulfilled promises.

Now Essar is back with more new investors claiming that this time will be different. Obviously, they need the state to lift the debarment heat. But they also ask to once again extend the project’s mineral leases beyond the deadline set for the end of this year.

Essar consultant Ron Dicklich revealed Wednesday that under a proposed new arrangement Essar would operate the mine and plant, with potential investments from Swiss investment house Mecuria and Canadian steelmaker Stelco. Additional partnerships would include Fluor, a South Carolina construction and engineering firm that would complete the plant, and Tenova/HYL, which holds the license on its proposed direct-reduced iron technology.

Mecuria was previously attached to the project. So that name isn’t new. Fluor and Tenova/HYL appear to bring services to the equation. Stelco represents a new name in the story. Like many steelmakers, Stelco hungers for iron ore in what is currently a very high priced market for taconite and DRI pellets.

I found the optics of this news story to be strange. It would appear that Ron Dicklich, a former Iron Range state senator and consultant for Mesabi Metallics, drove down to Duluth to do this interview at WDIO in a stretched out t-shirt. His primary message is that we should forget about the past problems with this project and move forward.

Dicklich seems an odd messenger for that sort of argument. Babies born when he started lobbying for an iron ore project at Nashwauk are not only voting now, they’re attending high school reunions to see who got fat.

But setting that aside, the story does not address one of the key problems: Cleveland-Cliffs’ purchase of critical land throughout the mine footprint of the Mesabi Metallics site. Mesabi Metallics previously claimed they could mine around Cliffs’ property. (Cliffs’ claims the same, but has not moved to develop its property yet).

Dicklich told Passal that construction would take 18 months. That seems far fetched even to this journalism major. The existing plant structure needs significant work and much remains undone. For public support, the public should know the fuller picture of what’s going on here.

Dicklich is right that the quality of the iron ore body at Nashwauk is very high. In fact, it’s some of the best ore left on the Mesabi Iron Range. If the region ever develops more value-added iron and steel products here, it would likely occur at this site.

The state of Minnesota faces a difficult question in whether to extend these leases. UPDATE (June 7): And we quickly learned their thinking. The Department of Natural Resources declared Thursday that Essar “lacked credibility.” The state will proceed with debarment. Whatever Dicklich and Essar sought to accomplish on the PR front seems to have been dashed on the rocks.

Truly, we see a tremendous opportunity to produce advanced iron products and even steel or manufactured steel goods here on the Range. These were the things I read about when this idea first emerged. You know, when I was in high school.

However, I don’t know whether this new partnership behind Essar will be able to deliver the goods. I am benumbed to its verity. I believe in shovels, trucks and contracts, not ghosts and promises. That seems the prevailing sentiment of folks on the western Mesabi.


Comments

  1. donald hilligoss says

    Have the new operators post a Bond.

  2. Tom whiting says

    The attached photograph reminds me of abandoned factory sites in eastern Europe.

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