The company that aims to buy and run the proposed Minnesota Steel plant near Nashwauk is running into legal problems related to its recent attempt to gain a larger share of the North American steel market. A MinnesotaBrown reader gave me this tip.
From Business Standard:
Domestic conglomerate Essar’s latest US possession, Esmark, is caught in a legal tangle with global steel giant ArcelorMittal, which is seeking over Rs 2,000 crore in damages for defaulting on a billion-dollar deal.
Esmark finds itself in a precarious condition as it cannot settle any claim over $0.5 million (around Rs 2 crore) without Essar Steel’s consent as per terms of merger with the Ruias-promoted firm. Besides, the Indian entity can seek up to $22.5 million (around Rs 90 crore) from the US company in case the deal falls apart.
ArcelorMittal has filed a suit against Esmark in the Supreme Court of the State of New York for the latter’s breach of contract in buying its Sparrows Point steel mill at a consideration of $1.35 billion.
That may sound like a bunch of mumbo jumbo to some, so let me shorten it for you. However many lawyers were involved in Essar’s North American operations before are now doubled. Lawyers make fast things slow and slow things sloooooooooow.
To refresh, Essar is the company that bought the proposed Minnesota Steel project on the Mesabi Iron Range. The project is intended to be the first direct ore to steel operation on the Iron Range. Recently, Essar has been buying steel plants in North America, however, giving the impression that building a new steel plant in Nashwauk might be lower on its priority list. The Minnesota Steel deal still awaits financial close. The recent legislative session raised about half the money needed to build infrastructure for the Nashwauk plant in the bonding bill. But if Essar is entangled with legal problems related to its other purchases, I can’t imagine that speeding up financial close on the Nashwauk project.
As always, we wait.
I have heard it more than once lately from the scrubs that the deal is done, or so they say.It is always July, it is always BechteI as contractor. I have looked into it each time for magic words in stock market or business documentation, and nothing of the sort appears true. Believe me I know what to look for, for anything that will boost trust for price value will show in an hour. Essar and ArcelorMittal are fighting a death struggle for market superiority in steel. The lawsuit is actually that Esmark reneged on an initial deal with ArcelorMittal, hiding the fact they could not get financing, then cut the deal with Essar behind their back for a merger. It really is about those two and not Esmark.Esmark is a steel company put together by two brothers in a hostile takeover; they actually have been in existence only six years, and the two are players with questionable motives..it was always about playing for the payoff. Really it is about ArcelorMittal and Essar fighting; two Indian Conglomerates fighting like J.P. Morgan and Andrew Carnegie for market control in certain regions. You probably know this crap, so if I am boring you say so. Here is the important part; These are all corporate strategy fights to maintain stock value and investor confidence for the foreseeable future. ArcelorMittal already has interests at Minorca and Hibtac….Essar moved to maintain equality in the American market by grabbing Minnesota Steel, Algoma and Esmark; now, A-mittal is trying to blow the deal apart and slow the momentum…to force a deal in some way, somehow.
Here is the problem. I am a regulator, and certain low level types of permits and enforcements are done through my office. I am seeing all kinds of real estate speculation up and down the range built on the assumption that all of these things are going to happen…not just the short term construction, but that for 20 years things are going to be alright and prepare for three thousand more steady gigs. I spend half my time checking on new plat developments in places where it does not make sense to me…the population is still getting older and declining, and florida crackers are not going to stay here. The problem is the big one may not be as big as these people think, and this is the same old game when it comes to extraction industries. When Potlatch built the now defunct Ainsworth plants, they stated up front they were made to last 20 years….people assumed they had careers..they didn’t. I see the same thing happening now…people, especially young men and families are operating on the assumption again they do not need to prepare to move or get an education..ok enough of my pontificating