Iron Range’s Essar project ‘on track’ but needs trains

(This post now contains some additions and a correction from Essar, which are indicated in italics below)

Someone call Sir Topham Hatt on the Island of Sodor. A new Iron Range mining project is in great need of some “really useful engines.”

At a recent meeting of the Itasca County Regional Rail Authority, officials revealed that the railroad expected to provide supply service to the new Essar Steel taconite plant in Nashwauk has backed out of the project.

After the region’s two big railroads, Canadian National (the old DM&IR) and BNSF (the old Great Northern), passed on the project years ago, Chicago and New York-based Anacostia and Pacific Railroad proposed to serve the plant, hauling in necessary materials and hauling out taconite pellets.

CN and BNSF won’t handle the supply line; they would, when the time comes, be in line to haul pellets.

Anacostia and Pacific sent a letter to Itasca County on Oct. 18 indicating that the wait has gone on long enough. With the failure of Excelsior Energy’s power plant (something they had hoped would provide an additional customer), the removal of the steel plant portion of the project, and delays in Essar’s construction, A&P is withdrawing.

Essar denies that it has suspended the steel mill, though A&P mentions it in the letter.

Essar would employ 350 people, no small thing for the Mesabi Iron Range, but the public infrastructure investment in the project is well over $70 million. Now Essar and Itasca County have to find a railroad willing to keep and maintain trains on the shiny new supply lines paid for by the people of Minnesota.

The money paid for several rail extensions to the plant, only some of which are related to this supply line.

Essar was expected to begin taconite production in Summer 2013, but saw a temporary slow-down of construction this fall while the company refinanced its investment. Though work has continued on the site, many contractors were sent home and have returned only sporadically since.

Meantime, Essar will have to reopen discussions with existing railroads or consider some new way of operating trains to and from the plant.

The complete letter may be found below the jump.

CORRECTION: I’ve been informed by Essar that the rail line in question is strictly for the supply line that brings in necessary minerals (limestone and dolomite) for taconite production. Essar reserves options with CN and BNSF to haul taconite pellets. Essar will be working with Itasca County on solutions to the supply line issue, as of yet unspecified.

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