Essar financing appears to fall apart … again

Iron Range newsThe financing necessary to resume construction at the Essar Steel Minnesota taconite plant in Nashwauk is now in question, according to a Ron Brochu report that ran in the Scenic Range News Forum and Business North.

For five years, India-based Essar Steel has been building a new iron mine near where the former Butler Taconite plant site was located until its closure in the Iron Range economic collapse of the early 1980s.

The idea for the project has been around much longer, originally conceived as a historic first-of-its-kind direct iron and steel production plant. Plans to make steel near where the ore was extracted were abandoned shortly after Essar bought the project, however, though remain part of the agreement the company reached with the state in order to access tens of millions of state bonding dollars for project infrastructure.

That issue may become a future problem, but the more immediate challenge is the company’s continuing inability to raise the necessary funds to complete what it started. Two full summer building seasons have passed now with minimal activity (except for a flurry of activity this time last year). Now another winter approaches and it’s not clear when critical equipment or continued plant contraction will resume. Essar financing has been suggested, withdrawn, only then to reform in increasingly higher risk bonds.

According to the story, Essar is expecting a shipment of important cargo at the Port of Duluth within a month. Whether Essar financing will secure the funds to install the new equipment is another matter entirely.

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