A close look at Essar construction

Workers build the pellet plant for Essar Steel Minnesota in this undated company photo.

Workers build the pellet plant for Essar Steel Minnesota in this undated company photo.

Yesterday, Dan Kraker of Minnesota Public Radio filed a report about Essar Minnesota, the new taconite plant under construction near Nashwauk, Minnesota, on the Mesabi Iron Range.

In essence, the long awaited project — funded in part by massive state and regional investments — has reached the critical mass needed to see completion (as soon as later this year, according to Essar). But that finish line is fraught with peril, as a global pricing crisis faces the whole North American taconite and steel industries.

From Kraker’s story:

The plant will boast 350 full-time jobs averaging $85,000 a year and provide tens of millions of dollars in tax revenue for decades, said Essar Steel Minnesota CEO Madhu Vuppuluri.

It will be one of the cleanest, most efficient, and lowest cost ore operations in North America, he added. “It has been quite a road. This project has been project on paper for almost 20 years, so we are seeing light at the end of the tunnel now.”

The steel plant is not off the table completely, but the $66 million in state grants to Essar were given on the belief the company would complete construction of a steel mill by October. The company has asked the state for a seven-year extension to build the plant, saying it’s still in their long-term plans.

But several Iron Range legislators, say that’s unlikely.

“I don’t think that’s in the cards right now,” said state Sen. David Tomassoni, DFL-Chisholm. “I think that they need to get the place built, and I think they need to pay it back.”

Essar struggled to raise the $1.9 billion needed just for the mine and taconite pellet plant. In 2012 and 2013 construction stalled when the company was unable to pay its contractors. Vupuluri says work resumed late last year when Essar secured its last $800 million in financing. But now steel demand in the U.S. is slumping.

Kraker’s story is accompanied by several new Derek Montgomery photos of the Essar site taken this month.

I drive by the Essar site every day and, from the outside, it still appears fairly quiet, except for the working industrial crane. Officials are promising a crew of 800 working this summer during prime construction season as the plant nears completion.

What still remains to be seen is how, and when, the project actually launches production. Everyone seems to agree that taconite will be back at some point. But in the international chess game of market share and supply chains, the game is just getting started.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.