Cliffs CEO, Dayton to talk Essar on the Range

Construction continues at Essar Steel's new taconite plant near Nashwauk on Oct. 8, 2015. (Aaron J. Brown)

Construction at Essar Steel’s new taconite plant near Nashwauk as seen on Oct. 8, 2015. (Aaron J. Brown)

Minnesota Gov. Mark Dayton and Cliffs Natural Resources CEO Lourenco Goncalves will come to the Iron Range on Tuesday, July 12. Their visit aims to showcase how a long suffering Iron Range mining project might find new life.

Dayton and Goncalves will discuss the governor’s recent decision to cancel the mineral leases for Essar Steel Minnesota’s new iron mine near Nashwauk and Cliffs’ plans to acquire and finish the project. Meanwhile, Cliffs is expected to announce plans to add value-added direct-reduced iron processing to the final project.

According to State Rep. Tom Anzelc (DFL-Balsam Township), the public forum with Dayton and Goncalves will take place at 11 a.m. at the Nashwauk Township Hall. That’s the new “Cloverdale” hall that I wrote about in February. The hall is located at 16410 County Highway 8, near the corner of Highway 65 going north out of Nashwauk. This is just down the road from the Essar construction site. In fact, you might be able to see the plant structures from the roof of the building. (I’m talking to you, photojournalists).

Anzelc has worked with the state, Essar, Cliffs, local contractors and other parties behind the scenes on this project for years, and shares the frustration over Essar’s handling of the project and their treatment of workers and contractors who have been on the job. However, he and Dayton agree that value-added iron products are necessary if the Iron Range mining industry is to have a long term future.

The deal for Cliffs to take over the project faces one big hurdle, however: Essar Steel Minnesota.

Essar filed for bankruptcy last Friday moments after Dayton informed them he would cancel their mineral leases for lack of repayment of state funds. Recent reports indicate Essar owes more than $74 million to contractors and vendors. To illustrate the point, Essar has yet to pay the bus company that toured politicians and journalists around the site to show progress on construction last year.

Bankruptcy means that the contractors will have extract their money through a legal process, one that typically pays far less than the actual balance. As some of the commenters here on MinnesotaBrown point out, this could put some of the Iron Range-based contractors out of business in a worst-case scenario.

Essar also told its “regulars,” the employees who work for Essar Global, not the bankrupt Essar Steel Minnesota, that it will fight Dayton on the mineral leases. Whether this is true, or just posturing to extract the best price from Cliffs, remains to be seen.

In any event, governor of the state and the leader of one of the region’s biggest mining companies seldom appear together, and certainly not “North a’ Nashwauk.” Many people are seeking answers, so let’s hope the meeting is informative.

DISCLOSURE: Rep. Anzelc is a personal friend and I advise his campaign.

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