IRON RANGE — Minnesota Gov. Tim Walz said Monday he’s not interested in extending a lease agreement with Essar on the Mesabi Metallics project in Nashwauk, a sentiment echoed by Iron Range officials.
The terms of a lease agreement say the half-constructed pellet plant must be completed by Dec. 31, 2019, or the state can retake control of the minerals covered by the contract, potentially opening the door for another company to assume a critical piece of the project.
Essar, which owned the project when it entered bankruptcy in 2015, has taken the lead in lobbying on its behalf under Essar Capital Americas and CEO Madhu Vuppuluri, who was overseeing operations during the company’s first stint of ownership. But the governor and officials from the Minnesota Department of Natural Resources have encouraged Mesabi Metallics, the entity in control of the leases, to find a more credible partner than Essar if it wants to move forward, to no avail as the deadline looms.
In an interview Monday morning, Walz doubled down on his stance on Essar, calling its lack of movement on the project since it regained the mineral leases in July 2018 “totally predictable” and expressing the need for a company the state considers more dependable.
“They’re bad actors — we’re frustrated with them,” he said. “We’re trying to figure it out, but we’re not interested [in an extension] with them … We don’t see any indication that they’re the ones. That entity needs to emerge.”
Essar is the largest creditor to Mesabi Metallics and has presented a development team for the project that includes Mercuria, Stelco and a South Carolina-based construction firm, but the state has rejected that plan, saying the commitments are the same offered by Essar in previous years.
The fate of the project has now boiled down from state officials to the local level, bringing in Iron Range mayors, county commissioners and the building trades, who are sometimes on opposite sides of the debate over how it should move forward.
Walz met with the building trades earlier Monday over the Nashwauk site, among other discussion points. Mike Syversrud, president of the Iron Range Building and Construction Trades, did not return an email seeking comment on the meeting or the project.
The DNR and governor’s office will hold a conference call Tuesday morning with local officials, hosted by the Range Association of Municipalities and Schools. Steve Giorgi, executive director of RAMS, said in a phone call Monday that there are better pathways for Mesabi Metallics and Essar to complete the project. He said that if a “recognized viable” partner were found, he’d be open to supporting an extension, but added that there’s no indication that is on the horizon.
“Based on the evidence, which is a lack of any sort of progress on the project, it is very hard to support an extension to the mystery group of Mesabi Metallics,” Giorgi said. “We don’t even know who the players are. There’s been no outreach to establish relationships as there have been in the past.”
Iron Range Delegation members have also soured on extension talk. State Rep. Julie Sandstede, DFL-Hibbing, has openly opposed giving Essar more time to finish construction. Essar officials have said they need 18 more months to complete the pellet plant.
Sen. David Tomassoni, DFL-Chisholm, is also opposed to an extension, saying he wants to see one of the Range’s three established taconite mining companies — U.S. Steel, ArcelorMittal USA or Cleveland-Cliffs — step in and take over the project. Both Tomassoni and Sandstede supported Mesabi Metallics as it emerged from bankruptcy and regained the state leases, but opposed the re-emergence of Essar.
"They wore out their welcome, it's as simple as that," Tomassoni said. "You can only trust people for so long. Something drastic would have to change."
State Rep. Dave Lislegard, DFL-Aurora, said he also opposes an extension to the company. Elected to the Legislature in November 2018, after the lease agreement was made with Mesabi Metallics, he’s been a proponent of a Cleveland-Cliffs-fronted project. Cliffs owns a large piece of mineral acreage within the Nashwauk site, which Mesabi Metallics lost last year when it failed to make lease payments to Glacier Park Iron Ore Properties. GPIOP sold and leased the majority of minerals intended for Nashwauk to Cliffs.
“I don’t even support the thought of an extension,” Lislegard said in an interview Monday. “I find it hard to believe how anyone could see a path that would lead to an extension for Essar. They have left an aftermath of devastation to our region, and any extension would be more of the same.”