Mesabi Metallics is taking direct aim at Cleveland-Cliffs, Inc. over the hotly-contested state mineral leases at the Mesabi Metallics’ project site near Nashwauk.
Mesabi Metallics LLC, said Tuesday that Lourenco Goncalves, Cleveland-Cliffs’ chairman, president and chief executive officer, recently said Hibbing Taconite Co. will close if it doesn’t acquire the state mineral leases, as reported in the Minneapolis Star Tribune.
However, Goncalves’ remarks contradict a previously reported statement in February 2021 by Cliffs that it “has identified a solution to extend HibTac’s life of mine using land already under the control of Cleveland-Cliffs,” Mesabi Metallics said in a statement.
“This begs the question why Cleveland-Cliffs is threatening to shut down Hibbing Taconite if it does not obtain additional leases at the Nashwauk site of Mesabi Metallics, despite not mining the leasehold interests that it already has in the same Nashwauk site,” Mesabi Metallics said in the statement.
The status of the mineral leases on about 2,664 acres of state land at the Mesabi Metallics site, remains a major tug-of-war.
Tuesday’s Mesabi Metallics’ statement ramps up ongoing conflict between the two companies.
The Minnesota Department of Natural Resources (DNR) in 2021 terminated the leases held by Mesabi Metallics, saying the company failed to meet terms of a December 2020 Master Lease Agreement Amendment.
A district court and the Minnesota Court of Appeals upheld the termination.
A decision is pending on a Mesabi Metallics’ petition to the Minnesota Supreme Court which asks the court to review the two lower court rulings.
At stake are some of the highest-quality crude ore reserves remaining on the Iron Range.
Hibbing Taconite is projected to run out of crude ore by 2025.
Cleveland-Cliffs says it wants the mineral leases to extend the life of Hibbing Taconite.
But according to DNR statements made at a December 2020 State Executive Council meeting, Cleveland-Cliffs has other options for supplying ore to Hibbing Taconite, says Mesabi Metallics.
According to a Feb. 2021, Mesabi Daily News story, Goncalves told Minnesota Gov. Tim Walz that the company had found a solution to the crude ore shortage at Hibbing Taconite.
“With this solution, no land swap with other companies will be necessary to extend the life of HibTac,” the company was reported to have said in a statement. “Gov. Walz stated his commitment to direct his agencies to take all legally possible actions to support Cliffs’ initiative.”
However, details of the reported crude ore solution were never made public.
Any subsequent talk of a solution other than the former Mesabi Metallics leases has quieted.
Cleveland-Cliffs already holds leases on about 3,200 acres at the Mesabi Metallics site, according to Mesabi Metallics.
“But it is not apparent from the public record whether Cleveland-Cliffs has pursued other alternatives to support continued operations at Hibbing Taconite,” Mesabi Metallics said. “Based on the foregoing, it is not clear why it would be in the State of Minnesota’s best interests to lease yet further lands in the Nashwauk site of Mesabi Metallics to Cleveland-Cliffs, while they already have significant mineral leases which they have not made efforts to mine at the site.”
In addition to the two lower court appeals on the lease termination and Minnesota Supreme Court petition, Mesabi Metallics has a pending lawsuit against Cleveland-Cliff, claiming Cliffs is blocking the Mesabi Metallics project.
“Among other things, Mesabi Metallics has alleged in that suit that Cleveland-Cliffs had ‘no legitimate business purpose,’ for acquiring the property and that its ‘sole purpose’ for the acquisition was the ‘destruction of the (Mesabi Metallics) Project’,’ according to Tuesday’s Mesabi Metallics’ statement.
Under the lawsuit, Mesabi Metallic says its seeking billions of dollars in damages to compensate for Cleveland-Cliffs’ anti-competitive practices and other violations, according to Mesabi Metallics.
“The litigation is still pending before the courts, and Mesabi Metallics is confident that it will prevail in its claims,” Mesabi Metallics said.
Construction work and residual engineering is ongoing at the project site, Mesabi Metallics said.
Mesabi Metallics says it plans to produce blast furnace and DR-grade pellets at the site.
An international engineering firm has been hired to prepare a techno-economic feasibility study of a hot briquetted iron plant at the site, according to Mesabi Metallics.
The project, which began in 2003 under different ownership, remains about half finished.
Several Iron Range legislators are encouraging the DNR to award the mineral leases to Cleveland-Cliffs.
The Minnesota Supreme Court is expected in coming weeks to make a decision whether to review the two lower court rulings on the lease termination.
Meanwhile, Mesabi Metallics says it continues work on the project.
“Mesabi Metallics is totally focused on making its Mesabi project a success,” Larry Sutherland, Mesabi Metallics president and chief operating officer said. “We have been working tirelessly to finalize our plans for 2023. We are confident that those plans will reassure all stakeholders that the Mesabi project is heading in a positive trajectory. As everyone knows, the Mesabi project will ultimately create thousands of union construction jobs to complete our project, as well as hundreds of full-time jobs to maintain and operate our facilities for generations to come, along with creating value and prosperity for Minnesota, the city of Nashwauk and its surrounding areas. We look forward to 2023 with a renewed sense of purpose.”
Cleveland-Cliffs did not respond to an email request for comment.