Contentious town hall

Minnesota Governor Mark Dayton, left, and Mesabi Metallics director Gary Heasley listen to an audience member question the viability of the long delayed project and the state's roll in awarding mineral leases during a contentious town hall meeting in Nashwauk Monday night.

“You’re asking me to answer a question for 20 years from now,” Mesabi Metallics CEO Gary Heasley said at a town hall Monday night. “We got a mine plan. We got teh permits. If you want to get into a 20-year mine plan, I can’t do that.”

Surely anyone with any stake in the Mesabi Metallics project in Nashwauk understands that having an operating plant for decades is vital for the West Range and its economy. Considering the history of the project from its days as Essar Steel Minnesota, assurances of a mine project with a long life span are welcome, if not necessary.

It’s assurances that leave a cloud hanging over such a project that create doubt in the true intentions of a company or institution. Essar gave assurance after assurance to the Iron Range and Minnesota Gov. Mark Dayton that it would have the money and see the plant into operation. They went bankrupt.

It’s fair to recognize that Heasley is relatively new to this project — he was named the new CEO on Aug. 2 — and has a lot to assess with what’s left in the wreckage of Essar and plans put in place by mining newcomer Tom Clarke.

Monday’s meeting wasn’t going to produce a splashy moment where Dayton or Tom Landwehr, commissioner of the Department of Natural Resources, declared their support for Cleveland-Cliffs and vowed to walk back previous statements that Mesabi Metallics is the most viable option at the moment. That wasn’t going to happen.

What also didn’t happen was a performance by Heasley or the state that tempered skeptics of the Nubai Global Investment ownership. Granted the deck was stacked with Cliffs employees, but there were plenty of local elected officials, media and residents to make a real attempt to sell them on the new leadership.

Instead, there was reason to walk out of Monday’s meeting with more reasonable doubt, based on what was and wasn’t said.

• Dayton opened the meeting by saying the state “Didn’t pick our partners” as the project moved through bankruptcy court, while later lamenting that the project wasn’t further along. He also said criticisms of the state and project are valid, recognizing his own frustrations.

• Dayton said Essar would operate the project again “over my dead body” while Heasley said he appreciated the former owner’s expertise. Essar’s fingerprints are all over the current project, through numerous connections to Riverdale and possible a buy-in opportunity through Mercuria Energy as a way to earn its money back. Any involvement is a disturbing cloud hanging over the new leadership.

• Dayton and Landwehr spent more time explaining why Cliffs wasn’t controlling the project — the employees and union members at United Taconite kept raising the point — than touting Mesabi Metallics. The governor said at one point “I don’t see any alternative,” citing the state’s stance it would have to start from square one if it revoked Mesabi’s leases.

• When asked if he believed Mesabi Metallics would complete construction on the pellet plant by the state’s deadline of December 2019 — while beginning full construction in March — Dayton admitted “I don’t know.”

• Dayton and Landwehr also took blame for numerous extensions granted to Essar and Mesabi Metallics — the latter given more time last fall to secure financing — that helped the project and the Range reach this boiling point. On Essar, Landwehr said “We kept going as long as we thought it was reasonable to go forward. We ultimately realized this was going nowhere.” The state famously pulled filed intent to pull the leases, at which point Essar filed for bankruptcy.

• At one point late in the meeting, Landwehr was asked to clarify if failing to meet the December 2019 deadline was grounds for terminating the state mineral leases. It was he said, despite objections from Heasley.

• Heasley was next asked if Mesabi Metallics intended to see construction through if it didn’t meet that deadline — and the state consequently filed intention to pull the leases — or take the bankruptcy route. He demurred saying “We’re not going to get into hypotheticals We’re not going to have this discussion.”

• On the pellet contract with Riverdale Commodities, Heasley explained the pellets have no set destination as Riverdale is a trader and will make them available on the open market. That contract appears to lack a take-or-pay clause that would ensure either pellets are made by Mesabi and purchased by Riverdale. Without one it appears both sides have a reasonable way out of their obligations.

• In a few moments of appearing out of touch with the region, Heasley said he was not aware of why Cliffs built its hot-briquetted iron plant in Toledo, Ohio over Minnesota, or why the company never pursued the Nashwauk site in the 1980s. Cliffs announced the Toledo plant days after Mesabi Metallics was awarded the project in bankruptcy court. The site has been on Cliffs’ radar since CEO Lourenco Goncalves joined the company in 2014 and focused on the domestic market.

Stripping away Monday’s back and forth among the state, Mesabi Metallics and Cliffs a few things are very clear. The outgoing administration isn’t willing to heave support on Mesabi Metallics as it tends to wounds of owners past. And Heasley needs to provide the Iron Range with more confidence that Mesabi Metallics and its partners aren’t simply the next Essar shell company intent on turning a profit and wiping out some Ruia family debt through bankruptcy or a multi-billion dollar flip of the site.

The region’s first public look at Mesabi Metallics was enlightening, but it wasn’t a good light. The burden is on them to show the Range and the state they will operate a project that benefits the residents of Minnesota for the “decades and decades” they have promised.

And the further burden is on Minnesota’s lawmakers to hold Mesabi Metallics, Nubai, Mercuria and anyone else involved in the project accountable so a repeat failure of Essar proportions is not on the horizon.

The answers are right there: Will Mesabi Metallics build in good faith toward its December 2019 deadline? And if it doesn’t — and continues with a shell of a project — will the state have the courage to stand up for its residents this time around?


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