Published: May 7, 2021 |

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The Minnesota Department of Natural Resources has started terminating the leases for Mesabi Metallics’ half-built iron ore mining project in Nashwauk, because the company could not prove it had enough cash on hand.

After a series of missed deadlines, the DNR, with approval from the Minnesota Executive Council, in December modified Mesabi’s leases to give it one final chance at proving it could finish the project.

In a news release Wednesday, the DNR said the company did not show it had $200 million in its accounts on May 1, which is a “failure to meet a fundamental requirement” of the amended lease. Without meeting the amended lease, the leases revert back to the original terms, which the company has violated.

“After initial review DNR determined that Mesabi failed to demonstrate that it had $200 million immediately available in its accounts, as required by the 2020 amendment,” the DNR said in a news release.

The DNR said it will begin the process of terminating the leases because Mesabi still owes $18 million in minimum base payments for 2020 and because it failed to mine 1.6 million tons of ore from state properties at least two quarters prior to Jan. 1, 2021, failed to complete construction by the end of 2019 and failed to ship 3 million tons of pellets by the end of 2020.

Mesabi did not immediately respond to the Forum News Service’s request for comment Wednesday afternoon.

The DNR said it continues to review all of the other documents due May 1. Other requirements included securing $850 million in equity and debt commitments for pellet plant financing, establishing offtake agreements for 4 million metric tons of taconite pellets per year and placing $24.5 million into an escrow account for missed rents and royalties and a Department of Employment and Economic Development settlement.

Before giving the project a final May 1 deadline, the agency could have canceled the leases as early as 2020 after the company missed a number of deadlines and payments late last year and early this year, including the completion of the plant by the end of 2019.

Mesabi Metallics — the former Essar Steel Minnesota project that has had multiple owners, managers and names — has floundered through construction stoppages, bankruptcies, missed deadlines, late payments, and other legal battles. In the works for more than a decade, the project sits about half-finished. While Essar walked away from the bankrupt project in 2015, leaving behind $1 billion in debt, the Mumbai, India-based company is back in the picture after settling some $260 million of debt.

Iron Range lawmakers and others have long urged the DNR to transfer the leases to mining and steelmaking company Cleveland-Cliffs, which owns a patchwork of land at the Nashwauk site, but the DNR said that would restart the lengthy permitting process.

Source: Twin Cities Pioneer Press

About Mesabi Metallics
Mesabi Metallics Company was formed in 2003 to develop and operate a fully integrated iron ore pellet facility on the Mesabi Iron Range in Nashwauk, Minnesota. The company controls nearly 21,000 acres within the current project boundary. Mesabi Metallics is owned and operated by Chippewa Capital Partners, a subsidiary of Nubai Global Investment Limited. Since Mesabi Metallics emerged from bankruptcy in December 2017, the company has invested more than $200 million in the project, including continued construction and land acquisition on the site.

To stop by Mesabi’s website, CLICK HERE

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