Delaware Court Concludes Facts Could Support Mesabi Metallics’ Antitrust Claims Against Cleveland-Cliffs
Court also denies Mesabi’s injunction request out of respect for state sovereignty.
NASHWAUK, Minn. (May 23, 2023) ) Mesabi Metallics Company LLC (Mesabi) provides the following comments about today’s decision by the U.S. Bankruptcy Court for the State of Delaware.
Mesabi is developing a 7-million-ton per annum iron ore mining and pelletization plant in Nashwauk, Minn., and commenced litigation against Cleveland-Cliffs Inc. (Cliffs) in 2017 for antitrust and other violations stemming from an alleged monopolistic scheme deployed by Cliffs from 2015 intended to stop Mesabi from completing its project in Nashwauk. This multi-billion dollar litigation has been taking place for six years in Delaware. Due to a protective order from the Deleware court, details of the action, and the underlying allegations, have not been widely reported or followed in Minnesota, but are compelling and serious in their nature.
Following the Minnesota Department of Natural Resources (DNR) recommendation that the Executive Council of the State of Minnesota during its May 25 meeting approve entering into mineral leases with Cliffs that Mesabi needs for its project to move forward, Mesabi approached the Delaware Court for a preliminary injunction to prevent Cliffs from signing those leases if the Executive Council were to award them.
The Delaware Court today heard Mesabi’s request and the judge found that Mesabi had met its burden with respect to the likelihood of success on the merits of the antitrust claim. While cautioning that he was not ruling on the ultimate merits of the case, he stated that, “There are facts in this case that could support a determination that Mesabi’s rights under federal antitrust law have been violated… There’s enough here to give me real concern… And I think that we’ll go forward with the litigation on the merits and we’ll get to the bottom of it. For this purpose, has Mesabi shown enough about a potential antitrust concern to continue this conversation? The answer to that is yes.”
On the second requirement for an injunction, the judge also found that Mesabi had made a sufficient showing of irreparable injury if the state were to award the mineral leases to Cliffs.
Finding that Mesabi had satisfied the first two elements for the grant of a preliminary injunction, the court went on to evaluate the “full balance of the equitable considerations,” which includes the public interest. In weighing the balance of the equities, the Court stated that “the other party whose interests are most concerning to me are those of the state of Minnesota.” In denying the injunction, the Court stated that “the sovereign interest of the state of Minnesota does weigh in the balance.”
The Court also recognized that Mesabi is engaged in a campaign to persuade the state of Minnesota to reconsider its views. The Court explained that nothing in its ruling prevents the State of Minnesota from granting the mineral leases to Mesabi
The Court was not inclined to issue an injunction in favor of Mesabi due to the balance of the equities—which included respect for the State of Minnesota’s sovereign interests.
“This decision relates to a lawsuit Mesabi filed against Cliffs in September 2017. The DNR isn’t a party to the lawsuit. We’re asking it to reconsider its recommendation concerning the mineral leases, including whether it is in the best interests of the state and local Itasca communities, in light of new information made available to it related to this Delaware litigation—and the judge’s comments today,” said Mesabi Metallics President Larry Sutherland. “The Delaware Court’s decision relates to Mesabi’s antitrust cases against Cliffs and has no impact on the State of Minnesota’s ability to award the leases to Mesabi.”
Mesabi expects to complete a summary judgment briefing on its antitrust claims against Cliffs by the end of 2023.
“We are confident we will prevail on our claims in the Delaware action,” Sutherland said. “While a court order currently prevents us from disclosing the extensive evidence obtained in discovery in that litigation, Mesabi eagerly awaits the day when the public can gain a more complete understanding of Cliffs’ actions and the harms Cliffs has caused.” Sutherland added that “Mesabi continues to be fully committed to completing its large taconite project for the benefit of the entire community and all stakeholders.”
About Mesabi Metallics
Mesabi Metallics is building a 7-million tons per annum taconite mining and direct-reduction grade pelletization project in Nashwauk, Minnesota. This is the first such project in the Mesabi Range in the last few decades and at the site of the old Butler Taconite mine, which closed more than 35 years ago. Project construction will produce up to 1,000 well-paying jobs. This project is more than 50 percent complete and when finished, will be one of the largest investments in Minnesota with more than $2.5 billion invested into it. To this end, Mesabi Metallics has already invested more than $1.5 billion and more than 3 million construction man-hours have been completed. Mesabi Metallics has large ambitions for the project, including DRI production.
About Essar – Parent of Mesabi Metallics
Essar is a private Ruia-family owned business group with a proven 50-year track record of building and operating large projects worth more than $20 billion globally, diversified across core sectors like metals & mining, infrastructure, oil & gas, power and services. The aggregate net worth of Essar is more than $6 billion as of March 31, 2022, and the group has annual revenues of more than $14 billion. Essar employs more than 7,000 people globally including 2,000-plus in the United States.
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