Itasca County Board asks state to split Nashwauk leases, give some back to Mesabi Metallics

The DNR has recommended all of the leases go to Cleveland-Cliffs to keep Hibbing Taconite running for decades.

NASHWAUK — Itasca County officials will urge the state to split a batch of mineral leases near Nashwauk and give them to two companies that have sparred over the land for years.

At the request of Mesabi Metallics and its Mumbai, India-based parent company Essar Group, the eight-member Itasca Board of Commissioners on Tuesday voted unanimously to submit a letter to the Minnesota Executive Council asking it give some of the state leases to Mesabi and the rest to Cleveland-Cliffs.

Two people can be in the same area and can protect 750 jobs to the east.

Itasca County Commissioner Casey Venema

Mesabi once held the leases and has tried to move iterations of its project forward for the last 16 years, while Cliffs intends to use the taconite mined there to feed the Hibbing Taconite pellet plant, which would otherwise run out of ore by 2026.

The council is chaired by Gov. Tim Walz and made up of the state’s constitutional officers and will consider the leases at a meeting Thursday, May 25. Two Itasca County commissioners will also testify at next week’s meeting.

The leases sit within Itasca County, but the ore would be taken to Hibtac, which is in St. Louis County, for processing, taking some of the tax revenue along with it.

“The Itasca County Board and its municipalities and surrounding Iron Range communities have an immediate and ongoing interest in ensuring the state of the Minnesota mineral leases are distributed to maximize the socio-economic benefits to Itasca County and the surrounding regions to support multi-generational sustainable job creation and the School Trust Land Fund,” the letter to the executive council said, adding later that the board recognizes some of the leases should go to Cliffs to keep Hibtac running.

“Two people can be in the same area and can protect 750 jobs to the east,” Itasca County Commissioner Casey Venema said in the meeting.

Earlier this month, the Minnesota Department of Natural Resources recommended the council award all of the leases to Cliffs, saying it would be in the best interest of the state and that the company has a proven track record of completing projects.
The leases had previously been held by Mesabi, but the DNR terminated its leases in May 2021 after the company failed to meet a last-chance requirement set by the state after years of missed lease requirements and deadlines.

Now, Mesabi wants another chance to complete its long-delayed plan for a mine, direct-reduced grade pellet plant and hot-briquetted iron plant by winning back at least some of the leases it lost two years ago.

Since 2007, iterations of Mesabi — 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. The project sits partially finished.

We’re studying many different avenues, but it’s a great risk if we can’t at least share leases. We’re at great risk.

Larry Sutherland, Mesabi Metallics president and CEO

While Essar walked away from the bankrupt project in 2015, leaving behind $1 billion in debt, the company reentered the picture after settling some $260 million of debt and is now Mesabi’s parent company.

Ravi Ruia, who founded and owns Essar Group with his brother, attended Tuesday’s county board meeting. Ruia apologized to the board for the project’s delays and said he took responsibility for the setbacks. But he also maintained some of it was outside of his control.

“As a family, we are absolutely committed to the completion of this project,” Ruia said.

In addition to the state leases, both Mesabi and Cliffs have nearby private leases, creating a complicated quilt of mineral rights in the area. Mesabi wants, at least, the state leases within its existing Permit to Mine area.

A 2018 map shows the complicated quilt of ownership at the Nashwauk mine site. The “State-Mesabi” leases were stripped from Mesabi Metallics in 2021 and could be awarded to Cleveland-Cliffs.

Larry Sutherland, Mesabi’s president and CEO, said private leases alone may not be enough for the project.

“We’re studying many different avenues, but it’s a great risk if we can’t at least share leases,” Sutherland said. “We’re at great risk.”

Cliffs did not respond to a question from the News Tribune on how Hibtac’s lifespan would be affected if Mesabi and Cliffs were to split the state leases.

The DNR also did not respond to the News Tribune’s request for comment Thursday.

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