Mesabi Metallics appeals DNR decision to grant Cliffs leases

Cliffs intends to use ore mined from the leases to keep Hibbing Taconite open, but Mesabi maintains the DNR erred in its decision to award the leases.

NASHWAUK — A beleaguered mining company is appealing a state agency’s decision to grant to a competitor mineral leases it once held.

On June 23, Mesabi Metallics filed a petition with the Minnesota Court of Appeals, arguing the Minnesota Department of Natural Resources erred in its decision to award 30 state mineral leases to Cleveland-Cliffs. The company also requested the leases be sent back to the DNR “for further proceedings to determine on a lease-by-lease basis whether the statutory prerequisites have been met.”

“Given the fact that some of the leased parcels are not adjacent to any Cliffs parcel, along with the disputed nature of Cliff’s property and mining rights in other adjacent parcels, the transaction does not meet the requirements prescribed by Minnesota law,” Jessica Nelson, an attorney for Mesabi wrote in the petition.

Last month, the Minnesota Executive Council — chaired by Gov. Tim Walz and made up of the state’s constitutional officers — unanimously approved granting all of the leases to Cliffs. Cliffs said it would use the ore mined in Nashwauk to feed its Hibbing Taconite processing facility in Hibbing, keeping it open for at least another two decades. The mine and pellet plant would otherwise run out of ore in 2026, putting more than 700 jobs at risk.

Cliffs already has mineral rights throughout the Nashwauk site.

But Mesabi maintains that if an anti-trust lawsuit it filed against in Cliffs in 2017 is ruled in its favor, separate third-party leases in Nashwauk would not go to Cliffs.

Mesabi cites Minnesota law that the state can grant the leases through negotiation if the party already has adjacent leases.

The company argues that because the third-party leases are in litigation, and that several of the state leases are not adjacent to any Cliffs parcels, the DNR erred in granting the leases to Cliffs.

Mesabi reiterated that it wants some of the state mineral leases, particularly the six state leases within its permit-to-mine area, while some of the leases could still go to Cliffs to help keep Hibbing Taconite open.

During last month’s Minnesota Executive Committee meeting, DNR officials maintained that it had looked into the possibility of splitting leases between multiple companies, but that breaking up and sharing mining land is difficult and could put permitting at risk.

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

Mesabi once held the state leases in question, but the DNR pulled the leases in May 2021 after Mesabi failed to meet what was then considered last-chance deadlines.

For more than 15 years, iterations of Mesabi, which is owned by Mumbai, India-based Essar Group, has floundered through construction stoppages, bankruptcies, missed deadlines, late payments and other legal battles. It maintained it would eventually complete its half-finished facilities and eventually mine and process it into direct-reduced iron pellets and hot-briquetted iron.

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