Mesabi Metallics Company LLC (Mesabi Metallics) has paid the lease of $7.25 million to Itasca County and the Minnesota Department of Employment & Economic Development (DEED), the company announced in a press release this week. The payment falls in line with a master lease agreement executed between Mesabi Metallics and the Minnesota Department of Natural Resources in December 2020.
An offshoot of Essar Steel Minnesota (ESML), the company doing business as Mesabi Metallics is taking over plans to build a pellet plant and steel mill near Nashwauk that was heralded to transform the industry in the region, along with its economy.
It’s been more than five years since ESML filed for bankruptcy on the Nashwauk project and emerged under Mesabi Metallics. Few significant changes have been made since construction was halted. Now, the company is working to move ahead again with the project’s former owner, Essar Global, re-emerging as a large investor in the project.
Since 2017, Mesabi Metallics has invested $339 million in its Nashwauk mining operation, of which $22 million was invested in 2022 alone with Essar Group, continuing to be involved in investments.
The recent announcement stated that nearly $40 million has been paid to Itasca County, DEED and the Minnesota Department of Natural Resources (DNR), as well as approximately $5.4 million to Itasca County in the form of property taxes since 2017.
“Last week’s payment, and our previous investments, clearly demonstrate the continued commitment of Mesabi Metallics and Essar Group to bring to life this massive and critical project here in Nashwauk,” says Larry Sutherland, Mesabi Metallics president and chief operating officer.
The company claims that Essar Group has repositioned itself financially in order to invest with “renewed vigor starting this year.” This includes completion of a debt repayment process through which about $25 billion was repaid to all its financial institutions, paving the way for additional investments into its portfolio companies such as Mesabi Metallics.
According to the press release, the debt repayment effectively made Essar Group debt-free from Indian banks and financial institutions. Armed with a much stronger balance sheet, Essar Group is now looking at reinvesting in building new assets and strengthening its existing operations using the latest in carbon neutral new-age technologies.
Mesabi Metallics has appointed a specialist international consultant to create a feasibility study for a new value-added direct reduced iron (DRI), hot briquetted iron facility that would be built at the Nashwauk site.
“We are now moving forward on completing this project and emerging as a strategic partner and important enabler for the green steel evolution in North America, given the world’s renewed focus on the environment,” Sutherland says.
Mesabi Metallics asserts that it has continued to invest in maintaining what already has been invested in Nashwauk, and “in complying with all of the environmental permits it holds for its current construction and operations plans.”
While ESML left the Iron Range workforce skeptical of the project’s completion, Mesabi Metallics says construction crews are back to work on the concentrator building, as it lies on the critical path of construction activities. The company also has been investing in detailed engineering plans, which it says are “very close to being completed.”
As it prepares for construction work to ramp up this year, Mesabi Metallics announced that it has re-engaged with local northern Minnesota contractors who collectively already spent almost 3 million man-hours on the project.
“Mesabi Metallics and Essar remain committed to working with the State of Minnesota, the DNR and regional stakeholders to move this project forward, allowing us to scale up construction in 2023 and bring thousands of construction jobs and additional economic benefits to this region, and the state of Minnesota,” Sutherland adds. The company is also in discussions with a highly reputable strategic partner from the steel industry to invest into the Mesabi project.
Mesabi Metallics owns approximately 21,000 acres of land in and around the project, which includes about 3,000 acres acquired last year from Glacier Park Iron Ore Properties. Apart from the mineral leases from the Minnesota DNR, which constitute 39 percent of Mesabi Metallics’ total mineral leases, the company either owns or has leased other private mineral leases within the project boundary as well. These constitute the 6,655 acres of total mineral-bearing land that form part of the Nashwauk project.
The agreement made with the state in 2020 originally stipulated that the entire plant must be ready for commissioning by June 30, 2024.
