Response to News Article
NASHWAUK, Minn. (November 29, 2022) —Mesabi Metallics Company LLC (Mesabi Metallics) today responded to comments made by Cleveland-Cliffs CEO Lourenco Goncalves and published by the Minneapolis Star Tribune Nov. 17, 2022, in which he stated Hibbing Taconite will close if it does not acquire the state mineral leases assigned to Mesabi Metallics at its Nashwauk site. These comments run directly counter to Cleveland-Cliffs’ previously reported statement from February 2021 that it “has identified a solution to extend HibTac’s life of mine using land already under the control of Cleveland-Cliffs.” Despite Mr. Goncalves’s recent comments, it should be noted that, in 2017, Cleveland-Cliffs acquired leases for mineral rights to 3,200 acres of iron-ore land at the Nashwauk site of Mesabi Metallics. At the time, it was reported that Cleveland-Cliffs intended to mine some or all of the mineral interests. However, the public record contains no indication that Cleveland-Cliffs has applied for a permit to mine any of these land parcels.
This begs the question why Cleveland-Cliffs is threatening to shut down Hibbing Taconite if it does not obtain additional leases at the Nashwauk site of Mesabi Metallics, despite not mining the leasehold interests that it already has in the same Nashwauk site.
In addition to the property interests it already owns, Cleveland-Cliffs has other options for supplying iron ore to Hibbing Taconite, according to statements by the Minnesota Department of Natural Resources (DNR) at a December 2020 Executive Council meeting. But it is not apparent from the public record whether Cleveland-Cliffs has pursued other alternatives to support continued operations at Hibbing Taconite.
Based on the foregoing, it is not clear why it would be in the State of Minnesota’s best interests to lease yet further lands in the Nashwauk site of Mesabi Metallics to Cleveland-Cliffs, while they already have significant mineral leases which they have not made efforts to mine at the same site.
Cleveland-Cliffs’ recent actions – and its inaction with respect to the Nashwauk property interests it acquired in 2017 – are consistent with the lawsuit that Mesabi Metallics filed against Cleveland-Cliffs for “block[ing] completion of the [Mesabi Metallics] Project.” Among other things, Mesabi Metallics has alleged in that suit that Cleveland-Cliffs had “no legitimate business purpose” for acquiring the property and that its “sole purpose” for the acquisition was “the destruction of the [Mesabi Metallics] Project.” Mesabi Metallics is seeking billions of dollars of damages to compensate it for Cleveland-Cliffs’ anti-competitive practices and other violations. This litigation is still pending before the courts, and Mesabi Metallics is confident that it will prevail in its claims.
Meanwhile, Mesabi Metallics continues to make progress with its Nashwauk project, with construction work still ongoing at the project site and the recent completion of the residual engineering. Mesabi Metallics expects construction activities to ramp up in 2023 and is confident it will complete this project.
Mesabi Metallics has also commissioned an internationally renowned engineering firm to prepare a techno-economic feasibility study of a next- phase HBI (hot briquetted iron) plant at Nashwauk. The HBI plant will support the green steel transition taking place in the United States. Despite past setbacks, the fact remains this is an exciting time for Mesabi Metallics as it privately continues to develop and finalize its completion plans.
Mesabi Metallics also said today it was inaccurate for the same article to have suggested that none of an infrastructure grant originally extended to the Mesabi project has been reimbursed. The repayment of the grant has been agreed between the parties. Mesabi as of this date has paid in excess of $20 million to the State of Minnesota by way of reimbursement and is fully compliant with the repayment terms that have been agreed upon.
“Mesabi Metallics is totally focused on making its Mesabi project a success. We have been working tirelessly to finalize our plans for 2023. We are confident that those plans will reassure all stakeholders that the Mesabi project is heading in a positive trajectory,” said Mesabi Metallics President and Chief Operating Officer Larry Sutherland. “As everyone knows, the Mesabi project will ultimately create thousands of union construction jobs to complete our project, as well as hundreds of full-time jobs to maintain and operate our facilities for generations to come, along with creating value and prosperity for Minnesota, the city of Nashwauk and its surrounding areas. We look forward to 2023 with a renewed sense of purpose.”
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