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After years of financial and environmental hurdles, Minnesota Steel said Tuesday that it has won two of the three environmental permits its needs to begin construction of its $1.6 billion taconite mine-to-steel plant that is slated for Nashwauk, Minn.

The Minnesota Department of Natural Resources and the U.S. Army Corps of Engineers formally accepted the company's 400-page environmental impact study and have issued an "adequacy decision" on the plans, the firm said.

A wetlands permit and a water quality permit were issued last month, officials said. An air quality permit is the final permit needed before construction can begin; the Minnesota Pollution Control Agency is expected to make its air quality ruling Friday.

If all three permits are obtained, Minnesota Steel will mark a major step forward on the project; for seven years, various owners have tried to get an energy-efficient steel mill built on the Iron Range's defunct Butler Taconite Mine.

The much-anticipated taconite-mine-and-steel-mill combination would be the first of its kind in Minnesota. The state is scheduled to deliver its roughly $53 million in roads, gas lines and railroad infrastructure.

Chairman and co-owner Joseph Bennett said in a statement Tuesday that exhaustive research has gone into the project. "Minnesota Steel has worked diligently to ensure that our facility will reflect our commitment to being good environmental stewards."

Supporters of the project say it will deliver 2,000 construction jobs, 700 full-time permanent jobs and 2,100 spin-off jobs to the long-struggling Iron Range.

Environmentalists oppose any new mine or steel mills because of potential air, soil and water pollution.

John Elmore, CEO and president of Minnesota Steel, disputes such concerns.

"Minnesota Steel has dedicated the human and financial resources necessary to ensure that all environmental questions about our project are resolved," Elmore said. "We have worked cooperatively with federal and state agencies and with stakeholders to ensure our facility will meet or beat all applicable environmental standards."

The company will spend about $100 million above what is required to make sure that the environmental impacts are minimal, Elmore said. Plans include special air filtration systems so that air emissions are 60 percent lower than what is typically found at a traditional steel mill.

If the company succeeds in getting its air quality permit, Minnesota Steel will move forward with construction and set the stage for Essar Global of India to buy the company.

Essar, which bought Algoma Steel in Canada in April, will invest the $1.6 billion required to move the project to completion.

Once up and running in 2009, the project is expected to generate $18 million in state royalties and taxes.

Dee DePass • 612-673-7725

Dee DePass • ddepass@startribune.com