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Iron Range's new steel plant deal is sealed
The good news was given to Gov. Tim Pawlenty in India, not long before he was scheduled to tour Essar's steel mill in Surat.
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BANGALORE, INDIA - Gov. Tim Pawlenty's trade trip took a welcome turn Thursday as the governor learned that Indian firm Essar Global has closed on its acquisition of Minnesota Steel Industries and will proceed with plans to build a $1.6 billion taconite-to-steel mill on the Iron Range.
Pawlenty already was scheduled to fly Thursday night to the city of Surat to tour Essar's Hazira Steel Mill and dine privately with the company's controlling Ruia family. Now the visit will also serve to toast the largest direct investment by an Indian firm in Minnesota.
"We are talking to them about timetables and about their expectations about what they expect from the county, the Iron Range Resources Board, and the state," Pawlenty said of Essar, adding he is hopeful that construction can begin early next year.
The project would provide an economic jolt for a region that saw almost 10,000 high-paying mining jobs disappear between 1979 and 2004. More recently, the national slump in home building has forced Weyerhauser and other lumber makers to curtail or suspend manufacturing activity in the region.
"This will be one of the largest investments in the state," Pawlenty said.
"If you look at a $1.6 billion investment in northern Minnesota, this is certainly one of the largest investments in a very long time," Pawlenty said.
News of the historic deal filtered to the trade mission staff members as they toured the massive campus of the software firm Wipro, in an area of Bangalore known as Electronic City. Sudip Banerjee, president of the Wipro Enterprise Solutions Division, was showing Pawlenty through Wipro's learning facility when the news came in on Pawlenty spokesman Brian McClung's BlackBerry.
Brian Hiti, deputy commissioner of the Iron Range Resources Board in Eveleth, said the Minnesota Steel deal is expected to create 700 new jobs directly, or about half the number of jobs lost from the 2000-2001 closure of the LTV plant. The Essar plant is expected to be completed in late 2009 or early 2010, he said.
Another 1,400 jobs could be created indirectly in retail, service, government and other categories as a result of the plant's operation, Hiti added, saying it will "have wide-reaching impact on the entire Iron Range."
After leaving Wipro, Pawlenty visited the sprawling, gated 3M campus, which is lined with palm trees and flowering shrubs.
3M generated $180 million in Indian revenue this year, a figure that is expected to grow 30 percent this year, said 3M India Managing Director Bert O'Donoghue.
3M India imports adhesive films from Minnesota that are used in the local manufacture of car and motorcycle decals and building and bus advertisements.
Pleased with progress
Before parting with delegates for his flight to Surat, Pawlenty said he was pleased with the progress Minnesota's delegates had made on this trade mission, Minnesota's first to India. The Essar news is not the only encouraging development so far, he said.
Wipro is "considering increasing the number of jobs in Minnesota and perhaps putting a production development or a training center in Minnesota. So we are going to continue to have dialogue with them about that," Pawlenty said. Wipro now has 1,600 workers in Minnesota, generating about $100 million in revenue from work done in the state.
Wipro does sizable business with several of the companies represented on the trade mission, including 3M, IBM, and Best Buy, as well as Northwest Airlines and Target Corp, Banerjee told the trade delegates.
Tom Schabel, CEO of Alexandria Extrusion, said he met with several current and potential customers during a reception Wednesday night. Mark Aulik, president of Alloy HardFacing and Engineering Co., said the trade mission will give him clout as he continues to do business in India, a country where he already employs nearly 200 workers making equipment for slaughterhouses and refrigeration.
Melissa Lage, marketing vice president of the Detroit Lakes-based waste water and sewage control firm SJE-Rhombus, said she has made contacts that should lead to new contracts.
The delegates were to leave Bangalore to fly to Mumbai Thursday afternoon. There, they were to tour the campus of the Tata Group conglomerate this morning and then engage in a series of networking sessions with Indian financial and industry experts before beginning their flight back to Minnesota close to midnight.
Staff writer Steve Alexander contributed to this report. Dee DePass • ddepass@startribune.com
Dee DePass • ddepass@startribune.com
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