About 200 construction workers are pouring concrete on the Iron Range, laying the foundations of Essar Steel's planned iron ore mine-to-steel mill complex.

The four-year, nearly $2 billion project could employ up to 2,000 construction workers and produce 500-plus permanent jobs by 2015 on the western end of the range that was once home to Butler Taconite, shuttered 25 years ago.

The plant, owned by Essar Group of India, would cost nearly four times as much as the Minnesota Twins' Target Field and provide the first integrated mine-to-mill facility in an area long exploited for its underground riches that are then shipped elsewhere for manufacture into the steel used for cars, ships and skyscrapers.

"This is a big deal," acknowledged Rep. Tom Anzelc, DFL-Balsam Township, who represents the area 70 miles northwest of Duluth. "I just wish they weren't using steel imported from India when the taxpayers of Minnesota already have invested $70 million in infrastructure, the gas, electric, water and sewer lines, roads, and a short-line railroad ... an unprecedented public investment in a taconite plant. And we are not buying American steel?"

Essar is delivering steel from one of its mills in India to northeastern Minnesota.

The locals are grateful that, after years of planning and negotiation, Essar is building what could be a huge economic engine near the bones of the Butler mine near Nashwauk. But importing steel to build a mine in "Buy America" country stings.

Anzelc and others suspect that Essar may be promising a steel mill, but might deliver only a mine that will extract taconite and ship it to one of its North American steelmaking plants.

Steve Rutherford, the Essar project manager at Nashwauk and a range veteran, acknowledges that the company's contract with the Iron Range Resources and Rehabilitation Board (IRRRB), the regional economic development agency, called for Essar to build with U.S. steel if possible.

However, Rutherford said Essar could not obtain financing for the massive project in the United States, particularly among that nation's recession-spooked banks between 2008 and 2010.

"We were able to get financing from the U.S. Export-Import Bank and Indian banks in 2010," Rutherford said. "We got funded in India. And they put on strings about steel. It's mandated by the Indian banks."

Essar will buy steel from its mills in India. Indian steel will save the Essar project about $10 million over U.S. steel, including shipping costs from India to Nashwauk, Rutherford said.

The plant is being built in stages. The mine, to be completed first, will generate about 7 million tons of ore by 2013. That will be followed by completion of the pellet-making facility. The steel plant would open in late 2015. By the time construction is completed the entire complex would employ 500 Minnesotans.

Might Essar just ship taconite elsewhere to be processed into steel?

Essar says that's not the plan.

The company plans a next-generation mine, pellet-making and steel-producing factory that Essar Steel Minnesota says will be "first fully integrated mine-through steelmaking facility in North America." In theory, the Minnesota operation will be lower-cost because of state-of-the art, low-energy technology and because the ore won't have to be shipped to make steel.

But Essar has other North American plants, including one on Lake Superior at Sault Ste. Marie, Ontario, to which it could ship Iron Range ore pellets.

"I am skeptical," said Anzelc, also chair of the House Iron Range delegation. "There is a lot of skepticism over whether this will ever be a steelmaking facility."

This could be a tremendous economic boost to a long-depressed part of the state. But skeptics won't be satisfied until they see the third phase, the steel mill, under construction.

"If this is not a value-added project, value beyond the taconite project, [Essar] will be required to pay the full taconite production tax on the first ton produced and repay the $70 million in public infrastructure," Anzelc said, citing the agreement with the IRRRB.

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com