Chippewa Capital Partners has complied with its May 31 deadline to secure a construction contract to finish building the old Essar Steel Minnesota taconite compound in Nashwauk.
Under its agreement with the state, Chippewa was required to enter into two binding contracts by the deadline, said Barb Naramore, assistant commissioner of the Minnesota Department of Natural Resources (DNR).
The first was with a construction firm. The second was proof that Chippewa had a buyer for the 4.2 million tons of taconite pellets that would be manufactured at the Nashwauk pelletizing plant.
Both appear to be satisfied, Naramore said.
Chippewa has a few more steps to go before it can claim victory.
It has until June 30 to secure the final rounds of $850 million in debt and equity financing for the project and to formally secure the mineral lease rights to the Nashwauk property that had been owned by Superior Mineral Resources LLC. Proof of both must be provided to the DNR before the state awards key mineral lease rights for the Nashwauk project to Chippewa.
While there is still work to be done, the DNR announcement this week moves Chippewa, which is led by Virginia health care billionaire Tom Clarke, one step closer to realizing its promise to resume a mega project that has been stalled for more than two years.
The Essar mining and taconite project landed in bankruptcy in July 2016 after the former owners, based in Mumbai, failed to finish construction despite 10 years of effort. After nearly $2 billion in spending, Essar Minnesota left a half-built site and more than $1 billion of debt.
Chippewa won the bid to buy the project out of bankruptcy court last year. The project has since been renamed Mesabi Metallics.
Chippewa has other obstacles to the project as well. It has been sparring with Ohio-based Cleveland Cliffs over the iron ore reserves for the site.
In December, Cliffs bought or leased 3,768 acres of the iron ore reserves adjacent to the Nashwauk property from Glacier Park Iron Ore Properties LLC.
Cliffs officials said they were making a smart investment in the future, especially since Cliffs needs iron ore to pelletize at the operations it runs on the Iron Range. They include Hibbing Taconite, United Taconite and Northshore Mining.
Chippewa Capital balked at Cliffs’ move and filed a complaint in bankruptcy court. Chippewa officials claimed that Cliffs’ property grab in Nashwauk was not valid because it was never approved by the bankruptcy court. It also claimed Cliffs’ land purchase was unfair and meant to thwart Chippewa’s extensive efforts to restart the defunct Essar property.
Cliffs argued that Essar, and later Chippewa Capital, originally had the right to lease the property from Glacier Park, but that it lost that right when it missed a key compliance deadline. Cliffs CEO Lourenco Goncalves has made no secret that he does not want Chippewa to have the Nashwauk mineral leases.
The bankruptcy court is expected to render a final decision on the matter.
In a separate matter, Clarke in March bought more than 1,040 acres of land in Nashwauk and the mineral lease rights to half the iron ore there. The other owner of that ore? Cleveland Cliffs. A judge’s ruling about who rightfully owns what is expected any day.
State officials declined to comment on the battle between the two companies, saying it is interested in restoring commerce to an area that has been hard hit by the blighted Essar project. If finished, the project could create 850 jobs.