Noting progress on many fronts, Gov. Mark Dayton gave his blessing for Chippewa Capital Partners to take over and develop the bankrupt Essar Steel Minnesota project on Minnesota's Iron Range.

The blessing comes with a recommendation that the company receive the mineral rights for the site. Dayton had given Chippewa until Sept. 30 to comply with various financing requirements dictated by the federal bankruptcy court handling Essar Minnesota's bankruptcy case.

Chippewa secured a "binding commitment" for $250 million, plus a letter of intent for an additional $250 million in equity investments. Separately, Chippewa has already spent $25 million on the project, Dayton said.

"After very careful review of Chippewa's progress to date, I believe that they have substantially satisfied its obligations to the bankruptcy court and the state of Minnesota," Dayton said. "Their progress has been very significant. Their securing the necessary financial commitments has been most impressive. [And] their negotiations for an offtake agreement with a Chinese company could open an entire new market for Range production."

Dayton also noted Chippewa's transfer of $39.5 million to repay contractors left in the cold by Essar.

If all matters comply with the bankruptcy court, the state's ruling will allow Chippewa to finish constructing Essar's controversial half-built taconite pellet plant in Nashwauk. Essar filed for bankruptcy in July 2016 — on the same day the state pulled its mineral rights from Essar because of continual missed deadlines and nonpayment of bills. The company also was ordered to pay back state subsidies on the $1.9 billion project.

Chippewa, led by Virginia billionaire Tom Clarke, has secured financial commitments from various bank and equity partners and has hired the Kiewit Energy Group and Tenova S.p.A. building contractors to design and complete the rest of the project, Dayton said in a letter sent to Iron Range stakeholders over the weekend.

Chippewa also secured a letter of intent from a new customer in China that is willing to buy the enhanced "direct-reduced iron-ore" that Chippewa intends to produce on Minnesota's Iron Range for the next 10 years, he said.

Once the plant is finished, Chippewa is expected to produce 7 million tons annually. Unlike other entities on the Iron Range, 2 million of those tons would be in a "direct-reduced iron/hot briquetted iron facility," which is the latest technology in the industry, Dayton said.

Clarke could not be immediately reached for comment Monday but met privately with Nashwauk Mayor Ben DeNucci and state Rep. Sandy Layman, R-Cohasset early Monday morning.

Clarke "was kind of doing the rounds this morning expressing his appreciation with the different elected officials and groups that supported the project," DeNucci said after having breakfast with Clarke.

"This is just the kind of news you want on a Monday morning. The ink isn't dry just yet, but it is looking very, very good," DeNucci said. "They will look to close on the [transaction] in the next 30 days and will put a shovel in the ground soon after. They are looking at 24 to 30 months of construction. We have seen estimates of 700 construction jobs and then 350 to 450 full-time, permanent jobs. This is good, good news."

Clarke has previously said he intended to merge the operations of the Nashwauk site with those of the former Magnetation ore operations in Grand Rapids, Minn., and in Reynolds, Ind. A different investment group controlled by Clarke called ERP Iron Ore took control of the bankrupt Magnetation properties earlier this year.

State officials said previously that they were pleased with Chippewa's plans to produce a higher grade of iron ore. Various Iron Range companies that produce taconite do not produce the enhanced "direct reduced iron" that is easier to convert into steel.

While Ohio-based Cleveland-Cliffs Inc. had expressed a strong desire to take over the Essar project, Dayton said that the progress made by Chippewa is significant and too important to disrupt. Cleveland-Cliffs, formerly Cliffs Natural Resources, already operates Hibbing Taconite, United Taconite and Northshore Mining in Minnesota.

While Dayton acknowledged that "Cliffs has proven itself to be very strong and greatly valued," he said Chippewa made the winning bid to acquire the Essar project in bankruptcy court.

At this point, "Failure to continue with Chippewa has negative consequences for the [Iron] Range," Dayton said.

Layman, former commissioner of the Iron Range Resources and Rehabilitation Board, said she is pleased with Dayton's latest actions. "This is a big milestone," she said.

"It's a tough position for the state to be in to have to pick and choose [a winner]. But it is absolutely true that a big part of our support for Chippewa is the fact that they are serious and this week will be making significant payments to the contractors who have been waiting for three years for any kind of payment" from previous work on the Nashwauk site, Layman said. "In my district alone, you have Hammerlund Construction and Northern Industrial Erectors who both were out in excess of $10 million. At least now, they will get partial payment that is about 50 cents on the dollar."