DNR penalizes northern Minnesota taconite firm over creek flow

State regulators this week slapped Mesabi Metallics with a $1 million penalty after the mining company failed to remedy its disruption of a creek west of Hibbing.

Formerly known as Essar Steel, Mesabi Metallics Co. mines taconite between Hibbing and Grand Rapids. The firm's pit dewatering operation draws water from Oxhide Creek, and its permits require that it pump water into the creek to maintain its natural level, according to the Minnesota Department of Natural Resources (DNR).

In the summer of 2018, the company relocated pumps used to draw water from one of its pits to pump back into the creek. But the company failed to resume pumping after moving the pumps, the DNR said.

On May 23, the DNR told Mesabi to start pumping water again, and 30 days later the company had failed to do so.

"As a result of this ongoing noncompliance, DNR has exercised its authority to draw upon Mesabi financial assurance funds and use that money to pay the state's cost to resume pumping to the creek," the DNR said in a statement Wednesday.

A financial assurance fund is a pool of money set aside, often by mining companies, to protect the public from the future environmental costs of mining operations.

The $1 million over Oxhide Creek is not a fine, because at least some of the money would be returned to Mesabi's financial assurance fund if it remedies the problem, said Jess Richards, an assistant commissioner at the DNR.

The half-built taconite mine has undergone a tumultuous period in recent years. It was owned by Essar Steel Minnesota, a subsidiary of Dubai-based Essar Global that went bankrupt in 2016.

The mine was taken over in 2017 by an investment group led by Virginia health care entrepreneur Tom Clarke, who then ceded control to an investment firm from the British Virgin Islands, which in January sold $260 million of Mesabi's debt back to Essar Global.