Cleveland-Cliffs CEO to state: Work with it, and company will expand

CHISHOLM, Minn. – Cleveland-Cliffs CEO Lourenco Goncalves said Tuesday the company would like to build a taconite-processing facility in Nashwauk, Minn., but will sit on the Iron Range parcel if the state does not work with it.

If the state does not want to bargain, Cliffs has the option of not doing anything with the property, which has one of the highest iron ore content levels of any parcel in the state.

"We own the land, and because we own the land there is no option without Cliffs," Goncalves told 145 civic officials who gathered Tuesday at the Minnesota Discovery Center in Chisholm for Cleveland-Cliffs' annual address. "Nobody can kick me out."

The parcel is caught in the ongoing controversies surrounding the neighboring land that holds the unfinished former Essar Steel Minnesota project.

Cliffs bought the land when Mesabi Metallics, which bought Essar Steel assets out of bankruptcy, missed a financing deadline for the parcel.

Under former Gov. Mark Dayton, the Department of Natural Resources (DNR) said it could not transfer the land's mineral rights to Cliffs while Mesabi Metallics was still under the jurisdiction of U.S. Bankruptcy Court.

But Goncalves has been outspoken about his disagreement with the state's position, and the company filed a lawsuit against the DNR over the rights.

If the rights are transferred, Cliffs will drop the lawsuit and start mining the land, feeding both the nearby Hibbing Taconite facility that it co-owns and the new plant, adding jobs.

"I have hope that Gov. Walz will fix what was broken by the previous administration. It's an easy win," Goncalves said.

During the 90-minute session, Goncalves also reaffirmed his desire for mining to thrive in Minnesota. Cleveland-Cliffs is coming off a banner year as far as revenue and profits, and he thanked employees, the United Steelworkers union that represents many of them and politicians for their help renewing labor contracts, toughening policies to end steel dumping by countries such as China and restarting idled plants on the Iron Range.

He endorsed Minnesota Sen. Amy Klobuchar's bid to become president.

Goncalves — a native of Brazil who has turned around Cliffs in the past four years — also told the crowd of mayors, port and state officials and school superintendents that his company's methods do not have the same environmental hazards as those of Vale, Brazil's largest iron ore firm.

Goncalves said Cliffs' mine in Hibbing and another in Tilden, Mich., use tailings dams that are much less steep and less than half as tall as those deployed by Vale.

Cliffs runs Hibbing Taconite, United Taconite and Northshore Mining on the Iron Range in Minnesota and two plants in Michigan.

The company also is expanding. Cliffs is building a hot briquette iron plant in Toledo, Ohio. It also is nearing the end of a $90 million addition to Northshore Mining in Silver Bay and Babbitt, Minn., after adding a $75 million ore processing plant at United Taconite in Forbes, Minn.

The company is building the plant in Toledo because of the dispute over the land in Nashwauk. It will need to build a second processing facility with the new technology; the only question is where.

Cliffs bought the 2,000 acres in Nashwauk in 2017.

"Now we are ready to go" in Toledo, Goncalves said. "We are in Toledo because we could not be here in Nashwauk."

Cliffs and the state are now in talks, hoping to reach an agreement that would lead to the next plant being in Nashwauk, he said.

Goncalves also made clear that if Cliffs sits on the land, it could hurt Mesabi Metallics' efforts to mine the adjacent land.

Essar Steel Minnesota for a decade promised it would develop a taconite mine and processing facility in Nashwauk. After years of financial problems, continued stalls in construction and failure to pay its contractors, the state called in its loans and rescinded mineral rights. Essar Steel filed for bankruptcy in July 2016.

Cleveland-Cliffs expressed interest in taking over the land, but in 2017 investors led by Virginia health care executive Tom Clarke bought the assets. Since then, Clarke has sold his controlling interest to Nubai Global Investments, which is based in the British Virgin Islands.

Last month, the DNR filed a petition with the state Department of Administration, accusing Essar of fraud and asking that Essar be barred from doing business in Minnesota.

Goncalves supports the DNR move.

"Get them out of Nashwauk," he said, regarding Essar Global. "Enough is enough. How many more decades do you need to see they are just using you for their own purposes? You need to kick them out of the land and give the land to someone who can deliver. That someone is Cleveland-Cliffs."