The state of Minnesota could issue a new lease for the defaulted Mesabi Metallics Co.'s taconite project in Nashwauk under an amendment proposal the governor's executive council will review Wednesday.
The lease amendments proposed by the Minnesota Department of Natural Resources (DNR) require Mesabi Metallics to first put $24.5 million into escrow accounts by Tuesday and to pay an additional $11.5 million in past-due rents and royalties owed to the state.
The funds would be overseen and used by the DNR, the state Department of Employment and Economic Development and Itasca County.
If approved by the state's executive council, the newly amended lease will require Mesabi Metallics and its two partners — Essar Global and HBI Newco — to complete construction of several structures in Nashwauk by specific dates, a task that has proved difficult to date.
Mesabi Metallics "is pleased to announce it has agreed to the terms of an amended mineral lease proposed by the Minnesota DNR that will allow an additional $1 billion to be invested to complete construction of a fully integrated iron ore pellet facility in Nashwauk, Minnesota," Mesabi officials said in a statement issued Tuesday.
The revised lease proposal has ruffled feathers because it means the state could allow Essar Global, now based in the Cayman Islands, to continue to be part of a drawn-out Iron Range construction project that has yet to materialize despite 14 years of promises.
Essar Global's subsidiary, the Mumbai-owned Essar Steel Minnesota, is the entity that filed for bankruptcy on the failed $1.9 billion project in Nashwauk in 2016. The bankruptcy came after 10 years of missed payments, missed construction deadlines and broken promises to contractors, the state and municipalities. The project, which sits half built on the Iron Range, owed creditors more than $1 billion in debt at the time of the filing.
The DNR had tried to bar Essar Global from doing business in the state. It has since agreed to allow it to be a financial stakeholder but not to have any operational role in the Mesabi Metallics project.