After several tense weeks, Essar Steel Minnesota said Wednesday that it has closed on the financing needed to complete its $1.8 billion taconite plant on the Iron Range.
The company expects the long-awaited plant in Nashwauk, Minn., to be complete in the second half of 2015. The company broke ground on the project in 2008 but it has been delayed for various reasons, including financing.
Essar has invested roughly $900 million into the project but needed to raise more money to finish construction, which is about half complete.
Last month, a bond deal to raise about $450 million for the project was abruptly called off. Executives at the Mumbai-based company declined to say what happened.
The precise amount of the financing announced Wednesday wasn’t disclosed. Essar Assistant General Counsel Mitch Brunfelt said it is a “combination of equity and loans,” but he did not elaborate.
In a statement, Essar Steel Minnesota CEO Madhu Vuppuluri said, “This truly is a momentous occasion for our company and for the Iron Range as we now have in place the necessary financing to complete this historic project.”
Construction at the site is expected to accelerate over the next 60 days as workers race to pour footings and do other concrete work before winter sets in. Builders will then focus on the erection of steel beams, cladding buildings and installing machines and equipment.
“By having completed the necessary financing for this project, we look forward to moving aggressively toward project completion and commencement of production,” Vuppuluri said.
Once completed, the taconite plant will mine and crush iron ore and produce 7 million tons of iron ore pellets a year. The taconite pellets are expected to be shipped from Nashwauk to the Essar Steel Algoma plant in Canada, where it will be processed with specialty furnaces until it is converted into pure steel.
Essar officials said they expect the Nashwauk project to generate hundreds of jobs and $180 million in new tax revenue for the state when fully operational. The mine is expected to last 70 years, enough time to provide jobs to three generations of workers, officials said.
County and city officials who visited the plant last month said at the time that they were encouraged by the physical progress. The plant endured several delays over the past two years as funds periodically ran dry and some contractors were paid late and walked off the job.
When the bond financing fell through last month, some local officials said privately that they were disappointed at facing yet one more delay and hoped the company could pull off a new financing plan.
Last month, Terry Snyder, an Itasca County commissioner, visited the site and said he was “pleased” to see so many contractors back on the site pouring concrete and operating cranes. “I have always thought that they have so much money invested in this plant that unless something goes really, really sour, they will continue to get their financing,” Snyder said. “This plant is so close to being done that another year of construction and they will be ready to produce.”
Two weeks ago, Nashwauk Mayor William Hendricks said that there were perhaps 70 workers at the plant. “I am a full believer that this project can move forward,” he said then. “I only hope that it does.”
The state of Minnesota has lent Essar $6 million toward the project and helped secure infrastructure bonds worth $60 million. The loans are not due until 2015, said Tony Sertich, commissioner of the Iron Range Resources and Rehabilitation Board.