The investors who want to relaunch the Essar Steel taconite project on the Iron Range received a 30-day extension Thursday to get their finances in order.
The bankruptcy courts originally set Thursday as the financing deadline that was needed to secure the Minnesota mineral lease rights attached to the Essar Steel site in Nashwauk, Minn. The deadline was issued to Virginia billionaire Tom Clarke and his Chippewa Capital Partners.
Gov. Mark Dayton and the state's Department of Natural Resources had taken back the mineral leases from Essar's former owners after the project failed to meet several extended deadlines and after a long list of construction bills remained unpaid. Dayton said he will give Chippewa more time.
"My administration has been working hard with [Iron] Range leaders to get the best possible outcome for the project," Dayton said. "The DNR will be in close communication with Chippewa over the next 30 days to monitor their progress. If Chippewa is unable to obtain their financing agreement within that 30-day period, the DNR will regain control of the leases."
The controversial $1.9 billion Essar Steel Minnesota project began in 2007 under owners based in Mumbai. It long frustrated state officials as construction stalled and stopped repeatedly over 10 years because of financing trouble.
Essar Steel Minnesota eventually filed for bankruptcy in July 2016 — on the same day the state attempted to rescind the firm's mineral lease rights after months of broken promises and missed payment deadlines.
Dayton has said that he and other state leaders hoped and still hope to transfer Minnesota's valuable mineral lease rights to Chippewa Capital Partners, the company that submitted the winning bid in bankruptcy court to overtake the Essar project.
In a late April interview, Clarke said his group of investors was determined to secure the rest of the funding necessary to restart the failed construction project in Nashwauk. Clarke said then that his plan was to complete the Essar project and combine its iron ore production capabilities with the former Magnetation ore operations in Grand Rapids, Minn., and in Michigan. (A different investment group controlled by Clarke called ERP Iron Ore took control of the bankrupt Magnetation properties earlier this year.)
Clarke said in April he planned to add an advanced technology, direct-reduced iron (DRI) plant to the Nashwauk site, making it an even more valuable entity to the state, which already has many taconite production plants.
Clarke and his representatives weren't available for comment Thursday.
Dayton said he wanted to ensure that the state's mineral leases in Nashwauk "are utilized by a financially capable entity to mine and process their resources, build and operate a value-added enterprise, and create more jobs and further economic growth on the Iron Range."
