The Minnesota Supreme Court has upheld the state's decision to terminate mineral leases for Mesabi Metallics' long-delayed iron ore project near Nashwauk.

That paves the way for the Minnesota Department of Natural Resources (DNR) to reassign Mesabi Metallics' state leases. The Iron Range's biggest mining companies — Cleveland- Cliffs and U.S. Steel — have shown keen interest in them, particularly the former.

"We are anticipating there will be potentially multiple parties interested in these state leases," Barb Naramore, the DNR's deputy commissioner, said Wednesday.

The Supreme Court late Tuesday rejected Mesabi Metallics' petition to review an October decision by the Minnesota Court of Appeals. The appellate court had affirmed a lower court ruling that upheld the DNR's termination of Mesabi Metallics' state ore leases.

The DNR in May 2021 canceled the leases after Mesabi missed the deadline for a $200 million down payment to complete its half-finished taconite plant. Without the leases, Mesabi Metallics' project doesn't appear viable.

Still, the company said in a statement that the project "remains compelling and exciting. ... Mesabi Metallics intends to do everything it can to keep its project moving forward."

Mesabi said it is in "advanced discussions" in forming a new joint venture that would provide "hundreds of millions of dollars" in new equity financing. Mesabi did not name the joint venture partner.

The Nashwauk project, announced in 2003, has languished for years as its backers have repeatedly run into financial problems.

The DNR can now either put the project's state leases out for bid or reallocate them through negotiations with mining companies. The DNR hasn't yet made a decision which path it will take.

But Naramore said "we are absolutely open to the negotiated lease route." Typically, that process starts with companies expressing informal interest in ore leases, and then moves on to formal state applications.

"To varying degrees, we have heard expressions of interest from more than one entity," Naramore said, declining to name the companies. The DNR could negotiate with more than one company — at least to the point where it had to focus on one proposal, she said.

"We might have preliminary conversations with more than one entity," she said. It's not clear how long either a negotiation or public bidding process would take. But Naramore said the DNR would not negotiate with Mesabi Metallics.

Cleveland-Cliffs, the Iron Range's largest miner, has said that securing the Nashwauk leases is vital for the future of its Hibbing Taconite plant.

Hibbing Taconite, which employs 750, is expected to run out of ore around 2025. If Cliffs gets the former Mesabi leases, Hibbing Taconite's life would be extended by 27 years; without them, the plant will close, Cliffs CEO Lourenco Goncalves said in November.

At the time, he said Cliffs representatives had been talking with state officials about the leases, and that he expects the DNR will negotiate with Cliffs — not simply put the leases out to bid.

"If they put to bid, I am not even going to bid," Goncalves said. "So, whoever wins, I don't give a rat's behind."

U.S. Steel, the Iron Range's other major player, has also expressed interest in the leases without elaborating on its plans.

The Nashwauk taconite project has had a tortuous history. Essar Steel Minnesota started building the plant in earnest in 2011 with a planned 2013 completion date. But it was never finished, and contractors got stiffed.

In July 2016, after myriad missed deadlines, then-Gov. Mark Dayton moved to terminate Essar's lease. Essar Minnesota responded by filing for Chapter 11 bankruptcy protection.

By the end of 2017, the former Essar Minnesota — rechristened Mesabi Metallics — had financially reorganized with new owners, a new plan and a new lease agreement with the state of Minnesota. But Mesabi Metallics quickly became a shambles.

Essar re-entered the picture in January 2019 by buying $260 million of Mesabi's outstanding debt and eventually what was left of its equity.

When Mesabi missed more deadlines by Jan. 1, 2020, the state could have pulled the leases then. But it chose to craft another deal with Mesabi.

Mesabi Metallics was formed after Chippewa Capital Partners — led by Virginia billionaire Tom Clarke — placed a successful $550 million Bankruptcy Court bid for the project in 2017. Cliffs bid $75 million in that auction. Clarke later lost control of the project.

The partly built Nashwauk taconite plant, along with an iron ore tailings basin, are on land owned by Mesabi Metallics. The company also holds environmental permits for the plant.