Time is now for Iron Range steel plant

After a nine-year kaleidoscope of owners, plans and pitfalls, the Iron Range is finally getting its steel plant.

India-based Essar Global is scheduled to break ground today in Nashwauk on a $1.6 billion project that it expects will become the first fully integrated mine-to-steel-slab facility in North America.

The project will be built over five years on the long-defunct Butler Taconite Mine and bring 2,000 construction jobs and 500 to 700 permanent jobs to the hard-knock Iron Range.

Today's groundbreaking comes 11 months after Essar Global bought Minnesota Steel Industries from the Longyear and Bennett families and pledged to put the state squarely on the steelmaking map for the first time.

At today's ceremony, officials will rename Minnesota Steel Industries to Essar Steel Minnesota and name Essar executive Madhu Vuppuluri as CEO and president.

"This is a fantastic opportunity for us," Vuppuluri said. "Minnesota is taking the lead on all our projects."

Essar produces 9.5 million tons of steel in India, Canada and Indonesia, and is expanding in Trinidad, India and now here. In five years, Nashwauk expects to produce 1.5 million tons of steel and plans to feed taconite, iron nuggets and steel to the Canadian-based Essar Steel Algoma, which Essar bought last year.

He plans to attend today's ceremony, along with Nashwauk, Itasca County and Iron Range Resources Board officials. Minneapolis-based Barr Engineering, Norwegian oil and mining expert Aker Kvaerner and about 20 other engineering firms will work on the site.

The project almost failed to materialize. Essar announced in October that it purchased Minnesota Steel, while Gov. Tim Pawlenty was in India on a trade mission. But the mega-investment instantly shot from celebration mode to worry, when it was discovered that Essar Global was in discussions to build an oil refinery in Iran. That would have violated U.S. sanction rules that prohibit investments in energy deals in "terrorist states."

Essar abandoned the Iran refinery project to maintain its U.S. relationship.

"Definitely we were caught unawares. We didn't know all the complications," Vuppuluri said. "We were made aware of that and have made a policy decision that we will comply with the sanctions act. ... It is [important] for us to be very respectful corporate citizens here."

The project will be built in three phases. Essar will mine iron ore from Butler's old Pit No. 5, then crush and convert it into taconite pellets 2 miles to the northeast. A reduction furnace, electric arc furnace and steel slab facility will also be built at the site.