Essar Steel Minnesota Sale Approved

Clarke says he eventually hopes to become a steel producer. In an interview with the Duluth News Tribune, Clarke said his goal is to become a player in the “total integration of the steel business, from mining iron ore and coke coal to producing pig iron and finished steel.”

The transaction includes paying off more than $1 billion in debt and restarting construction on the half-completed taconite iron ore mine and processing center. The name Mesabi Metallics, taken on during the bankruptcy proceedings, will be changed, said Clarke, but will not be called Chippewa. Finalization of the sale is expected within 50 days or Aug. 1.

One of the last hurdles for the sale was an agreement by Gov. Mark Dayton to hand over the state mineral leases after ensuring that certain safeguards were in place. Among those were restarting construction of the DRI pellet plant by Sept. 30, 2017, and completing it by the end of 2019.

Beginning in 2019, Minnesota will receive guaranteed minimum payments from the company. Once the plant is in operation, it will pay the state 75 cents for each ton of finished concentrate mined from the leased land.

The agreement also stipulates that Chippewa Capital have at least $626 million in place by the end of August for construction, or the leases revert back to the state. Dayton had originally discussed transfer of the leases to Mesabi Metallics’ competitor Cliffs Natural Resources. The governor told the News Tribune he is “hopeful” the new owners will keep their promises for the facility.

“We’ll know in a fairly short amount of time if it works,” Dayton said in the News Tribune. “If it’s not moving forward as promised, the state can rescind those leases and give them to someone who will develop the facility.”

Minnesota State Representative Sandy Layman said the agreement was necessary, telling WDIO-TV, “We can’t be in the same position as before with broken promises, so the state supports the bid for the leases that has those conditions.”

About $1.8 billion was invested in the facility by Essar Group. It’s estimated it will take $600 million or more to complete work on the project. Clarke has formed another entity, Vencer Capital Partners, which will handle the financing of the pellet plant.