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Sad Saga of Mesabi Metallics May Finally End with Cliffs Taking Over
Written by Sandy Williams
May 7, 2021
The Minnesota Department of Natural Resources announced Wednesday that it will cancel the Iron Range mineral leases for Mesabi Metallics after the company failed to meet a May 1 deadline.
Mesabi Metallics missed the deadline to demonstrate that it had $200 million of funding available for its half-finished taconite mine project. Said the department in a statement, “The DNR has also informed Mesabi that it owes $18 million in minimum base lease payments for 2020 and that the DNR has initiated termination of the leases.”
The site near Nashwauk, Minn., was originally owned by Essar Global, which promised a pellet plant and steel plant in the region. The company broke ground in 2008, but failed to accomplish much else and entered bankruptcy in 2016. The mineral leases were canceled by then Governor Mark Dayton who began negotiations with Cliffs Natural Resources. The mining rights were eventually given to Tom Clarke and Chippewa Capital, who formed Mesabi Metallics in 2017. The sale was contested by Cleveland-Cliffs, which then bought land in the Nashwauk area as a source for HBI.
In 2018, Nubai Global took majority control of Chippewa Capital, and Essar Global returned to the project as a Mesabi shareholder, buying out $260 million of debt. In January 2019, the new governor, Tim Walz, banned Essar from operating in the state, calling Essar “a company that left the Iron Range in a lurch and caused a lot of pain.”
Mesabi Metallics continued to miss construction deadlines and in 2020 was given more time due to the COVID-19 crisis to fulfill its obligations. After missing the May 1, 2021, deadline, the DNR finally had enough and wrote to the company stating that “it did not meet all the conditions required” for continuation of the leases.
Nearly $1.9 million dollars have been spent over the years for a half-finished operation that was expected to produce 7 million tons of taconite pellets per year and provide much-needed jobs to the region.
The United Steelworkers union applauded the decision by the DNR, calling iron ore mining an essential part of the economy of Minnesota and the U.S. steel industry.
“The former Mesabi Metallics mine project has the potential to deliver hundreds of good-paying, family-supporting jobs to the hard-working people of the Iron Range,” said USW District 11 Director Emil Ramirez. “Making sure that this project is in the hands of a company that will move forward in a timely, responsible and sustainable way is the best decision for the people of Minnesota.”
Minnesota State Rep. David Lislegard commented in a statement: “Today’s announcement validates everything we’ve said about this organization, and what Mesabi Metallics put forth recently was just more in a long line of continued failed promises. While we have lost precious time and economic opportunity over the last 13 years, now is the time for us to move forward. I’m extremely pleased that today the DNR has listened to the will of the people of the Iron Range who have been impacted by this bad actor’s inability to meet its commitments.”
Lislegard continued, “It’s critical the decisions we make today protect the assets and our ability to finally move the project in Nashwauk forward with a viable and credible partner, and finally give us the opportunity to strengthen our region’s economic future.”
That “viable and credible partner” will likely be Cleveland-Cliffs.
Said Cleveland-Cliffs CEO Lourenco Goncalves in a statement: “Cleveland-Cliffs applauds the move made today by the DNR to address the long-term injury inflicted on the Minnesota Iron Range by people with no agenda other than the goal of extracting benefit for themselves. We also appreciate the relevant support from the Iron Range legislators, the local associations, the mayors, the United Steelworkers and the population in general. As soon as the legal process of terminating the leases is completed by the state, and assuming that at this time the saga will come to an end, Cleveland-Cliffs is ready to step in and do what we have been doing for decades, by developing Nashwauk and generating a big number of good paying middle-class union jobs for the people of the Iron Range.”
By Sandy Williams, Sandy@SteelMarketUpdate.com

Sandy Williams
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