A federal bankruptcy hearing Thursday in Delaware could decide the fate of valuable mineral rights to the iron ore under the shuttered Essar Steel Minnesota project in Nashwauk.
Attorneys for the state of Minnesota will argue that the mineral rights were withdrawn from Essar in July after the company failed to finish the project and reneged on paying $66 million owed the state for unfulfilled economic development guarantees.
The state also wanted Essar to repay local contractors and vendors who worked on the half-built project but who have not been paid. But Essar filed for Chapter 11 bankruptcy protection minutes before the state officially pulled the mineral leases, and now Essar is arguing that the mineral leases should be listed as assets that will be decided by the bankruptcy court — likely not until 2017 at the earliest.
Gov. Mark Dayton and state officials want the judge to make a decision on the leases now so the Minnesota Department of Natural Resources can hand them over to Cliffs Natural Resources.
Cliffs CEO Lourenco Goncalves has said he wants access to the rich load of taconite iron ore at the Nashwauk site and has pledged that, if he gains control of the site, he’ll build Minnesota’s first iron plant that can make directly reduced iron for use in electric arc mini mills, the fastest-growing segment of the U.S. steel industry.
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