Chippewa Capital Partners has reached an agreement with Gov. Mark Dayton over mineral leases at the former Essar Steel Minnesota project in Nashwauk, removing one of the last obstacles to a bankruptcy settlement approved this morning in Delaware.
The agreement allows Chippewa — a joint venture of London steel and energy conglomerate GFG Alliance and Roanoke, Va., billionaire Tom Clarke — to take over the bankrupt, half-built taconite iron ore mine and processing center, restart construction and start mining and processing ore by 2020.
India-based Essar pumped $1.8 billion into the Nashwauk project over seven years but then walked away in late 2015, out of cash and more than $1 billion in debt, filing for bankruptcy last July.
Clarke, who also purchased most of the bankrupt Magnetation Iron Range mining and processing operations in December, has vowed to add a major new element to the Nashwauk project — an iron plant that would turn taconite concentrate produced at the site into hot briquette iron. That iron would be used in electric arc mini-mill steel mills, the first big push for Minnesota iron ore into that growing steelmaking market.
Dayton had steadfastly refused to release the state’s rights to minerals under about 30 percent of the Nashwauk mine site, now called Mesabi Metallics, saying he wanted a better deal for local contractors and vendors who are still owed millions by Essar. He also wanted better guarantees that the new company has the financial backing to finish the project that’s been underway since 2008 without producing an ounce of taconite.
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