NEWS RELEASE: An Open Letter to the Iron Range – by Mark Dayton (August 28, 2018)

Mark Dayton is the Governor of the State of Minnesota.

Dear Friends,

I am as frustrated as anyone, by all of the setbacks that have delayed completion of the former Essar Steel’s taconite plant in Nashwauk. When I became Governor in 2011, the project had already been plagued by several years of broken promises, missed deadlines, and lame excuses.

After another missed deadline, the Minnesota Department of Natural Resources (DNR) gave Essar the legally required notice that we intended to revoke the company’s mineral leases of state lands in Nashwauk. Instead, Essar filed for bankruptcy, which under federal law blocked our actions and transferred control of the project’s future to a Bankruptcy Court Judge in Delaware. We were enormously frustrated by this maneuver; but we had no choice, other than to abide by federal law.

After several months of legal filings, the judge asked for bids from anyone who wanted to buy ownership of the project, pay off existing creditors, finish building the plant, and begin to produce pellets. In June 2017, the Judge ruled that Chippewa Capital Partners, headed by an East Coast businessman named Thomas Clarke, had made the best offer. He was awarded ownership of Mesabi Metallics, which included Essar’s mineral leases with the DNR.

At first, the new owners and their plans to finish construction and begin production looked promising. Importantly, they paid Iron Range contractors $46 million that they were owed for their previous work. All of the required steps to retain the state mineral leases post-bankruptcy, including contracts to complete the site’s construction, $850 million debt and equity investment, and offtake agreements for the pellets, were represented by Mr. Clarke to have been completed by the June 30, 2018 deadline.

It was only afterward that we were told about an internal conflict between Mr. Clarke and his equity partner, a company named Nubai Global Investment in the country of Dubai. That dispute went to another federal court, where the Judge awarded control of Mesabi Metallics to the Nubai investors.

I met on August 16 with Mr. Gary Heasley, designated by Nubai as Mesabi Metallics’ Chief Executive Officer. He expressed his intent to resume construction and begin producing taconite pellets as soon as possible. He also confirmed his strong commitment to completing the required value-added iron ore component at the site.

Like you, I have heard all of this before: from Essar, from a previous group of investors (SPL), and from Mr. Clarke. I hope this time it will be different. However, I fully realize that everyone, myself included, has been burned so many times that we are cautious about new promises. Only restarting construction will provide the proof we are all looking for.

I understand some people’s desire to pull the state’s mineral leases from this project and transfer them to Cleveland Cliffs. Unfortunately, such a switch would not be nearly as simple as some are saying. Cliffs had the chance to take ownership of the project, including the state’s mineral leases, in the bankruptcy proceedings. However, the federal judge ruled in favor of Chippewa Capital Partners’ bid, and transferred the ownership to them.

The Bankruptcy Judge made that decision, not the State of Minnesota. We own land with iron ore deposits that have been leased to the owners of this project; however, we do not own the project, the facilities, or any part of the company that does.

It is unfair to blame “The DNR” for these problems. If you need someone to blame, blame me. I have been closely involved with the DNR Commissioner and his staff at every step of this tortured path. We have also communicated frequently with Range legislators and with Itasca County leadership. Neither the DNR nor I have been trying to tell anyone on the Range what to do. Rather, we have done our very best to work in partnership to complete this project and begin producing pellets and jobs.

And that is what we will continue to do.

Sincerely,

Governor Mark Dayton

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