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Dayton: Mesabi Metallics progress is a 'very important step'

It took nearly a week, but two of the key players in the emergence of Mesabi Metallics out of the Essar Steel Minnesota bankruptcy are finally commenting on the record. Minnesota Gov. Mark Dayton and Tom Clarke, the billionaire health-care and no...

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A worker uses a backhoe to bury a ground grid at the fine ore storage facility at Mesabi Metallics near Nashwauk recently. Bob King / rking@duluthnews.com

 

It took nearly a week, but two of the key players in the emergence of Mesabi Metallics out of the Essar Steel Minnesota bankruptcy are finally commenting on the record.

Minnesota Gov. Mark Dayton and Tom Clarke, the billionaire health-care and now mining industry executive who heads Mesabi Metallics, both released statements Thursday.

Dayton was the last major player to sign off on the deal - finalized in federal bankruptcy court last Friday in Delaware - in which Clarke's new company Chippewa Capital Partners assumed some of the debt and all of the half-built project in Nashwauk.

Clarke, Chippewa principal and Mesabi CEO, is vowing to finish the taconite mine and processing center and also build an iron plant on the site that Essar walked away from two years ago.

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Dayton, in a statement Thursday, said the emergence from bankruptcy is "a very important step" toward the ultimate goal of beginning production and creating more jobs.

"Per a settlement agreement with the (Department of Natural Resources), the state of Minnesota's mineral assets, which were formerly tied up in the bankruptcy proceedings, now revert to DNR's control," Dayton said in a statement. "If Chippewa meets the conditions of the agreement, the state leases will be reinstated."

In all the project, if completed as Clarke proposes, will cost more than $3.7 billion and employ some 350 people producing 7 million tons of taconite annually. Much of that will go to make 2 million tons of pig iron that will feed electric arc mini-mills, long a sought-after market for Minnesota iron ore. The rest is promised to Chinese steelmakers.

The bankruptcy judge approved the deal last June and all parties agreed on the Dec. 22 date to make the deal final.

In a statement Thursday, Clarke and Mesabi Metallics said they are working with an "international team of experts" to bring the Nashwauk facility online. The former Magnetation operations, also owned by Clarke, will be integrated into the Mesabi operations.

"The project is intended to provide substantial employment and tax benefits to northern Minnesota throughout the construction period and for decades to come," the statement said.

Clarke praised the efforts of Dayton, the Minnesota Department of Natural Resources and the Itasca County Board of Commissioners "who worked closely with the Mesabi and Chippewa teams to achieve last Friday's success."

Clarke last Friday also made a final payment to so-called lienholders owed money by Essar, many of them local vendors and contractors on the Iron Range. The payment was three years ahead of schedule; Dayton on Thursday thanked Chippewa Capital and Clarke for expediting the payment.

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Mesabi also is making promised payments to both the IRRRB and Itasca County, Clarke said.

David Pauker, Mesabi's chief restructuring officer throughout the Chapter 11 case, said the Essar failure "raised the very real prospect of liquidation," with the project pieces auctioned off for cents on the dollar.

"Instead, on emergence from bankruptcy, contractors and others who worked on the project received 75 cents on the dollar and lenders received a notional recovery of 30 cents, including new bonds," Pauker said in a statement. "This was only made possible by the state's willingness to work with creditors and our new investors to avoid a liquidation, save the Nashwauk project, and ensure creditors receive a recovery."

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