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Cliffs works to block access to Mesabi Metallics

An induration furnace is seen under construction in October 2015 at what was then Essar Steel Minnesota near Nashwauk. (News Tribune file photo)

The heated battle between Cleveland-Cliffs and Chippewa Capital Partners over a chunk of Minnesota's Iron Range spilled out of the courtroom and onto the ground outside Nashwauk this week when Cliffs erected signs to keep people off part of the Mesabi Metallics project.

Cliffs employees or contractors apparently rode snowmobiles onto the site, crossing Mesabi Metallics property to erect "No Trespassing" signs around a disputed piece of property Cliffs claims in the middle of the Mesabi Metallics project, said Tom Clarke, CEO of Chippewa Capital Partners.

Chippewa officials said Cliffs employees illegally trespassed on the Mesabi Metallics property at night and conducted "criminal activity."

Attorneys for Chippewa are expected to contact the Itasca County Sheriff's Office about the incident, Clarke said.

The battle stems from the efforts of Clarke's company, Chippewa Capital Partners, to revive the bankrupt Essar Steel Minnesota project, now called Mesabi Metallics, in Nashwauk. Clarke won the bankruptcy auction for the project last summer and in December pulled the effort out of bankruptcy court for good, signaling work would resume in earnest this spring on the $3.7 billion taconite mine and processing center and adjacent pig iron plant that, combined, could employ 350 people.

But one big issue remains unresolved.

Just before the December bankruptcy emergence, Cliffs announced it had purchased the interests of Glacier Park Iron Ore Properties LLC for a large piece of what was expected to be the Mesabi Metallics mine.

Chippewa says Glacier Park should not have been allowed to sell the property — that access to the mineral rights should have transferred with the bankruptcy case. Cliffs argued they bought the rights after Chippewa missed an agreed-upon deadline to pay for the rights.

The issue was argued in a Delaware courtroom Thursday. Federal Judge Brendan Shannon is expected to decide the matter later this month.

But Cliffs didn't wait, moving this week to physically mark the property in question, allegedly trespassing to erect their own "No Trespassing" signs, Clarke told the News Tribune.

Attorneys for Chippewa sent Cliffs notice late Thursday to stop its activities on the property and allow unfettered access to the Mesabi Metallics project, calling Cliffs' efforts "extrajudicial harassment."

The land in dispute is in the center of Mesabi Metallics project and, if it was permanently blocked off, could thwart efforts to finish the project and mine at the site.

Patricia Persico, spokeswoman for Cliffs, said Friday that erecting the signs was simply the company "securing its purchased and leased properties on the Nashwauk site. Our main concern is for public safety. Erecting signage is standard company practice and protocol for securing the perimeters of our land and operations."

Persico said any snowmobiling activity was done during daylight hours by surveyors marking the boundaries of Cliffs' newly acquired land.

"There is no illegal activity,'' she said, calling Chippewa's claims unfounded. "There is none of that going on."

Earlier this week Cliffs also attempted to serve legal papers to Mesabi Metallics project leaders, ordering them to stay off the property in question. Similar documents also were presented to contactors entering the property to work on the massive structures that sit about half-built, Chippewa's attorneys alleged in the letter to Cliffs.

"We are working to settle this amicably and then we have this just incredible behavior by Cliffs," Clarke told the News Tribune on Friday. "This is a blatant effort by a desperate company trying to intimidate contractors off this project. But it's not going to work."

Clarke said the alleged late-night trespassing is part of Cliffs' ongoing effort to sabotage the Mesabi Metallics project to fend off potential competition. Mesabi Metallics promises to produce some 7 million tons of taconite pellets annually which could compete with Cliffs, currently the nation's largest producer of taconite iron ore, the main ingredient in steel made in blast furnaces.

Clarke has said he will gain access to the ore under the property in question legally, or purchase it from Cliffs, or go around Cliffs and mine other land where Chippewa already has access to the ore.

Minnesota Gov. Mark Dayton and Iron Range lawmakers have called on Cliffs CEO Lourenco Goncalves to stop trying to block Clarke's project and instead work with Mesabi Metallics as it develops. So far that hasn't happened.