Mesabi Metallics misses year-end deadline; Essar said it will 'participate' in project
The iron ore mining company trying to restart the former Essar site in Nashwauk missed a year-end construction deadline, triggering financial penalties.
Mesabi Metallics failed to start construction on its value-added facility by Dec. 31, 2018, which has caused its rent and royalty payments to the state to double until “the failure to meet the lease term is corrected,” assistant DNR commissioner Barb Naramore said in an email to the News Tribune Monday afternoon.
The company told the DNR in late November 2018 that it would not meet the deadline “due to other project obligations and the possible acquisition by Mercuria,” Darin Broton, a spokesperson for Mesabi Metallics, said in an email to the News Tribune Monday evening.
In September, Switzerland-based commodity group Mercuria and Mesabi Metallics signed a memorandum of understanding that said Mercuria would take a majority stake in Mesabi Metallics, whose sole owner is currently Chippewa Capital Partners, by the end of 2018. The deal would also give Essar, the Nashwauk mine’s former owner, a stake in the business.
But as of Monday Mercuria had not yet acquired Mesabi Metallics, Broton said.
Mercuria officials did not respond to a phone message and email seeking comment by the News Tribune Monday.
The missed deadline was first reported by the Mesabi Daily News.
Mesabi Metallics took over the Nashwauk site in June 2017, pulled it out of bankruptcy in December 2017 and won back key mineral leases from the state in July.
But Mesabi Metallics was bogged down shortly after by an ownership and management dispute between founder Tom Clarke and owner Nubai Global Invested Limit. A court sided with Nubai in August, banning Clarke from representing himself as an employee.
Mesabi Metallics plans to finish a taconite mine, pellet plant and iron plant at the site left behind by a bankrupt Essar.
Essar repays Mesabi Metallics' debt, buys back in
But on Monday, Mumbai-based Essar said it was returning to the Nashwauk site.
In a news release, Essar announced it had purchased $260 million in face value notes issued by Mesabi Metallics, which the company said covered debt and secured its role in the project.
"These notes substantially constitute all of the debt of Mesabi, and paves the way for Essar Global to once again participate in the low-cost iron ore mining and pellet manufacturing project that is under construction in Minnesota," Essar said in the news release.
Broton, Mesabi Metallics’ spokesperson, did not elaborate on Essar’s plans Monday.
“Mesabi Metallics will provide additional information about Essar Global’s role and details of the purchase in the coming days,” Broton said.