The beleaguered iron ore mine and taconite plant project in Nashwauk has missed more deadlines, giving the state the option to rescind the company's mineral leases anytime in 2020.
Mesabi Metallics missed an $11.6 million payment due Jan. 20, Minnesota Department of Natural Resources Assistant Commissioner Jess Richards said in an email to the News Tribune. The missed lease rental and mineral royalty payment comes just weeks after the company also missed a year-end deadline that required the completion of its pellet plant by the end of 2019. The missed deadlines were first reported by the Mesabi Daily News.
Missing just one of those deadlines gives the DNR the ability to terminate Mesabi Metallics' mineral leases at any time over the next year, but Richards said the agency is waiting to make any decision.
"We continue to weigh all of our options related to this default as well as the company’s failure to complete construction of the pellet plant by the end of 2019," Richards said. "The DNR remains committed to finding a viable path for completion of this project and is willing to talk with any credible entity that can move the project forward."
Mesabi Metallics has not provided the DNR with a timeline for payment, Richards said.
Mesabi Metallics and Essar — the company that first started and then abandoned the project, only to return again as an investor in Mesabi Metallics — did not respond to the News Tribune's request for comment Thursday.
The missed payment was a requirement of the "Master Lease Amendment" with the state to help get the project out of bankruptcy, Richards said. It would have been only $6 million, but it doubled after Mesabi Metallics missed a key year-end deadline when it failed to start construction on its value-added facility by Dec. 31, 2018.
Richards said Mesabi Metallics faces a quarterly lease rental payment in April and an $18 million lease rental and mineral royalty payment at the end of 2020.
The project has faced repeated setbacks for over a decade.
In 2008, Essar took over the Nashwauk project, which was set to be the state's first all-new taconite mine and processing center in decades and employ 350 people by 2014 as it produced some 7 million tons of taconite iron ore pellets each year.
At the time, plans called for an iron and steel plant on the site, which would have created even more jobs.
But in 2015, Essar walked away from the project after spending $1.8 billion on it and left the facility less than half-finished. The company also left behind $1 billion in debt, leading to years of bankruptcy and post-bankruptcy troubles that continue today.
The project was then bought by Chippewa Capital Partners, the parent company of Mesabi Metallics, which pulled it out of bankruptcy in December 2017 and vowed to finish the mine and processing center.
Mesabi Metallics also earned back key mineral leases from the state in July 2018, but an ownership dispute just weeks later forced Chippewa owner Tom Clarke out of the company.
After Essar said it would settle $260 million of the debt it left behind and buy its way back into the project, DNR Commissioner Sarah Strommen sent a letter to Mesabi Metallics warning the company of the agency's intention to block Essar from having any involvement in the project.
Essar's complaint called Strommen's letter a "threat" when it responded with its own lawsuit.
Richards told the News Tribune in an interview earlier this month that the DNR is open to having Essar as an investor, but would not allow it to control the project.
"We continue to not view Essar as a credible owner-operator, but we also recognize Essar has a role. It's just that if we were to do some business with Mesabi (Metallics), it would need to be with some other credible owner-operator that would be the controlling presence at the project," Richards said. "Essar would have to be a passive investor."