The process to ban Essar Global from doing business in Minnesota will continue after the Minnesota Court of Appeals on Monday upheld a lower court's decision dismissing a challenge to the process.

Essar, the company that left the Nashwauk mine and steel plant site half-built and in bankruptcy, sued the Minnesota Department of Natural Resources and Department of Administration in February 2019 in State District Court in St. Paul after the agencies moved to debar the company from doing business in the state. The company claimed the agencies had violated state law and put the future of the Nashwauk project at risk.

But Judge Robyn Millenacker dismissed Essar's case without prejudice in September for numerous reasons, including that the company's concerns should be raised in an administrative process with the Department of Administration.

If the agency does moves to debar Essar, then the company can request the agency's commissioner review the decision, and if the commissioner's "determination is unfavorable" then the company can "seek review in the appropriate appellate courts."

"It is also apparent from (Essar's) briefing that it desires to sidestep the entire administrative process through the instant civil action," Millenacker wrote. "Being compelled to proceed through an undesirable forum does not constitute irreparable harm."

Newsletter signup for email alerts

In an opinion filed Monday, the Court of Appeals affirmed Millenacker's decision to dismiss the case.

In an emailed statement to the News Tribune on Monday, the Department of Administration said the debarment process of Essar would proceed.

"We are pleased that the Minnesota Court of Appeals has upheld the district court’s ruling in the Essar Global case," agency spokesperson Curt Yoakum said. "The review had been on hold but we will now determine next steps once a more thorough review of the court’s decision has been completed. "

The DNR said it was also pleased with the court's decision.

"We are reviewing the specifics of the decision, but we are pleased that the Appeals court upheld the lower court decision," DNR spokesperson Chris Niskanen said in an email to the News Tribune on Monday.

Essar took control of the massive project in 2008 and the Nashwauk facility — the state’s first all-new taconite mine and processing center in decades — was supposed to be employing 350 people by 2014, and producing some 7 million tons of taconite iron ore pellets each year. Plans also originally called for an iron and steel plant on the site, creating even more jobs.

But Essar walked away from the project in late 2015 after spending $1.8 billion and leaving it 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.

Earlier this year, as Mesabi Metallics missed more state deadlines, DNR Assistant Commissioner Jess Richards told the News Tribune that DNR is open to having Essar as an investor, but would not allow it to control the project.

Essar did not return a request for comment from the News Tribune on Monday.