Essar could become a minority stakeholder in Mesabi Metallics if a memorandum of understanding with a Switzerland-based commodity group comes to fruition.
That's not sitting well with some Minnesota lawmakers who watched Mumbai-based Essar make promises for the Nashwauk mine site, start construction, then abandon the project in bankruptcy.
Mesabi Metallics, which took over the former Essar site in Nashwauk in June 2017 and pulled it out of bankruptcy in December 2017, and Mercuria Energy announced Wednesday morning that Mercuria could take a majority stake in Mesabi Metallics, whose sole owner is currently Chippewa Capital Partners, by the end of the year.
Left out of the announcement was the fact Essar would become a minority shareholder in Mesabi Metallics.
That came to light in a draft of Mercuria's news release published on MarketScreener, a financial news website, and was confirmed by spokespeople for both Mesabi Metallics and Mercuria on Wednesday.
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Gov. Mark Dayton has repeatedly said Essar "burned" both him and the Iron Range for abandoning the project. Dayton's press secretary Caroline Burns told the News Tribune Wednesday afternoon that Essar's position in the Mercuria deal was not disclosed to the governor when he met with Mesabi Metallics interim CEO Gary Heasley Tuesday morning.
"These changing developments and the lack of prior notice about them are very concerning, and the Governor will express those concerns, when he makes contact with the Mercuria principals," Burns said in an email.
Minnesota State Sen. David Tomassoni said Essar's role in the Nashwauk site "left a really bad taste in everybody's mouth."
"Anyone who followed it ... gets the feeling (Essar) did a sham job of actually doing what they promised to do," Tomassoni said.
Essar's potential position as a minority shareholder apparently came to light when MarketScreener published a draft version of Mercuria's news release online Tuesday, which said, "Essar, which has a long association with the Mesabi Project, will be the minority shareholder alongside Mercuria."
"We also look forward to working alongside our partner, Essar, who have a deep knowledge and understanding of the path required to bring the Project to completion," the news release said. "Their participation in this venture by our side is something that we very much welcome and deeply value."
In an email to the News Tribune Wednesday Mesabi Metallics spokesperson Darin Broton stressed Mesabi Metallics and Mercuria had only signed a memorandum of understanding and "nothing has been sealed in ink."
Broton also addressed the discontent with Essar and the company's potential minority shareholder position was not disclosed in this morning's press releases.
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"Governor has made it clear about Essar's involvement in this project. It is a sentiment shared by many. There is a reason why today's announcement did not include Essar. I think the message was received by Mercuria," Broton said.
According to Mercuria, their investment will "lead to an acceleration of the engineering, procurement and construction of the Mesabi Project."
Dayton spent Tuesday in Nashwauk meeting with Mesabi Metallic officials and Iron Range politicians. He said construction could ramp up by March and the pellet plant must be completed by the end of 2019.
The company said some crews are already onsite, working on the pellet plant and various buildings.
The frustration and struggle over the Nashwauk site has persisted for over a decade, beginning with Essar.
Said Tomassoni, "It's like deja vu all over again."
