Minnesota's largest industrial project has crossed one more hurdle.
The Iron Range Resources Board today approved a new loan agreement with Minnesota Steel Industries LLC, a move that officials of the steel company said would help finalize financial closure of the mammoth project.
The board, on a 9-0 vote, approved an agreement under which Iron Range Resources would receive $6 million from the Bank of India, New York, should a $6 million IRR loan to the $1.6 billion steelmaking project go into default.
In 2005, the IRRB approved a $6 million loan for the project.
Under that deal, royalties from iron ore at the proposed site served as collateral in the event the project went into default.
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However, Matt Sjoberg, Iron Range Resources development strategies director, told the board today that the new $6 million agreement "would be a much more liquid instrument" in the event of a default on the loan.
"With the royalties, we would have to wait until it would be mined to have collateral," said Sjoberg.
Payments on the loan are to begin no later than Dec. 31, 2012, said Sjoberg.
Plans are to construct an open-pit taconite mine, processing plant, direct-reduced iron and steel slab facility near the site of the former Butler Taconite near Nashwauk.
In 1985, Butler Taconite closed under bankruptcy and the taconite plant was razed.
Minnesota Steel controls an estimated 1.4 billion tons of high-grade iron ore reserves at the site that could be used to feed the mill.
Permits for construction of the facility are approved.
Essar Steel Holdings LLC, an India-based steelmaker, is in the process of assuming control of the project from Minnesota Steel.
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John Elmore, Minnesota Steel president and chief executive officer, told the board Tuesday in a teleconference call that financial closure could begin next week.
"This [new agreement] gives you significantly more comfort than the royalties," said Elmore. "There's always some little things that happen in a closing, but this is critical."
If built, the plant would be the first of its kind in the nation, producing 2.5 million metric tons of steel slabs annually.
Steel slabs would be shipped to domestic steelmakers and rolled into steel for use in products such as automobiles and appliances.
Construction of the plant would require 2,000 workers. The facility would employ about 700 full-time workers, create an estimated 2,100 spinoff jobs and have an annual economic impact of more than $600 million.
Because mining, processing, and steelmaking would be done at one site, company officials say it would be North America's lowest-cost steel producer.
