Minnesota Gov. Tim Pawlenty released a statement Saturday saying he may oppose state funding for what is forecast to be the largest industrial project in the Iron Range's history because the firm behind it might be pursuing a development in Iran.
Essar Global Limited, a steelmaker based in India, is planning to build a $1.6 billion steel plant on 20,000 acres west of Nashwauk. Iron Range and ore experts have said the project has the potential to dramatically revitalize an area of the state whose economy has suffered in recent decades.
But in a statement, Pawlenty said he had "learned that Essar companies may be engaged in discussions, plans or activities that may constitute or lead to prohibited business practices with Iran."
The U.S. and Iran do not have diplomatic relations with each other. Pawlenty also called Iran "a terrorist state."
In a brief conversation, a spokesman for Pawlenty said he learned of the possible development via a story from Reuters, a news wire service. Reuters was reporting on Saturday that Essar will being building an $8-10 billion oil refinery in southern Iran next year. Another spokesperson did not return follow-up calls seeking clarification.
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Itasca County had planned to seek between $45 and $60 million from a projected $1 billion state bonding bill for the project infrastructure during the 2008 legislative session.
On an Oct. 24 conference call from India, where he had been on 10-day state trip to promote trade, Pawlenty called the project "exciting."
"It's a very exciting proposal and an exciting project," he said. "There's been a lot of exciting projects proposed in the Iron Range that haven't come to fruition, but this one has a chance to come to fruition."
Lawmakers from the region around the project expressed consternation at Pawlenty's about-face. They said they were surprised at his new position regarding the project given his previously upbeat outlook.
"I don't want to overstate it, but we're at the eleventh-hour-plus," said State Rep. Tom Anzelc, DFL-Balsam Township. "We just saw stories --'Steel Deal Sealed' and the governor was in India. That seemed so positive to me."
Anzelc said Pawlenty's chief of staff called him around 3 p.m. to inform him of Pawlenty's change of heart. Anzelc said it was especially grim news for him, since the project is within his district.
State Sen. Tom Saxhaug, DFL-Grand Rapids, said he can support Pawlenty not wanting to do business with Essar Global if it is working with Iran. However, he said Pawlenty needs to realize that the money Itasca County is requesting would go towards infrastructure that would facilitate the project, such as gas and power lines and roads. He said the money is not directly supporting Essar Global.
State Sen. David Tomassoni, DFL-Chisholm, said he felt it was "premature" for Pawlenty to make such statements.
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"We've been working on (the steel plant project) long enough and hard enough that I want to see it done," he said. "I'm not willing to bring this down because of some third world country's relationship to another third world country."
"I don't think we can control what foreign companies can do in foreign countries," he added later. "We've got to worry about our backyard -- that comes first."
State Rep. Tom Rukavina, DFL-Virginia, said he hadn't heard about Essar's possible involvement in Iran, but was critical of how quickly Pawlenty's enthusiasm for the project cooled.
"Two days ago he was bragging, implying that he had gotten them to come here," Rukavina said. "It seems a convenient way for him to back out of the promise he made two days ago ... Maybe he realized he was committing to a $45 to $60 million project, and this was a convenient way to get out if it."
