Essar Minnesota Sues Parent for US$1 Billion and Hopes to Restart Project
01/13/2017 - The former Essar Steel Minnesota, which hopes to complete its half-finished taconite mine and pellet plant in Minnesota, has filed a lawsuit against parent Essar Global, alleging “a myriad of damaging actions” that helped starve it of cash, according to news reports.
According to The Wall Street Journal, the lawsuit, filed as part of Essar Minnesota’s ongoing Chapter 11 bankruptcy case, contends that parent transferred millions of dollars from Essar Minnesota to affiliated companies not working on the project.
And as a result, the company is saddled with more than US$1 billion in debt and is sitting on a half-finished facility that will require hundreds of millions more to complete, it said, according to The Journal.
Essar Minnesota, now known as Mesabi Metallics, is seeking more than US$1 billion in damages.
In a statement to the Minneapolis, Minn. Star Tribune, Essar Global officials denied the allegations and said it will vigorously contest them in court.
It also said that it regrets "these allegations have been publicly disclosed through the Complaint being filed, prior to (Essar Global) having the opportunity to correct and rebut these unfounded allegations,” according to the newspaper.
Mesabi Metallics is under new management, which is looking to complete the project. If all goes according to plan, Mesabi Metallics said it could be producing pellets by April 2019, the Duluth News Tribune reported.
But even if the plans come to fruition, it’s not clear would buy its output – it doesn’t have any major supply agreements from steelmakers, and they already seem to be fully served by other ore producers, the newspaper said.
However, Mesabi Metallics chief executive Matthew Stock told the newspaper that U.S. steelmakers that buy ore on the spot market would indeed like to have another domestic supplier in the market.
And as a result, the company is saddled with more than US$1 billion in debt and is sitting on a half-finished facility that will require hundreds of millions more to complete, it said, according to The Journal.
Essar Minnesota, now known as Mesabi Metallics, is seeking more than US$1 billion in damages.
In a statement to the Minneapolis, Minn. Star Tribune, Essar Global officials denied the allegations and said it will vigorously contest them in court.
It also said that it regrets "these allegations have been publicly disclosed through the Complaint being filed, prior to (Essar Global) having the opportunity to correct and rebut these unfounded allegations,” according to the newspaper.
Mesabi Metallics is under new management, which is looking to complete the project. If all goes according to plan, Mesabi Metallics said it could be producing pellets by April 2019, the Duluth News Tribune reported.
But even if the plans come to fruition, it’s not clear would buy its output – it doesn’t have any major supply agreements from steelmakers, and they already seem to be fully served by other ore producers, the newspaper said.
However, Mesabi Metallics chief executive Matthew Stock told the newspaper that U.S. steelmakers that buy ore on the spot market would indeed like to have another domestic supplier in the market.
