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Minnesota Governor Threatens To Take Away Mineral Leases From Startup Iron Ore Miner
04/14/2016 - Minnesota Gov. Mark Dayton has issued an ultimatum to would-be iron ore producer Essar Steel Minnesota, telling the company that if it doesn't line up the funding to finish its new taconite mine and processing facility, the state won't renew mineral leases.
The leases expire on 1 July, and Dayton is giving the company two months to put its financial house in order, he said in a statement.
“If Essar Steel fails to fulfill in full its commitments to the state and its vendors by that deadline, the company should not expect the leases to be renewed,” Dayton said.
The company is building a US$1.9 billion open pit taconite mine and ore processing facility. The project has been developed in fits and starts, but it's now stalled, having run out of funding. The company owes millions of dollars to contractors who have worked on the project, and it has missed a deadline to begin paying back forfeited economic incentives offered by the state.
Dayton said Essar Steel's parent, Essar Global, is committing an undisclosed amount of interim funding to meet the company’s immediate obligations.
"Essar Steel is reportedly also seeking a new equity partner for the project. It remains to be seen whether or not those efforts will be successful,” Dayton said.
Minnesota owns the mineral rights to some, but not all, of the land Essar plans to mine, the Duluth News Tribune reported. The newspaper said several private trusts also hold mineral claims, and it is unclear how much leverage the state leases might provide.
“If Essar Steel fails to fulfill in full its commitments to the state and its vendors by that deadline, the company should not expect the leases to be renewed,” Dayton said.
The company is building a US$1.9 billion open pit taconite mine and ore processing facility. The project has been developed in fits and starts, but it's now stalled, having run out of funding. The company owes millions of dollars to contractors who have worked on the project, and it has missed a deadline to begin paying back forfeited economic incentives offered by the state.
Dayton said Essar Steel's parent, Essar Global, is committing an undisclosed amount of interim funding to meet the company’s immediate obligations.
"Essar Steel is reportedly also seeking a new equity partner for the project. It remains to be seen whether or not those efforts will be successful,” Dayton said.
Minnesota owns the mineral rights to some, but not all, of the land Essar plans to mine, the Duluth News Tribune reported. The newspaper said several private trusts also hold mineral claims, and it is unclear how much leverage the state leases might provide.
