IRON RANGE — The Walz administration is strongly rejecting an account that the governor met with Essar officials and will consider extending state mineral lease deadlines for the Mesabi Metallics taconite project in Nashwauk, saying a published report contained numerous factual errors.
Citing Ron Dicklich, a former legislator and current lobbyist for Essar Capital Americas, a Business North article claimed that Essar officials met with Walz about the project and potential investors, and described an upcoming September meeting of the Executive Council — consisting of the governor, lieutenant governor, attorney general, secretary of state and state auditor — to consider a lease extension request.
But in an email to the Iron Range Delegation last week, obtained by the Mesabi Daily News and verified independently by multiple legislators, the Walz administration and the Minnesota Department of Natural Resources dispute key aspects of the report. The story, also published last week, does not indicate if the state was contacted for comment.
According to the email, Walz’s policy advisor Charles Sutton told legislators that Mesabi Metallics never submitted an “actionable request to extend” a Dec. 31 mineral lease deadline with the DNR. As part of its emergence from bankruptcy, the state told Mesabi it has until the end of this year to finish building the pellet plant, which the company and Essar — its largest lender — have conceded will pass without significant construction. Dicklich previously said Mesabi needs about 18 months to secure funding and finish the work.
Further, Sutton said the the Nashwauk project is not on the agenda for “any upcoming Executive Council meeting” and there is no meeting scheduled this September. The next meeting, according to the state’s website, is Dec. 5.
“No decisions will be made in September,” the email continues.
Sutton also says Walz did not meet with Dicklich, Essar, Stelco or Mercuria about the project. The latter two companies have been named as potential investors and business partners to push the project into operation. Sutton added that “no entity has provided the State with documentation of $800 million in guaranteed construction funding” to complete the pellet plant.
Walz’s office also clarified that the state didn’t fine Mesabi Metallics over compliance issues, but rather drew $1 million from the company’s financial assurances under the terms of a DNR permit for failing to “perform its permit obligation.”
In an email seeking comment, Dicklich called the Business North report inaccurate, citing parts about the Executive Council and Walz meeting. A Business North representative said they have not seen a request for corrections from Dicklich.
The dueling stories over how the state is interacting with the project is part of an ongoing saga in Nashwauk dating back to the 2016 bankruptcy filed by Essar Steel Minnesota. Essar Capital Americas, an offshoot of parent company Essar Global and the company that retains Dicklich as a lobbyist, is headed by CEO Madhu Vuppuluri, who was also CEO of the project under Essar Steel Minnesota.
Former Gov. Mark Dayton tried at the time to extract state mineral leases from Essar in 2016, but failed as they were tied into bankruptcy court.
In 2017, Mesabi Metallics won a court bid to control the project and emerged with it last year, retaining state mineral leases in July 2018, but was immediately connected back to Essar Global through reported financial partner Riverdale Commodities SA.
Essar announced earlier this year, on the same day Walz was sworn in as the new governor, that they rejoined the project through buying out more than $250 million in debt from Mesabi Metallics, making it the company’s largest lender.
While Essar’s ultimate role is unknown, the company has gone to lengths to speak for the project and introduced an operations group that included Stelco, Mercuria, direct-reduced iron company Tenovo and South Carolina-based construction firm Fluor.
Since Essar stepped up its role, the Mesabi Metallics website was wiped clean of all information in June, the same day Essar Global co-founder Ravi Ruia visited the site. Since then, former Mesabi Metallics CEO Gary Heasley has departed from the project, with board member Jamie Nelson’s name circulating on several letters sent to state officials on behalf of the company.