The former Essar Steel Minnesota has asked the U.S. Bankruptcy Court for permission to take over the suspended mineral leases associated with a half-finished, $2 billion taconite and mining operation on the Iron Range.
Mesabi Metallic Co., in the petition filed late Thursday, said said the mineral lease rights are a necessary first step in the company’s reorganization plan that seeks to jumpstart construction of the failed iron ore project in Nashwauk.
The new management said in the petition the company hopes to complete the problem-plagued project within two years.
This is the same management that last month sued former parent company Essar Global, claiming that the India-based parent firm had committed fraud, financial mismanagement and siphoned hundreds of millions of dollars that should have gone to pay Minnesota contractors, buy construction supplies and honor various vending and government contracts.
Officials with Essar Global in India denied the accusations and said they will vigorously defend themselves in court.
Essar Steel Minnesota filed for Chapter 11 bankruptcy projection in July. That same month it found new investors and ousted its former chief executive and a key director with the intention of severing ties with Mumbai-based parent firm Essar Global. The entity owes more than $1 billion.
The project dates back to 2007 when Essar bought Minnesota Steel Industries and promised to build Minnesota’s only fully integrated iron-ore mine, pelletizing plant and steel mill.
The project, however, hit financial problems and other delays that caused the company to miss deadlines, leaving unpaid contractors and laid off workers.
After Gov. Mark Dayton worked to secure a repayment schedule for state incentives after the last missed deadline. After failing to meet terms of that agreement, Dayton and the state’s Department of Natural Resources in July terminated Essar Steel’s leasing rights.
In November, the bankruptcy court temporarily disallowed the state’s attempt to rescind mineral rights. That order gave Essar (now Mesabi) until February to put together a financial plan to finish the project and also pay off creditors.
Another mining company, Cliffs Natural Resources, had hoped to take over the Nashwauk project from Essar and acquire the mineral rights beneath the ground.
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