Dayton: Essar Steel OKs plan to repay $66 million state loan
Updated 1:45 p.m. | Posted 12:55 p.m.
Essar Steel has agreed to begin making payments in February on a $66 million state loan tied to its construction of an Iron Range taconite operation, Gov. Mark Dayton's office said Thursday.
Essar conceded to the "final offer" proposal Dayton made recently. The governor had threatened to demand immediate repayment if the company balked.
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Terms of the deal require Essar to repay $10 million by the end of March, Dayton's office said in a statement. The balance will be repaid in quarterly payments, beginning in 2017.
Essar also must notify the state of the status of its payments to vendors each quarter.
"This project is tremendously important to the Iron Range, supporting more than 700 construction jobs and an expected 350 permanent jobs once the plant opens," Dayton said in the statement.
Minnesota agreed in 2004 to fund the infrastructure, mainly a rail line and electric substation at Essar's mine site in Nashwauk, for what was supposed to be the state's first integrated iron ore mine and steel mill.
Essar, however, ultimately dropped its plans to build the steel plant, triggering the state's effort to recoup the $66 million.
Essar has also struggled to pay contractors at the site amid a major global downturn in the steel and iron ore industries.
State officials became increasingly frustrated with the company this fall. Construction stopped on the massive $1.9 billion taconite operation as contractors waited for Essar to pay them.
In November, Dayton threatened to call the loan unless Essar paid its Minnesota contractors and other vendors in full. The company complied.
Dayton last week laid out his offer on the loan repayment plan. In announcing on Thursday that Essar agreed to the deal, Dayton called it "an important step to move this project forward."
Essar said in a statement that it will focus on keeping payments flowing to contractors and vendors and on moving forward with the project.
State Rep. Tom Anzelc, DFL-Balsam Township, said he was pleased Essar has agreed on a plan to repay the cash.
"Now that this is behind us, we can work on making sure that this company pays its contractors in a timely fashion and gets on with the construction of this pellet plant," he said.