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Despite CEO threat, Cliffs says no plans to shut Iron Range plants

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Essar Steel construction
After nine years of financing and construction delays, Minnesota's first modern taconite operation was nearing completion during the spring. The $2 billion Essar Steel project is located near Nashwauk, Minn.
Derek Montgomery | File for MPR News

Cliffs Natural Resources on Monday backed away from its CEO's threat to close one of its Minnesota Iron Range operations as soon as a competitor's plant opened.

Angered that the state of Minnesota subsidized taconite rival Essar Steel's efforts to open a new mine in Nashwauk, Minn., at a time when the taconite industry is struggling, Cliffs CEO Lourenco Goncalves told the Mesabi Daily News his company intended to close a Cliffs plant immediately after the Essar operation opened.

"If they go online, I will shut down a plant up there the same day," Goncalves told the newspaper in a story published over the weekend. "We have fully planned for the worst case scenario."

On Monday, however, Cliffs posted a statement saying it "does not have any current plans to permanently idle or close any of its Minnesota mines."

The statement, however, also scolded Cliffs, saying it believes Essar's claims that the Nashwauk project is nearly complete "are substantially overstated and, as a result, the projected timeline for pellet production in 2016 is inaccurate."

In the works for years, Essar officials originally planned to open a taconite mine and steel plant and received more than $70 million in public funding based on that plan. Essar, however, pulled back plans for the steel plant, a controversial move that remains a sore point for some Minnesota lawmakers. 

Given that it took state funding based on a promise of a mine and plant, Cliffs called on Essar to "immediately repay its construction subsidy due to Essar unilaterally changing the scope of its project" and warned that Essar's Nashwauk mine "if it were to come online, would create iron ore pellet overcapacity in the U.S."

Cliffs' Minnesota operations include United Taconite in Eveleth and Forbes and Northshore's mine in Babbitt, a processing plant in Silver Bay. It also manages Hibbing Taconite.