Dayton slams 'untrustworthy' Essar Steel over missed state payment

Essar Steel construction
Gov. Mark Dayton thought he had a deal with Essar Steel Minnesota late last year on the repayment of $66 million in state incentives for an Iron Range taconite project. However, the first promised payment hasn't been made.
Derek Montgomery | For MPR News 2015

Gov. Mark Dayton said Wednesday he's very concerned about Essar Steel Minnesota after the company didn't deliver on a promised $10 million payment to the state.

Dayton thought he had a deal with Essar back in December on the repayment of $66 million in state incentives for an Iron Range taconite project. The first payment was due last week.

Essar has proven to be an untrustworthy partner with the state and with many local businesses, Dayton told reporters.

"They've got even worse in my view," he said, citing "a whole number of vendors, businesses, small and medium size businesses up on the Range who have not been paid for the services and the materials that they've provided. In my judgement, they've destroyed the trust that they were beginning to establish with people on the Range. I'm reviewing what our options are."

Dayton declined to say what some of those options might be. He said he'll offer further details "in a short time." Despite the Essar experience, Dayton said he still believes state financial incentives for businesses are important.

Minnesota agreed in 2004 to fund the infrastructure — mainly a rail line and electric substation at Essar's mine site in Nashwauk, Minn. — 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.

In November, Dayton threatened to call the loan unless Essar paid its Minnesota contractors and other vendors in full. The company complied.

The company had no immediate response to Dayton's comments. After the repayment deal was unveiled in December, Essar said it would focus on keeping payments flowing to contractors and vendors and moving forward with the project.