State awards Iron Range mineral leases to Chippewa Capital Partners

Mining site
The site where Essar Steel had planned to mine for taconite ore, seen on March 19, 2015.
Derek Montgomery for MPR News 2015

State officials have reinstated key mineral leases in northeast Minnesota to Chippewa Capital Partners, the company trying to finish the half-built Essar Steel taconite mine and processing plant on the Iron Range.

Chippewa, headed by Virginia businessman Tom Clarke, is the parent company of Mesabi Metallics, which acquired the assets to the Essar site in bankruptcy proceedings in December. Now the Minnesota Department of Natural Resources has agreed to hand over the state mineral leases at the site near Nashwauk, after Chippewa showed it had secured $850 million to finish construction.

Chippewa also met other financial requirements mandated by the state, including speeding up payments owed to contractors who hadn't been paid for previous work on the project. Chippewa also has secured sales contracts for more than four million tons of iron ore pellets annually.

In a statement, Gov. Mark Dayton said Chippewa can now move forward with construction and production. "The company's success will bring new jobs and economic vitality to the Iron Range," Dayton said.

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Chippewa is trying to complete what India-based Essar Steel started 10 years ago, when it broke ground on what was supposed to be the first new taconite mine and pellet plant built in Minnesota in decades.

The company also promised to build the state's first-ever steel mill at the mouth of the mine, a step long-sought on the Iron Range to add more value to the ore mined in northeast Minnesota.

But Essar declared bankruptcy on July 8, 2016, just before Dayton attempted to terminate the state's mineral lease agreements with Essar and transfer them to rival Cleveland-Cliffs.

Chippewa subsequently outbid Cliffs on the Essar assets during the bankruptcy proceedings, although Cliffs has since acquired additional mineral leases under the Essar site.

Chippewa has also said it eventually plans to open a value-added pig iron plant at the site near Nashwauk.