Essar Steel Algoma sister firm doesn't pay its bills (9 p.m. update)

Update - 9 p.m.

From Governor Dayton's press secretary: "We are now looking, almost certainly, at a statement coming tomorrow - not tonight."

Update - 6:40 p.m.

An American sister company of Essar Steel Algoma isn't paying its bills, prompting Minnesota Governor Mark Dayton to threaten to reclaim $66 million in state incentives unless the firm pays its local vendors in full.

Media reports indicate that Governor Dayton (shown) will decide today whether to follow through on a demand he made one week ago to Essar Steel Minnesota (ESM).

Dayton told Madhu Vuppuluri, ESM's president and chief executive officer, that if the firm didn't pay its Minnesota vendors by the close of business yesterday, he intended to demand immediate repayment of a $66 million state loan.

The money was given to ESM as incentive to build a $1.9 billion taconite facility in Nashwauk, Minnesota.

Both ESM and Essar Steel Algoma are part of India's Essar Group multinational conglomerate.

When completed, the Nashwauk plant is expected to supply Essar Steel Algoma as well as ArcelorMittal's North American steelmaking operations.

ESM will compete with Cliffs Natural Resources Inc., which stopped shipping taconite iron ore pellets to Essar Steel Algoma in October.

Also that month, Cliffs started pressing Minnesota to demand repayment of state construction incentives "due to Essar unilaterally changing the scope of its project."

The project was originally supposed to be a new steel mill but ESM turned it into another taconite operation, Cliffs says.

More recently, U.S. media outlets have reported that ESM owes millions to Minnesota construction and iron erection contractors.

Governor Dayton says he was promised by Essar officials on October 12 that vendors would be paid in full by the end of that month. 

That hasn't happened and Dayton is now advising ESM that even if Minnesota vendors are paid this month, he's prepared to call the state's loan should the company fall behind again in the future.

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