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Minnesota plant will fulfill its contracts: Essar

Tuesday, April 15, 2014   by: Bob Mihell

Officials at Essar Steel Minnesota say construction on their new facility is further along than has been recently reported.

The company said it wants to address what it says were inaccuracies in comments made by a Minnesota union representative.

Nashwauk, Minn. is the site of a massive new taconite facility on the Mesabi Iron Range with iron ore reserves estimated at close to two billion metric tonnes.

ESML had hoped to begin pellet production early in 2015, ramping up to full production by the end of the year, according to earlier media reports.

Essar Steel Algoma has a contract with ESML, part of the Essar Group, to begin receiving iron ore supplies in 2017.

In a letter April 11, Essar officials challenged the qualifications of Dan Kingsley, Minnesota representative for Local 49 Operating Engineers, to evaluate the amount of work completed on the large scale project.

In an April 7 SooToday.com article, Kingsley estimated that only 20 percent of work on the actual taconite plant was finished, although he acknowledged that Essar might be basing its higher estimates on groundwork at the site.

“Mr. Dan Kingsley represents one of 15 different building and construction trade unions that are or will be involved with the Essar Steel Minnesota LLC (ESML) project that is being built by Essar Project U.S. Limited (EPUL),” the company wrote. “As such, he would not be in a position to know all the activities taking place on a daily basis to move this massive $1.8 billion project forward.  Only those working on the project on a daily basis would have sufficient knowledge of the detailed project plans and activities to judge the status of the project.”

In its statement, Essar officials stood by their calculations that 64 percent of the project is complete.

“The level of completion we have reported is audited and verified by a professional engineering firm that conducts quarterly independent evaluations of the project execution for lenders,” the company wrote. “Anyone without access to the details of a project of this scale would find it very difficult to make an accurate assessment of the level of completeness.”

The company statement goes on to say that despite severe winter conditions, “considerable progress” had been made in pouring concrete foundations and floors, building and tank erections, mill shell assembly, and tailings basin dam construction by contractors.

The Essar response did not address, however, recent reports in the Minnesota media, confirmed by Kingsley, that work at the site has come to a standstill with two major contractors filing liens totaling over $12 million against ESML.

What they did say is that ESML was continuing efforts “to secure the additional funding required to complete the pellet plant portion of the project”, and that they were working closely with contractors to meet their completion targets.

The company letter also acknowledged its pellet supply contracts with both Essar Steel Algoma, scheduled to begin in 2017, and Arcelor Mittal U.S.

“ESML is in constant communication with its pellet customers, and fully expects to meet its obligations under both contracts,” they wrote.

Essar Steel Algoma had declined to answer a question from Soo Today about what affect the current work stoppage at the Minnesota site might have on their contract with ESML, but last summer and fall, the local steelmaker repeated they had no concern because the contract for delivery was set to begin in 2017.

ESA has extended also its contract for iron ore pellets with Cliffs Natural Resources, set to end in 2016, until 2024.

 
Comments
17
Note: Comments that appear on the site are not the opinion of SooToday.com. If you see an abusive post, please click the link beside the post to report it.
northernmale 4/15/2014 10:34:52 AM Report

Why does the Essar family think it should not pay there bills?? I am sure a lot of company's owed monies to are just small local ones that can not afford to not be without payment.I wonder how long the Essar family would have stayed in business if no one paid for there steel when sold to them.
Sam C 4/15/2014 11:26:52 AM Report

itsme... that is a load of nonsense, and a rather despicable bit of racism.

Essar is contributing to this community. No, there aren't the number of jobs there once were, back when Algoma had 10,000 employees. But there are still jobs, and the company is doing better than under some of the previous owners.
frnlak 4/15/2014 12:03:21 PM Report

sam
Nice try in turning this into a racist article but the point being made is that Essar Algoma does not pay their bills. There are several vendors and contractors that supply a service to Essar that are on a pay by week operation. ie: you don't pay me friday, no work or machinery available on monday. Some suppliers have resorted to cash up front. Rental machinery is removed from the steel works without notice. It sure looks nice to the naive in the city that only see the sign on the Essar Centre or Sault College and think what a great corporate sponsor they are while they treat their employees with a third world attitude.
No Sammy Boy, this is not about racism. It's all about respect / disrespect.
Opstday 4/15/2014 12:37:10 PM Report

Frnlak, sounds like you want a wage increase! I don't see the logic in your respect comment. If you are not satisfied with your working conditions and wages at the plant then quit and apply somewhere else. You and I both know that ain't going to happen ;)
jillybeanblack 4/15/2014 12:47:55 PM Report

we are not a third world country, we have employment acts in place that protect the workers which are being violated everyday within the gates of essar. the moral of the city is being dragged down by essar not paying bills to the hard working people of the sault. some of these stores have been a staple in this city who cant afford to hire summer students or even part-time never mind good paying full time jobs. if nothing gets done about it soon essar will be gone back to india, leaving behind a run down steel mill and a city that will soon be a ghost town. with tons of bankrupt families who can't pay their tax bills.
itsme29 4/15/2014 12:48:14 PM Report

I call them what they are (thieves)(they take a service and don't pay for it) and sootoday deletes my post. makes ya wonder don't it? people in this town live on the business parts/maintenance demanded by essar if they don't pay for or even buy those parts everyone suffers in the long run. and they havnt been keeping up with there maintenance the place is run to the ground..
habsfan 4/15/2014 1:09:20 PM Report

How did that come across as racism? Weird.
Opstday 4/15/2014 1:29:12 PM Report

Everybody bad mouths Essar Steel. If they didn't buy Algoma Steel, where do you think the plant would be now? That's right, shut down. Take a good look at the St Mary's property!

By the way, how did the union do when they controlled the plant ? Was that one bankruptcy or two?
Dead End Kid 4/15/2014 1:41:46 PM Report

I have noticed lately the moderator has ignored some raunchy vulgarity against other posters but if they don't like what you say about Essar they may delete your comment. I expressed my opinion and it happened to me. My comment was completely civil with no racism involved.
Jmann! 4/15/2014 2:40:00 PM Report

I agree with you OptsDay!

The union is no where near what it was then now.
I'd rather not have it to be honest with you.
Ran the place into the ground not once but twice.

I think what people fail to understand, with no union there are still government laws to follow as a company... Ie Wages, Paid Breaks etc. I'm at a 50/50 stand point with a union or not to be honest but i feel it does has it fair share of harm.

They are just representing themselves 3/4 of the time anyways.

The company is driven by success so let them be. There would be nothing here In the Sault Otherwise. When you people drive on that bridge that a good look on the other side and tell me that isn't sad?
Paper mill!?
Opstday 4/15/2014 3:15:41 PM Report

Jmann, you are spot right on!

I grew up in a strong union NDP family and I think they were necessary at one time. They forced the government and all parties to respect the labour movement and bring about social change. However, it has swung way too far to the left, representing those who choose not to contribute to society and only want more and more.

Do you think they would be happy if the minimum wage went to $15? No, they would want $20 and then $25. It would be a viscious cycle and no one would win
rockbanger 4/15/2014 3:17:12 PM Report

Do not worry about Minnesota. Many local people are owed monies by Essar. Contractors, suppliers, pensioners and workers all have monies owed to them.

The local union executive was intimidated and tabled a take it or we go bankrupt contract last July that illustrates Essar tactics. All people who rely on the pension were scared into accepting Essar cries that they were broke. Also, many union members are owed money. Ask any Essar trades person and they will explain. To be fair these workers have been assured that the money is coming to them.

Most concerning for the company and this city is.

Essar management could not adequately store raw materials for the winter? They have and are still losing large amounts of revenues on a daily basis due to this method of funding the local mill. The steel cycle is high but Essar is not able to meet the market and capitalize. They blame the harsh winter. Never will you hear Essar admit that mistakes have been made.

itsme29 4/15/2014 4:18:06 PM Report

oh cmon they didn't know winter was coming!! its not there fault!
tosimple 4/15/2014 4:19:16 PM Report

That is so true rock banger. We have almost no iron ore on the dock. The blast furnace has been going down 60 hours at a time. We are loosing huge revenue because of this. The coke ovens has been at a lower production most of the winter. Because we had a very limited coal supply in stock.. They put on a good show for the city of SSM. The sad part is that those who don't work at essar believe they are doing things right..... Try not making your vehicle payment for 3 or 6 months????? See how the bank responds to you...........
harry dick 4/15/2014 11:52:53 PM Report

To jmann: BE VERY CAREFUL WHAT YOU WISH FOR. IT JUST MIGHT COME TRUE , AND YOU MIGHT REGRET YOUR DECISION VERY MUCH!!!!
rockbanger 4/16/2014 7:17:32 AM Report

Jmann...

Without union representation everyone would be at minimum wage and your home "if you own one" would be about 70% of its current value.

As for success.... Essar to this point has had none. But everyone is pulling for them to get their act in order and start managing the facility properly.

Essar need to manage the production aspect of the business as it's number one priority. Purchase or arrange the needed raw materials in a timely fashion and not create 1-800 phone numbers to micro manage the union employees.

As for driving it into the ground...
You do realize that the current DSPC which is the cornerstone of modern day Essar was financed by the local unions. Yes both locals at ASI stood up and did the right thing to finance this asset.

When people like yourself state such nonsense it makes you look like your ill-informed and spouting off garbage.


frnlak 4/16/2014 11:27:43 AM Report

Opstday
Your right. It aint going to happen because I am a pensioner and my finances are just fine thankyou .I paid my dues for forty plus years and still pay my bills. I have no respect for those who do not.
Comments
17
Note: Comments that appear on the site are not the opinion of SooToday.com. If you see an abusive post, please click the link beside the post to report it.
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