The action was taken after Minnesota Governor Mark Dayton yesterday terminated Essar's lease agreements with the state on a massive taconite project that was expected to supply sister company Essar Steel Algoma.
Essar Steel Minnesota, a sister company to Essar Steel Algoma and an expected future supplier of taconite to the Sault steelmaker, has filed for U.S. Chapter 11 bankruptcy protection, Minnesota news media are reporting.
The action was taken after Minnesota Governor Mark Dayton terminated Essar's lease agreements with the state Friday.
"The company has been told for the past nine months that the state would not extend those leases beyond July 1, 2016, unless it paid the full amounts it owed to Minnesota contractors and showed that it had the ability to carry its current construction project through to completion," the governor said.
"The company has not done so, and has provided no reliable assurances that it will be able to do so in the foreseeable future."
Both Essar Steel Minnesota and Essar Steel Algoma are part of India's Essar Group Essar Global Fund Ltd.multinational conglomerate.
Essar Minnesota has been building a $1.9 billion plant in Nashwauk that was expected to supply Essar Steel Algoma as well as ArcelorMittal's North American steelmaking operations with taconite iron ore pellets.
The plant would have been a competitor to Cliffs Natural Resources Inc., which stopped shipping taconite pellets to Essar Steel Algoma last October in a contract dispute.
Essar Algoma announced in April that the dispute had been resolved.
Now, Governor Dayton is talking to Cliffs about finishing the massive taconite project and adding a direct reduced iron facility.
"I have met with Mr. Lourenco Goncalves, the chief executive officer of Cliffs Natural Resources, who has expressed his strong desire to take the existing project to completion and add to it a direct reduced iron facility, if his company is assigned those state leases."
Governor Dayton issued the following statement yesterday:
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Statement from Governor Dayton on Essar Steel Minnesota
ST. PAUL, MINNESOTA - Today, Minnesota Commissioner of Natural Resources Tom Landwehr
issued this letter to Essar Steel Minnesota. Following the issuance of that letter, Governor Mark Dayton released the following statement.
“This morning I instructed the Minnesota Department of Natural Resources to terminate Essar Steel Minnesota’s lease agreements with the state.
"The company has been told for the past nine months that the state would not extend those leases beyond July 1, 2016, unless it paid the full amounts it owed to Minnesota contractors and showed that it had the ability to carry its current construction project through to completion.
"The company has not done so, and has provided no reliable assurances that it will be able to do so in the foreseeable future.
"Meanwhile, I have met with Mr. Lourenco Goncalves, the chief executive officer of Cliffs Natural Resources, who has expressed his strong desire to take the existing project to completion and add to it a direct reduced iron facility, if his company is assigned those state leases.
"The State of Minnesota will continue those negotiations with Cliffs and obtain a firm commitment to execute those plans, before the leases are re-assigned.
"Mr. Goncalves and I will travel to the Range on Tuesday to discuss his plans in greater detail.
"I remain dedicated to assuring that these state leases are utilized by a responsible entity to mine and process their resources, and to create more jobs and further economic growth on the Iron Range.”
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