Minnesota DNR, Cleveland-Cliffs reach mineral lease agreement in Nashwauk

United Steelworkers Local 2705, elected officials and more march at an October 2022 rally to save Hibbing Taconite. On May 4, 2023, the Minnesota DNR said it reached an agreement with Cleveland-Cliffs that would award the company decades of state mineral leases to extend the mine’s lifespan. (Jerry Burnes/Iron Range Today)

Jerry Burnes/Iron Range Today

Minnesota regulators have negotiated a mineral lease agreement in Nashwauk with Cleveland-Cliffs, which pending Executive Council approval, will likely end the saga surrounding the land and extend the life of Hibbing Taconite for decades.

The state Department of Natural Resources said Thursday that it reached an agreement with Cliffs on the lease terms and would present it to the Executive Council on May 25 for final approval. 

In going with Cliffs, the state signaled it is ready to move beyond a project plagued by bankruptcy and mismanagement from Essar Steel Minnesota and Mesabi Metallics, both ultimately controlled by the Ruia family that owns Essar’s global brand. 

The decision also stands to usher in a new era of stability on the Iron Range, where Hibbing Taconite has teetered on the edge of its mining lifespan — potentially running out of ore by 2026, in the best-case projections — and now about 750 jobs could be pulled from the brink of elimination.

“Cliffs has a proven record of bringing mining projects into operation and currently holds a significant land position adjacent to the state ore in the area,” the DNR wrote in a statement Thursday. “Leasing this state ore to Cleveland Cliffs will provide local communities, K-12 public schools and other beneficiaries a long overdue source of mineral revenue. Cleveland Cliffs has stated that, if the leases are approved, it intends to utilize the state ore to extend the life of Hibbing Taconite and that it would immediately begin the work needed to bring the ore into production.”

The DNR pulled the state mineral leases from Mesabi Metallics last year, and in January, the Minnesota Supreme Court declined to hear the company’s appeal over the withdrawal, opening the leases back up to negotiation. 

Cliffs and U.S. Steel prominently sought the state’s mineral assets at the former Butler Taconite site in Nashwauk, but the former had an inside track with numerous private acreage holdings within the Butler footprint. 

Cliffs CEO Lourenco Goncalves thanked the DNR and Gov. Tim Walz for reaching the lease agreement.

“When approved by the MN Executive Council, the leases will be used to provide a long-term extension of Hibbing Taconite’s mine life, securing the future of Hibbing Taconite and the good-paying, union jobs at HibTac, our flagship operation in Minnesota,” Goncalves said through a statement. “I look forward to the Minnesota Executive Council’s review and approval of this lease package on May 25.” 

The decision was also heralded by local elected officials who pushed — some for years — for Cliffs or a reputable company to take over the stalled leases once held by Mesabi Metallics. Last October, many of those officials marched a large rally in Chisholm that organized to send a message to statewide decision makers about Hibbing Taconite.

“There have been years of broken promises and missed deadlines, and as a result, the people of the Iron Range have had to experience economic turmoil for far too long,” said Rep. Dave Lislegard, DFL-Aurora, on the agreement. “Cliffs has demonstrated a real commitment to the people of our region. I’ve been working to see this result come to fruition for many years – with the leases going to a proven, reputable company – and I’m proud to have brought people around the table so we could finally arrive at a solution like the one announced today. The relief workers, families, businesses, and communities will experience following this news cannot be overstated, and I could not be more happy for the people of our region.”

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