Mesabi Metallics asks court for injunction on Cliffs, Nashwauk leases

Jerry Burnes/Iron Range Today

A federal bankruptcy judge in Delaware will consider Mesabi Metallics’ request for a preliminary injunction on Cleveland-Cliffs acquiring state mineral leases this week, the latest escalation of the companies’ long-running feud and battle to control the former Butler Taconite mining site.

Sides will meet for a hearing set on Tuesday in front of the Hon. Craig T. Goldblatt, less than 48 hours before the Minnesota Executive Council is expected on Thursday to approve an agreement with the state and Cliffs that would lease the company state minerals near Nashwauk to eventually feed the dwindling ore supply at Hibbing Taconite.

The injunction request, filed earlier this month as part of an ongoing 2017 lawsuit between the companies, remains under seal by the court, along with supporting statements and the formal Cliffs objection. Public documents suggest the original lawsuit is through the deposition stage, with several interviews and documents listed among the sealed exhibits. Matthew Holihan, vice president of mining and pelletizing operations for Cliffs, is the lone potential witness listed.

Attorneys for the company said it would “suffer irreparable harm” without an injunction.

If Goldblatt allows the preliminary injunction to proceed, it could grind Minnesota Department of Natural Resources’ agreement with Cliffs to a halt and undermine more than a year of decisions by Minnesota courts that affirmed the DNR’s right to strip the mineral leases from Mesabi Metallics.

DNR officials moved to terminate the agency’s lease agreement from Mesabi Metallics late last year. The company filed a lawsuit against the state, but lost at the district and appeals court levels, and the Minnesota Supreme Court declined to take up the case in January, effectively granting the DNR free agency with the minerals.

“Mesabi’s motion appears timed to cast doubt on the State of Minnesota’s clear rights to enter into leases for the State-held mineral properties in Nashwauk, Minnesota with any party other than Mesabi when the State Executive Council meets on May 25, 2023,” wrote Kristen Morrison, a Jones Day attorney for Cliffs, in a letter to the judge, which outlined in detail the legal challenges and the negotiation process that also included the formal intention of U.S. Steel to seek the leases.

“If Mesabi were worried about being shut out of negotiations with the State, it should have acted in January, not in May,” she wrote.

With their opportunities to reroute the state leases on life support, the injunction attempt is another example how Mesabi Metallics has recently turned up its political and legal maneuvering ahead of Thursday decision day.

Essar, the parent company of Mesabi Metallics, hired longtime Iron Range politician Tom Bakk as one of its registered lobbyists this year in hopes the former majority leader could wield enough influence in St. Paul to chart a course for its long-stalled project.

Last week, commissioners on the Itasca County Board — at the request of Mesabi Metalllics — sent a letter to Executive Council members asking them to consider splitting the leases between the companies and allowing two projects to move forward, noting a completed Mesabi Metallics project would create jobs in the region.

Even in lending support to the embattled company, commissioners recognized the tightrope they were walking on following Mesabi Metallics down another road, suggesting project completion and operations goals for the project to reach before enacting the split leases, setting aside multiple failures to reach construction and payment deadlines that led to the state’s mineral withdrawal.

“With full acknowledgment of past concerns regarding timing and completion of the Nashwauk project, we propose that leases awarded to Mesabi Metallics be kept in reserve until such time the pellet plant construction has progressed to be able to commence operations in nine months – at such time the leases could be executed,” commissioners wrote in the letter, later stating: “We believe that without the necessary mineral leases Mesabi Metallics will not be able to move forward, resulting in the loss of jobs and revenue to Itasca County and our region. Itasca County simply cannot weather another economic opportunity lost.”

Denying the injunction would keep the current status of the agreement on track for Executive Council members to weigh, potentially clearing a path for Cliffs to route minerals to Hibbing Taconite in the coming years, extending the mine’s life by decades. Hibbing Taconite is currently nearing the end of its mine life, with best-case scenario projections giving it until 2026 before running out of ore and impacting 750 jobs.

Cliffs has signaled that the mine is its top priority in securing the leases, a factor the DNR said it considered negotiating lease terms with the company. Some permitting hurdles are likely to remain for Cliffs if it secures the minerals. Railroad lines from Nashwauk to Hibbing processing plant, for example, are not in place, but its currently unclear what other environmental permits would be required.

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