-
Minnesota lands on new leases for Hibbing Taconite
Hibbing Taconite was granted new leases by state of Minnesota on March 2, extending its mine life by about nine months. (Courtesy of Cleveland-Cliffs) Jerry Burnes/Iron Range Today
New mineral leases were approved Thursday for Hibbing Taconite — not those leases — to expand the mine’s ore body out several months.
Minnesota’s Executive Council, which consists of the governor, lieutenant governor, attorney general, secretary of state and auditor, unanimously issued the leases without discussion.
“On behalf of our more than 2,000 employees in the State of Minnesota, we would like to thank the MN Executive Council for the approval of the mineral leases that will allow Hibbing Taconite to extend operations another 9 months through 2026,” said Lourenco Goncalves, chairman, president and CEO of Cleveland-Cliffs, through a statement Thursday.
The amended leases don’t solve the long-term problems Hibbing Taconite faces as it inches toward the end of its ore reserves in 2026, but the company said it’s looking beyond the Band-Aid solution for the mine.
Cliffs has applied for the state mineral leases at the former Butler Taconite site in Nashwauk after the Minnesota Supreme Court in January declined to take up a legal argument from Mesabi Metallics, which was stripped of the leases by the Department of Natural Resources last year.
“We remain confident that, once we obtain the state leases to add to Nashwauk land already controlled by Cleveland-Cliffs, we will then be able to extend the life of Hibbing Taconite for decades,” Goncalves added.
Cliffs, U.S. Steel and Scranton Holding Company, an entity formed in 2020, have so far expressed interest in all or some of the leases. The DNR hasn’t set a timeline on when the leases will be resolved and final approval would land back in the decision making of the Executive Council.
Mesabi Metallics said in January it would explore avenues to keep the largely defunct project in Nashwauk moving forward, and said it was in advanced discussions to form a joint partnership that would “provide hundreds of million dollars of additional equity funds and will allay any concerns that the project will not proceed as intended.”
As of Thursday, the company has yet to join the fray to regain the leases or provide more details on its potential partnership.
-
Cleveland-Cliffs set to reopen Northshore Mining in April
Northshore Mining (courtesy of Cleveland-Cliffs) By Jerry Burnes/Iron Range Today
Northshore Mining in Silver Bay and Babbitt will reopen in at least a partial capacity by early April, with workers set to return to the job site as early as next week.
Local and statewide elected officials were notified of the plans Monday and recall notices were sent to workers this week.
Cleveland-Cliffs confirmed Monday that it notified some employees, but a company spokesperson said they “will provide more details when we decide when and at what capacity this operation will be brought back online.”
Northshore was idled last May due to demand and a royalty dispute, impacting 450 people, and Cliffs anticipated the mine and processing plant would reopen in the early second quarter of this year.
The royalty dispute between Cliffs and Mesabi Trust arose in February 2022 when Lourenco Goncalves, chairman, president and CEO of the mining company, called the royalty structure “ridiculous” and that it would idle Northshore. He also cited the ability to produce DR-grade pellets at the company’s Minorca Mine in Virginia, reducing the need for iron ore pellets.
Mesabi Trust reportedly agreed to renegotiate terms of the royalty agreement, according to local officials, prompting the potential restart of the mine.
Cliffs didn’t provide an update on Northshore during its Feb. 14 earnings call, but said it anticipated nearly $2 billion in savings on its steelmaking costs, in part from reduced maintenance and idle time at its operations.
Extended unemployment benefits for Northshore miners was among the first bills signed into law this session by the Minnesota Legislature and Gov. Time Walz. The bill was authored by a northeastern Minnesota delegation of Sens. Grant Hauschild, Jen McEwen, Rob Farnsworth, Justin Eichorn, and Kari Dziedzic and Reps. Dave Lislegard, Roger Skraba, and Spencer Igo.
Hauschild said he was encouraged that the process to reopen is beginning.
“I heard from numerous miners who were impacted by this closure who said they wanted to get back to work,” Hauschild said through a statement. “While we were able to get them a bridge in unemployment extension until April with my recent bill, my primary goal has always been to reopen these two plants. I’m glad to say that we’re one step closer to making that happen.”
-
Cliffs is ready to drive the automotive inventory comeback
By Jerry Burnes/Iron Range Today
Cleveland-Cliffs has set its sights on the auto industry as one of the company’s keys for 2023.
The steelmaker announced Tuesday that it secured fixed price contracts with automakers, a move that could put Cliffs in the driver’s seat when automakers begin to rebuild their inventory in a post-pandemic era when supply chain issues have started to resolve.
Lourenco Goncalves, chairman, president and CEO of Cliffs, said during the company’s year-end earnings calls that he’s expecting a larger sales volume to the auto industry in 2023 compared to 2022, with what he described as a “significant but modest” price increase in line with inflation.
“Automotive is the most exciting steel consuming sector in 2023,” he added. “The age of cars on the road, consumer backlog, low unemployment rate and inventory levels continue to point to growth in automotive sales and production over the coming years. Particularly now, when they have finally improved their supply chains.”
The focus on the auto industry means Cliffs plans to double down on its blast furnace operations, bucking the industry trend that is moving toward electric arc furnaces (EAFs). Automakers require highly-specified steel for their products that EAFs can’t produce.
Along with the materials, Goncalves cited other countries also relying on blast furnaces for the industry and the U.S. importing iron ore and sinter feed to make the necessary, and specific, steel products.
“That’s why Cleveland-Cliffs does not need to, and does not plan to invest in new EAFs beyond the five EAFs we already operate,” he said, later noting the company is able to use hot-briquetted iron (HBI) in its blast furnaces.
Car prices have risen about 30% in the last few years, largely due to the Covid-19 pandemic that created high demand and low supply. While the supply chain issues have started to resolve, automakers have yet to ramp up production of new vehicles.
Cliffs is making a bet that car companies will look to increase their inventory in the coming years, which would be a boon for steelmakers supplying the sector. Goncalves is also predicting that the newly-formed fixed costs, combined with the company’s ability to deliver specific steel products on time, will put Cliffs in a good position to feed the industry’s output.
“Clients had to worry about a lot of things, but there was no steel disruption from Cleveland-Cliffs,” Goncalves said.” The steel was always there. Automatic. We are good at that.”
No update on Northshore, HibTac
Goncalves didn’t provide an update on the idled Northshore operation in Babbitt and Silver Bay, but the company’s IRS filing reported that it “will restart no earlier than the second quarter of 2023.”
The second quarter begins in April, which matches the latest timeline the company provided for its restart after idling it in early 2022.
Cliffs also didn’t provide updates on state mineral leases at the former Butler Taconite site in Nashwauk, which the company wants to gain access to in order to expand the lifespan of Hibbing Taconite.
Cliffs was expected to express formal interest in the leases with the state Department of Natural Resources, and U.S. Steel, the minority owner of HibTac, was expected to be interested. It is unknown how many companies have formally applied for the leases with the DNR.
“We plan to discuss the developments around the Nashwauk site with our stakeholders, including the governmental agencies involved,” a U.S. Steel spokesperson told Iron Range Today. “We consistently seek out opportunities that will support our business, and the Iron Range is fundamental to our strategy.”
-
Virginia man faces 3 felonies after arrest near Rock Ridge school
A Virginia man was charged Thursday with three felonies after he allegedly threw rocks at construction workers outside North Star Elementary on Tuesday.
Michael John Broker, 31, was ordered to be held on $50,000 bail Thursday by Sixth District Judge Andrew R. Peterson as prosecutors charged him with second-degree assault with a dangerous weapon, threats of violence with reckless disregard and fifth-degree drug possession.
He remained held at the St. Louis County Jail in Virginia.
Michael John Broker According to court records, Virginia police responded to the North Star Elementary construction site around 11:35 a.m. Feb. 14, where a worker reported a man threw rocks at a construction, threatened him with a pipe and went toward a white trailer near a downtown hotel.
Officers located Broker walking toward a U-Haul truck, which he allegedly jumped into the back of and closed the door. After police forced the door open they placed Broker under arrest and allegedly found a small bag of methamphetamine and a pipe.
After interviewing the worker, according to court records, police learned that Broker appeared from alley behind the library and allegedly began screaming obscenities while throwing rocks at the crane. The worker told Broker to stop, but he reportedly continued yelling: “You’re a baby killer! You’re a baby killer! Is that what you’re into? I’m going to f*****g kill you!”
Broker then allegedly ran to a trailer and grabbed a large pipe, around 5 feet long, and approached the worker holding it with both hands, yelling “I”m going to kill you.”
He did not attempt to enter nearby Virginia High School, according to Rock Ridge Superintendent Dr. Noel Schmidt, who said the school would review its safety procedures.
Broker faces up to 17 years in prison and is due in court again Feb. 27 for a Rule 8 hearing.
Read the full complaint:
-
Smith visits East Range to Celebrate Joint Water Project; $4M in federal funds secured
From left: U.S. Sen. Tina Smith (D-Minn.) talks with Aurora Mayor Doug Gregor, Biwabik Mayor Jim Weikum and Mike Larson, community development manager at SEH. (Photo by Leah Ryan/Iron Range Today) By Leah Ryan/Iron Range Today
It was a mild January morning as U.S. Sen. Tina Smith met with East Range leaders near Giants Ridge. The snow hung heavily on the tree lined road and ice covered Lake Mine Pit, which was the focus of the meeting.
“I think today is a pivotal moment in our project. It is wonderful seeing everything coming together, financially.” said Jodi Knaus, manager/clerk in Town of White, moments before Smith (D-Minn.) arrived. “The engineering is done and we are ready to go out for bids, hopefully, sometime in 2023.”
Knaus went on to say the Joint Water Project is a great project for the East Range region. “This is Phase 1 of a multi-year project. We are very grateful to have legislators and leaders supporting this project.”
Smith attended the Joint Water Project update meeting and celebrated her and Sen. Amy Klobuchar’s efforts that secured federal funding for the project.
“Senator Klobuchar and I worked very closely together on the congressional designated funding that has produced the dollars for this project. And I think that really matters because what it means is essentially what happened is the best ideas, the great ideas that come from communities get percolated into the federal funding system in exactly the way that it should because you’re going to know way better than we are, or anyone in Washington D.C. is going to know, about what your community needs and why does it make a big difference for this community, ” Smith said, explaining the best ideas for federal funding come from the community level. “So having worked at the local level and the state level and now the federal level… I think this is exactly the way this kind of effort should work. The Joint Powers Board is such a great example of local and regional cooperation and collaboration to take care of business and do the really good work that needs to get done. Congratulations to all of you! I’m excited to think about the impact that this is going to have not only for good, clean drinking water and water treatment but also for the jobs and economic development it is going to provide in the community as well.”
Smith congratulated the Joint Powers Board as a great example of communities working together and advocating. “I know that you all are really good at solving problems. To me, that is exactly what is happening here. You are solving a really important problem. Thank you.”
Wacootah Grille was closed for the snow season but was reopened for the event. A U-shape of tables faced posters describing the project with enlarged maps of the area in which the room sat. The tables were full with members of the East Range Joint Water Board, which was established in July 2021, including: Doug Gregor, Chair and Mayor of Aurora; Jon Skelton, Vice Chair and President of the Board for Town of White; Dave Skelton, Secretary and Treasurer; Dennis Schubbe, Aurora member-at-large; and Clark Niemi, Township member-at-large and Foreman for Town of White.
Smith listened to the board from her seat at the table.
“Congratulations, this has come so far,” said Biwabik Mayor Jim Weikum. “I also want to acknowledge this is the water source for the city of Biwabik. We are going to share a water source and sometime in the future we hope to share even more closely.”
Weikum concluded stating how critical it has been for the project to secure the federal funding.
During the roundtable discussion, Gregor and Weikum stated that an emergency water plan has been put in place in case there is another situation that jeopardizes Biwabik water, as happened in 2018.
A new face at the table was Luke Heikkila, who has since started at the city administrator of Aurora. He has experience working both in Aurora Public Works and for the past six years has been on the board of directors of the Minnesota Rural Water Association.
Hoyt Lakes Mayor Dave Zins said he doesn’t see Hoyt Lakes joining the project in the near future but stated it is good for his city to have the option.
“I just feel that anytime we can get help from financial aid, especially for small communities where we don’t have a tremendous tax base than a lot of bigger cities,” Zins said. “I think we need to rely on central federal funding to help us out with projects, such as the one we’re going to talk about today.”
He added “if the finances are there” then he would support opting into the project. “I mean, if the taxes are going to have to go up to raise the cost to cover it, we would definitely have to have the backing of the community.”
Ida Rukavina, the new commissioner of Iron Range Resources & Rehabilitation, added: “This makes sense. Earmarks make sense because of projects like this in rural areas. It just makes sense. Rural residents deserve clean water.”
Extra chairs were brought in to accommodate residents of the area, employees of the East Range municipalities, labor representatives and RAMS members, including former executive director Steve Giorgi.
“This project is a model other Range communities need to learn from,” Giorgi said. “The communities recognized a problem and are pulling resources together to look long term…We do better if we pull together. This is encouraging. Projects like this are so easy to support at the federal level and it does better for the whole region.”
Before the end of the meeting, Giorgi reminded community leaders of the dig once resolution and encouraged preparatory laying fiber for future broadband projects.
Joint Water Project
The project came about with Aurora and the Town of White becoming in immediate need of a new water source and water treatment.
“A few years ago, we landed on the plant will be in Aurora and the water source will be Lake Mine,” said Knaus, while explaining the long process up to this point. “The citizens that live in the Scenic Acres Development Area are going to be getting much needed water and fire protection.”
Two of the three wells in Scenic Acres have failed. Currently, over 30 homes are serviced on one well. There is not enough water to flush the system, which has led to discolored water.
“Fire is an issue,” explained John Miettunen, a resident of Scenic Acres. “Our system would run out of water in two minutes.” Another issue would be if a major break occurred. These could both lead to catastrophic losses, physically and financially.
For close to two decades, their needs and those of their neighbors have been researched and planned. Finally, all the hard work is going into action.
The Joint Water Project is planned in two phases. Phase 1 will include water for Aurora and the Town of White. Phase 2 will expand to include Biwabik and Hoyt Lakes. The working assumption is that both phases will eventually be completed to include water access across the East Range. Therefore, Phase 1 includes creating capacity and laying the groundwork for Phase 2. This is more efficient and cost effective.
The proposed water treatment plant is designed to be constructed mainly of concrete, to last decades, and accounts for future expansion in Phase 2 to allow for the addition of Biwabik and Hoyt Lakes. The design also utilizes modern equipment while the treatment process is familiar to existing operators and similar to facilities in the area.
The project includes a vertical caisson-style pump station on the shore of Lake Mine where the intake pipe will be a minimum of 50’ below the water surface; below the future low water level of Embarrass Pit. During Phase 1, two pumps will be installed with room for an additional two pumps to be installed during Phase 2.
The Joint Water Project has been divided into five tasks, with the first two already completed: preliminary design, final design, permitting and regulatory approvals, bidding services, construction phase services. This final task is estimated to begin in early 2024.
The estimated construction cost will be about $20.4 million. The total project cost is estimated at $25 million increased to $30 million with inflation.
Funding initiatives are at various stages of applied, pending, approved and secured totaling $25 million. Estimated community contributions are up to $5 million (see chart below).
Federal Funds
Federal funding is playing a big role in the project after Smith and Klobuchar (D-Minn.) secured $4 million for the Joint Water Project, among others in the region.
“This is a celebratory moment to be able to help with federal dollars and all the incredible local support and cooperation to get this water project off the ground. They will be putting bids out this spring,” said Smith after the meeting. “Sen. Klobuchar and I worked closely together to get the federal congressionally designated funds to get it going. This is exactly the way it should work community cooperation and we can help make sure the federal dollars are there. I just want to say, a lot of times small towns and rural places feel like they can’t tap into the resources at the federal level. And, you know, if you have a small town with a city clerk- how are you going to know what rent money there might be or how you can participate in that. And that’s the thing that I think we’ve been able to break through with this project that is really critical.”
The meeting was Smith’s first stop of the day on her tour celebrating projects throughout the area. Following the East Range, she visited Chisholm where $1.2 million in federal funds were given to the United Way to build childcare facilities in Chisholm and Ely. Then, she traveled to Grand Rapids where $350,000 of federal funds were invested in improvements for the Boys and Girls Club Greenway facility. The regional funding package also included $1.3 million for the Ely Area Ambulance Service Joint Powers Board to build a centralized emergency response facility.
Although Ely was not on her tour of the region, Duluth was. There Smith attended a ribbon cutting event for a housing project.
“The Iron Range deserves strong federal partners and I’m proud of the work we did with local leaders to bring these investments here,” said Smith in a press release about the projects. “From making important water infrastructure improvements, supporting emergency response services, increasing access to child care, and expanding housing and shelter resources, these projects are going to have a real, positive impact on people’s lives.”
“This federal funding will have a real impact for communities across the Iron Range. From investing in emergency response services and improving water infrastructure to increasing access to affordable child care, these projects will address key issues impacting Minnesotans on a daily basis. I am proud to have worked with leaders from across the Iron Range to secure the resources for these projects, and I look forward to seeing all the good they will do,” said Klobuchar in the same press release.
-
Rock Ridge students organize Iron Range winter clothing drive
Editor’s note: The winter coat drive is, in part, being run by our daughter. But what good is having parents who run a website if they can’t help you build the interview and marketing skills, and to help boost your community-focused project? Exactly.
Jerry Burnes/Iron Range Today
VIRGINIA — Iron Range winters can bring a harsh, bitter cold along with them. Not a big surprise to residents of the area, but a group of students at Rock Ridge High School noticed not everyone in the area is ready — or can be — for the yearly elements.
So they decided to do something about it.
Savanna Burnes, Kendall Collie, Ava Dodge and Daunte Gooden have organized a winter apparel around Virginia next week, with three drop-off locations and two community centers set to receive the collected winter gear. The drive came about as part of the Leos Club at the school, which asks participating students to do a community-focused project.
People can drop off winter apparel — hats, gloves, jackets, boots and more — at Virginia High School, the Virginia Community Foundation or Ken Waschke Auto Plaza (both locations) from Jan. 23-27, with donations going to The Salvation Army and Bill’s House in Virginia. Items can be gently used and for all ages.
“We want to help different organizations that help people so we can ensure everyone can feel comfortable this winter,” Gooden said.
There will also be collection boxes for check and cash donations to go toward new winter gear.
“We wanted to do something that could really benefit those in need in our community,” Burnes said. “The people that need these items will benefit, but I also believe the people that donated will benefit, because by doing something nice, it makes you feel nice.”
She said the apparel drive experience has been a good one all around by teaching their team leadership skills they will need later in life. They also hope the drive will “open the eyes of the other people in the community” and let them know there are people who can’t get what they need at all times.
“Perspective is the experience of a lifetime,” Gooden said. “Understanding and getting a personal view of the diverse amount of struggling people around our towns sets us off with an understanding of gratitude — to have a slight understanding of being in someone else’s shoes.”
Burnes added that she hopes the goals of the Leos Club and the service projects can help bridge the gaps of the older and younger generations on the Iron Range by helping them work toward a common goal of solving the community’s problems.
“I think that the older generations just need to be a little bit more open to change,” she said. “And I believe the younger generations can just be nicer to each other. Everyone is just so invested in social media that they almost forget about the real work and the problems in our community. I believe that we should all come together to solve them.”
-
Analysis: Slim margin in Minnesota Senate a tipping point for mining reform bills
Photo: Bao Chau via Unsplash Jerry Burnes/Iron Range Today
A set of bills that would significantly alter the landscape of mining in Minnesota and the Iron Range face an ominous path through the Legislature, with a key senator standing in opposition and the standard partisan divide ready to tip the scales.
One of those efforts — Senate File 167 and House File 329 — would enact mining restrictions on state land in the Rainy River Watershed and squash Twin Metals Minnesota’s proposed underground copper-nickel mine near Ely. The other, S.F. 167, would transfer the responsibility of mining promotion from the state Department of Natural Resources (DNR) to the Department of Employment and Economic Development (DEED). The latter bill does not have a House companion.
The bills are far from unexpected considering the DFL trifecta and have helped provide Republicans and mining advocates with the fodder they need to rail against the new DFL majority in both chambers and the executive branch, but those cliches need not apply here in the end.
Democrats hold a 34-33 seat majority in the Senate and with Sen. Grant Hauschild, DFL-Hermantown, already out against both bills, passage through the high chamber will seemingly rely on a Republican breaking from the ranks to swing the vote back.
Until that vote is secured, the standalone versions of the bills are dead on arrival and spell out a perilous path if added onto larger bills that could require a party-line majority to pass. Senate Republicans have pushed bills deemed as overregulation of the mining industry before, but have never supported a straight-up ban or new regulatory agency. With the caucus focused on winning the two remaining Iron Range seats in future elections, it has no margin of error for defections on the issues.
Even with the larger Democrat majority of the House the companion bill will find tough sledding. Speaker Melissa Hortman, DFL-Brooklyn Park, and previous House leadership have not allowed anti-mining legislation to reach the chamber floor in an attempt to keep the House above the fray and in part as a nod to her close partnership with Rep. Dave Lislegard, DFL-Aurora.
The unfavorable route forward underscores Hauschild’s comments after the election, rejecting the idea that Democrats were given a mandate by the voters and instead embracing working with legislators “with good ideas” no matter their ilk. Representing a portion of the Iron Range, him and Lislegard watched Republicans knock off two longstanding DFL incumbents in November and secure an open seat, before taking the two Democrats down the wire. At times Republicans tried to link the two Democrats to the their DFL counterparts who oppose copper-nickel mining proposals.
Efforts to stop mining in the Rainy River Watershed are also hitting roadblocks beyond St. Paul. In Washington, a new GOP majority in the House makes it unlikely that U.S. Rep. Betty McCollumn, D-Minn., can get her bill to stop the Twin Metals mine over the finish line.
Meanwhile, Rep. Pete Stauber, R-Minn., who represents the mining region of the state, is calling for Congress to look into the Biden administration’s decision to rescind federal mineral leases from Twin Metals, while also proposing his own measure to limit the timeline of environmental reviews.
Back locally, the Senate files were sent to the Environment, Climate and Legacy Committee, which Hauschild and two of the bills’ co-authors, Sen. Kelly Morrison and Sent. Jen McEwen, also sit on. The House bill was sent to the Environment and Natural Resources Finance and Policy Committee.
-
Minnesota DNR retains control of Iron Range mineral leases, opening up a new era in Nashwauk
Jerry Burnes/Iron Range Today
Essar Global once promised to do something the Iron Range had never seen.
Almost 15 years later, not one part of that promise has been fulfilled, and after Tuesday it seems more unlikely it will ever be seen.
The Minnesota Supreme Court declined to hear a petition by Mesabi Metallics, whose majority owner is Essar, to review a pair of lower court rulings that allowed the Minnesota Department of Natural Resources (DNR) to terminate a state mineral lease agreement with the company on its long-stalled iron mining project.
Now, the leases at the former Butler Taconite site in Nashwauk are back in the state’s hands, and an era of certain uncertainty begins anew on the Iron Range. The project once billed as a beacon for jobs and economic impact in northeastern Minnesota, turned into a modern day version of the Monorail that fell into a $1.1 billion bankruptcy filing, emerged under the leadership of a healthcare huckster and later a tarnished steel behemoth with no credibility left in Minnesota.
The fallout of Tuesday’s Supreme Court decision, summed up in a mere 19 words by Chief Justice Lorie S. Gildea — “It is hereby ordered that the petition of Mesabi Metallics Company, LLC, et. al., for further review is denied.” — won’t be realized until the dominoes are done falling.
DNR officials are anticipating the leases will generate a fair amount of interest from companies looking to develop the site, most notably from Cleveland-Cliffs and U.S. Steel, and said they will evaluate the state’s options. The DNR could directly negotiate with a company like Cliffs, which has mineral leases and land already within the Butler Taconite footprint, or open the process up for bidding.
“The decision paves the way for the DNR to advance discussions with credible miners,” the agency said in a statement, later adding: “The DNR is committed to securing fair compensation for the state as we determine the best path forward for development of these resources.”
The DNR didn’t comment when asked if any companies had already applied for the leases. It was expected Cliffs would apply in the near-immediate aftermath. The company hasn’t responded to a request for comment on the court decision or its application status.
Cliffs, which owns and operates four Iron Range mines, has aggressively pursued the leases for years as it angles for a path to keep Hibbing Taconite open beyond a 2024-2026 time period when the mine will run out of ore. CEO Lourenco Goncalves, citing the company’s current holdings on the property, said he wants the DNR to work directly with Cliffs and won’t participate in a bidding war for the state leases.
Cliffs has a number of interests at the project site including 553 acres of land acquired by the company and more than 3,200 leased minerals from Mesabi Metallics that expire in 2068.
“Listen to me: If they put it to bid, I am not even going to bid. So whoever wins, I don’t give a rat’s behind,” Goncalves said in November. “I’m not going to even talk to that entity. That place will be pristine forever. It will be gone for good.”
What level of involvement to expect from U.S. Steel is unknown. The company first expressed official interest in the property in 2021 but have remained on the sidelines. It notably has a 14.7% ownership stake in Hibbing Taconite, but has a fierce rivalry with Cliffs, its business partner. The company had not yet responded to an inquiry about whether it plans to seek the state leases.
For its part, Mesabi Metallics said it plans to move forward with the project despite the setback. The company still owns the land where the half-built processing plant sits and maintains some mineral acreage to mine, but questions have lingered for years if Mesabi can complete a mine plan and meet production goals with the land it controls.
The company said in a press release Tuesday that it’s in “advanced discussions” on forming a joint venture with a “strategic partner in the steel industry,” but didn’t provide further details. A spokesperson for the company said conversations around the partnership are covered by confidentiality clauses and would not disclose more information, but added that Mesabi “believes that the new partner will bring relevant industrial experience and strategic insights” to the project.
Mesabi has had a revolving door of partnerships since emerging form bankruptcy in 2016 including Riverdale Commodities, Mercuria and more.
“Mesabi Metallics is the only entity that has the permits to develop the mine facility at the Nashwauk site,” said Larry Sutherland, president and COO of Mesabi, in a statement. “We are the logical counterparty for the DNR to partner with to develop and mine the rich iron ore resources in Nashwauk.”
A new ally for Mesabi Metallics and Essar would seemingly need to be of blockbuster proportions for the state to withstand the potential scrutiny it would face for reversing course back to the company, especially if a viable alternative is presented.
The Walz administration moved to debar Essar from doing business in Minnesota in 2019, meaning it could still own Mesabi Metallics, but could not run the operations side of the project. It’s unclear, however, if the debarment was ever fully formalized. Local lawmakers and the United Steelworkers have also lobbied aggressively for a new direction and the Minnesota Legislature last year approved a bill that would allow the project’s permits to remain active for two years should it change hands, providing a narrow window of opportunity for a new company.
“I thank Governor Walz and the DNR for their steadfast pursuit to rightfully take back the state’s mineral leases in Nashwauk from Essar Steel and Mesabi Metallics, and leave all their broken promises behind,” said State Rep. Dave Lislegard, DFL-Aurora, one of the first area legislators to call for the leases to be pulled from Mesabi. “Now, residents of the Iron Range expect the DNR to move swiftly to work with Cleveland-Cliffs and utilize these leases to extend the mine life at Hibbing Taconic and ensure a long future for the hundreds of people who work there.”
More recently Essar and Mesabi Metallics have been plagued by late payments on Itasca County property taxes and were court ordered to make payments to the Department of Employment and Economic Development and Itasca County for reimbursement of infrastructure costs incurred by Itasca associated with the project. Those payments are due through 2028, according to the court order.
What direction the DNR takes with the leases is likely to significantly shape the economic outlook on the western Iron Range. The original Essar Steel Minnesota project promised about 500 jobs, up to 2,100 spinoff positions and would put more than 2,000 construction to work on building it.
With dreams of a steel mill long-shattered, the region is now left holding onto hope that the site can transform from a pipe dream into a pipeline of new iron ore production that would ideally save hundreds of jobs from permanently disappearing. Hibbing Taconite employs more than 700 people on the Iron Range and produces about 7.8 million tons of pellets annually, most of which would be lost if it closes down without a solution.
“This is a great thing that should’ve happened years ago,” said Chris Johnson, president of USW Local 2705 representing Hibbing Taconite. “Kudos to the Governor’s office and DNR for doing the right thing. I’m glad the courts sided with them. It gives HibTac and surrounding communities hope that Cliffs and the state can possibly find a pathway to keeping us open. We will see what happens in the coming weeks.”
-
What to know: A decision nears on Mesabi Metallics leases in Nashwauk
The former Butler Taconite site in Nashwauk. (via Mesabi Metallics) Jerry Burnes/Iron Range Today
A new year ushers in a new chapter for the Mesabi Metallics project and state mineral leases in Nashwauk, this time with a finish line in sight for those beleaguered by years of failed starts, ownership changes, legal battles, late payments and general stress.
Adding to the saga is the unknown waiting at the finish line, as the Minnesota Supreme Court weighs whether it will consider a Mesabi Metallics appeal of a state decision to revoke mineral leases from the company. Justices are expected in the coming days to either take the case or uphold the Court of Appeals opinion that would place the leases back in control of the state Department of Natural Resources.
Here’s what you need to know about that upcoming decision and how it could reverberate around the Iron Range.
First, here’s a quick refresher:
Mesabi Metallics took control of the project in 2016 under the purview of healthcare executive Tom Clarke, who was later removed, but missed construction deadlines, state payments and late Itasca County property taxes have plagued them since. The Dayton and Walz administrations have granted some extensions during that time but Gov. Tim Walz ultimately began moving toward nixing the lease agreement after Essar Group, the former owners who plunged into a $1.1 billion bankruptcy filing in 2015, re-emerged as the principal owners of the project.
That’s where we stand today.
What does the Minnesota Supreme Court decision actually do?
By upholding opinions of the lower courts and siding with the state, the high court would free the leases after almost seven contentious and tumultuous years, allowing the DNR to effectively reissue them to another company.
If the court takes up the appeal it will trigger a process of filings and oral arguments before justices weigh an opinion of their own. From there they could ultimately side with the DNR or keep the leases with Mesabi Metallics.
In the grand scheme of things, the former decision is a finish line for the Mesabi Metallics portion of the story, while the latter would extend an already long timeline by a few months.
What happens if the DNR is allowed to take the leases back?
The state would have a few options but it’s expected the DNR will take the route of negotiating lease terms with a credible mining company, likely U.S. Steel or Cleveland-Cliffs, to develop the former Butler Taconite site. The other option is to put them out for bid.
Working with one of two companies is the preferred option right now for local lawmakers, who have committed to a credible successor, with some outright supporting Cliffs as both an adjacent landowner and the best route to save hundreds of jobs at Hibbing Taconite. Either company would give the DNR a known entity to work with and allow the administration to avoid some questions about its decision making.
Process aside, what happens if the court takes up the appeal?
It is probably the last gasp of air for Mesabi Metallics and Essar to develop the project. As mentioned above, taking on the appeal isn’t a reversal of the DNR’s decision, so it can go either way.
The biggest impact is that it would be just another delay for development to go forward with any company. The site has sat in limbo for most of the decade, Hibbing Taconite isn’t generating more ore while this drags on and a bill that would preserve permits should the project change hands has a time limit of two years on it, unless lawmakers can work another deal.
What is Mesabi Metallics/Essar saying?
That they can finish the project and start production with the Iron Range’s newest mining facility.
As their appeal goes, they’re arguing the DNR didn’t have the right to terminate the lease agreement and the company has worked to meet the goals outlined in said agreement. The condition Mesabi Metallics failed to meet, triggering the termination, was owing $200 million into a state account for the project. They got halfway there at $100 million and blamed the Covid-19 pandemic for impacting the other half.
Beyond that, they’re still engaged in a tit-for-tat with Cleveland-Cliffs in a long-running feud between the companies. Most recently, Mesabi Metallics called Cliffs out for having previously identified a solution for Hibbing Taconite and talk of closing it without the Nashwauk ore as misleading.
Did Cliffs find a solution?
Cliffs did identify to Gov. Tim Walz a potential solution for Hibbing Taconite in February 2021 that didn’t involve the Nashwauk leases. It was not previously reported but sources that year told me it was to transfer ore from United Taconite in Eveleth to Hibbing Taconite, making it essentially an ore barn for UTac.
Cliffs CEO Lourenco Goncalves at the 2022 Economic Summit hosted by the Minnesota Chamber of Commerce. (Courtesy of the Minnesota Chamber of Commerce) That idea was scratched — it was viable but sources said it was expected to carry a major cost and require some additional permitting to transfer ore between the facilities.
What is the DNR saying?
Not a lot. The standard statement is that the administration is awaiting the Supreme Court decision and will go from there with the leases.
What is Cliffs saying?
A common thread lately has been that Cliffs wants to use the state leases, combined with its current lease holdings in Nashwauk, to extend the life of Hibbing Taconite beyond the mine inevitably running out of crude ore sometime between 2024 and 2026.
At a recent Minnesota Chamber of Commerce event, Cliffs CEO Lourenco Gonclaves told reporters that the land the project sits on would remain “pristine” if the company didn’t get the state leases. He also reiterated that this is the only path for Hibbing Taconite to move forward and the company won’t bid on the leases if the state opts for that route over negotiating with adjacent land owners.
“Listen to me: If they put it to bid, I am not even going to bid. So whoever wins, I don’t give a rat’s behind,” he said. “I’m not going to even talk to that entity. That place will be pristine forever. It will be gone for good.”
Goncalves and Cliffs have been hopeful the Walz administration will see things the same way.
What control does Cliffs have?
Cliffs has a number of acres at the project site including 553 acres of land acquired by the company and more than 3,200 acres in leased surface and mineral acreage from Glacier Park Iron Ore Properties.
Mesabi Metallics last July said it purchased 3,200 acres of land and leases from Butlertac Holdings, a division of Glacier Park, meaning Cliffs would be leasing from Mesabi Metallics. But that lease agreement has been described to me as pretty ironclad, with Cliffs holding lease rights through 2068, according to the company.
With the way this project has gone, one would hope for some resolution and not a pristine land mass by 2068.
What is U.S. Steel saying?
Nothing. Actually. The company in 2021, for the first time, expressed interest in Nashwauk, but have said nothing since. That might change once there’s some finality on the leases.
Are there any other “credible” companies?
None have emerged and with Cliffs’ land and lease holdings, plus U.S. Steel likely in the state’s thoughts, it’s a stretch that any will.
Where is Essar at in the whole situation?
The Ruia family and Essar continue to be the primary owner of Mesabi Metallics as of 2018. There hasn’t been any word lately on the state’s effort to debar the company from operating in Minnesota, meaning they could own the company but not be the operating manager of the mine. That was before the lease termination began.
Now, Essar is mainly behind the scenes letting Mesabi Metallics speak largely through CEO Larry Sutherland, a former manager at U.S. Steel, who left rather unceremoniously in 2020 and became CEO of the now-maligned Prairie River Minerals that tried to restart Magnetation/ERP Iron Ore.
Essar recently struck an agreement with trustees in its original bankruptcy filing at the Nashwauk site, a settlement worth $26.5 million. As a reminder, Essar was sued by Mesabi Metallics in bankruptcy court, claiming they funneled money meant to complete the project in Nashwauk into other global entities of Essar.
Does the settlement mean anything to Nashwauk now?
Not really. Businesses will get paid something from the funds. It’s more the Ruias clearing out the skeletons left in Essar’s closet as they try to salvage any business ties left and re-enter an era of relevance and credibility.
-
Analysis: Iron Range shifts its politics, but only so far — for now
Senator-elect Rob Farnsworth, R-Hibbing, listens to potential voters at a Laurentian Chamber of Commerce candidate meet and greet in October in Virginia. Farnsworth won the Senate District 7 race, a seat long held by Democrats. (Jerry Burnes/Iron Range Today) Jerry Burnes/Iron Range Today
The political landscape of the Iron Range shifted largely as expected Tuesday night as Republicans took control of the delegation’s majority for the first time in modern election history, but found themselves in the minority statewide.
What ripple effect those results have on the region’s political future and the upcoming legislative session are left for pure speculation at the moment. While Republicans have gained steadily on the DFL since 2010, it took the party 12 years and two open seats to finally — mostly, at least — flip the script on election night, producing less of a wave and more a tide that turned red.
GOP incumbents won expected races centered in Itasca County, where Sen. Justin Eichorn easily prevailed and Rep. Spencer Igo defeated DFL incumbent Julie Sandstede by 7.5 points in House 7A, a district combined due to redistricting. Rob Farnsworth also won by a solid majority over Ben DeNucci in Senate District 7, a margin of 7 points, in a seat formerly held by the late Sen. David Tomassoni.
“[Senate District 7] was a solid win for Republicans in the heart of the Mesabi Iron Range,” said Aaron Brown, a writer and college instructor in Hibbing, to KAXE. “That’s probably, for Republicans, one of the big headlines. That marks a significant shift in a district that, in recent memory, I recall being Democratic by 30, 40, 45 points. That shifted quite a bit.”
A more surprising result came in House 3A, where Republican Roger Skraba currently holds a 15-vote lead over DFL incumbent Rob Ecklund. The margin was the narrowest in the state Tuesday night and will head to an automatic recount. In 2020, Sandstede prevailed over the then-challenger Farnsworth following a state-funded recount, so the door isn’t closed on Ecklund.
Yet, the historic nature of the seat — representing the far northeastern parts of the Minnesota including International Falls, Ely and Cook County — speaks volumes to the ground gained by Republicans since 2010.
The late DFL Rep. David Dill won his first effort at the seat in 2002 after Tom Bakk was promoted to the Senate. Among those Dill defeated was Skraba, who ran that year as an Independent and finished second, topping the Republican nominee Tom Porter.
Four years later, Dill would run unopposed.
“The culture has shifted,” Brown said. “That shift is now built in. I see the region as Republican-leaning for the foreseeable future, but it wasn’t a blow out — none of the races were blowouts for the Republicans.”
Democrats found victories in the House 7B race with incumbent Dave Lislegard narrowly defeating challenger Matt Norri, while Grant Hauschild won a highly-contested race against Andrea Zupancich in Senate District 3 to replace Bakk.
Those wins underscore some of the sentiment toward Democrats felt on the Iron Range, which tilted toward Republicans almost across the board in statewide races, largely on issues of mining, Covid-19 restrictions and the economy.
Where DFLers like Ecklund publicly adhered closely to party-line politics in supporting Gov. Tim Walz and Jen Schultz, the Democratic nominee in the 8th Congressional District who lost to incumbent Pete Stauber by around 12 points, Lislegard and Hauschild largely avoided the fray.
Both cited a campaign that played up their labor and mining support, with a boots-on-the-ground approach that got their message to voters in the region. Hauschild was among the top Senate candidates when it came to fundraising and estimated he knocked on more than 10,000 doors, but added it wasn’t one issue that brought voters his way.
Rep. Dave Lislegard, DFL-Aurora, speaks at a Save Hibbing Taconite rally in October. He was one of two Democrats to win on the Range, retaining his House 7B seat. (Jerry Burnes/Iron Range Today) “We ran an independent campaign that avoided extremes and was no nonsense,” he said. “Clearly that’s something Northland voters wanted. Voters resonated with somebody that won’t toe the party line and wait for directions.”
Lislegard pointed to experience in the Legislature, leading bills that delivered local government aid, bonding projects and taconite municipal aid dollars to the Iron Range, while being a fervent supporter of PolyMet and being on the forefront of calls to use a Nashwauk ore body to save Hibbing Taconite.
“It’s working hard for the Iron Range, our mining industry, our communities, working-class people and the elderly,” he said. “I believe they trusted me to put the needs of the district first and I believe they understand the importance of experience and effectiveness.”
Experience was a theme of the campaigns for Lislegard, Ecklund and Sandstede as multi-term legislators, considering the departure of the retiring Bakk and the death of Tomassoni, leaving an extensive leadership gap in the Iron Range political scene.
Bakk acknowledged as much when he endorsed Liselgard, Ecklund and Zupancich, promoting their legislative and city government chops. The sign off from the former DFL majority and minority leader in the Senate was expected to carry weight among voters, not only because of his own political career as a longtime Iron Range champion, but Bakk left the DFL with Tomassoni to form an Independent caucus in the Senate in 2020.
It was largely seen as a rebuke of the party, which declined that year to retain Bakk as a party leader in the chamber, and had grown more vocally averse to potential copper-nickel mining projects in the region. Bakk stepping into the races was viewed locally as independent voice lending his support in the contested 2022 election.
But on Tuesday night, Bakk-endorsed candidates went 1-for-3, with Lislegard pulling off the only victory, pending the Ecklund-Skraba recount.
“Northlanders don’t want a kingmaker,” said Hauschild, who was endorsed by Bakk’s predecessor, the late DFL Sen. Doug Johnson. “They want who is best for them.”
Brown cited Lislegard’s staunch pro-mining stance and broad base of support among business and labor groups on the Range as key pieces in retaining his seat, despite the shifting trend, and pointed to Hauschild’s campaign strategy.
Both Senate candidates raised massive sums of money — more than $250,000 combined. But Hauschild, the relative newcomer to the wider political scene of the region, outperformed Ecklund and longtime DFL Rep. Mary Murphy — both of who lost — to win a race framed early on as the Iron Range candidate versus the Duluth area candidate.
Grant Hauschild, DFL-Hermantown, won the Senate District 3 race. (Provided) “The DFL should pay attention to how Grant Hauschild won that race when it looks at some of these other northern Minnesota House and Senate seats they lost,” Brown added. “He ran a modern campaign. He was very active, heavy on online and offline media buys … Hauschild was just a little better at figuring out where those undecided voters were.”
Zooming out, Democrats across Minnesota — mainly in the metro region — celebrated winning full-party control in St. Paul for the first time since 2014, including all seats in the state’s executive branch. The victories leave Lislegard and Hauschild in the minority at home, but in the legislative majority, providing an immediate chance to utilize their consensus-building style of politics.
At home, Republicans are poised to have majority rule of the Iron Range Resources and Rehabilitation Advisory Board for the first time. The board consists of state senators and representatives from districts with at least one-third of the residents living in the taconite assistance area covered by the IRRR.
Pending the House 3A recount, Republicans would hold 5-3 control of the board with Eichorn, Farnsworth, Igo, Skraba and Ben Davis from House 6A. Lislegard, Hauschild and a senator appointed by the Senate Majority Leader, now a Democrat, would represent the DFL. If Ecklund ultimately prevails, it becomes a 4-4 split.
IRRR Commissioner Mark Phillips said he doesn’t expect a partisan split when the new makeup of the board convenes next year. In recent history, the political divide in St. Paul hasn’t translated to the IRRR, which mainly deals with community and economic development issues.
Years ago, when the board acted in less of an advisory role and more in the decision-making process, politics could have been a factor, he added. But that dynamic largely changed recently when the IRRR was reformed to a state department, thus moving the board to an advisory position rather than chief decider.
Phillips noted the incoming makeup of the board was “essentially what we had with Bakk and Tomassoni caucusing with Republicans” after making their switch to Independent.
“I see very little disruption,” he said. “The issues we bring to the advisory board are not really political, at least they haven’t been for the last eight years. In past years, maybe, but now it’s community and economic development projects, and that doesn’t usually cross over political boundaries.”
Iron Range Today 