Updated: July 11, 2018 06:48 PM
Decision day is here. Wednesday afternoon, Governor Mark Dayton announced that the state has reinstated mineral leases in Nashwauk to Tom Clarke and Chippewa Capital Partners.
Clarke and Chippewa had come to a settlement agreement with the DNR back in December. They had to meet a list of conditions by certain deadlines, in order to get the leases reinstated. Some of those conditions included paying vendors, securing an off-take agreement for pellets, and closing on financing.
"After a detailed review, the DNR has determined that the company has satisfied those terms. Therefore, the State's mineral leases are reinstated, which allows Chippewa to move forward with construction and production," according to the governor's statement. It goes on to say, "I thank Chippewa for its continued commitment. The company's success will bring new jobs and economic vitality to the Iron Range."
The leases had reverted back to the DNR, as part of the bankruptcy proceedings. Clarke brought the company out of bankruptcy in December, and has been pushing to get the Mesabi Metallics project going. He plans on finishing the mine and pellet plant, and then building a state-of-the-art pig iron plant on site as well.
He's had some competition for the site.
Two years, ago, Dayton attempted to terminate the leases, which had been with Essar, partly because of non-payment to contractors. Essar filed for bankruptcy the same day, which tied up the leases in court.
At the same time in July of 2016, Dayton and Cleveland Cliffs, along with state and federal leaders, held a public meeting in Nashwauk Township. Many vendors who were owed tens of millions of dollars attended.
Cliffs' CEO Lourenco Goncalves said he was committed to finishing the project and putting a DRI plant in Nashwauk, if Cliffs was to acquire the leases.
However, Chippewa emerged the winner of the auction of the project in bankruptcy court, and the state began working with them.
So Cliffs put their investment into Toledo, Ohio, for their first DRI plant.
Cliffs does own private mineral rights in Nashwauk.
Range lawmakers have hoped that Cliffs and Clarke could work together, but it seems unlikely for now, since the two sides remain caught up in litigation.
Cliffs did not have any comment Wednesday about the reinstatement.
The DNR said now Chippewa will be held accountable like any other mineral lease holder, and will be required to meet the terms of the lease agreements.
The full list of terms from the settlement agreement between the state and Chippewa is as follows:
· By December 31, 2017, accelerating all remaining payments owed to contractors under the settlement agreement
· By January 9, 2017, extending a $4 million letter of credit to the DNR to secure royalty payments
· By May 31, 2018, executing off-take agreements for at least 4.2 MMTPA of pellets (sales contracts for at least 4.2 million metric tons per annum of pellet product)
· By May 31, 2018, executing a binding and enforceable construction agreement with a nationally-recognized Engineering, Procurement and Construction firm that is acceptable to lenders and the DNR for completion of a pellet plant
· By June 30, 2018, securing the Superior Mineral Resources LLC's mineral holdings at the site
· By June 30, 2018, closing transactions for at least $850 million in binding and enforceable debt/equity commitments
· Meeting an ongoing commitment to perform or cure all obligations arising on or after December 21, 2017 (i.e. paying royalties due to the State of Minnesota, etc.)
Updated: July 11, 2018 06:48 PM
Created: July 11, 2018 10:35 AM
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