Dayton grants extension for Iron Range project financing

Minnesota Gov. Mark Dayton has granted more time to the company trying to restart the half-finished Essar Steel taconite mine and processing plant in Nashwauk, Minn.

Chippewa Capital Partners won the bidding for the former Essar site in federal bankruptcy court in July. As part of the deal the Minnesota Department of Natural Resources agreed to hand over critical state mineral leases to Chippewa, provided the company and its investors were able to secure at least $850 million in financing by the end of August.

Now Dayton says he has instructed the DNR to give Chippewa a 30-day extension.

"If Chippewa is unable to obtain their financing agreement within that thirty-day period, the DNR will regain control of the leases," Dayton said in a statement.

Chippewa has promised to complete the mine and taconite pellet plant by December 2019. The company has also vowed to open the state's first direct reduced iron plant at the site by the end of 2022, which would be able to feed steel mills known as electric arc furnaces, a growing segment of the American steel industry.

India-based Essar broke ground on the mine and processing plant nearly ten years ago with great fanfare, promising to build the state's first ever steel mill at the mouth of an iron ore mine.

But after investing nearly $2 billion into the facility, stopping and starting construction on several occasions, struggling to pay contractors and unable to meet state timelines, the company finally filed for bankruptcy last year.

The state is now banking on Chippewa to finally complete the project.

"I am dedicated to ensuring that these state leases are utilized by a financially capable entity to mine and process their resources, build and operate a value-added enterprise, and create more jobs and further economic growth on the Iron Range," Dayton said.