The land and minerals at the heart of discussions to extend the mine life of Hibbing Taconite are back on center stage, this time as part of a legal effort by the company in possession of the leases.
U.S. Steel has filed a countersuit against Glacier Park Iron Ore Properties, saying its lease agreement for the Carmi-Enterprise land and minerals near Hibbing Taconite is valid and that the lawsuit is designed to obstruct their operations in favor of a financial windfall.
Glacier Park claimed in a lawsuit last month that U.S. Steel used pressure tactics to negotiate a 47-year sweetheart deal on the land, breaching the intentions and agreements of the Great Northern Iron Ore Properties Trust. U.S. Steel filed the countersuit in Sixth Judicial District Court in Hibbing on Tuesday, the same jurisdiction as the original. In it, the Pittsburgh-based steel company paints the picture of a new ownership group unhappy with their predecessor’s agreement on the land, and is using Hibbing Taconite as a narrative “to extract an undue corporate windfall.” U.S. Steel is now seeking to dismiss the claims of Glacier Park, prevent it from arbitrating the Carmi-Enterprise lease agreement and declare that the steel company isn’t liable for damages.
“GPIOP’s allegations are frivolous and have been made in bad faith,” U.S. Steel says in its countersuit. “GPIOP is hoping that the specter of litigation, and its potential impact on U.S. Steel’s operations, will provide commercial leverage, and GPIOP further hopes that it “saves Hibtac” narrative will generate public and political pressure.”
The original lawsuit filed by Glacier Park claims a U.S. Steel insider became a trustee of GNIOP and helped lead negotiations on lease terms that were below-market value for 42 years beyond trust’s capacity. GPIOP also says the trust intended for the Carmi-Campbell portion of the lease to go to Hibbing Taconite because mining would likely begin before the trust dissolved in 2015, adding that U.S. Steel has not shown any intention to mine the Carmi acreage.
The Carmi-Enterprise lease is a combination of the Carmi-Campbell, Mississippi-Enterprise and Grant leases, which individually were set to expire on Dec. 31, 2010. U.S. Steel held the lease agreement for the three properties through the trust and counters that the intent of the trust was to consolidate the leases, extend the company’s interest and provide the trust and reversioner with a steady revenue stream.
In the filing, U.S. Steel adds that the terms were accepted to provide them with “complete discretion and control” over the property, mining operations and “if it chooses to mine” the production levels. “The Carmi OA [operating agreement] reflects this fundamental economic reality in terms that are crystal clear.”
The complaint also points to the ownership lineage of Glacier Park, which at the time of the lease agreement was oil and gas giant ConocoPhillips, selling to unaffiliated owners based in Texas in 2016 who were not involved in the lease agreement review or negotiations, and “did not exist at any time relevant” to the claims.
U.S. Steel claims the new ownership began expressing dissatisfaction with the lease terms and minimum royalties as a way to “capitalize” on improved market conditions in the iron ore industry. But, the company contends, the new owners don’t have a contractual basis to change the mine plan or dispute royalties, noting it has remained current on lease payments for the Carmi-Enterprise.
Claiming Glacier Park’s claims of a conspiracy with the trust are false and senseless, U.S. Steel says it did not “suppress bidding” and instead included an escalation clause for changing market conditions in the royalty portion of the agreement. The company also cites that Glacier Park did not name any of the GNIOP trustees in the lawsuit.
“GPIOP’s allegations focus on the newest Trustee at the time, James E. Swearingen, a former U.S. Steel employees. Beyond noting his former employment … GPIOP does not allege a single fact to support any claim of misconduct by Mr. Swearingen, nor offer any plausible theory as to how Mr. Swearingen could have single-handedly steamrolled three other independent Trustees to cause the Trust to enter into the Carmi Lease & OA, over any objections from the other Trustees, who at the time had served the Trust for a combined 92 years.”
Swearingen was the former general manager of Minnesota Ore Operations for U.S. Steel and, according to the U.S. Steel complaint, retired from the company six years ago. Glacier Park claims Swearingen was the only mining expert on the trust. Swearingen has since denied Glacier Park’s allegations.
Glacier Park declined comment on the countersuit citing pending litigation. U.S. Steel did not return a request for comment on the lawsuit.
Other legal action
U.S. Steel had sought a federal court complaint Aug. 26, the same day Glacier Park filed two lawsuits against them, trying to stop arbitration attempts on the leases. That complaint was sealed and later dropped by the company.
Glacier Park’s original lawsuit was then sealed Aug. 27. It’s the first public attempt to put pressure on U.S. Steel over the land in question, which would provide about 500 million tons of resources and seven to 12 years of mining for HibTac. Estimates currently show the mine could run out of ore by 2024, potentially threatening its current operation and more than 3,000 direct and indirect jobs across the Iron Range.
The second lawsuit filed by Glacier Park claimed U.S. Steel knowingly dumped up to 3.8 million tons of waste rock on top of unmined ore located adjacent to Keewatin-based Keetac, which is owned and operated by U.S. Steel. It also said the company stockpiled about 800,00 tons of waste rock on property leased to Hibbing Taconite without consent. The land in question is owned by Glacier Park.
“The second complaint is equally meritless, and has been asserted by GPIOP solely in an effort to exert further leverage over U.S. Steel with respect to the lands covered by the Carmi Lease & OA.”