The recent drama enveloping the Mesabi Metallics project in Nashwauk has taken more twists and turns than daytime TV since the project was awarded state mineral leases on July 11.
Gaining the leases came after Mesabi submitted an offtake pellet agreement at the end of May and financing proposals at the end of June. It should have been good news, but the last two weeks have been anything but that. Let’s recap:
• The same day the state awarded the leases, Tom Clarke’s other venture, ERP Iron Ore, dropped an objection to a forced bankruptcy petition. ERP and Mesabi were on a path to becoming one operation under Clarke’s emergence plan.
• On July 12, the state Department of Natural Resources began a lease termination process with ERP.
• On July 13, the Mesabi Daily News reported that Riverdale Commodities SA, the Swiss-based company that holds the offtake agreement and provided $650 million in financing for Mesabi, had numerous ties to Essar, which previously owned the Nashwauk mine and drove into $1.1 billion in debt and eventually bankruptcy in 2016.
• On July 17, ERP entered Chapter 11 and Clarke was rebuked by Cleveland-Cliffs for saying he had a commitment to supply crude ore to Hibbing Taconite, partially owned and fully operated by Cliffs.
• On July 18, the Mesabi Daily News further tied one of Riverdale’s directors, Raman Jaggi, to a current role as the sole administrator of Essar Processing and Distribution in Valencia, Spain.
• On July 23, Cliffs won a land dispute over Mesabi for about 3,700 acres of land in Nashwauk after a federal judge ruled in favor of the Cleveland company. On the same day Itasca County officials said they were meeting with Clarke on July 25 over $21 million in liens on ERP Plant 4 that the county could be on the hook for.
• On July 24, Cliffs announced it had filed a libel and defamation suit against Clarke and Mesabi the previous day, claiming damages over the Hibbing Taconite claims.
• On July 25, as Clarke was meeting with Itasca County officials, his investors in Mesabi Metallics wrote to county officials saying they had removed Clarke from his roles at the project. Clarke, in turn, said he removed Nubai Global Investment from the Mesabi and Chippewa Capital Partners board and was now the sole director.
The questions are endless for the state and Clarke, and unfortunately many will be settled in a courtroom process that drags this process out even further.
But it doesn’t need to end this way.
The state, for example, knew as early as May 29 of Riverdale Commodities and likely its Essar ties. DNR officials and Gov. Mark Dayton remained silent. So, is this Essar money or not, and why ignore the connections? Inquiring minds around the Iron Range would love a clear answer.
Similarly, the state should have known by June 30, when Chippewa/Mesabi submitted its final financing plan, that Nubai was withholding $90 million — as of April 15, according to Clarke — for reasons unknown to date. Did Clarke fail to disclose this significant development or did the state make the same mistake it did numerous time with Essar and make a bad deal?
Despite Dayton saying in January that the state would need to review the impact of Cliffs’ land acquisition, said to be a significant amount of ore, the DNR declined to say what those impacts would be on Mesabi and overall project. Was due diligence done on researching this or did the state set up a smoke screen in hopes the court would rule the other way? The public needs to know if Clarke and Mesabi can even do what is promised in Nashwauk now.
Any way, the DNR and governor’s office will likely have a very big decision to make at the end of the year. If Mesabi doesn’t begin construction in earnest or begin construction on the value-added facility, will it buy the excuses that struggles over ownership, withheld funding or the involvement of Cliffs warrants an extension?
It is a slippery slope no matter what the state does. Recalling Essar, the state granted extension after extension and was too late on pulling the trigger to retake the leases. It can’t make that mistake again.
If it pulls the leases too soon it risks lawsuits and mistrust of Mesabi’s supporters.
As Clarke and Nubai battle over funding in the courts, the leadership at Mesabi hangs in the balance. So does the work Mesabi needs to begin and complete in short order.
All the while the Range is caught in the middle of this tug of war, with far more questions than answers, and far more to lose than the state of Minnesota, Clarke and Nubai.