Essar Steel misses $10 million repayment to Minnesota

MINNEAPOLIS (AP) — Essar Steel Minnesota failed to make a $10 million payment that it promised to the state for missing deadlines on its troubled Iron Range taconite project, officials said. The company made a deal with Gov. Mark Dayton in December to repay $66 million in economic incentives that...

MINNEAPOLIS (AP) — Essar Steel Minnesota failed to make a $10 million payment that it promised to the state for missing deadlines on its troubled Iron Range taconite project, officials said.

The company made a deal with Gov. Mark Dayton in December to repay $66 million in economic incentives that it received for the stalled Nashwauk project, which state officials estimate is less than 60 percent completed after eight years of trying. The first payment of $10 million was due March 31.

"I have not seen it," Jeff Walker, the Itasca County auditor and treasurer, who's charged with receiving and turning over the payments to the state, told the Star Tribune on Tuesday (http://strib.mn/1qr2IR9 ).

State Rep. Tom Anzelc, who chairs the Legislature's Iron Range delegation, also confirmed that Essar failed to make the payment.

Essar and Dayton administration officials declined to comment.

Essar Steel Minnesota is owned by Essar Global Fund Ltd., which is based in Mumbai, India. The company broke ground in 2008, promising a $1.8 billion mine, iron ore processing plant and steel mill that would be completed in 2011. But the project quickly faltered because of significant financial problems and the collapse in the global steel market. The state incentives were contingent on Essar building the steel mill, but Essar has since scrapped that plan. The company now plans to build just a taconite-pellet facility.

Essar Steel Minnesota still owes contractors $35 million to $40 million, said Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Board.

In addition, Essar owes heavy equipment suppliers Komatsu and Ziegler owed $25 million to $28 million, Anzelc said. Great Lakes Gas Transmission Co. won a $32 million judgment for nonpayment.

The parent company's Essar Steel Algoma subsidiary, based in Sault Ste. Marie, Ontario, is in bankruptcy restructuring, and Anzelc said he believes Essar Steel Minnesota should consider a similar move so that other investors could bring the project to completion.

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Information from: Star Tribune, http://www.startribune.com

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