Two of the largest mining companies in the Iron Range – Cleveland-Cliffs and US Steel – have filed formal requests with the state to secure coveted mining leases formerly owned by Mesabi Metallics.
Last year, the Minnesota Department of Natural Resources (DNR) terminated Mesabi’s lease on state-owned ore. In January, the Minnesota Supreme Court upheld the termination of the lease, allowing the DNR to assign the lease near Nashwalk, Minnesota.
Cleveland-Cliffs filed a formal offer to lease all of the Nashwalk premises on the same day that the Supreme Court’s decision was made. US Steel submitted a formal offer on February 24th.
DNR is still parsing the US Steel request. Joe Henderson, director of DNR Lands and Minerals, said the department believes, but has not confirmed, that US Steel also claims all “holdings” held by Mesabi Metallics.
Mesabi’s previous lease consisted of 66 lots of about 40 acres each. DNR has not set a deadline for rental proposals.
“The fact that there is no deadline for the proposal should not be interpreted to mean that the DPR will not prioritize ore leases near Nashwalk,” said DPR Assistant Commissioner Jess Richards.
DNR canceled Mesabi’s lease after the company missed a 2021 deadline to make a $200 million down payment to complete the half-built taconite plant. The predecessor company started the project in 2011 but went bankrupt in 2016. Since then, the project has suffered from delays.
DNR may enter into new leases or put mining rights up for public auction. Any lease agreement entered into by the DNR must be approved by the Minnesota Executive Council, which includes Gov. Tim Walz and the state’s four other top elected officials.
Cleveland-Cliffs and US Steel are asking for a lease, both have a long history in the Iron Range. Cliffs wholly owns three of Range’s six taconite mines, and US Steel owns two. Cliffs owns 85% of Hibbing Taconite and US Steel 15%.
In a letter to the DNR, Cliffs said the former Mesabi site “adjacent to ore owned and leased by Cleveland-Cliffs” and “cannot be mined by anyone else.”
Hibbing Taconite ore, which employs 750 people, is expected to run out around 2025. The life of Hibbing Taconite will be extended by 27 years if Cliffs obtains Mesabi’s former lease; without them, the plant will close, Cliffs CEO Lourenko Gonçalves said in November.
“Because the US Steel Keetac mine is the closest production site to the [government lease], the subject matter of the lease is especially important to the life of the Keetac plant,” US Steel said in a statement.
Keetac’s lifespan on public records is unclear, but according to SEC filings, it has about three times the mineral reserves of Hibtac.
Last year, US Steel announced a $150 million capital increase for Keetac to produce new pellets for electric arc furnaces rather than traditional blast furnaces.
The DNR said they were contacted by others interested in leasing Nashwauk, but there was only one official offer. It covers six of the 66 leased lots.
Scranton Holding Co., owned by Hibbing, is interested in these leases for “emergency” mining, which involves the recovery of residual ore from old mining waste. Scranton is interested in dumps for six sites.
Mike Hewlett has covered energy and other topics for The Star Tribune since 2010. Prior to that, he worked as a reporter for newspapers in Chicago, St. Paul, New Orleans, and Duluth.
Post time: Mar-06-2023