CLEVELAND, Ohio — Despite a disagreement with Essar Steel Minnesota, Cliffs Natural Resources says there are no current plans to permanently idle or close any of its mines in Minnesota.
The company explained in a news release Monday that a tour of Essar’s steel plant construction site in July led them to believe that Essar’s claims of the project’s state of completion were “substantially overstated.”
Cliffs says that until Essar begins producing iron ore pellets at a sustainable rate, the Minnesota project is “nothing more than a construction site.”
They also say that if the Essar Minnesota project were to come online, it would create iron ore pellet overcapacity in the U.S., contrary to the original intent of the $73 million in loans from the State of Minnesota to Essar to support the construction of a new steel mill in the Great Lakes region. Cliffs believes that Essar Minnesota should be required to immediately repay its construction subsidy due to Essar “unilaterally changing the scope of its project.”
In a statement from Essar Minnesota they say they have met with Governor Dayton and State officials to discuss the reimbursement obligations related to the state grant.
The statement says they felt it was a very productive meeting and they will continue discussions towards the resolution of the grant reimbursement obligation in the near future.
The following is Essar Steel Minnesota’s full response to the Press Release issued by Cliffs this morning.
“It appears that the Press Release issued by Cliffs this morning is a retraction or a backtracking on public threats made by the Cliffs’ CEO in a story that ran yesterday in the Mesabi Daily News. In a follow-up e-mail, I will send you the link to that story.
When you review the Mesabi Daily News story from yesterday, the comments made by our President/CEO, Madhu Vuppuluri, in that story constitute Essar Steel Minnesota’s statements in response to the statements/threats made by the Cliffs’ CEO.
In the Press Release issued by Cliffs today, Cliffs seems to be backtracking on the public threats made the Cliffs’ CEO in his interview with Bill Hanna at the Mesabi Daily News –- as Cliffs is now saying that it does not have any current plans to permanently idle or close any of its Minnesota mines. Since the steel mills that Essar Steel Minnesota will be supplying pellets to are not supplied or sourced from any Iron Range mines, the threats made by Cliffs’ CEO (that he would close one of “his” Minnesota mines the very day Essar Steel Minnesota goes online) do not make much sense. There is no correlation. It appears that is why Cliffs had to issue the Press Release today, basically retracting the public threats made by its CEO.
As to the part of the Cliffs Press Release regarding Essar Steel Minnesota’s construction progress and timelines, we disagree with Cliffs’ assessment. As of this month, the construction on the project is 79.2% complete and overall progress (engineering, procurement and construction activities) on the project is 88.6% complete. Essar Steel Minnesota anticipates that it will be completing construction of the facilities at the site by mid-2016 and will be producing pellets for delivery in the second half of 2016.
As to Cliffs’ statements about the “loans” from the State, let me first clarify that the $65.9 million actually was a grant from the State and the $6 million was a loan from the IRRRB to Essar Steel Minnesota’s predecessor, Minnesota Steel Industries. We met with Governor Dayton and State officials last Monday to discuss the reimbursement obligations related to the grant. We felt it was a very productive meeting. We appreciate the time that the Governor and area legislators spent with us to discuss this matter. We will be continuing our discussions towards resolution of the grant reimbursement obligation in the near future.”