The Iron Range Resources Board on Thursday granted an extension and approved modifications to the terms of $9.5 million in loans to Excelsior Energy.

Excelsior is developer of the proposed Mesaba Energy Project. Plans call for creation of a $3 billion 600 megawatt gasification power generation facility near Taconite, MN.

While the so-called clean coal project has moved steadily through the review process in its nine-year history, it has yet to secure a buyer for the power it would produce. Industry heavy-hitters like Xcel and Minnesota Power said the power would be too costly.

IRR Commissioner Sandy Layman noted the project’s lack of customers, but recommended the extension and modifications saying, “the project is moving forward on all fronts.”

Under terms of the new agreement, Excelsior Energy is required to pay $100,000 in annual principal once each year, beginning Dev. 31, 2010, and ending Dec. 31, 2017, the due date for the entire loan sum. If Excelsior’s payments are made on time, it will reduce the company’s interest rate for that year from 20 percent to 5 percent. If the company should pay the loans in full prior to the due date, Excelsior will be entitled to a recalculated interest rate of 3 percent.

State Rep. Tom Anzelc, DFL – Balsam, whose district includes the development site, opposed the measure. He moved to table until more information on allowable emissions is obtained. He asserted that the development of Mesaba could hinder mining development elsewhere on the Iron Range.

“You can only mine where minerals exist, you can generate power anywhere,” he said.

Excelsior co-CEO Tom Micheletti said his project wouldn’t have an impact on mining development.

“We feel very strongly that this project will not have any negative impact to other project development,” he said

The board approved the renegotiated loan agreements. Anzelc was the sole dissenter.

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