Chippewa Capital Partners has satisfied all requirements needed to reinstate its state mineral leases, Gov. Mark Dayton announced Wednesday.
“The project’s emergence from bankruptcy in December 2017 was an important step toward Chippewa Capital Partners’ goal of finishing the plant's construction and beginning production," the governor said in a news release.
The Department of Natural Resources (DNR) required Chippewa, the company seeking to build an iron mining and processing project near Nashwauk, to meet certain conditions in order to reinstate the mineral leases, which are essential to bring the project to fruition.
“After a detailed review, the DNR has determined that the company has satisfied those terms. Therefore, the state’s mineral leases are reinstated, which allows Chippewa to move forward with construction and production.
“I thank Chippewa for its continued commitment. The company's success will bring new jobs and economic vitality to the Iron Range,” Dayton said.
According to the DNR’s review, Chippewa Capital Partners satisfied the following terms laid out in its settlement agreement with the state:
- By December 31, 2017, accelerating all remaining payments owed to contractors under the settlement agreement.
- By January 9, 2017, extending a $4 million letter of credit to the DNR to secure royalty payments.
- By May 31, 2018, executing off-take agreements for at least 4.2 MMTPA of pellets (sales contracts for at least 4.2 million metric tons per annum of pellet product).
- By May 31, 2018, executing a binding and enforceable construction agreement with a nationally-recognized Engineering, Procurement and Constructionfirm that is acceptable to lenders and the DNR for completion of a pellet plant.
- By June 30, 2018, securing the Superior Mineral Resources LLC’s mineral holdings at the site.
- By June 30, 2018, closing transactions for at least $850 million in binding and enforceable debt/equity commitments.
- Meeting an ongoing commitment to perform or cure all obligations arising on or after December 21, 2017 (i.e. paying royalties due to the state of Minnesota, etc.)
The news of the mineral lease reinstatement was welcomed by local officials, who say the project would bring 300 permanent and more than 800 construction jobs to the area.
"We are very happy about the mineral leases being reinstated. This project is so important for our area," said Itasca County Commissioner Ben DeNucci, whose district includes the site. It's been a long journey and it's great to finally have some good news."
DeNucci said he expects the company to quickly move into the construction phase.
“The reinstatement of the mineral leases is great news for the workforce in our area," State Rep Sandy Layman, R-Cohasset, said in a prepared statement. "My hope is to see construction continue in order to bring more good-paying jobs to the region. This is certainly an encouraging step, and I look forward to this valuable mining project moving forward in the process.”
It's not yet known how the decision will affect a competitor's effort to obtain the leases.
In February, Cleveland-Cliffs said it seeks to lease mineral rights from the state of Minnesota near its newly acquired mineral deposits near Nashwauk. A formal request was sent Feb. 1 to the Department of Natural Resources, said Cliffs’ President, Chairman and CEO Lourenco Goncalves.
The ore is needed by Hibbing Taconite, Goncalves said, where the existing mine could be depleted of ore in seven or eight years.
“I’m not going to let that plant stop,” he said.
The Nashwauk ore further could be processed at United Taconite in Eveleth or Northshore Mining in Silver Bay, he explained. The high-grade ore could be processed into standard taconite, which is consumed in blast furnaces, or DR-grade pellets, which are needed to manufacture hot briquetted iron (HBI), the feedstock used by electric-arc steel mills.