In a letter dated Feb. 15, Mesabi Metallics CEO Matthew Stock voiced strong opposition to the state’s objections to its reorganization plan, which was recently filed in U.S. Bankruptcy Court.
Mesabi Metallics, formed in the wake of Essar Steel Minnesota’s July bankruptcy filing, is a new company with new investors and leadership, executives say. Essar won’t be involved in the reorganized company, Stock said.
His letter, addressed to Gov. Mark Dayton, asserts “the state’s opposition to the company’s reorganization plan goes directly against the wishes of, and jeopardizes the recoveries of virtually every other stakeholder that has an interest in the company’s project.”
Essar Steel Minnesota, the predecessor of Mesabi Metallics, filed for bankruptcy protection owing the state $66 million and another $49 million to local contractors.
Last week, Dayton voiced strong objections to Mesabi Metallics retaining state mineral leases previously held by Essar. He argued the company’s plan offered little assurance that creditors would be paid and the half-built taconite mine would be completed.
“Mesabi Metallics proposes that it be granted possession of the state’s mineral leases for the next 17 years without any commitment to complete the project or begin mining. The DNR terminated those leases last July, when then-Essar once again failed to meet the leases' conditions. However, Essar declared bankruptcy, thus blocking the State's rightful termination of them," Dayton wrote in a press release.
Stock countered that Dayton’s statements “may have been based on a misunderstanding of the company’s proposed actions and reorganization plan.”
“Our proposal to assume the leases in connection with a reorganization does not suggest that the company should be granted possession of the state mineral leases without a clear path to completion of the plant and continuation of mining,” wrote Stock.
The CEO also contends that transfer of those state-held leases, which account for about 40 percent of the project’s mineral formation, to another company would result in the “need to take numerous expensive steps in a multi-year process” before any mining could begin at the site located near Nashwauk.
In closing, Stock asks the governor to reassess his position and withdraw the state's objections. He also offered to meet in person with the governor for further discussion.
Meanwhile, Mesabi Metallics has garnered support from stakeholders in the project, including local government, secured and unsecured creditors and local lawmakers. At a city council meeting in Nashwauk on Tuesday, Mesabi Metallics spokesperson Mitch Brunfelt asked for and received verbal confirmation that the city would send a letter to the governor’s office in support of the company’s reorganization plan.
“Our reorganization efforts are the best hope for getting this project completed,” Brunfelt told Nashwauk officials.
The bankruptcy court will lay out finite timelines which must be adhered to in order to keep the company’s reorganization efforts on track, according to Brunfelt. Those targets have yet to be set by the court.