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Essar pays contractors $20M, governor eases off threat to force loan repayment

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Essar Steel has paid contractors some of the money it owes them, and taken steps toward repaying back more – significant enough moves that Gov. Mark Dayton will not force the mining company to immediately return the state a multimillion dollar loan.

The company's $1.9 billion taconite plant has been in the works for nearly nine years. It was originally meant to also be a steel plant – but then Essar dropped the steel mill portion of the project, and financing has been an issue.

Essar owed money to contractors, and earlier this week Dayton issued an ultimatum: Start paying it back, or face having to immediately return the $66 million loan the state of Minnesota awarded the company years ago.

An email release from Dayton's office Friday however said the company paid $20 million in "outstanding obligations" to vendors. In addition, Essar is working with an international bank to find more capital, with the hope being they'll repay "all additional outstanding obligations" to the vendors by the end of the month, the release says.

Dayton was said to be "satisfied" with all of it and will not require the $66 million loan from the state to be repaid in full at this time.

Some vendors were also concerned demanding the full loan back could disrupt Essar's ability to pay back future obligations, or possibly an end to the project – which, once the taconite mine is completed, is expected to create 350 full-time jobs averaging $85,000 a year in salary, MPR reported. Dayton was "sympathetic" to that concern, the release says.

More on the mine

Essar Steel is part of the India-based Essar Group, and the Hibbing Daily Tribune wrote last month that the taconite plant is on track for a mid-2016 opening.

Some critics have said that Essar should pay back the public money it received because the scope of the project has changed.

State Rep. Jason Metsa, DFL-Virginia, says he isn’t keen on showing leniency to a foreign-owned company that’s getting incentives from the state for a project that wasn’t completed – while at the same time, they’re building a new plant that puts them in direct competition with local taconite companies.

The taconite industry is in poor shape right now, and employees across the Iron Range have faced layoffs and idling in recent months.

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