Mesabi Metallics sues DNR for terminating lease at unfinished Iron Range mine

The Minnesota DNR terminated the lease after Mesabi Metallics failed to pay a $200 million lease requirement by May 1.
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Mesabi Metallics is suing the Minnesota Department of Resources over its terminated lease at the site of an iron ore mine and plant in Nashwauk, which is currently under construction.

The lawsuit, filed in Ramsey County District Court Friday, is asking that the DNR not be permitted to terminate the mineral leases held by Mesabi Metallics. The DNR terminated Mesabi Metallics’ lease this month after it failed to meet a financial deadline.

According to the Pioneer Press, the mining company only paid half of a $200 million lease requirement by the May 1 deadline.

In the lawsuit, Mesabi Metallics cited the COVID-19 pandemic in India, where its funder Essar is based. While only half the money was advanced to a Mesabi Metallics bank account by the deadline, current construction funds are enough for the next six months, the lawsuit argues.

The deadline was meant to ensure the project would be completed by 2024, according to the Duluth News Tribune. The company has already missed multiple deadlines throughout the years-long construction project, including one to have the project completed by 2019.

But the lawsuit argues that the DNR’s reasons for terminating the lease do not meet legal requirements laid out in a master lease between the two parties.

“The DNR’s actions in recent weeks demonstrate both a failure to meet the legal standards, but more importantly, a failure to meet a standard of common sense and fair play that all Minnesotans understand,” a press release from Mesabi Metallics reads.

“Should the DNR be allowed to stop construction of the most advanced mine on the Iron Range?”

The iron ore pellet production facility currently employs 40 people, though Mesabi Metallics says once it is completed, it will create 350 full-time jobs and about 800 spin-off jobs in the area. 

Last week. the co-founder of the Essar Global Fund took out an ad in the Star Tribune urging people to back the project, saying there had been "some setbacks due to circumstances we could not control."

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