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Essar Steel announces layoffs of some Minnesota workers

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Troubles continue for Essar Steel's plant in northern Minnesota.

In recent weeks, construction on the mining facility in Nashwauk has slowed, WDIO reports, and now Essar Steel has confirmed it has reduced its workforce.

“We have implemented some reductions in our workforce necessitated by challenges facing the iron ore sector and, as a result, the (Nashwauk) project,’’ the company said in a statement to the Duluth News Tribune Friday. “We expect that this reduction is temporary, but our ability to recall employees will depend on several factors over the coming weeks.”

It's for the same reason that many steel companies have idled plants in the past year – the challenges facing the iron ore industry, including the plummeting price of the product worldwide.

It's not clear how many people were affected, but the Star Tribune says Essar has about 100 full-time employees in the state.

This comes a little more than a week after Essar Steel agreed to give back $66 million in incentive payments it accepted from the state of Minnesota after changing its mind about the state-of-the-art project, scaling it back to a more traditional taconite plant.

The company says $1.9 billion plant is on track to open in the second quarter of 2016 and will ramp up to full production in the third quarter.

But the absence of a steel plant led to calls from the State Capitol for Essar to pay back the $66 million. Negotiations between the company and the state came to a head when Dayton went public with his ultimatum last month.

This fall Essar also missed payments to contractors building the taconite plant. But the company said in December it was making back payments to vendors and working with an international bank on getting fresh financing.

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