Mesabi Metallics has sued the state of Minnesota for terminating its iron ore leases, a move intended to keep its troubled and long-delayed mining project from collapsing, the Minneapolis Star Tribune reported. The Minnesota Department of Natural Resources (DNR) terminated Mesabi Metallics' mineral leases last week, saying the company failed to meet provisions of its state agreement, notably having $200 million in hand by May 1. Mesabi Metallics late Friday sued the DNR in Ramsey County District Court for breach of contract and breach of good faith, essentially asking the court to disallow the lease cancellation. Mesabi Metallics called the DNR's termination "unjustified and unlawful." The DNR declined to comment on the suit. The state leases are critical for Mesabi Metallics' plans to finish a half-built taconite project in Nashwauk that first proposed in 2007, with construction beginning a decade ago. Cleveland-Cliffs, the largest player in Minnesota's taconite business, has long sought the leases. Recently, U.S. Steel, the Iron Range's other heavyweight, has shown interest in them, too. Both companies want the leases to supply ore to their existing taconite plants, though each is also apparently interested in building a nearby facility that would create a purer form of iron. The state has not yet indicated its next move on the Mesabi leases. Essar Steel Minnesota started building the project in earnest in 2011 with a planned 2013 completion date. But in July 2016, after myriad missed deadlines, then-Gov. Mark Dayton moved to terminate Essar's lease. The financially strapped firm filed chapter 11 bankruptcy. By the end of 2017, the project — rechristened Mesabi Metallics — had financially reorganized with new owners, a new plan and a new lease agreement with the state of Minnesota. Essar re-entered the picture in January 2019 by buying up $260 million of Mesabi's outstanding debt and eventually what was left of its equity. In December 2020, the state extended Mesabi's lease agreement over strong objections from Cleveland-Cliffs.
