Cleveland-Cliffs drops lawsuit against Minnesota DNR

Cleveland-Cliffs dropped its lawsuit against the Minnesota Department of Natural Resources this week, ending an eight-month battle in which the Ohio mining giant claimed it — and not a competitor — should be given mining permits to a controversial piece of land in Nashwauk, Minn.

Cliffs terminated the lawsuit Monday in Ramsey County Court after an appellate court ruled against the company in a second, but related, lawsuit it had filed against the DNR and the competitor, Mesabi Metallics.

Both lawsuits had to do with issues that arose in conjunction with Mesabi's efforts to revive Essar Steel Minnesota's $1.9 billion taconite project in Nashwauk.

Cliffs operates Hibbing Taconite, United Taconite and Northshore Mining on the Iron Range and bought a piece of land in Nashwauk after Mesabi failed to meet a financing deadline on it. The land is adjacent to where the Essar Steel project is.

Cliffs requested that the state transfer mining permits it believes are related to its parcel of land from Essar Steel/Mesabi. After the request was denied, the company sued the DNR and Mesabi Metallics over the issue.

The lawsuit alleged that Cliffs had purchased or leased thousands of acres of land surrounding the half-built Essar Steel Minnesota plant and that Cliffs therefore deserved the right to mine the land.

Cliffs also filed a separate, second lawsuit against the DNR and Mesabi demanding that water appropriation permits be reissued to Cliffs instead of Mesabi Metallics. That lawsuit also accused Mesabi of trespassing on its property in Nashwauk.

That court filing dismissed Cliffs' claim and said the company suffered no real harm in the case. It also said that Mesabi correctly held the right to pump and appropriate water from the Nashwauk site's mining pits. The court opinion noted various actions the DNR and Mesabi recently took to ensure that Mesabi was accessing its land without venturing onto Cliffs' property.

The actions involved moving pumps, other equipment and several access points away from locations controlled by Cliffs, the court decision said.

"As a result of the DNR's actions, the water-appropriation points of taking are now located on lands in which Mesabi holds a legal interest," the decision said. "These modifications effectively resolved the concerns raised by Cleveland Cliffs Minnesota Land Development and extinguished any claims of direct injury to Cleveland Cliffs."

Monday's court order only addressed Cliffs' water appropriations lawsuit permit issue and not Cliffs' lawsuit demanding that the state issue it a permit to mine. However, following Monday's court opinion, Cliffs moved to dismiss its mining lawsuit against the DNR.

"We were very confident in the basis of our decisions with respect to both the water appropriations permits and the permit-to-mine [issue] in denying Cleveland Cliffs' requests on all of those permits," said Deputy DNR Commissioner Barb Naramore.

Cliffs "will continue to pursue the remainder of its legal action against Mesabi Metallics for trespassing and creating on ongoing nuisance on properties on which [Cliffs] holds exclusive interests," said company spokeswoman Patricia Persico in an e-mail.

Essar's efforts to build a taconite and steel mill on the Iron Range began in 2007 and continued to sputter for almost a decade until Essar Steel Minnesota filed for bankruptcy in 2016. The company, since renamed Mesabi Metallics, was bought out of bankruptcy by Chippewa Capital Partners, led by Virginia health care entrepreneur Tom Clarke.

When Chippewa missed a financial commitment, Cliffs purchased 3,768 acres of land surrounding the Nashwauk mining project in December 2017.

The trespassing issue emerged, Cliffs CEO Lourenco Goncalves argued in public meetings, because Mesabi Metallics' access point to the construction area was through Cliffs' land. He said he wants the trespassing to stop.

The Nashwauk project's future is on uneasy footing again.

Making matters more complicated is that Essar Global bought $260 million of Mesabi's debt in January and is now demanding that it have some say in the project's future. State officials have moved to bar Essar Global from doing business in the state, but the company says it wants to again participate in the Nashwauk project. Essar Global is fighting the state's debarment efforts.