The Iron Range's two largest mining companies — Cleveland-Cliffs and U.S. Steel — have submitted formal requests to the state for coveted mineral leases formerly held by Mesabi Metallics.
Cleveland-Cliffs, U.S. Steel vying for mineral rights in Nashwauk on Iron Range
The requests were made after the Minnesota Supreme Court upheld the Department of Natural Resources' termination of Mesabi Metallics' leases.
March 3, 2023 at 4:49PM
The Minnesota Department of Natural Resources (DNR) terminated Mesabi's leases for state-owned ore last year. The Minnesota Supreme Court upheld the termination in January, paving the way for the DNR to reallocate the leases near Nashwauk, Minn.
Cleveland-Cliffs filed a formal proposal for all of the Nashwauk leases the day the Supreme Court made its decision. U.S. Steel filed its formal proposal on Feb. 24.
The DNR is still analyzing U.S. Steel's request. The department believes, but has not confirmed, that U.S. Steel is also requesting all of the "parcels" held by Mesabi Metallics, said Joe Henderson, director of the DNR's land and minerals division.
The former Mesabi leases cover 66 parcels, each roughly 40 acres. The DNR has not set a deadline for lease proposals.
"The fact that there isn't a deadline for proposals should not be construed to mean that it is not a priority for DNR to lease the ore near Nashwauk," said Jess Richards, assistant DNR commissioner.
The DNR canceled Mesabi's leases after the company missed a 2021 deadline for a $200 million down payment to complete a half-built taconite plant. A predecessor company started the project in 2011, but it went bankrupt in 2016. Since then, the venture has been plagued by delays.
The DNR can negotiate new leases or put mineral rights up for public bidding. Any lease agreement made by the DNR must be approved by the Minnesota Executive Council, which is comprised of Gov. Tim Walz and the state's other top four elected officials.
Cleveland-Cliffs and U.S. Steel have asked for negotiated leases; both have long histories on the Iron Range. Cliffs fully owns three of the Range's six taconite mines; U.S. Steel, two. Cliffs owns 85% of Hibbing Taconite and U.S. Steel, 15 %.
In its letter to the DNR, Cliffs said the former Mesabi parcels "are adjacent to ore owned and leased" by Cleveland-Cliffs, "and it is impracticable for anyone else to mine."
Hibbing Taconite, which employs 750, is expected to run out of ore around 2025. If Cliffs gets the former Mesabi leases, Hibbing Taconite's life would be extended by 27 years; without them, the plant will close, Cliffs CEO Lourenco Goncalves said in November.
U.S. Steel is interested in the Nashwauk leases for its Keewatin Taconite operation.
"With U.S. Steel's Keetac mine being the closest production to the [state lease properties], the subject leases are [of] particular interest to the longevity of the Keetac facility," U.S. Steel said in a statement.
Keetac's lifespan isn't clear from public records, but it has about three times more mineral reserves than does Hibtac, according to Securities and Exchange Commission filings.
Last year, U.S. Steel announced a $150 million addition to Keetac aimed at making a new pellet for electric steel furnaces, not traditional blast furnaces.
The DNR says it has been contacted by others interested in the Nashwauk leases, but there is only one other formal proposal. It covers six of the 66 lease parcels.
Scranton Holding Co. of Hibbing is interested in those leases for "scram" mining, which involves extracting residual ore from old mining wastes. Scranton is interested in waste piles on those six parcels.
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