Minnesota DNR sued over Nashwauk mining permit

Cleveland Cliffs has sued the Minnesota Department of Natural Resources (DNR), demanding that it — and not Mesabi Metallics — be given the ore-mining permits to parts of the defunct Essar Steel operation in Nashwauk, Minn.

The lawsuit is the latest development in the long effort to jump-start the $2 billion mine and taconite project at the Iron Range site. It's one that Essar Steel Minnesota left half-constructed when it filed for bankruptcy in 2016 after a decade of stalled progress.

Cleveland Cliffs — which operates Hibbing Taconite, United Taconite and Northshore Mining on the Range — filed the lawsuit last week in Minnesota District Court in Itasca, claiming the DNR has unjustly denied its request to change the name on the mining permit for the land in question. It has balked, arguing that the state's refusal to alter the permit means that Essar (now renamed Mesabi Metallics) has rights to dig on Cliffs' land.

Cliffs bought the surface and mineral rights to much of the land in question in December 2017. In July 2018, the U.S. Bankruptcy Court in Delaware awarded Cliffs the mineral-lease rights to the land as part of the Essar case, court papers said.

After each development, the lawsuit said the DNR refused to transfer Cleveland Cliffs' name onto the permit and refused to take Essar's name off the permit, the papers said. On Aug. 16, Cliffs issued Mesabi notice that it is not allowed to trespass on its Nashwauk properties, even though Essar/Mesabi Metallics owns acres of land adjacent to the land in dispute, making access an issue.

The DNR is reviewing the lawsuit and did not have a comment at this time, spokesman Chris Niskanen said on Thursday.

Mesabi Metallics is the entity that bought Essar out of bankruptcy and controls several large parcels of land in Nashwauk that are separate from those disputed by Cleveland Cliffs. However, Mesabi itself has been in several court battles recently regarding who actually controls it.

The legal sparring between Cliffs and the state is just the latest of many fights to break out over the highly contentious Nashwauk mining property. More than six different lawsuits have ensued over the coveted land, which has one of the richest iron ore deposits in the state.

Last month, Nubai Global Investment of the British Virgin Islands won a restraining order against Virginia businessman Tom Clarke, who controlled Mesabi Metallics when it bought Essar Steel out of bankruptcy. The order said Clarke was to turn over management of Mesabi to Nubai.

Nubai has said it will finish developing the Essar/Mesabi iron ore facility.

It remains to be seen how the court decides what parcels of land in Nashwauk each company will be allowed to mine, though.

Last week, Cliffs — which also wanted to buy Essar out of bankruptcy — asked the Minnesota District Court to formally rule that Mesabi cannot mine Cliffs' land or otherwise act on its Minnesota mining permit because Mesabi "lacks the necessary ownership and control of all the properties currently subject to Mesabi's permit to mine."

Cliffs wants a declaratory judgment that recognizes that Cliffs' legal rights and interests have been subject to harm because the mine permit has been focused on Mesabi and not Cliffs.

Dee DePass • 612-673-7725