Indian Steel Giant’s Essar Steel Minnesota files for bankruptcy in US

Essar said that since the notice of termination happened, they concluded the best way to move forward with its restructuring was to seek Chapter 11 protection.

The announcement appears to set up a battle between Essar’s parent company and the state of Minnesota, which after pulling the mineral leases out from under Essar, is vowing to give them to Cliffs Natural Resources.

The Company, which produces iron ore, is represented by Jeffrey M. Schlerf of Fox Rothschild.

Dayton, Smith and Goncalves are scheduled to meet with the Iron Range legislative delegation and U.S. Rep. Rick Nolan, followed by a public meeting at 11:15 a.m.at the Nashwauk Township Community Center. The deal would give SPL an 80 percent ownership stake in Essar Steel Minnesota, with Essar still needing to secure another $650 million in financing. He said the state’s retraction of the leases would have taken effect at 12:01 p.m. Friday, 31 minutes after Essar filed for bankruptcy.

Essar, which had already missed a July 1 deadline on repayment to contractors, was seeking a nine-month extension from the governor.

The company owes a total of $74 million to contractors – $49 million to Minnesota-based companies and $25 million for out-of-state vendors.

Essar’s project proposes an open-pit iron ore mine, crushing, concentrating and pelletizing facilities and a rail line and train-loading system, with the possibility of additional, value-added processes to be constructed at the site in the future.

Gov. Dayton went on to say that he has met with Lourenco Goncalves Cliffs Natural Resources CEO, who has expressed a strong interest in the development of the site.

A statement from Essar Steel Minnesota on Monday morning indicates the company plans to continue their pursuit of the mining project in Nashwauk.

Ground was broken in 2008 on the taconite project, but work occurred in fits and starts.