Cleveland Cliffs Inc (CLF)

[Democritus_of_Abdera]

Re: Essar Steel Minnesota Resolution…

On Tuesday (Jun 13) Federal Judge Brendan Shannon in Delaware approved a settlement plan for Chippewa Capital Partners to take control of Essar and restart construction on the Nashwauk taconite iron ore mine and processing center by 2020.

see the story by John Myers: http://www.duluthnewstribune.com/news/4282404-update-judge-approves-essar-bankruptcy-settlement

Clarke, who also purchased most of the bankrupt Magnetation Iron Range mining and processing operations in December, has vowed to add a major new element to the Nashwauk project — an iron plant that would turn taconite concentrate produced at the site into hot briquette iron. That iron would be used in electric arc mini-mill steel mills, the first big push for Minnesota iron ore into that growing steelmaking market.

The state had little choice but to deal with Chippewa, Dayton noted, because theirs was the only formal bankruptcy court bid submitted for the former Essar project. Dayton had at one time tried to pass the leases on to Cliffs Natural Resources, but that move was prevented by the bankruptcy court. Cliffs ultimately never submitted a formal bid for the Essar project.

The agreement between Chippewa and the Minnesota Department of Natural Resources, filed in court documents, requires the company to have at least $625 million in place by Aug. 31 to finish construction or the leases revert back to the state. Chippewa has also agreed to start construction by September, finish work by the end of 2019 and ship at least 3 million tons of taconite in 2020. The state can rescind her leases if any of those marks aren't met.

Clarke submitted the winning bid for the Essar project in April that includes financial backing from GFG Alliance. … Another firm called Vencer Capital Partners LLC has been formed for the rebirth of the Essar project, although it's not clear where it has incorporated.

GFG Alliance is a consortium between steelmaker Liberty House and the Simec Group that has developed into a multi-billion dollar metals, mining and energy conglomerate that recently purchased a North Carolina steel mill. GFG is controlled by India-born steel magnate Sanjeev Gupta.

The Nashwauk iron would displace pig iron for U.S. mini-mills that now comes from overseas. The rich, virgin iron is mixed with scrap metal to improve the recipe for newly made steel in electric arc mills.
Clarke also hopes to join Magentation ore with Mesabi Metallics ore to feed his existing pellet plant in Reynolds, Ind., which could begin operations within weeks. Sales of those pellets would be a revenue source to help fund construction of the Nashwauk project.

Clarke and his ERP Iron Ore LLC acquired Magnetation's Plant 4 mining and processing operations near Grand Rapids as well as its Reynolds, Ind., pellet plant in December…. Clarke closed the financing for the Magnetation deal on Jan. 30 and said he hopes to have the plant fully operational this summer.