In bid to add jobs, state officials risk losing them

A mining company employing 1,850 employees at three plants in Minnesota is warning politicians not to help out another company that plans to have 300 employees at a taconite plant.

The Duluth News Tribune reports that the Cliffs Natural Resources CEO met with Iron Range legislators in St. Paul last night that further subsidizing Essar Steel’s bid to build a taconite operation in Nashwauk “may upset what has been a well-balanced supply-and-demand chain.”

The meeting underscores the minefield that public financing of private companies presents when competing companies are involved.

In this case, the News Tribune says, the problem is a financing deal with the upstart company.

Essar Steel needs help from the Minnesota Legislature in 2015 to forestall repayment of a $67 million state subsidy – first approved in 2007 – used to help build its new taconite plant in Nashwauk. Essar officials recently told Range lawmakers that they won’t make the October, 2015 deadline to make not just taconite iron ore pellets but also finished steel at the facility that remains under construction, nearly eight years after the project began. They have suggested an extension to 2022, and removal of language that requires a steel mill be built.

Essar officials now say the steel mill – the crux of the state’s original investment – is unlikely ever to be built in Nashwauk. That leaves Minnesota subsidizing a new taconite plant to compete with existing operations.

Cliffs’ Goncalves “made it clear that they don’t want us to give Essar that extension,’’ (Rep. Carly) Melin said. “They think Essar should have to abide by the original legislation…And to be honest Cliffs isn’t the only one saying that. A lot of people on the Iron Range have concerns about Essar.”

Range lawmakers say they’re caught in the middle, the News Tribune says, because the jobs it’s trying to create at one location, might come at the expense of employment at another.

“We’re caught between a rock and a hard place. On one hand we want to encourage new jobs with Essar. But we don’t want that simply at the cost of jobs we already have with Cliffs,’’ said Sen. Dave Tomassoni, DFL-Chisholm.

  • jon

    Weighing your options when none of them are particularly sound, and trying to choose the one does either the most good, or baring that the least harm… Sounds like leadership. (or perhaps the first Tuesday that follows a Monday in November)

    Also, $67 million for 300 potential jobs…
    For $67 million we could have hired the 300 people and paid them the same as state legislatures salary for the whole nearly the whole 8 year period. (67 million divided by 300 jobs divided by $31,000 state legislatures make)

  • Gary F

    Government picking winners and losers again.

  • kevinfromminneapolis

    We gave them $67 million?! I don’t remember that at all.