Builder Of Iron Ore Plant Denies Rumor That It’s For Sale
Essar Steel Minnesota (ESML)—which is part of an India-based conglomerate and has been building a new $1.8 billion iron ore facility on the Iron Range—wants the world to know that it is not up for sale.
In a recent press release, the company said that it “categorically denies” that its owner, Essar Global Fund Limited, “is considering selling the business, contrary to recent media reports.”
In the Northeastern Minnesota town of Nashwauk, ESML has been building a new plant on the former site of the Butler Taconite facility, which closed in 1985. The company broke ground on the project in 2008 and originally planned to produce “direct reduced iron,” a more valuable product than taconite pellets. Then it was to turn that iron into steel, all in one location. Completion of the project was expected in four years. The company has since announced multiple delays, most recently in January, as it sought more money for the project. (Read more about the project here.)
Recent news reports, including one by Bloomberg, indicated that ESML’s operations might be part of a package of assets that the India-based parent company is considering divesting. The reports cited unnamed sources.
One source told Bloomberg that the sale could take place after the facility becomes operational, and it may value Essar Steel Minnesota at about $2 billion including debt.
ESML, which less than a month ago said it secured $450 million in financing and would proceed with the Iron Range project, said the rumor is inaccurate.
“We are very pleased to have closed $450 million of bond financing for ESML in the last few weeks,” President and CEO Madhu Vuppuluri said in a Monday statement, calling the financing a “significant milestone” and saying that the company looks forward to completing its Minnesota facility.
“ESML is a world-class asset that we believe will be one of the lowest cash cost producers of iron ore pellets in North America,” Vuppuluri added, calling it a “core investment” in Essar Global Fund Limited’s portfolio.