There are many intriguing aspects of the recent news concerning Nashwauk-based Mesabi Metallics. One is that the company is opening the first new iron mine and processing facility in Minnesota in five decades. The other is that the financial power behind the project is the Essar Group, a multinational conglomerate headquartered in India.

And in fact, Essar is just one of several non-domestic entities that control significant businesses in northern Minnesota.

• In 2011, Duluth-based general aviation manufacturer Cirrus Aircraft was bought by China Aviation Industry General Aircraft, a subsidiary of a Chinese defense conglomerate.

• In 2019, Duluth-headquartered women’s clothing retailer Maurices was sold to U.K. private equity firm OpCapita.

• In 2024, Italian company Sofidel acquired and expanded the 40-year-old paper plant in central Duluth. While Minnesota companies originally built the mill, it had gone through several U.S.-based owners until Sofidel made its deal.

• Last year, Japan-based Nippon Steel purchased U.S. Steel, which operates two taconite facilities on the Iron Range.

Other examples of international ownership up north date farther back. In 1997, Finnish forestry company UPM acquired the Grand Rapids Blandin Paper plant. And in 2002, South Africa-based SAPPI bought the former Potlatch pulp and paper mill in Cloquet.

Then there are the far-flung companies that are exploring the possibility of mining copper, nickel, and other precious metals in the Great North:

• Talon Metals, whose Tamarack Nickel-Copper Project is a joint venture between Toronto-based Talon and U.K.-Australian mining giant Rio Tinto

• Twin Metals, owned by Antofagasta, a global copper producer headquartered in Chile

• NewRange, co-owned by Swiss conglomerate Glencore and Canadian mining company Teck Resources

A relative newcomer to this list is Portugal-based Pulsar Helium, which has found sufficient quantities of the globally in-demand gas (used in a variety of high-tech manufacturing applications) to justify building a helium liquefaction plant in Two Harbors.

Why is there so much foreign investment up here? Why aren’t U.S.-headquartered companies and investors putting their money into these enterprises?

Exceptions and Risks

To be sure, there is plenty of non-domestic ownership of businesses throughout the state. And there also are numerous northern Minnesota businesses that are still U.S.-owned. For instance:

• Marvin Windows & Doors continues to manufacture its products in Warroad, and it’s still owned by the Marvin family.

• In International Falls, the former Boise Paper plant has been owned and operated since 2013 by Illinois-based Packaging Corp. of America.

• Tennessee-headquartered Louisiana Pacific still runs the Two Harbors fiberboard plant.

Another U.S. company with a massive presence in the region is Ohio-based Cleveland-Cliffs, which owns four iron mines and pellet plants in Minnesota. Cliffs’ experience points to possible explanations for domestic investors’ northern nervousness.

Like extractive industries in general, iron is an ebb-and-flow business. While many U.S. steelmakers have been doing well lately, those operating traditional blast furnaces—the type of production that uses taconite pellets—have been struggling with shrinking demand. That’s because blast-furnace steel companies’ biggest customers are automakers, which had been selling fewer cars. This drove Cliffs to idle production lines at its Minorca and Hibbing Taconite (Hibtac) facilities. The company’s recently posted third-quarter results suggest that demand for its steel is kicking into higher gear. But that rebound has yet to bring back laid-off employees to Minorca and Hibtac.

Factors and Opportunities

There doesn’t appear to be much research exploring the predominance of non-U.S. investment in northern Minnesota, particularly in extractive industries. But there are observations that can shed some light.

Before becoming an instructor of finance at the University of Minnesota Duluth’s Labovitz School of Business and Economics, Tim Peterson held executive positions at Cleveland-Cliffs and Duluth-based utility Allete from 1987 to 2018. At Allete, he looked for businesses that his company could acquire. One thing he learned: “There weren’t a lot of growth opportunities in northern Minnesota. I love it up here, but it’s not known as a Mecca for investment.”

A case in point is the region’s paper industry. “I don’t think the profit margins are that good for an American company,” Peterson believes. An overseas business like Sofidel “sees things differently than we, as Americans, see.” As for metal extraction, Peterson identifies copper and nickel mining as “niche markets. You have to know what you’re doing.” Not many companies do.

Based on these and other observations, here are some possible explanations why U.S. companies might be shying away from investing in northern Minnesota:

• Location. The region is far from major urban areas. (And the Iron Range in particular is losing population.) That can keep it off U.S. investors’ radars.

• Highly capital-intensive. In general, natural resources–based businesses need access to global capital sources. Their customer bases also tend to be spread worldwide.

• Global diversity. Overseas owners typically have multiple locations throughout the world. Rio Tinto, for instance, has major mining, processing, and port locations across the U.S., Australia, and South America, as well as operations in Africa and Mongolia. That diversity extends to the metals it mines, which include copper, iron, aluminum, and lithium.

• Industry consolidation. Iron mining and forest products are mature industries. Overseas-based companies are taking advantage of economies of scale, which can help them deal with these industries’ lower returns on investment.

• Patience (along with deep pockets). Consider the NewRange copper-nickel project, which has been under development since 2004. Given this project’s proximity to the Boundary Waters Canoe Area Wilderness, environmental concerns have been the chief reason for the lack of progress.

These reasons might not tell the whole story of why non-U.S. investors and companies see opportunities and are willing to take risks in northern Minnesota. And, again, there are exceptions. But it’s undeniable that foreign capital has been a significant support for the region’s industry base.