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DULUTH – A long-stalled iron mine near Nashwauk will have at least two more years to finish construction — potentially under different ownership — after Iron Range legislators moved to preserve permits for the project.

The state canceled Mesabi Metallics' mineral leases in May, effectively ending a 13-year quest by a number of companies to finish the $2.6 billion taconite mine. But a measure in the omnibus environment bill, which Gov. Tim Walz signed Tuesday, says the Minnesota Department of Natural Resources and the Minnesota Pollution Control Agency "must wait at least two years after the termination before initiating action to terminate environmental permits associated with the mining or processing of iron ore from the lands."

The mine is permitted to produce 7 million annual tons of taconite pellets and could employ up to 350 people.

U.S. Steel and Cleveland-Cliffs have both expressed interest in the ore at the site and potentially building a facility there to produce a more concentrated form of iron ore.

Whether Mesabi Metallics wins back its leases in court or another company takes over, state Sen. David Tomassoni, I-Chisholm, said the site is only suited for a mining project.

"We don't want to have to go through the same environmental review that was already done for exactly the same project," he said. "If someone were to take it over, they'd be doing the same project."

Legislators and officials have expressed frustration with Mesabi Metallics and its predecessors over delays to the project. Cliffs CEO Lourenco Goncalves said in a statement in May: "As soon as the legal process of terminating the leases is completed by the state, and assuming that at this time the saga will come to an end, Cleveland-Cliffs is ready to step in and do what we have been doing for decades, by developing Nashwauk and generating a big number of good paying middle-class union jobs for the people of the Iron Range."

Mesabi Metallics maintains it can and will complete the half-built mine and plant and has sued the state DNR over the lease termination, which was handed down due to missed deadlines and insufficient funds.

"It is an abusive and unlawful effort to devalue Mesabi and, in turn, force out Mesabi's existing foreign owner, Essar Global," the lawsuit states. The company did not immediately respond to a request for comment Wednesday.

Mesabi had $100 million in cash on May 1, half of what was required as a condition to keep the mineral leases that are essential to the project. The DNR has also called into question the company's financing for the project.

First proposed in 2007, Essar Steel Minnesota started building the project in 2011. In 2016, then-Gov. Mark Dayton moved to terminate Essar's lease following a number of missed deadlines. The company filed for Chapter 11 bankruptcy.

At the end of 2017, the project — renamed Mesabi Metallics — had reorganized with new owners, a new plan and a new lease agreement with the state of Minnesota.

Essar then bought its way back into the project in 2019, and in December 2020 the state gave a last-chance extension for Mesabi's lease agreement over strong objections from Cleveland-Cliffs.

Brooks Johnson • 218-491-6496