Essar Steel Minnesota said Monday it has signed a nonbinding letter of intent with investment firm SPL Advisors LLC to introduce $250 million of new equity into the Nashwauk taconite project, which has been idle since 2015. The company already has more than $1 billion invested in the project—protecting that investment was the primary reason behind the recent Chapter 11 filing, the company said.
“The company and SPL are currently working to finalize terms in the next few days. If they can do so, the company would likely seek court approval for the financing by the end of this week,” Essar Steel Minnesota said in a statement.
The announcement will reportedly intensify the conflict between Essar’s parent company and the state of Minnesota, which pulled Essar’s state mineral leases last week in favor of Cliffs Natural Resources. State officials claim an obligation to revoke the leases after Essar failed to advance the project, but Essar countered that the filed for bankruptcy before the leases were terminated, which puts the issue in the hands of federal bankruptcy court.