Essar Steel Minnesota went into Chapter 11 bankruptcy on Friday as the State of Minnesota withdrew the state licences for the taconite the company was preparing to mine. It might seem a little odd that an Indian owned mine in Minnesota will go out of business as a result of the Chinese steel industry slowing down but that is what has happened.
This globalisation thing really does mean that the international markets are connected in this manner. The basic background here is that taconite is a low grade form of iron ore used to make steel. As China’s steel industry has grown less fast than other iron ore miners thought it would the price of high grade ore has fallen. That in turn has knock on effects on the low grade ore. There is a way out of this but not for the current owners, Essar.
“Essar Steel Minnesota, a sister company to Essar Steel Algoma and an expected future supplier of taconite to the Sault steelmaker, has filed for U.S. Chapter 11 bankruptcy protection, Minnesota news media are reporting.
The action was taken after Minnesota Governor Mark Dayton terminated Essar’s lease agreements with the state Friday.”
The company pretty much ran out of development money a year back and has littered the area with unpaid bills. So, the Governor gave them a warning that unless they showed they could finance the project to completion then those leases would be pulled:
“Essar Steel Minnesota, which once promised the state’s first new taconite plant in decades and the state’s first direct-reduced iron plant, filed for Chapter 11 bankruptcy protection Friday after falling short of both of those promises.
For the rest of this article, click here: http://www.forbes.com/sites/timworstall/2016/07/10/essar-steel-minnesotas-chapter-11-bankruptcy-another-victim-of-the-chinese-steel-industry/#a4aba6839b04