Iran concern fixed; Minnesota's largest industrial proposal is given green light

ST. PAUL -- Minnesota's largest-ever industrial development will proceed after its India-based owner promised to avoid any dealings with Iran that violate American law.

ST. PAUL -- Minnesota's largest-ever industrial development will proceed after its India-based owner promised to avoid any dealings with Iran that violate American law.

"No investment or firm commitment will be made in Iran unless and until permitted to do so under the applicable U.S. or international laws," President Madhu S. Vuppuluri of Essar Global Ltd.'s Americas division wrote Wednesday to Gov. Tim Pawlenty.

The letter and a conversation Pawlenty had with Vuppuluri earlier in the day convinced the governor to throw his support behind the $1.6 billion project again. The state is being asked for $67 million to improve roads, railroads, water lines and other infrastructure in the area.

While Pawlenty did not pledge to support the entire asking, he did say he is happy with Essar's response to questions about its Iran involvement.

When Pawlenty returned from a weeklong trade mission to India Saturday, he said he was concerned about news reports that Essar, which earlier in the week closed on a deal to buy Minnesota Steel, wanted to partner with Iran on an oil refinery. That would have violated U.S. law prohibiting investment in countries that support terrorism.


"We're pleased that Essar is making this commitment to ensure U.S. law is followed and to keep this important project on track in Minnesota," Pawlenty said Wednesday.

Essar last week finished its purchase of Minnesota Steel, which plans to build a $1.6 billion steel mill near a new taconite mine on northeast Minnesota's Iron Range. The mill would produce slab steel. Other Range mines ship their taconite to steel mills located elsewhere.

The mill would employ about 700 workers, and its supporters say another 2,100 workers could be needed for related businesses.

Iron Range lawmakers were thrilled to receive Pawlenty's endorsement.

Rangers who lost jobs in recent years' lumber industry cutbacks will find construction and permanent jobs at Minnesota Steel, Sen. Tom Saxhaug, DFL-Grand Rapids, said.

With Pawlenty's support, Saxhaug said the project appears likely to be built after years of planning.

"I am really confident we can take on just about any bump," Saxhaug said.

However, legislators and Pawlenty still need to "decide what would be adequate" for state fiscal support, Saxhaug said. "We will just have to plead our case."


No state money would go to Minnesota Steel.

House Majority Leader Tony Sertich, DFL-Chisholm, said the infrastructure for Minnesota Steel would help other Iron Range projects, such as spin-off companies that develop to help the steel mill.

Sertich said the best thing about Minnesota Steel is it would produce steel, not ship raw materials elsewhere for processing.

"For generations, we have been shipping our raw product to other parts of the world," he said.

Pawlenty said Essar was very receptive to working out the Iranian issue. He said he does not expect further problems, adding that it is doubtful the India firm will try to skirt American law because it plans more expansions in the country.

The U.S. State Department looks carefully at Iranian connections, he added.

The episode may convince state officials to conduct more thorough investigations when they seek state money, Pawlenty said. He suggested using the Google Internet search engine to check out companies.

Pawlenty joked that he was glad to settle the matter now, before the Governor's Deer Hunting Opener on the Iron Range this weekend. "Otherwise, the hunter may have become the hunted."


A member of the House committee that will make borrowing decisions wondered if the Minnesota Steel project will get all the state money local officials want.

Rep. Al Juhnke, DFL-Willmar, said public works borrowing requests probably will be near $4 billion, and he predicted about $1 billion will be granted. The Minnesota Steel and a Vermillion Lake park proposal top $110 million, and are just two of the projects in the northeastern part of the state, he said, wondering if lawmakers will approve so much for one area.

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