October 12, 2008

Essar plans in US being opposed on its plans in Iran

Just two days after the deal was announced, Star Tribune reported that plans to build a taconite to build ISD 1.6 billion steel plant on the Iron Range are in jeopardy because Essar Global is working with Iran.

Governor Tim Pawlenty had announced the deal as one of the crowning moments of his trade mission to India. But on Saturday, moments after touching down in Minneapolis from Mumbai, Governor Pawlenty said that the deal may be in jeopardy and that he would personally oppose it if the company is engaged in activities prohibited by the US government.

Governor Pawlenty said that "Minnesota will oppose, and I will oppose, any economic support for a company that does business with Iran. Iran is a terrorist state. I told Essar representatives that if they are engaged in problematic transactions with Iran, we will be parting ways. Until these matters are resolved to my full satisfaction and that of the United States government, I will strongly oppose any state assistance for the Essar Steel plant project."

Governor Pawlenty said that he would talk to Minnesota Steel Industries to find out what, if anything, the group knows about Essar Global's plans in Iran.

According to media reports Essar is expected to start construction on a 300,000 barrel per day refinery plant in southern Iran early next year. Essar is also trying to build an Iranian steel plant and acquire oil exploration rights for the country's Azadegan field.

US government, which earlier this week announced tighter sanctions on Iran, must now determine if a potential Essar arrangement with Iran could shut down it's involvement in the Iron Range project.

Essar Group closed a deal to buy Minnesota Steel last week, planning to begin construction on a steel mill near Hibbing early next year.