Swiss commodity trading firm Mercuria Energy has signed a memorandum of understanding (MOU) to provide a $650m financing package for US-based iron ore producer Mesabi Metallics Company.
The financing packaging will fund the completion of Mesabi’s 7mtpa mine-to-plant pelletisation project in Minnesota and support job creation and economic growth in Nashwauk, Itasca County and Minnesota’s Iron Range.
The injection of funds will help accelerate the engineering, procurement and construction of the project.
In exchange for the investment, Mercuria will acquire a majority stake in Mesabi, which is a wholly-owned subsidiary of Chippewa Capital Partners (CCP).
Mesabi’s mineral lease rights were reinstated in July this year after meeting key milestones.
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Mercuria Energy CEO Marco Dunand said: “Today’s announcement is part of Mercuria’s ambition to further expand and invest in the US, playing a greater role in increasing American production capacity, and indirectly supporting the strategic steel sector, which is resurging as the US economy is showing even more robust growth.
“Pursuant to this investment, Mercuria plans to employ the highly-skilled workforce in Minnesota, as we do elsewhere in America and internationally in all the ventures that Mercuria operates and bring more efficiency to markets and create reliable alternative physical supply solutions to clients.
“Specifically, the Mesabi investment demonstrates our confidence that – with greater financial strength and stability – Mesabi Metallics can re-emerge as a significant player in the North American pellet and value-added product market segment.”
The company is planning to complete the proposed investment following the closure of the acquisition in the fourth quarter of this year.