President Donald Trump 's announcement of a steel plant coming to southeast Iowa could transform the economy of a rural community.
Hailed by the president on Monday, Sept. 28, as "the largest steel plant in American history," the project will cost an estimated $15 billion, according to the White House, and will require 6,000 construction workers over the next four years.
Plant owner Mesabi Metallics will employ about 1,750 workers when the factory starts producing.
For residents, the development seems swift. Property owners in the area say a real estate agent approached them about buying land for the plant around a month ago.
But for Ravi Ruia, the co-founder of Mesabi Metallics' Mumbai-based parent company, Trump's announcement was just the latest step in his family's two-decade-long journey to build a North American steel empire. The Ruias' quest has faced many obstacles, including multiple bankruptcy filings, accusations of broken contracts, missed deadlines and stiffed contractors.
Still, after selling tens of billions in assets and receiving a large loan from a Russian state-owned financial institution, the Ruias are about to accomplish a goal that once seemed far-fetched: opening Minnesota's first new iron ore mine in 50 years.
Next comes the Iowa plant. Gov. Kim Reynolds, who said in a statement that the plant is "the most consequential economic development opportunity ever for our state," scheduled a special legislative session for Friday, Oct. 1, to consider tax incentives for the project.
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Jesse Harris, a spokesperson for Mesabi Metallics, told the Des Moines Register that Mesabi Metallics is "well positioned to fund and develop the Iowa steel plant." He said Essar Group, its parent company, has invested about $2 billion.
"With the start of operations in Minnesota, strong business fundamentals and the continued backing of our parent companies, we are confident in securing the financing the project requires," Harris said in an email. "We will disclose our financing arrangements on a regular basis and build this plant transparently, working closely with our stakeholders."
He also blamed some of the delays on the Minnesota mine's construction on "anti-competitive conduct" by Cleveland-Cliffs. Mesabi Metallics sued the rival steelmaker in 2017 for alleged antitrust violations, including pressuring contractors not to work for Mesabi. That case is still pending.
The Ruia family's empire expands as India rolls back state controls
Essar Group derives its name from the first letters of the names of its founders, brothers Sashi and Ravi Ruia.
The brothers started the company in Chennai, India, as a construction business in 1969, 22 years after India gained independence. At the time, India required entrepreneurs to receive government approval to start or expand a business. After securing a contract to help build a pipeline, the brothers moved Essar to Mumbai, India's largest city, according to Indian magazine Business Today .
In 1991, India liberalized its economy, privatizing industries and letting executives expand businesses without government approval. The Ruias grew Essar Group into a conglomerate, buying and building ports, oil refineries, a steel plant, telecom infrastructure and a staffing business.
In the mid-2000s, when India loosened regulations about how much debt companies could hold, the Ruias set their sights on North America, hoping to build a steel empire. One of their businesses, Essar Global, bought Algoma Steel, a Canadian steel producer, for $1.85 billion in April 2007. Days later, the company bought Minnesota Steel Industries and took over that company's effort to build an iron ore mine.
Essar Global announced it would spend $1.65 billion to build both the mine and a steel plant at the site in Nashwauk, a city in northern Minnesota's Iron Range, a region with the richest iron deposits in the country. Local officials had been advocating for a company to build a new mine there since the mid-1990s. When the new company in the Ruias' empire, Essar Steel Minnesota, broke ground on the project in 2008, about 1,000 people attended a ceremony , according to Minnesota Public Radio.
At the time, the company planned to mine iron ore and produce steel in Nashwauk by 2012. A year later, Forbes pegged the Ruia brothers' combined net worth at $8.5 billion, making them among the richest people in India.
When Shashi Ruia died in 2024, Indian Prime Minister Narendra Modi called him a "colossal figure" in a tribute posted on X.
Minnesota mine idled as Essar Global accused of siphoning money
The Ruias' North American projects struggled as several of the family's companies failed to keep up with loan payments, according to Business Today.
Essar Steel Algoma, the company that owned the Canadian steel plant, filed for bankruptcy protection in November 2015. Essar Steel Minnesota did the same in July 2016, blocking then-Minnesota Gov. Mark Dayton's attempt to revoke the company's mineral lease after multiple missed deadlines.
At the time, Essar Steel Minnesota owed creditors about $1.1 billion, according to the Mesabi Daily News in Minnesota. A California-based private investment fund took over the company and sued Essar Global, accusing the Indian company of diverting about $500 million in funds intended for the mine to other businesses, according to the Mesabi Tribune .
In Canada, meanwhile, a court-appointed monitor launched proceedings against Essar Global over its financial transactions with Essar Steel Algoma, according to SooToday . The monitor accused Essar Global of billing the steel plant $9 million for a corporate jet that the Algoma company never used, as well as $7.5 million for New York City office space and residential property. Essar Global spokespeople at the time denied the allegations in both Minnesota and Canada.
In India, Business Today reported a few years ago that the Essar Group was one of the country's most indebted companies and "notorious" for defaults dating back to 1999, when Essar Steel failed to pay $250 million to international creditors. In addition to the bankruptcies at the company's U.S. and Canadian subsidiaries, the Essar Group restructured debt in Canada three times.
In 2017, the Reserve Bank of India told commercial lenders to invoke bankruptcy proceedings against Essar Steel, a separate company from the Minnesota and Canadian operations.
"In hindsight, we could have been more conservative," Prashant Ruia, a second-generation leader of the family company, told the Economic Times. "But, in 2008-2009, the mood of the nation was to chase growth, build assets. The government encouraged that."
Ultimately, the parent company unloaded several assets, including ports, an oil refinery and an Indian steel plant. Among other buyers, Rosneft Oil Co., a Russian state-owned energy operation, paid Essar Global about $12.9 billion in 2017, according to Reuters .
Essar Group buys back Minnesota mine project over state leaders' objections
In Nashwauk, investors took control of Essar Steel Minnesota, rebranded the company as Mesabi Metallics and emerged from bankruptcy protection in December 2017. Backers bought and sold the business repeatedly before Essar Group once again took over the mine in 2019.
State leaders objected. Department of Natural Resources Commissioner Sarah Strommen wrote in a February 2019 letter that the Essar conglomerate had previously violated contracts on the mine, missed deadlines, failed to pay contractors and failed to repay the state and a local government $66 million for infrastructure improvements, according to the Minnesota Star Tribune .
In response to the state's objections, an attorney for Essar Global said the conglomerate spent $700 million on the mine project before the Minnesota entity filed for bankruptcy. Ultimately, state leaders agreed to extend a mineral lease for Mesabi Metallics.
But when the company failed to meet the state's demand to show $200 million in a Mesabi Metallics bank account by a May 2021 deadline, the Minnesota DNR withdrew the lease, which covered about 39% of the area Mesabi Metallics planned to mine. After the company unsuccessfully petitioned judges to overturn the DNR's decision, the Minnesota Executive Council, a panel chaired by the governor, awarded the lease to Cleveland-Cliffs in May 2023.
During a public meeting, Ravi Ruia objected to the state's handling of the issue. The company had resumed construction on the mine.
"Our commitment to the Mesabi Metallics projects is clear," he said, according to the Star Tribune.
But a DNR spokesperson told the newspaper that the Essar Group was not a "credible miner," and Minnesota Gov. Tim Walz said the company's problems with the mine had caused "incredible heartache" in the Iron Range.
Despite that, Mesabi Metallics steadily continued construction and bought 3,200 acres of private property for the company to mine. According to the Wall Street Journal, Mesabi Metallics has enough land to sustain its mining operation for about 23 years .
The company is now on the verge of beginning operations at the $3 billion mine, setting off its first production blast Sept. 17 to fracture the ore for collection and processing. Minnesota officials have told the Star Tribune that Mesabi Metallics is current on a repayment plan to satisfy pre-bankruptcy debts to the state.
The company has also hired several lobbyists, including former Trump adviser Jason Miller. On Sept. 24, four days before Trump's announcement of the Iowa plant, the U.S. Export-Import Bank approved a $770 million loan to Mesabi Metallics, according to CBS News .
Call for probe of Essar subsidiary's loan repayments to sanctioned Russian bank
In addition to the $12.9 billion acquisition of some Essar assets by a Russian state-owned energy company, Essar Group subsidiaries have received loans from VTB, a Russian state-owned bank. By 2020, according to the Guardian , the Essar businesses' debt to VTB had increased to $2.35 billion.
Some loans were held on the books of entities in Cyprus that are subsidiaries of Essar Energy, which is based in the United Kingdom. Following Russia's invasion of Ukraine in February 2022, the UK, European Union and other countries sanctioned VTB.
In the UK, according to the Guardian, most companies must seek a permit from the government before repaying debts to a sanctioned entity. Essar Energy did not apply for a permit, according to the outlet. Instead, the Cyprus entities transferred loans to a subsidiary in Mauritius, a tax haven off the east coast of Africa where the sanctions against Russia do not apply.
Michael Ruck, a sanctions expert, told the Guardian the loan transfer, "raises red flags in relation to potential sanctions circumvention."
Attorneys for the company, meanwhile, told the outlet that suggestions of circumvention are "without foundation."
"(The company) took responsible steps, on the basis of expert legal advice, to ensure full compliance with the UK, EU and any other applicable sanctions," the attorneys said.
A spokesperson for the Cyprus government, however, said officials were investigating whether the transfer was a "violation of EU sanctions regulations."
"The approval was explicitly conditional upon no funds being made available, directly or indirectly, to VTB," the spokesperson told the Guardian.
Lloyd Hatton, a member of Parliament who is a part of a group investigating corruption, told the Guardian that the arrangement was "very alarming."
"The authorities must now investigate Essar and their potential dealings with this Russian bank," he said.
Iowa's economic incentive law bars the state from providing tax credits and refunds to a business tied to a foreign adversary. Harris, the Mesabi Metallics spokesperson, said the company is not receiving funds from VTB.
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"Mesabi Metallics does not have any relationship with sanctioned entities, and Mesabi Metallics and its parent companies always remain in full compliance with any sanctions laws," he said.
Tyler Jett is an investigative reporter for the Des Moines Register. Reach him at tjett@registermedia.com , 515-284-8215, or on X at @LetsJett. He also accepts encrypted messages at tjett@proton.me .
This article originally appeared on Des Moines Register: Company behind Iowa steel plant praised by Trump has history of trouble
