Contractors off job at Essar Steel, says company owes them millions

By KBJR News 1

February 28, 2014 Updated Feb 28, 2014 at 8:57 PM CDT

Nashwauk, MN (NNCNOW.com)--- Construction workers and contractors are no longer working on the Essar Steel site in Nashwauk.

According to union representatives, Essar has failed to pay the contractors the last couple of months, now owing them millions of dollars.

"Hammerlund construction has filed liens that totaled in the neighborhood of nine million dollars and with the other contractors, my estimates are its closer to twelve million total," said Dan Kingsley, Area Business Representative for Operating Engineers Local 49.

In the fall Kingsley says Essar told them work was expected to pick up this winter. But instead, there's been no work and no pay.

"Very disappointing. Many of them last fall, in speaking with us, we're relaying we'll be ready to go to work, looks like we'll be ready to go through the winter, so obviously people plan, and make family plans accordingly, and plan budgets, and what-not so, yes, it's been a large impact on the area," said Kingsley.

This isn't the first time Essar has been in financial trouble but experts say the fact that a lien has been filed suggests bad news for the entire project.

"The unusual and very concerning thing is the fact that a large sum of money is owed to some of these contractors, to the point that they finally filed a lien, which means that that will affect their financing, because the lien is on the project until they pay off those bills," said Aaron Brown, an Iron Range Blogger.

Aaron Brown lives on the Iron Range, and like most Rangers, he's held on to the hope of Essar becoming a reality. He felt confident because the project has received $73 million dollars in public tax money.

"If you owe the bank 10-thousand dollars, you're in trouble. If you owe the bank 10-million dollars, they're in trouble. And that's kind of where we're at. You know we've got so much money into it, all we can do is hope that the company , Essar, figures out a way to pay for this or sells the company or the project, rather, to a company that will," said Brown.

Essar Steel has issued the following statement:

"We are working with our contractors on financial matters and appreciate all they've done for the project. With respect to project financing, substantial progress has been made and several important milestones recently achieved. We have reached the very final stage and expect additional funding to be available relatively soon."

Written and posted to the web by Raeanna Marnati
rmarnati@kbjr.com

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