Essar Steel Sister Company Not Paying Bills Either

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An American sister company to Essar Steel Algoma seems to be having the same problems as the Sault Ste. Marie based steel maker.

According to media reports, Essar Steel Minnesota hasn’t paid it’s bills to its vendors prompting Minnesota Governor Mark Dayton to threaten to reclaim $66 million in state incentives to the company.

Dayton made the threat last week, he’s expected to follow through today.

Dayton told Madhu Vuppuluri, ESM’s president and chief executive officer, that if the firm didn’t pay its Minnesota vendors by the close of business yesterday, he intended to demand immediate repayment of a $66 million state loan.

Similar to Canadian governments investing in Essar Steel Algoma , the Minnesota sister company was given finanical incentives to build a $1.9 billion taconite facility in that state.

Both ESM and Essar Steel Algoma are part of India’s Essar Group multinational conglomerate.

When completed, the $1.9 million Nashwauk plant is expected to supply Essar Steel Algoma as well as Arcelor Mittal’s North American steelmaking operations.

ESM will compete with Cliffs Natural Resources Inc., which stopped shipping taconite iron ore pellets to Essar Steel Algoma in October.

Also that month, Cliffs started pressing Minnesota to demand repayment of state construction incentives “due to Essar unilaterally changing the scope of its project.”

The project was originally supposed to be a new steel mill but ESM turned it into another taconite operation, Cliffs says.

As in Sault Ste. Marie, Essar Steel Algoma owes hundreds of millions to it’s creditors, including about $38 million to local businesses.

Eariler this week, the company sought permission by a judge during it’s creditor protection, to pay 23 executives in the company, bonuses of $3,468,027 as a retention plan.

Last week, the steelmaker requested a court order to suspend its November special payment to the employee pension plan.

Governor Dayton says he was promised by Essar officials on October 12 that vendors would be paid in full by the end of that month.

Yesterday, Sault MPP David Orazietti called on the Federal government for action on steel dumping that is being blamed for the steelmaker to file for creditor protection three weeks ago.

 

2 COMMENTS

  1. The “broke” deadbeat billionaires have paid off 20 million to creditors in Minnesota, so why do the creditors here not deserve the same?
    The Canadian government needs to grow some balls and make it happen and while they are at it do an in depth audit on their creative accounting practices.

  2. These deadbeats better smarten up and pay their bills, it’s not like they don’t have multi-billions stuffed away, a few of which came from Sault Ste. Marie.
    They could take care of it in a heartbeat if they were responsible and honest business people, but time and time again they prove that they are not.
    They’ve done some creative accounting and the government needs to do an in depth audit to find out where all the millions disappeared to before ever considering giving them another dime.

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