Sierra Club Response on Subsidies to Mesabi Metallics
On October 2, 2026, Iowa's legislature modified the Major Economic Growth Attraction Program (MEGA) which clears the way for Iowa Economic Development Authority to provide $1.5 billion in incentives and subsidies to Mesabi Metallics to build an steel plant in Lee County.
The project was publicly announced during a media event in the White House on September 28. Erin Murphy of The Gazette reported, “Howard Lutnick said at Monday’s announcement that the plant’s location and construction in Iowa is not dependent upon state tax incentives or breaks.” Further, he added, “‘No, I think this deal’s done. This deal is done. They’ve already worked it out,’ Lutnick said in response to a reporter’s question. ‘That’s why we’re all together with the president. The president doesn’t bring people together unless it’s a done deal.’” [1] Howard Lutnick is the U.S. Commerce Secretary.
As things unfolded over the next week, it became obvious that the project isn't a done deal and is far from it. In fact, Mesabi Metallics does not even have all of the financing in place to begin the project.
Included in the generous subsidy is the ability of Mesabi to transfer the tax credits to another entity by selling them or using it as collateral.
The Sierra Club opposed the level of subsidies:
- The Revenue Estimating Conference is scheduled to meeting on October 16, 2026, and will review the health of the state's economy and expected tax receipts. The legislature was asked to approve this stepped-up incentive package without knowing the state of next year's revenue.
- With annual budget shortfalls of $1.3 billion this year and last year, the state's finances are on a trajectory to use the reserve accounts within the next couple of years. This will leave the state in a fiscal crisis that will be even harder to recover from with the additional Mesabi Metallics incentive package.
- There could be long-term implications when the state is unable to meet expect costs with severely declining revenue, such as laying off staff, not taking care of water quality, reduced enforcement of environmental laws, and many services reduced.
- The governor missed an opportunity to place additional requirements on the project that would benefit the public, such as requiring maximum achievable control technologies for pollution, requiring neutrality in dealing with efforts of unions to organize labor, and requiring the use of renewable energy to power the plant.
- The changes made for Mesabi Metallics are going to be the starting point for future companies that want to locate in Iowa and want taxpayer support for their projects.
Furthermore, the process was rushed. The proposed legislation was loaded into the legislative system at 7:45 am on October 2, the day of the special legislative session. The public did not have time to fully understand the details of the subsidy, making it harder to interact with the legislators. This was complicated by Howard Lutnick's statement and the governor's request that would allow increased subsidies to Mesabi Metallics.
Even so, the public was largely opposed to this proposal, based on the testimony provided to the subcommittees reviewing the governor's proposal.
Based on Senator Dan Dawson's comments during the debate, it appears that Arkansas officials walked away from a deal with Mesabi Metallics. Dawson concluded that the Governor negotiated against her self and did not need to make this generous package of incentives to the company. [2]
Based on reporting throughout the week and questions from legislators directed to Debi Durham, Director of Iowa Economic Development Authority, and Joe Broking, CEO of Mesabi Metallics, there are serious issues related to the economics of the project. Mesabi Metallics has been in bankruptcy, has huge debts related to operations in Minnesota, does not have the financing currently in place to undertake the project, and has taken loans from Russian entities. All of this leaves a large number of questions - questions for which there was little time to get answers.
It has the appearance of being an attempt to prop up candidates who may be facing defeats in the November mid-term election.
For these reasons, Sierra Club opposed the level of the gift, grant, incentives, subsidies that are being provided.
[1] Erin Murphy, “Largest-ever U.S. steel plant coming to Iowa, White House says”, The Gazette, September 28, 2026
[2] Robin Opsahl, "Governor signs law allowing $1.4B in tax incentives for steel mill project", Iowa Capital Dispatch, October 2, 2026