Mesabi Metallics $265M Royalty Deal
Mesabi Metallics Company LLC has agreed to sell 50% of its royalty interest to The Metals Royalty Company Inc. (TMCR) for $265 million. The transaction will be completed in two equal tranches, with proceeds directed toward the company’s future growth. The agreement comes alongside substantial financing momentum and positions Mesabi Metallics to become a key domestic producer of direct reduction (DR) grade iron ore pellets from its Minnesota operation, slated to begin production in the third quarter of 2026.
Deal Structure and Use of Proceeds
- Total consideration: $265 million for 50% of Mesabi Metallics’ royalty interest
- Two equal tranches of $132.5 million each
- First tranche closed on June 1, 2026; second tranche expected within 60 days
- Majority of proceeds to support Mesabi Metallics’ growth initiatives
Strategic Importance of the Minnesota Project
Mesabi Metallics’ integrated mine, beneficiation plant, and pellet plant in Minnesota is designed to produce DR-grade iron ore pellets, a crucial feedstock for electric arc furnace (EAF) steelmaking. The United States currently relies significantly on imports for DR-grade pellets, including supply from Brazil and other countries. By bringing new domestic capacity online, Mesabi Metallics aims to strengthen U.S. manufacturing competitiveness and support key sectors such as infrastructure, automotive, shipbuilding, defense, and energy.
Cost and Quality Advantages
At startup, the company targets a position among the lowest-cost iron ore producers globally. This advantage is underpinned by the high grade and scale of its ore body, modern processing infrastructure, and a strategic Midwestern location with efficient access to customers. The operation is designed to produce high-quality, high-grade DR pellets that are well-suited to EAF steelmakers seeking reliable domestic feedstock.
Financing Momentum and Institutional Confidence
The royalty transaction follows more than $670 million in recently announced financing commitments, including $520 million from Breakwall Capital and $150 million from Macquarie Group. Mesabi Metallics has also received an indication of support from the Export-Import Bank of the United States (EXIM) of up to $10 billion. Together, these commitments signal growing institutional confidence in the project’s scale, quality, and strategic relevance to U.S. industrial policy and critical mineral supply chains.
Leadership Commentary
“TMCR’s investment is a powerful third-party validation of the quality and strategic importance of Mesabi,” said Artem Matyushok, Board Member of Mesabi Metallics. “As the United States works to rebuild domestic industrial capacity and secure critical supply chains, DR-grade iron ore has become an increasingly important strategic resource. Mesabi is uniquely positioned to supply that resource from a long-life American asset while creating substantial value for our stakeholders.”
“Mesabi Metallics represents one of the most strategically important mining projects under development in North America,” said Brian Paes-Braga, Founder, Chairman and CEO of TMCR. “The project combines scale, quality, long mine life and direct exposure to the re-industrialisation of the United States. We believe Mesabi will play a critical role in supplying the domestic steel industry for decades to come.”
Advisors
Scotiabank served as exclusive financial advisor to Mesabi Metallics and its affiliates in connection with the transaction.
