Iowa lawmakers have approved $1.36 billion in tax incentives over 10 years for a proposed steel plant in Lee County, despite objections that the deal was rushed and offered too much public money to an overseas-owned company.
The measure passed the Iowa House by 75 votes to 17 and the Senate by 28 to 19 during a one-day special session. Republican Governor Kim Reynolds signed it into law on Friday night.
The plant is being developed by Mesabi Metallics, which is owned by the Indian conglomerate Essar Group. President Donald Trump announced on Monday that the project would become the largest steel plant in US history, with an expected cost of $15 billion.
Mr Trump said the development would create 1,750 permanent jobs and about 6,000 construction jobs. Mesabi has said the plant is not expected to begin operating before 2030, and the tax credits will not take effect until it is running.
Concerns over Iowa steel plant tax incentives
Protesters gathered at the Iowa Statehouse on Friday with signs reading “No Steel Steal!” as legislators moved to approve the package.
Many opponents support the proposed steel plant but argued that lawmakers should have demanded stronger guarantees of jobs and wider public benefits before committing taxpayers’ money.
Based on the number of permanent positions, the incentives amount to roughly $777,000 per job over 10 years. Supporters say that calculation excludes the estimated 6,000 construction jobs, while critics note that those positions would be temporary.
The speed of the process also drew criticism. When Commerce Secretary Howard Lutnick said at the White House on Monday that “the deal is done”, Iowa lawmakers had not yet received full details or been told when the special session would take place.
Republican state Senator Kevin Alons said lawmakers needed more time before Friday’s vote, describing the situation as “political extortion”. He nevertheless voted in favour of the bill.
Republican Senator Dave Sires opposed the measure, while Senator Dan Dawson called it “the largest corporate giveaway in the state of Iowa’s history”. Senator Jeff Taylor said the state was already facing a serious budget squeeze.
Mr Taylor was removed from the Senate Ways and Means Committee shortly before the vote. The bill passed the committee by 10 votes to eight, with six Republican senators voting against it.
Political stakes for Iowa Republicans
The decision comes as Iowa prepares for closely fought congressional, Senate and governor’s races. The proposed plant would be located in the state’s first congressional district, where Republican Congresswoman Mariannette Miller-Meeks is defending a vulnerable seat.
Ms Miller-Meeks defeated Democrat Christina Bohannan by 798 votes after a recount in 2024. The race had recently been shifted from “toss up” to “leans Democratic” by Sabato’s Crystal Ball before the steel announcement.
Republican gubernatorial candidate Zach Lahn, who has campaigned against corporate handouts, described an Iowa steel plant as a “once in a lifetime” exception and backed the legislation.
Democrats have also faced a difficult calculation, seeking to support potential job creation while questioning the decision to approve nearly $1.4 billion in tax breaks before early voting begins on October 14.
Rob Sand, the Democratic nominee for governor and the state auditor, called the project “a promising idea for Lee County” but said more information was needed.
“You look at these data center deals that this administration has done over the last few years and we gave away the farm,” Mr Sand said. “I want to make sure this is a real opportunity, but also at the end of the day Iowa is getting served by it and not getting fleeced.”
Iowa Senate Democratic Leader Janice Weiner said the state needed well-paid jobs and investment, but argued the decision should have been delayed until after the election.
“If we were doing this the right way, we would be waiting until after the election,” she said. “If it’s a good deal now, it will be a good deal in January when due diligence has been done.”
Mesabi Metallics’ troubled history
The project has also revived concerns about Essar and Mesabi Metallics’ record of missed deadlines and unfulfilled promises.
Essar announced a $1.6 billion iron ore mine and steel plant in Nashwauk, Minnesota, in 2008, promising more than 700 permanent jobs. Plans for the steel mill were abandoned in 2015, and Essar Steel Minnesota filed for bankruptcy the following year.
The company was later renamed Mesabi Metallics under new ownership before coming back under Essar’s control.
Iowa has no commercial iron ore and has only a couple of small scrap-fed steel mills. Mesabi Metallics has argued that the state’s position on the Mississippi River makes it a practical location for a plant supplied from Minnesota.
The debate has prompted comparisons with Foxconn’s proposed Wisconsin factory. In 2017, Mr Trump and the company announced a $10 billion project that was expected to create 13,000 jobs. By 2021, it had been reduced to $672 million and 1,454 jobs.
Democratic state Representative Dave Jacoby voted for the Iowa package, saying he hoped the plan was real, but added: “Today is not a ribbon cutting.”
With construction still years away, Iowa voters will now judge whether the steel plant is likely to materialise — and whether the $1.36 billion price of the incentives is justified.
