DES MOINES, Iowa — Iowa lawmakers returned to the Statehouse on Friday to consider expanding the ceiling on state tax incentives in an effort to secure a $15 billion steel plant project for the state because the company wouldn't accept what is currently allowed in law.
President Donald Trump announced the plant Monday alongside Iowa elected officials, heralding the project as a major economic and national security investment. Commerce Secretary Howard Lutnick said that the "deal is done," but state action and local officials in the days since suggested otherwise.
Five weeks before the midterm elections, Republicans seized on the promise of good-paying jobs and a central role for the heartland in the push for American steel manufacturing. It was celebrated as an opportunity for southeast Iowa, an area along the Mississippi River that once thrived as a hub for industry but has since suffered from shuttered facilities and dwindled populations.
Still, the deal and the state dollars it could require have been met with some skepticism in rural Iowa and Des Moines alike.
Lawmakers learned Friday that Mesabi Metallics, the Minnesota company owned by the India-based conglomerate Essar Group, was not going to build the plant in Iowa under the law's current credit for eligible projects of up to 5% of investments, paid out over five years. Debi Durham, director of Iowa's Economic Development Authority, said lawmakers wouldn't be back in Des Moines if they were.
Republican Gov. Kim Reynolds on Tuesday called the Republican-controlled Legislature back for the special session, asking them to increase the maximum amount to 10% paid out over 10 years contingent on performance and jobs.
Trump announced another major investment for a battleground state this week — a $54 billion investment by South Korea in a natural gas project in Alaska — that's still in early stages. South Korean officials said they needed to assess the project's commercial viability before committing to the investment.
Trump told reporters on Friday that he would hike tariffs on South Korea if they don’t finalize the investment.
The Iowa state House advanced the bill Friday afternoon. A Senate committee approved the bill for a floor vote, but some Republicans publicly showed opposition.
The pivot to Iowa seems to have moved quickly
The terms of an agreement between the state and Mesabi Metallics have been outlined in a memorandum of understanding; neither provided a copy when asked for one. Durham told state senators Friday that the memo included the company's agreement to negotiate exclusively with Iowa for 60 days.
Iowa officials say the changes to state law are needed because Iowa is in competition with other states, naming Arkansas and Kentucky specifically.
As recently as July, job listings on Mesabi’s website for the steel plant were based in Kentucky, according to a version saved in the web archive. Jobs are now listed for Iowa, though the job responsibilities for a government relations manager still included interfacing with Kentucky’s economic development team as of Friday morning.
While the company had been in discussion with Kentucky officials, the scale of the project “more than doubled over the negotiation period,” spokesperson Brandon Mattingly said in an email.
Iowa “did get kind of into the mix late,” said Iowa state Rep. Matthew Rinker, a Republican. “I think once they got here, they realized this is where they needed to be.”
While the specific location in Lee County remains undisclosed, the chair of the county board of supervisors also said this week that the company has not yet committed to the project site.
Mesabi Metallics “looks forward to breaking ground in the near future,” Jesse Harris, a spokesperson for the company, said in a statement Tuesday. He said the company is “optimistic” that changes to the law will be enacted based on conversations with legislators and elected officials.
The White House said Thursday that the Iowa project is only possible because of the president's policies.
“President Trump has a proven record of securing historic investments, creating high-paying jobs, and bringing manufacturing back to the United States," spokesperson Taylor Rogers said in a statement.
A major investment opportunity could carry risks for local communities
Many Iowans from Lee County spoke to lawmakers Friday about the enormous potential for the area's families, main streets and schools.
“There's going to be some challenges ... those are growing pains,” said Patrick Jones, owner of a contracting company in the county, but “if you don't grow, you die."
Still, the scale of an investment such as this one is asymmetrical with the legal and administrative capacity of a rural community, said Anthony Pipa, a senior fellow at the Brookings Institution who studies development and policy in rural areas.
Lee County does not have any general zoning or permitting ordinances that would apply to the project. The company would need a permit for hauling on the county’s secondary roads.
While there's a lot of potential upside, the asymmetry can also leave those communities vulnerable and without leverage, he said. Pipa also pointed to examples of massive proposed investments that didn't come to fruition, such as a Foxconn Technology Group display screen manufacturing facility and its promise of 13,000 jobs announced for Wisconsin during the first Trump administration.
Foxconn has since dramatically reduced the project's scope and now says it will employ about 2,600 people by the end of 2029.
The Lee County Economic Development Board, which Rinker said was pivotal in bringing the Mesabi project to Iowa, said the plant brings “extraordinary opportunity,” while acknowledging the ongoing questions that need to be addressed “about workforce, infrastructure, housing, and community services.”
“We take both seriously,” board CEO and President Emily Benjamin said in a statement. “Our job is to help make sure growth like this benefits the people who live and work here.”
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Associated Press writer Scott Bauer contributed from Madison, Wisconsin.
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