Consultants, Nucor, Correnti Talk Big River Steel in 5-Hour Session

by Michael Stratford, The Associated Press  on Tuesday, Mar. 26, 2013 7:16 am  

Lawmakers on the Joint Agriculture, Forestry and Economic Development Committee quiz consultants, steel executives and economic developers about the $1.1 billion Big River Steel project in this photo by U.S Rep. Duncan Baird, R-Lowell, posted to Twitter. (Photo by Duncan Baird)

LITTLE ROCK — A pair of outside consultants on Monday offered mixed reviews of Gov. Mike Beebe's proposal to provide a company with $125 million in state financing to build a steel mill in the northeast part of the state.

Consultants from IHS Global Insights told a special meeting of lawmakers that it's a "close call" whether the state would see a positive return on the millions of dollars it's proposing to spend to lure the project to Arkansas.

"It's not a slam dunk," said John Anton, the director of steel services for IHS. "But it's not an absolute train wreck either."

The analysts said that while they were optimistic about the trajectory of the steel industry generally, there was considerable risk about whether the market would provide sufficient demand for the Arkansas steel facility, called Big River Steel.

Gov. Mike Beebe has asked state lawmakers to approve a $125 million financing plan for the project, which is expected to employ 525 people. The Legislature hired the consultants to independently review Beebe's proposal to offer a package of economic incentives, including loans, grants and tax breaks, to land the steel mill in Arkansas.

(Poll: The reports are in. Do you still think Big River Steel is a good use of Arkansas money? Vote here.)

Lawmakers on Monday asked pointed questions about the assumptions the consultants used to render their conclusions. Some legislators also said they were concerned with a possible conflict of interest after Anton, the IHS consultant, testified that Nucor Steel — a company lobbying against the project — is one of his other clients.

Sen. Joyce Elliot, D-Little Rock, called the disclosure "very concerning."

Anton said that he did not believe a conflict existed and had not discussed his analysis of the Big River Steel project with Nucor.

Consultants from another firm, Regional Economics Models Inc., gave a more favorable view of the project, telling lawmakers that the mill's impact on the state's economy was generally positive when compared with the costs. Still, they said, it depends on what basis the Legislature wants to use to evaluate the project.

The facility would most likely provide a positive economic benefit — such as jobs — even if the costs of the incentives and opportunity costs of tax credits negatively impact the state budget in some years, said Scott Nystrom, an associate economist at REMI.

(The Consultant Reports: Download the REMI report summary here (PDF) and the full report here (PDF). Download the executive summary of IHS Global Insight's report on Big River Steel here (RDF).)



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