The summary report on Big River Steel by Regional Economics Models Inc. (REMI), one of two firms hired by the Legislature to vet the project and the state's incentives used to lure it.
Although Big River Steel reviews weren't over the top, consultant John Anton of IHS Global Services did rate the proposed $1.1 billion project a "6, maybe a 7" on a 10-point scale of good investments in a Monday meeting with Arkansas lawmakers.
"But there is risk," he added.
Meanwhile, consultants with Regional Economics Models Inc. (REMI), the other firm hired by the Legislature to vet the project and the state's incentives used to lure it, didn't object to a suggestion by Rep. Homer Lenderman, D-Brookland, that their report rated the project about an 8 on such a scale.
The consultants appeared before a joint meeting of the House and Senate Agriculture, Forestry & Economic Development committees to answer questions about their reports which many lawmakers found to be less optimistic than expected.
(Poll: The reports are in. Do you still think Big River Steel is a good use of Arkansas money? Vote here.)
House Speaker Davy Carter, R-Cabot, had asked the consultants to rate the project on a scale of 1 to 10 on the liklihood of the state getting its money back.
As the first project potentially funded through Amendment 82, the General Assembly is carefully vetting reports it commissioned about the planned $1.1 billion steel mill just south of Osceola on the Mississippi River and the incentives the state used to land it.
Employees of Nucor Steel in Osceola testified that a new mill right next door would hurt their business, while John Correnti, a former Nucor executive who is spearheading the Big River project, insisted his new mill wouldn't compete directly with Nucor.
Read more about Monday's meeting here. Legislators have been optimistic about the project, which will entail $125 million in state financing and roughly $216 million over 14 years in recycling tax credits.
Here are some more high points from Monday's meeting:
- Anton, director of steel operations for IHS, said he was bullish on the future of U.S. steel. "We have every rational reason to believe that steel production will grow in the U.S.," he said. But he noted that the cyclical steel industry still hasn't fully recovered from the recession.
- Anton said if Big River comes "on line," there probably won't be room for another steel mill in the country before the end of the decade.
- While Anton revealed that Nucor is a client of IHS, he said that IHS represents the majority of U.S. steel companies.
- In response to a question about the possibility of Arkansas attracting a major steel consumer such as an auto plant, Anton suggested that ship hasn't sailed, but it's close. The first wave of North American auto manufacturing hit the southeatern U.S. (and bypassed Arkansas), but the second wave, he said, is hitting Mexico, where seven plants are under construction or planned.
- Anton said Nucor and Big River Steel could co-exist, but "there would be growing pains." There could be problems initially, he said, but none of them fatal. Anton said that by the time Big River is producing steel, the economy will be able to support the new plant.
- Consultants from REMI said their report focused more on the economic effects of the project, and insisted the state will get its money back.
- Rep. John Walker, D-Little Rock, suggested the consultants go back to the drawing board. "We want more optimism," he said. Walker said he wanted the project to go forward, but didn't believe the consultants' reports provided enough evidence to do so.
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