Posted 1/29/2013 11:03 am
Updated 10 months ago
Big River Steel LLC and Gov. Mike Beebe announced plans Tuesday for the company to build a $1.1 billion steel mill in Osceola (Mississippi County) that will directly employ 525 people with annual average compensation of $75,000 a year.
The project will employ another 2,000 people while under construction, the governor said. When completed, Big River will produce steel for the automotive, oil and gas and electrical energy industries. Customers of the steel will include Siemens, ABB and Emerson Electric.
The mill will produce flat roll steel and low alloy, high strength steel. The corporate headquarters will be in Osceola.
Big Steel CEO John Correnti of Blytheville, a former Nucor executive, said he hoped Little Rock's Welspun would become a customer as well. He said he likes to see the U.S. oil rig count go up because it means more pipe is needed, and more steel for those pipes.
Construction of the mill, which could begin as early as August, will take about 20 months. It will be located on 1,140 acres south of the city on Highway 198 adjacent to the Osceola city limits. The site, which has been considered for large manufacturing projects before, is bordered by the Mississippi River to the east and class 1 rail on the west side of the property. Interstate 55 is three miles to the west.
Correnti called the site "steel mill heaven," and said that average salaries could soon approach $100,000 after the plant opens. Beebe said the project will make Mississippi County the second largest steel producing county in the U.S. and believed it could make the First Congressional District the largest steel-producing district in the country.
Beebe has described the project as "one of the biggest" Arkansas has ever seen, and is luring the company to Arkansas in part with a previously-unused funding mechanism that would let the state borrow up to $235 million to help cover the company's start-up costs.
For the Big River project, the state plans to provide $125 million for start-up costs: a $50 million loan to the company, $50 million for site prep, $20 million for piling and $5 million for bond insurance.
Once Beebe refers the project to the legislative leaders, the Legislature will have 20 working days to conduct its own economic impact study. The plan will then enter the committee process.
Other state incentives include:
- sales tax refunds on building materials, taxable machinery and equipment used in the project;
- a 4 percent income tax credit based on new payroll jobs for five years;
- $10 million from the Governor's Quick Action Closing Fund;
- $5 million from the Department of Workforce Services Trust Fund to be used for training;
- an income tax credit for recycling equipment equal to 30 percent of eligible recycling costs that will include legislation that could extend the credit from three to 14 years;
- and a sales tax exemption on utilities that will include legislation to fully exempt sales tax associated with the sale of natural gas and electricity.
Mississippi County is providing $12 million from a half-cent, industrial development sales tax to be used on infrastructure needs including gas and sewer lines and purchasing the land. The city of Osceola is pitching in $2 million.
On Tuesday, Beebe also noted Entergy Arkansas Inc.'s efforts to help bring the plant to the region. Entergy Arkansas spokesperson Julie Munsell told Arkansas Business that the utility will provide a design team to work with Big Steel on specific electrical needs and getting power to the site.
Big River Steel is led by Correnti, an Arkansas native and former Nucor Corp. CEO. Correnti tried to build a $700 million steel mill in Mississippi County in 2005. He ended up moving that project, which would have employed 450 people, to Columbus, Miss., after that state offered an incentive package of grants and loans that amounted to $110 million.
At the time, Correnti was critical of Arkansas' economic development efforts. Others with knowledge of the deal said electricity rates might have been among the deal breakers.
Correnti said the difference this time amounted to Beebe, who took office in 2007; the work of Arkansas Economic Development Commission director Grant Tennille and his staff; and being able to come to terms with Entergy. He called the current AEDC staff the best he's worked with in the country.
"This happened because Gov. Beebe wanted it to happen," he said.
Correnti said his group looked at sites in other states, including Missouri and Texas, and at other sites in Arkansas.
Correnti has had success developing steel operations in Mississippi but some of his other projects have failed. He backed a $650 million Severstal steel mill that opened in 2007 in Lowndes County, Miss. A separate silicon plant in the county lapsed when funding couldn't be arranged.
He also announced in 2008 plans for a $175 million steel rebar project at Amory, Miss. With the promise of an 80,000-square-foot facility along the Tennessee-Tombigbee River and the creation of 200 jobs. But after a celebratory groundbreaking, the project fizzled.
In Ontario, Ohio, Correnti and others promised a $275 million silicon plant that was never built, and in Stanly County, N.C., Correnti and others promoted a $300 million silicon project and 450 new jobs. After local officials bickered over the project, the deal was taken off the table in December 2011.
On Tuesday, Tennille told the Associated Press that his team looked at those previous ventures but are confident that the Arkansas project will succeed.
"When you're dealing with somebody who does as many deals as he has, there will always be things that are bigger successes than others," Tennille said. "We really feel that in terms of building steel mills there is nobody better than John Correnti."
Legislative leaders said Tuesday that they looked forward to reviewing the project.
On Tuesdsay, local leaders lauded the development and expressed high hopes for its regional economic effects.
"It is an event that's going to bring the struggling Delta community out of the doldrums," Osceola Mayor Dickie Kennemore said.
In a statement, 1st District U.S. Rep. Rick Crawford, R-Ark., who represents the area in Congress, said the plant has the potential to enhance the state's steel industry and grow the regional economy.
"If the state Legislature approves the bonds, 500 families will see new employment opportunities with good paying jobs," Crawford said. "As a member of the Congressional Steel Caucus, I work every day to expand markets for American steel and opportunities for American workers in the steel industry. In the coming weeks and months I plan to work closely with Big River Steel’s leadership team, officials in Mississippi County and Osceola Mayor Dickie Kennemore to do all we can to advocate for the successful completion of this project."
Mississippi County has been the headquarters of Arkansas' steel industry, with Nucor steel manufacturing operations in the county. Two plants are in Armorel and one is in Hickman. All three employ a combined 1,600 people, according to Arkansas Business' new list of the largest manufacturers, which will be published on Monday.
Last year, Nucor announced that its Nucor-Yamato Steel Co., a joint venture between Nucor and Yamato Kogyo Co. Ltd., approved a $115 million plan to expand hot rolled sheet piling production at its steel mill in Blytheville. The expansion is expected to be completed in early 2014.
The news release:
Big River Steel, LLC today announced plans to build a more than $1 billion steel mill in Mississippi County, Arkansas that will directly employ more than 500 people with annual average compensation of $75,000 a year.
The plans are contingent on approval by the legislature authorizing the state to issue $125 million in general obligation bonds under the authority of Amendment 82 and all necessary regulatory approvals. As required by the Amendment, Governor Mike Beebe will be referring the project to the legislature for its consideration.
This is the first time Amendment 82 has been triggered since its adoption during the November 2004 general election. It allows the state legislature to approve up to 5 percent of the state’s general revenue budget to be used for bonding of super economic development projects.
John Correnti is Big River Steel’s chief executive officer and heads a group of investors backing the project.
“Having lived in Arkansas for over 20 years and having been involved in building and operating two other world class steel mills in the state, I know first-hand that the quality of the work force in Arkansas is outstanding and well suited for the high-paying jobs we intend to create,” said Correnti. “Arkansas’s geographic location in the heart of the markets we intend to serve, the state’s well-developed transportation infrastructure as well as the availability of reliable electrical power and the ‘can do attitude’ of the government officials in Little Rock, Mississippi County and Osceola make Arkansas a great place for Big River Steel to make its investment.”
“A project of this scope will be a catalyst for job creation, investment and economic development beyond this one facility,” Governor Beebe said. “Building Big River Steel will mean up to 2,000 construction jobs, and it will help us recruit more supplier businesses and steel consumers to Northeast Arkansas.”
Big River will produce steel for the automotive, oil and gas and electrical energy industries. Construction of the mill will take approximately 20 months from ground breaking which is expected later this year.
“The Big River Steel project will change the demographics of Mississippi County and Osceola in particular, now, and for generations to come,” said Osceola Mayor Dickie Kennemore. “It will continue to improve our economy and will positively impact all our citizens and every aspect of their lives, and every entity in our community.”
The $125 million generated by the sale of the bonds will be used as follows:
- $50 million loan to Big River Steel
- $50 million for site preparation
- $20 million for costs associated with piling – subsurface stabilization
- $5 million bond issuance cost
Once Beebe refers the project to the Speaker of the House and President Pro Tempore of the Senate, the legislature will have 20 working days to conduct its own independent economic impact study. The legislation will then work its way through the committee process after which a vote of both houses of the legislature will be taken.
A project of this magnitude involved many entities, public and private, to negotiate terms that make this announcement possible. Among the agencies and companies that worked to bring Big River Steel, LLC to Arkansas include: Governor’s Office, Arkansas Economic Development Commission, Arkansas Department of Finance and Administration, Arkansas Development Finance Authority, Arkansas Department of Environmental Quality, Attorney General’s Office, Arkansas Department of Workforce Services, Arkansas Capital Corporation and its affiliates, Mississippi County Economic Development, the City of Osceola, Entergy Arkansas, Inc., and BNSF Railway.
All employment inquiries should be made to the Blytheville Office of the Arkansas Department of Workforce Services, P.O. Box 1409, Blytheville, Arkansas 72316. Phone 870-762-2035.
(The Associated Press' Michael Stratford contributed to this report.)