Big River Steel announced Friday that it will spend $1.2 billion to expand its scrap recycling and steel production facility near Osceola, a move that will create an additional 500 jobs there.
The expansion will double the plant's hot-rolled steel production capacity to 3.3 million tons annually, the company said in a news release. Major construction will begin later this year and continue for about 24 months.
The new jobs will pay an average salary of $75,000, according to the Arkansas Economic Development Commission. The company currently employs 541 people.
"Our $1.2 billion expansion will further cement Big River Steel's position as a global leader in terms of advanced manufacturing and environmental stewardship," said CEO Dave Stickler. "Announcing this investment less than 18 months after beginning operations is a testament to the hard work and great success of the men and women on our team."
In addition to doubling hot-rolled steel production, the company said the expansion will allow it to produce higher grades of electrical steel. Demand for that product is expected to increase amid calls for better energy efficiency and an increase in hybrid and electric vehicle sales.
The company is also considering installing a next-generation coating line for automotive applications — a move it said might involve "a steel industry partner." That could come with this expansion or another phase in the future, the company said.
"When Big River Steel chose Arkansas as the site of its new plant, it was the largest economic development project in the state’s history," Gov. Asa Hutchinson said in a news release. "Our state's pro-business climate has led to the company deciding to expand here. That means even more jobs and more investment in Arkansas."
AEDC Executive Director Mike Preston said the plant has performed "beyond expectations."
Clif Chitwood, Mississippi County's economic developer, called the announcement "very good news" and said construction alone would provide a significant boost to the county's economy. A Big River Steel spokesperson said the expansion will require about 1,300 construction workers.
"And we're happy to see that — it's an affirmation of Mississippi County and northeast Arkansas that, after making one investment of roughly that same size, that so quickly behind it they feel confident to make another one," Chitwood said.
At $1.3 billion, the Big River Steel plant was a major economic development project by the AEDC and the state Legislature, which in 2013 approved a multimillion-dollar package of incentives for the plant, including a $125 million bond issue under Amendment 82 of the Arkansas Constitution — the first time the "superproject" legislation was implemented.
In 2014, Arkansas Teacher Retirement System trustees authorized investing up to $125 million in Big River Steel. Koch Minerals, a subsidiary of Koch Industries of Wichita, Kansas, was an early — and major — investor in Big River Steel.
Construction on Big River Steel began in September 2014, and the company processed its first batch of steel in 2016. It aims to produce 1.6 million tons of niche and specialty steel for sale in North America.
Chitwood said the U.S. imports about 20 percent of its steel, making it possible for domestic suppliers to expand or for new competitors, like Big River Steel, to emerge. What's more, he said the new plants are the ones that can make the most money, because they take advantage of new technology and equipment that make them more efficient to operate.
"With these electric induction mills — that's the answer," he said. "It makes steel a completely recyclable material just like paper or plastic or anything else that we routinely recycle now. Steel is now that easily recyclable."
The plant is located in Mississippi County, which is among the largest steel producing counties in the country. Nucor, the largest steelmaker in the U.S., has a three-decade history there, operating four facilities and employing nearly 1,700 workers. Nucor is currently adding a $230 million cold mill, first announced in 2016, that will create 100 new jobs at an average salary of $80,000.
A company spokesperson told Arkansas Business that the Trump administration's tariffs on imported steel, which went into effect on June 1, played little role in its decision to expand. The company had already made provisions for future expansion, including $100 million in capital expenditures during the plant's original construction, whose value would only be unlocked if the plant expanded.
But the company said changes to the tax code, approved by Congress at the end of last year, "did add momentum" to the decision to expand and "will likely lead to us accelerating our growth initiatives throughout the United States."
The Big River Steel expansion qualifies for AEDC's Recycling Tax Credit incentive, which allows an income tax credit for the purchase of equipment used exclusively for reduction, reuse or recycling of solid waste material for commercial purposes and the cost of installation of such equipment by outside contractors.