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Update: Sun Paper of China Picks Clark County for $1.3B Pulp Mill

3 min read

Shandong Sun Paper Industry of China has selected Arkadelphia (Clark County) for a pulp mill plant that will cost between $1 billion and $1.3 billion to build, employ 250 people directly and have an economic impact of up to $100 million a year in the timberlands of south Arkansas.

Gov. Asa Hutchinson and the company’s founder and chairman, Li Hongxin, announced the finalization of a memorandum of understanding (PDF) during a news conference at the state Capitol. 

Li said the bio-refinery would also result in 2,000 construction jobs over the two-and-a-half year construction period and about 1,000 indirect jobs.

When it begins operation, the plant will process at least 400 truckloads of small timber per day, which local officials said will generate at least $28 million a year in income for owners of timberland in the area. Sun Paper will provide a new market for small trees that must be thinned from around trees grown for lumber, Sen. Bruce Maloch, D-Magnolia, said.

The average salary for the 250 permanent workers at the Sun Paper plant will be $52,000, according to the memorandum. But locals think it could be as high as $60,000.

As many as 1,000 additional jobs in the timber industry are expected to be created in order to supply the mill.

The plant will begin construction in the Clark County Industrial Park, about five miles south of Arkadelphia near Gum Springs, in the first half of next year, with an eye toward a late 2019 production start. 

It will be Sun Paper’s first plant in North America.

The company behind the long-planned paper plant had signed a letter of intent with the Republican governor and the Arkansas Economic Development Commission in November to study building the operation. The company considered sites in Camden and Crossett, as well as in Mississippi.

“The fact that Sun Paper is investing more than $1 billion in south Arkansas speaks volumes of the confidence in our workforce and our pro-business environment,” the governor said in a news release distributed ahead of the news conference.

Hutchinson called the project one of “the largest private investments in the history” of Arkansas.

AEDC Executive Director Mike Preston said the project will receive incentives from the state and Clark County, including the AEDC’s “Create Rebate” and grants to help with infrastructure. 

State officials did not immediately provide the total value of state incentives. But Clark County economic development leaders Bill Wright and Eric Hughes told reporters that $10 million cash from its 9-year-old, 0.5 percent economic development sales tax has been committed to helping with infrastructure costs at the building site.

County leaders have also agreed to abate 65 percent of the property tax for the project, worth about $92 million over 20 years.

(See a complete list of state incentives at the end of this story.)

Arkansas Business first reported on the project in February 2013.

The plant has been in the works since before former Gov. Mike Beebe’s trip to China in April 2012, after which he hinted of two strong business possibilities, including one related to the timber industry. 

Sun Paper employs 10,000 worldwide. AEDC said the firm “ranks among the top 500 Chinese enterprises” and is “one of the world’s top pulp and paper makers.”

State Incentives

AEDC provided a list of state incentives for the project:

  • Create Rebate – provides a cash rebate equal to 5 percent of new payroll for 10 years.
  • Tax Back – provides sales tax refunds on building materials, taxable machinery and equipment associated with the construction project.
  • Recycling Tax Credit – the company should be eligible if they pursue this incentive, AEDC said. The value is dependent on the total amount of qualifying equipment purchased by the company.
  • $12.5 Million Grant – this money will be provided through a combination of Community Development Block grant funds and the Governor’s Quick Action Closing Fund. This is for site preparation and equipment.
  • Training Grant – AEDC will provide up to $3 million in workforce training funds.
  • $50 Million Fully Collateralized Loan – this will be provided through multiple state sources.
  • AEDC will partner with Clark County to pursue federal funding for a public intermodal facility that would be located on the Sun Paper site.
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