State to get new steel mill

Firm to hire 525, obtain incentives


Gov. Mike Beebe, left, in a packed conference room Tuesday morning at the State Capitol during the announcement of the $1.1 billion Big River Steel plant to be built in Osceola. The "superproject"  which could begin construction as early as August, will create 525 high paying jobs.
Gov. Mike Beebe, left, in a packed conference room Tuesday morning at the State Capitol during the announcement of the $1.1 billion Big River Steel plant to be built in Osceola. The "superproject" which could begin construction as early as August, will create 525 high paying jobs.

— Big River Steel LLC, a company led by steel magnate John Correnti of Blytheville, plans to build a $1.1 billion steel mill near Osceola that will employ 525 people, Gov. Mike Beebe said Tuesday at the state Capitol.

For workers, the averageannual salary and bonus will be more than $75,000, said Correnti, a former chief executive officer for steelmaker Nucor Corp.of Charlotte, N.C.

The Osceola mill will mark the first time the state’s Amendment 82 legislation - passed in 2004 to provide incentives for superprojects - will be set in motion. The amendment requires the state Legislature to approve the project. That could take several weeks.

The mayor of Osceola, the Mississippi County judge, House Speaker Davy Carter and Arkansas Economic Development Commission leader Grant Tennille talk about a $1.1 billion steel mill slated to come to Osceola.

Officials react to superproject announcement

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Watch the complete news conference announcing a $1.1 billion steel mill in Mississippi County.

Complete superproject announcement

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The state will seek to issue $125 million in general obligation bonds under the amendment. The bonds would be backed by the state and financed with tax revenue usually devoted to the operation of state government.

The money will be used for a $50 million loan to Big River Steel, $50 million for site preparation, $20 mil-lion for costs associated with stabilizing the surface and $5 million to cover the cost of issuing the bonds.

In addition, the state will provide $10 million in training funds to prepare employees to work at the mill.

Mississippi County will supply $12 million in incentives for the project, and Osceola will add $2 million in incentives, said Clif Chitwood, the county’s economic development director.

Correnti and his partners in Big River Steel, whom he did not name, will be responsible for covering the balance of the construction bill.

The mill will make flat roll steel, with about a third of it used for electrical steel in transformers, and light steel used in automobile manufacturing, Correnti said. The mill will also take scrap metal and process it into steel.

The county has promoted the site for many years but has not been able to attract a major project until now, Chitwood said.

The site is “steel mill heaven,” said Correnti, who is Big River Steel’s chief executive officer.

On the east side of the property is the Mississippi River. On the west side is a Burlington Northern Santa Fe railroad line, Correnti said. The mill site is also near an Entergy Arkansas 500-kilovolt transmission line, and 3 miles to the west is Interstate 55, Correnti said.

Depending on the approval process, work on the mill could start as early as August. It will take about 20 months to complete, Correnti said.

The state will not sell the bonds until private equity from the investors in the mill is first deposited into an escrow account, said Grant Tennille, executive director for the Arkansas Economic Development Commission.

“We won’t spend a dollar of Arkansas taxpayer money until they’ve put $250 million in the ground,” Tennille said.

Tennille said implementing Amendment 82 would be best if “gigantic multinational companies” were the investors.

“But that’s not how steel mills get built anymore,” Tennille said. “It is a startup, there’s no question. But it’s a startup with a guy [Correnti] who started this exact same kind of process up to 14 different times around the world.”

The proposed mill is the largest economic development project ever sited in Arkansas.

At peak construction the mill will generate about 2,000 temporary jobs over the two years it will take to build it, Beebe said.

Nucor has three steel mills in the Blytheville area - oneowned in a joint venture with Japanese firm Yamato Kogyo Co. The mills support about 1,600 jobs.

With the Nucor jobs and other smaller steel companies in Mississippi County, the county already is recognized as the second-largest steel-producing county in the nation, behind Allegheny County, Pa., Beebe said.

The steel mill and its 525 jobs will have a significant effect on Mississippi County, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.

“Good jobs attract people,” Deck said. “Any community that is able to attract jobs doesn’t just send those jobs to its local community, but actually grows its own community because folks will move from elsewhere to take advantage of them.”

And because there is already such a strong steel industry presence in Mississippi County, Big River’s plant will help to create a cluster effect, Deck said.

“Success breeds success,” Deck said. “That encourages other companies at other points in the supply chain to locate nearby.”

There is a possibility that Big River Steel could spawn another 2,000 ancillary jobs from related businesses, such as suppliers and customers locating near the new mill, Beebe said.

The state’s northeastern corner has been in need of jobs to keep residents from leaving for better opportunities.

Mississippi County, home to Blytheville and Osceola, the site of the proposed steel mill, has seen its population dwindle for decades.

In 1980, the county had a population of nearly 60,000 people. But in the following decades, residents fled by the thousands, according to numbers from the U.S. Census Bureau.

By 2010, the most recent census, the county had shed more than a fifth of its 1980 population, falling to 46,480.

Government data shed light on the state of Mississippi County’s work force, which is younger and lesseducated than other parts of the state.

With a median age of 34.9, Mississippi County is among the 10 youngest-population counties in the state, census numbers show. In 2010, more than 42 percent of its work force was under 40, which puts the county in the top fifth of all counties.

Mississippi County’s unemployment rate was 8.7 percent in November, down from 15.5 percent in 2009.

The latest census numbers show that the median household income in Mississippi County was $35,778, about $3,000 lower than themedian household income statewide.

In 2010, about 77 percent of residents 25 and older had high school diplomas, and only 14 percent had at least bachelor’s degrees, both about 5 percentage points below the statewide rates, census numbers show.

The Arkansas Department of Environmental Quality received part of the steel plant’s application for an air-qualitypermit Tuesday. The permit review process for a project like a steel plant is extensive and looks at emissions from the plant and other nearby facilities, said spokesman Katherine Benenati.

Mississippi County is in compliance with all national air-quality standards, Benenati said.

Mike Bates, the department’s air division chief, said review of the application isnot a quick process, and he did not say how long it will take the department to process the permit.

In 2005, Correnti looked at locating a $650 million steel plant with 450 jobs in Mississippi County, but he chose to move the project to Columbus, Miss. Correnti said Arkansas didn’t deliver the necessary incentives at the time and an adequate contract couldn’t be workedout to supply the enormous amounts of electricity needed to operate a steel mill.

In his comments Tuesday, Correnti recalled another news conference he attended in 1985 at the state Capitol to announce plans to build a steel mill in Mississippi County.

The news conference was on the steps of the Capitol, and Bill Clinton was governor. At that time, Nucor announced that it would build its first plant in Arkansas, said Correnti, who worked for Nucor until leaving in 1999.

“Arkansas is where it is, boys,” said Correnti, who has kept a home in Blytheville since the 1980s. “Slap dab in the middle of the United States. [The Mississippi River] is a transportation harbor.[Arkansas] was a good place to come 28 years ago, and it’s an even better place today to put in an operation like this.” Information for this article was contributed by Chad Day, Sarah Wire and Jessica Seaman of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 01/30/2013

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