Firm scuttles plan to build $90 million wood-pellet mill in Arkansas

Zilkha Biomass LLC of Houston has scuttled its plan to build a $90 million wood-pellet mill in Monticello.

Zilkha reached a deal four years ago to build a facility that would support 52 new jobs. After a recent meeting with Zilkha's legal counsel, the Monticello Economic Development Commission said the energy company will not be building a mill there after all.

"Zilkha's not going to be able to produce on their commitment," the commission's Bennie Ryburn said at a meeting Wednesday. "So what we agreed upon was this settlement."

The commission approved the resolution on Wednesday. News outlet Monticello Live reported on and recorded the meeting.

Zilkha has agreed to forfeit land for the proposed mill to the Monticello Economic Development Commission and repay thousands of dollars spent on environmental and energy studies during the planning stages.

To facilitate mill construction, the University of Arkansas at Monticello sold 80.9 acres to Zilkha in 2014 and the commission agreed to let the company use almost 30 acres of contiguous industrial-park land for the site. The nearly 110-acre area will now be owned by the commission, increasing land available for future projects.

At the meeting, Ryburn said the money returned by Zilkha will help pay down debts related to a recent land purchase and a road built in Drew County.

According to a news release dated July 30, 2014, the Monticello plant was supposed to be one of Zilkha's largest. The company makes wood pellets as an alternative fuel source for the energy industry. At the time, officials called the project a good fit because of abundant forestland in Arkansas.

The Monticello project qualified for state incentives, including a $1 million infrastructure grant. Commission member Nita McDaniel assured the public "they never executed any of the incentives from the state."

"My words to their counsel was -- I would much prefer that we won the investment and the facilities and the number of jobs that they intended to create," McDaniel said at the meeting. "But I completely understand how the environment changed on them once they made the announcement that they were going to do this."

Ryburn said Zilkha's financial troubles began after some of its trading partners "duped" the company.

"They shipped one or two shipments over to Paris, France, and Paris didn't pay for them," he told the commission. "It was quite a few million dollars they got duped on. Anyway that's kinda where the downfall really started."

The listed phone number for Zilkha was not in service Friday.

Business on 07/14/2018

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