Big River Steel project closes on financing.
Big River Steel LLC, which wishes to build an electric arc furnace steel mill in Osceola, Arkansas, says it has officially closed on the financing necessary to build the $1.3 billion project. When fully operational, the facility will employ more than 500 people. A formal groundbreaking ceremony is being planned for late summer 2014.
“It’s truly been a team effort between our investors, local and state leadership, our management team, and many others to get to this point,” says John Correnti, Big River Steel CEO. “I know firsthand northeast Arkansas has everything we need to operate a world-class mill. Now it’s time to get to work.”
Big River Steel first announced plans in early 2013 to build in Arkansas a mill to produce steel for the automotive, oil and gas and electrical energy industries. Construction is expected to take about two years to complete, the company says.
“The economic impact Big River Steel will have on the state of Arkansas is tremendous,” says Grant Tennille, executive director of the Arkansas Economic Development Commission (AEDC). “In addition to the benefits of Big River alone, we fully expect a significant number of suppliers to locate operations in the region. We appreciate the Arkansas Development Finance Authority (ADFA) and Arkansas Teacher Retirement System working hard to make this project possible.”
To help with the financing, the state of Arkansas has available Amendment 82, which is a constitutional amendment passed by voters of Arkansas in 2004. The amendment allows the state to issue bonds to provide funds for infrastructure and other considerations for new and expanding companies.
Originally limits were set on when Amendment 82 could be used. The project had to create 500-plus jobs and involve an investment of at least $500 million. In 2010, voters approved removing those thresholds. The Big River Steel project is the first time Amendment 82 has been used.
Under Arkansas’ Amendment 82, the state has authorized the following:
- issuing up to $125 million in 20-year general obligation bonds;
- a $50 million loan to Big River Steel;
- a $50 million grant for site preparation;
- a $20 million grant for subsurface stabilization and pilings; and
- $5 million bond issuance costs.
In addition to incentives provided by Amendment 82, incentives secured by Big River Steel include:
- sales tax refunds on building materials, taxable machinery and equipment associated with the project;
- Advantage Arkansas 4 percent income tax credit based on new payroll for new jobs for five years;
- training funds of $10 million ($5 million Governor’s Quick Action Closing Fund, and $5 million Department of Workforce Services Trust Fund);
- recycling equipment tax credit, an income tax credit equal to 30 percent of eligible recycling equipment costs that will carry forward for 14 years;
- sales tax exemption on utilities (natural gas and electricity); and
- ADFA has agreed to make $5 million in bridge-gap funding available to Big River Steel.
Local incentives provided to Big River Steel include:
- $12 million from Mississippi County and $2 million from the City of Osceola; and
- trustees of the Arkansas Teacher Retirement System (ARTRS) have approved an investment of up to $125 million in system funds in Big River Steel (ARTRS originally announced a total investment of $60 million but recently authorized an additional $65 million investment).