Columbus — SteelCorr’s financial closing was scheduled for the week of July 25 in New York, but the complicated deal has been delayed until early September.
“We thought we’d have this deal closed a long time ago, but it’s like watching paint dry on the wall,” said SteelCorr CEO John Correnti.
Charleigh Ford, executive director of the Columbus Lowndes Development Link, said the loan “for all practical purposes is complete. They’re just turning pages now.”
“We had dinner recently with (SteelCorr folks) and somebody asked why it’s taking so long, and they said, try to go to a bank and borrow $750 million,” said Ford, with a chuckle. “It’s not an easy process.”
SteelCorr’s new $750-million technologically-advanced steel mini-mill to be built on the 1,550-acre Tennessee Valley Authority (TVA)-certified megasite in Lowndes County has hit several snags since Correnti surprised economic developers in February by moving the project to Mississippi, which was not on the short list of sites announced by the company last year.
The final three sites in the South being considered for the “economic development coup of the year” were all located on the Mississippi River in Arkansas, Louisiana and Missouri, with a site in Osceola, Ark., speculated as the leading contender. The city of 10,000 already had two Nucor steel plants and the local community college had a steel-training program.
Based in Vestavia Hills, Ala., a suburb of Birmingham, Correnti had said he preferred a deep-water port site for the mill to help with costs related to the transportation of raw materials, and a favorable power contract. TVA invested $14 million to build a transmission line that would extend 20 miles from its West Point substation to power the area. Correnti also chose Columbus because of its location on the Tennessee-Tombigbee Waterway, a 234-mile man-made waterway that passes from Tennessee through eastern Mississippi and down to the Gulf of Mexico at Mobile, Ala.
The project is expected to create 450 jobs paying an annual average salary of $70,000 plus competitive fringe benefits and up to 1,000 indirect jobs to the Golden Triangle area, making it among the state’s top-paying manufacturing jobs. SteelCorr will transform scrap iron into 1.5 million tons of high-grade steel annually, primarily for the automotive industry.
“Demand is real good,” said Correnti, “because the automotive industry is moving to the South. Kia may be sniffing around, and you’ve already got Nissan. Toyota is coming to San Antonio while Mercedes, Hyundai and Honda are in Alabama, and BMW is not far away in South Carolina. All their steel is now coming from Detroit, Pittsburgh, Cleveland, Chicago, Europe or Asia at huge freight costs.”
Lowndes County acquired all of the land from seven landowners, and the Economic Development District has leased it to Correnti’s company. SteelCorr plans to build its mini-mill on 1,380 acres of the site located east of the Golden Triangle Regional Airport.
The private financing package for SteelCorr, which will possibly be renamed SeverCorr, includes $200 million from Severstal, Russia’s second-largest steel maker, and $425 million from GE Capital and a consortium of others, including Stephens Investments, an Arkansas-based company, the German financial institution KfW and other European lenders.
“The foreign currency exchange rate has not impacted this process,” remarked Correnti. “Reports of it affecting us buying scrap, that’s a lot of hogwash.”
SteelCorr will also receive multiple state and local incentives for the site, including a $25-million grant for real estate improvements, up to $10 million to cover half of the cost overruns anticipated during the site preparation, and up to a $75-million loan after five years for miscellaneous purposes. The company will receive job credits of $5,000 per full-time job for 10 years, as long as 450 people are employed. Lowndes County will grant the facility up to $5 million for construction costs and/or lend up to $5 million to help with construction or project financing, according to state auditor Phil Bryant.
“The good thing about the state’s money is that it’s tied to the project and can’t be drawn out on the front end,” Ford pointed out. “A certain amount has to be spent before the company can access it.”
Mike Wagner, vice president for marketing for SteelCorr, said the initial reaction from potential customers has been very positive.
“The automakers obviously want to have a just-in-time type of arrangement from a nearby low-cost producer, and we’ll be the only supplier of exposed automotive steel located in the South,” he said. “I’ve had discussions with some of the automotive transplants located in the South and the Big 3 automotive guys. They’re anxious for us to get going, to get qualified as quickly as we can, and they’re willing to work with us to try to shorten that time frame. I’ve also met with appliance guys and pipe and tube guys on a limited basis, and they’ve wanted to have a lot more discussion. Until the project is finalized, there’s not that much to talk about.”
Construction is expected to begin the day after the contract is signed, under the supervision of veteran construction manager Richard Painter. The SteelCorr plant will represent his eighth mini-mill construction project. It is expected to take at least 20 months to complete and employ up to 2,000 construction workers.
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.