It’s not clear whether or not Nucor will ultimately proceed with four additional phases of a planned $3.4 billion iron and steel plant in St. James Parish. But if it does, a new incentive deal will have to be worked out with state officials after Nucor missed a year-end deadline to notify Louisiana Economic Development on its final investment decision.
By missing the deadline, the state is no longer obligated under a 2010 agreement to provide up to $130 million in incentives to help build out the four additional phases of the project. Nucor says in a statement to Daily Report that uncertain market conditions are keeping it from making a final investment decision at this time.
“Given the challenging conditions in the global steel market, we continue to assess our options and evaluate the best long-term opportunities for our company, teammates and shareholders,” the company says. “Nucor will continue to work closely with state officials, and we will honor the commitments we made in our agreement with the state of Louisiana.”
Since the project was announced in September 2010—touted at that time as one of the largest industrial projects in state history—Nucor has completed the first $750 million phase of the plant and is employing about 170. Production at the plant started in late December 2013 and the state has provided $30 million in incentives on the first phase.
“We remain confident in our investment and the long-term value owning our own (direct-reduced iron) production provides us. Having the capability to produce our own DRI gives Nucor an unrivaled position of flexibility in optimizing our iron unit costs, and our 170 Louisiana teammates have, and will continue to produce DRI at world-class quality levels,” Nucor says.
On Wednesday, Nucor announced it will resume production at the direct reduced iron plant by the end of the month. The announcement came about three weeks after the Charlotte, North Carolina-based firm temporarily idled production at the plant, citing poor market conditions.
LED also says discussions are ongoing.
“Nucor and the State of Louisiana continue to maintain a positive dialogue about the company’s existing facilities and investment, as well as constructive discussions about potential future investment in Louisiana,” reads a statement from LED provided to Daily Report.
Along with the $30 million in incentives Nucor has already received from the state for the first phase, it has also been provided an additional $30 million in state-funded bond proceeds applied to the first-phase DRI plant that would have converted to a performance-based grant for the second phase, LED says.
“Absent a final investment decision on an additional phase by Dec. 31, 2015, Nucor will continue to repay the $30 million in bonds, and the state and company obligations for future phases—as outlined in a September 2010 cooperative endeavor agreement—will not be in force,” concludes the statement from LED. “Commitments will remain in force for the initial DRI phase, and the state will continue to engage Nucor in discussions, with a goal of adding economic value for all parties.”
Should all five phases of the project be completed, the Nucor complex is expected to employ as many as 1,250 people and produce millions of tons of steel each year.
—Steve Sanoski
