LITTLE ROCK, Ark. (AP) -- State economic development officials overestimated the long-term benefits of a proposal to help finance a $1.1 billion steel mill proposed in northeast Arkansas, because they didn't consider uncertainties surrounding the project, according to report released Thursday by a consultant that lawmakers hired.
Legislative officials released the executive summary of a report by IHS Global Insight, a firm hired by the House and Senate to look at the proposed Big River Steel mill in Osceola. Gov. Mike Beebe has asked lawmakers to approve a $125 million financing plan for the mill, which is expected to employ 525 people.
Lawmakers said they expect to receive the consultants' full report Friday. The three-page summary said that the steel industry can absorb another plant like Big River, but said the facility may not be able to reach its performance goals if another major plant opens.
"IHS asserts that the (Arkansas Economic Development Commission) has, to some extent, overestimated the long-term, net economic benefits of the incentives being considered for the BRS project, primarily because they did not fully consider some of the key assumptions" such as production levels, the firm said.
Of the $125 million in bonds that Beebe wants to issue to help finance the project, $50 million would be a loan to the company while the remaining amount would be paid off by taxpayers. Big River Steel is led by John Correnti, a former Nucor Steel executive who engineered the 2007 launch of a successful $650 million steel mill at Columbus, Miss.
Arkansas Economic Development Director Grant Tennille said he has some questions about the firm's methodologies and conclusions, but said he believed the analysis was fair and confirmed many of his department's findings. Tennille said the proposal includes "claw back" provisions for the state to reclaim money if the mill doesn't meet its performance goals.
"I'm betting on the Big River guys that they've analyzed the market well, that they know how to operate in this market and they've proven to the world very recently that they can do it," Tennille said. "I think they can do it again and if they can't we've put the safeguards in place to allow us to get the state's money back."
But the report could spur opposition to the proposal as lawmakers prepare for a hearing Monday on the plant and the financing plan. House Speaker Davy Carter said he had some questions about the report, but didn't see any major surprises. Senate President Michael Lamoureux said he was reviewing the findings.
House Majority Leader Bruce Westerman, R-Hot Springs, said the findings concerned him.
"I'm certainly not sold on it based on the summary report that we got," Westerman said. "I would have hoped it would have been much better."