A key financing element of steelmaker Nucor's plans to build up to a $3.5 billion iron plant in St. James Parish received preliminary state approval Thursday.
The State Bond Commission agreed to let Nucor use $600 million in tax-free hurricane recovery bonds for construction costs through the Gulf Opportunity Zone program. The application will need one more approval from the commission, after its staff reviews the details, before the bonds can be sold.
The Nucor project, to be built in five phases, is one of the largest industrial development projects in Louisiana history.
The first phase of the project is a $750 million direct reduced iron facility that will create 150 jobs. Future phases, according to Nucor, will include a second DRI facility, a pig iron blast furnace, coke ovens and, ultimately, a steel mill itself.
During a Wednesday news conference, John Ferriola, Nucor's chief operating officer, said an initial pig iron blast furnace project has been pushed back because of concerns about climate-control legislation, particularly "cap-and-trade" legislation, that is now before Congress.
Ferriola said DRI facilities, which are fired by natural gas, have fewer emissions than the coke-fired blast furnace. Coke emissions might be covered under the "cap-and-trade" discussions, he said, noting that future phases of the project will depend on what happens with the climate legislation.
Gov. Bobby Jindal said that the possibility of cap-and-trade could restrict this and other projects. "The mere talk of cap-and-trade is causing companies to slow down and start looking overseas," he said.
Ferriola said the Charlotte, N.C.-based company must modify its state air and water quality permits that already have been granted for the proposed blast furnace before work can begin on the DRI project. However, he said, he anticipates no problem in getting those changes approved because DRIs have lower emissions.
He said he hopes the permit changes will be in place by the end of year. From the point of approval, he said, it will take about 24 months before the facility is up and running.
If all five phases are completed, Ferriola said that will eventually mean 1,250 jobs for the state and a $3.4 billion in capital investment from Nucor, a specialty steel manufacturer that needs both kinds of iron — recycled scrap and refined iron ore — for its products.
The company said the jobs would pay an average of $75,000 per year. Median income in Louisiana is around $28,000.
Nucor already has spent $50 million buying nearly 4,000 acres on the Mississippi River. The company also had been considering a site in Brazil.
The project also is in line for a $30 million capital outlay from the state, along with state grants and loans that would total $160 million over six years provided that all five phases are built.
Nucor Corp.: http://www.nucor.com/
LED GO-Zone bonds: http://www.louisianaeconomicdevelopment.com/opportunities/incentives--programs/gulf-opportunity-zone.aspx