LITTLE ROCK, Ark. (AP) -- The wraps came off Arkansas' largest ever economic development project Tuesday as Gov. Mike Beebe unveiled plans for a $1.1 billion steel mill along the Mississippi River that private investors are poised to build -- so long as legislators approve millions in startup funding.
Big River Steel, LLC, would employ 525 people at a new plant near Osceola if legislators approve $125 million in bond financing to be repaid over 20 years. If the Legislature rejects the pact, another state is poised to step in, Arkansas' economic development chief said, without specifying the state.
Mississippi County was hit hard after an Air Force base closed in the 1990s, and about one-third of its residents currently live in poverty. The mill's average salary would be $75,000 — about double the state average — and it would turn Mississippi County into the second-largest steel producing county in the country, Beebe said.
"It is an event that's going to bring a struggling Delta county out of the doldrums," Osceola Mayor Dickie Kennemore said.
The facility will take scrap metal and reduce it back to steel, according to Arkansas Economic Development Director Grant Tennille. Nucor Corp. already operates a similar mill in Blytheville, and since it opened in 1988, Mississippi County has seen its unemployment rate cut in half.
"This could do exactly the same thing again and then some," Beebe said at a news conference unveiling the plant.
The majority of the $125 million Beebe is proposing — $75 million — would be a grant to Blue River Steel for startup costs associated with building the facility. The remaining $50 million would be a loan the company would have to repay.
Arkansas' total net cost of repaying the bonds would be about $5.1 million per year over 20 years, based on an estimated 3.7 or 3.8 percent interest rate, according to economic development officials.
Arkansas voters in 2004 gave legislators authority to borrow money for economic development after narrowly missing out on a Toyota truck plant that was eventually built in San Antonio, Texas.
The plant will make steel for auto, oil and gas and electrical energy industries. Its site is about 40 miles north of Memphis, Tenn., along the Mississippi River, a railroad line and Interstate 55. A major transport hub is 30 miles away in Marion, where goods can be transported by barge, train or truck.
"Arkansas' geographic location in the heart of the markets we intend to serve, the state's well-developed transportation infrastructure as well as the availability of reliable electrical power and the 'can do attitude' of the government officials in Little Rock, Mississippi County and Osceola make Arkansas a great place for Big River Steel to make its investment," Big River Steel CEO John Correnti said in a statement.
As part of the incentive program, state officials will pay to stabilize the loose, fine soil beneath the plant.
Correnti, a former Nucor executive, has had success developing steel operations in the past, including the construction of a $650 million Severstal steel mill that opened in 2007 in Lowndes County, Miss. But some of his other recent projects have failed — a steel rebar facility in Mississippi and silicon projects in Ohio and North Carolina.
Tennille, the economic development director, said that his team looked at those previous ventures but are confident that the Arkansas project will succeed.
"When you're dealing with somebody who does as many deals as he has, there will always be things that are bigger successes than others," Tennille said. "We really feel that in terms of building steel mills there is nobody better than John Correnti."
Legislative leaders said Tuesday that they looked forward to reviewing the project.
Senate President Michael Lamoureux said the Legislature will likely hire an outside consultant.
"It's a major state investment, so it's just doing the proper amount of due diligence and making sure it's a good value," he said. "You're essentially giving state money or using the state to loan money to a private entity, so you have to make sure that's a good value there."
House Speaker Davy Carter said that he was excited about the long-term possibilities the deal presents, but reserved judgment on the bond offering until he has more information.
"This is inning 2 of a nine-inning baseball game and the House and Senate has a lot of work to do in a short period of time," he said. "We're going to go through the process and do our homework."
Associated Press writer Jack Elliott in Jackson, Miss., contributed to this report.