Requirements from a German bank that is providing $600 million for the Big River Steel plant near Osceola pushed the total cost of the project to $1.3 billion from $1.1 billion, according to officials gathered Tuesday in the offices of the Arkansas Economic Development Commission.
That information was discussed a day after the project made the Monday financing deadline as required by the 2013 Amendment 82 to the state Constitution.
The mill will employ 525 workers who will be paid an average of $75,000 a year, according to John Correnti, head of Big River Steel LLC and former chief executive of steel-making Nucor Corp. of Charlotte, N.C.
Correnti said Tuesday: "Now the hard work starts" -- building the plant. He said the pouring of steel should begin in 24 months.
He characterized the project as a $1.1 billion capital project that costs $1.3 billion to finance.
Grant Tennille, executive director of the commission, said financial compliance with Amendment 82 had been achieved by two recent actions taken by public agencies, though some loose ends had to be addressed as the deadline approached.
The sale of $125 million bonds, issuance of which was approved last year by the Legislature, had to be achieved by Monday, according to Tennille. The state also provided tax incentives.
"The alternative would've been to go back to the Legislature and ask for more time. And nobody wanted that," Tennille said.
The project was opposed during the 2012 legislative session by Nucor Corp., which operates two steel mills in Mississippi County, where Osceola is located, and contended that it might have to eliminate jobs if the Big River Steel plant were built.
The recent enhancement of the Arkansas Teacher Retirement System commitment and a line of credit established by the Arkansas Department of Finance and Administration were the last two major hurdles, Tennille said.
Trustees for the Arkansas Teacher Retirement System authorized in June to invest up to $125 million in the steel mill --more than doubling its initial $60 million approved early last year.
System Executive Director George Hopkins said the increase of up to $65 million authorized for the investment was because of its "attractiveness" and includes $20 million for a contingency fund, $12 million required for a debt service fund, $10 million for secured debt, $5 million for unsecured debt and $16.91 million for other possible financing.
KfW, a German government-owned development bank, had required additional money -- for a contingency fund and debt service -- as a requirement for providing $600 million, the vast majority of which will fund the purchase of steel-making machinery from a German firm.
Business on 07/02/2014
Print Headline: Big River Steel plant near Osceola to rise in cost to $1.3 billion