1 year later: New look at Alcoa’s jobs-for-license offer
RALEIGH (AP) — Last December, a group of investors backed by Alcoa Inc. scrapped plans to bring 450 jobs to two new industrial plants at the former Alcoa aluminum smelting plant in North Carolina where once about 1,000 worked.
Clean Tech Silicon & Bar LLC’s announcement that ruled out the site along the Yadkin River in Badin came three months after John Correnti and other investors struck an even bigger deal with Mississippi for a silicon metal production operation projected to employ 950.
That project, too, though, is having trouble getting off the ground despite $80 million in promised incentives from the state and local groups.
The financing problems that risk scuttling the Mississippi proposal likely would have been the same in North Carolina, Correnti said. State and local officials wouldn’t agree to the bargain because it included allowing Alcoa a multi-decade dam license worth billions of dollars.
“I think it would have been similar,” the former CEO of Charlotte-based steelmaker Nucor Corp. said of the problems.
The trouble some of the same investors have had in Mississippi validates doubts some North Carolina officials had that the jobs would appear as promised by Clean Tech and Alcoa, said Stanly County Commissioner Lindsey Dunevant, who until earlier this month was the board’s chairman.
“It makes us feel like we appropriately judged the circumstances and that we weren’t in a position to accept that proposal,” Dunevant said. New county commission chairman Gene McIntyre declined interview requests.
A total of 250 of the North Carolina jobs that were to pay $55,000 a year were promised at a new steel recycling plant and a second facility producing silicon metal by burning gravel and wood chips to extract silicon for solar fuel cells, adhesives, cosmetics and aluminum. Another 200 support jobs were forecast.
In Mississippi, an initial silicon metal production operation was forecast to employ 200 at $45,000 a year. A silicon metal purifying operation employing about 750 was part of a second phase. Mississippi promised $75 million in loans and grants, and Lowndes County guaranteed to lease the land and build roads and other improvements.
But the company planning the big project, Silicor Materials Inc., has missed deadlines to get started this year, said Joe Max Higgins, chief executive officer of Golden Triangle Development Link, the business recruiting agency for Lowndes and two other counties. Silicor Materials, of which Correnti is executive chairman, has had trouble concluding funding commitments, Higgins said.
Silicor Materials is facing a Dec. 31 deadline to put up $150,000 to cover Lowndes Country’s expenses if the deal falls through, Higgins said. The money would be refunded if construction on the silicon metal plant gets started.
“When they’re dropping the ball on Times Square, when the ball hits zero, if there’s not the $150,000 deposited into our account, we will nullify the loan and incentive package” the county offered, Higgins said. “My people here don’t understand: How can a guy be building a $200 million project and then have a problem with escrowing $150,000 when he’s missed two critical deadlines?”
Correnti saidhe’s willing to walk away from the Mississippi project rather than post the money.
“We’re not going to put any money down on escrow. I never have on any project I’ve ever done. If people don’t have the patience for it, so be it. That’s OK,” he said.
Correnti has had mixed success in Mississippi. He was instrumental in opening a steel mill in Columbus in 2007. A Russian company later bought out Correnti and other senior managers and changed its name to Severstal. Correnti also promised a steel rebar mill that hasn’t materialized in Amory.
Another principal in both the Mississippi and North Carolina projects, David Stickler, said he doesn’t know where the jobs proposed by Clean Tech might land or when a decision might come. He called the incentive-packed Mississippi deal “a challenging project to get off of the ground in these less-than robust economic times.”
The main condition for landing the Clean Tech jobs was that officials drop their opposition to Alcoa receiving a new federal license to operate its four hydroelectric dams along the Yadkin for up to another 50 years. Alcoa planned to take a 25 percent stake in Clean Tech had a deal been reached.
“Alcoa was prepared to make a substantial investment in the proposed Clean Tech project in Badin and obviously our financial commitment was a critical piece of the proposal.
Unfortunately, that Clean Tech opportunity passed last year and we are now focused on moving forward and renewing our license,” said Ray Barham, Alcoa’s manager leading the Yadkin relicensing effort.
Alcoa has sold the electricity to commercial customers since its smelter closed about a decade ago. Company figures estimate that the dams could generate more than $2 billion in revenues over 50 years, a figure that could multiply if demand for clean power booms or the dams increase their output.
State and local officials have resisted Alcoa’s relicensing under the belief that cheap energy from public control of the dams could result in thousands of jobs in coming decades, and that freedom to use the river’s water was needed as supplies tighten for North Carolina’s 9.5 million residents.
Correnti said he may again test the interest of North Carolina officials to make a deal.
Correnti may approach Gov.-elect Pat McCrory’s GOP administration after he takes office next month to again pitch the steel plant for the Alcoa site.
“I was just going to wait until after the new governor took office and got his feet wet and got his cabinet in place, etcetera, etcetera, etcetera and then visit with Alcoa and see if it’s worth reloading the gun,” Correnti said.