ST. JAMES PARISH, La. – This is one of the Big, big fishes that Louisiana has caught that did not get away.
Today, Gov. Bobby Jindal and Nucor Corp. (NYSE: NUE) Chief Operating Officer John Ferriola joined Louisiana Economic Development Secretary Stephen Moret and St. James Parish President Dale Hymel to announce what will ultimately be one of the largest industrial projects in Louisiana history. Gov. Jindal joined Nucor to announce after the state's work to win the project for years, the company selected St. James Parish as the location for a multiphase iron and steel project that could create 1,250 new, direct jobs averaging at least $75,000 per year, plus benefits, as well as $3.4 billion in capital investment.
Headquartered in Charlotte, N.C.., Nucor Corp. has a production capacity that exceeds 26 million tons, and is the largest producer of steel in the U.S. A member of the Fortune 500, Nucor runs approximately 200 operating facilities and employs more than 20,400 people. Nucor is also North America's largest recycler and the world's foremost steel recycler.
Over the past few years, Nucor evaluated several sites in the U.S. and abroad while deciding where to locate the project.. Since taking office in 2008, Gov. Jindal worked with Nucor executives to promote Louisiana as the best site for the project, and met with Nucor Chairman, President and CEO Daniel R. DiMicco and other Nucor executives many times. In July 2008, Gov. Jindal traveled to South Carolina to meet with Nucor executives and tour one of the company's facilities.
"This is a huge win for our state and will ultimately be one of the largest industrial projects in Louisiana history," said Gov. Jindal. "Nucor's decision to come to Louisiana instead of anywhere else in the nation or the world is not just a tremendous victory for Louisianans in that it could create 1,250 new high-paying jobs and $3.4 billion in capital investment, but it also sends a signal far and wide that Louisiana is the best place for businesses to locate, grow and succeed. We are competing for the best businesses in the world. We have already announced project wins creating more than 35,000 new jobs since taking office, and the Nucor project will be a tremendous economic boost for Southeast Louisiana and our entire state for years to come."
"This facility will create good jobs for American workers and, at the same time, it will help Nucor achieve our long-term goal of increasing control over our raw materials supply," said DiMicco.
The five phases of the project described in an incentive agreement with the state include a direct reduced iron (DRI) facility (150 jobs and $750 million capital investment), which will be the first phase of the project; a second DRI facility (100 jobs and $400 million capital investment); a pellet plant (200 jobs and $500 million capital investment); a blast furnace and coke ovens (300 jobs and $1 billion capital investment); and a steel mill (500 jobs and $750 million capital investment).
The first phase of the project, a 2.5 million tons-per-year iron making facility, will use direct reduction technology to convert natural gas and iron ore pellets into high-quality DRI used by Nucor's steel mills, along with recycled scrap, in producing numerous steel products, such as sheet, plate and special bar quality steel.
Subject to final approval of the proposed state incentive package, Nucor will begin construction of the first DRI facility as soon as possible after completion of related environmental permitting. Nucor estimates phase one will create 500 jobs during peak construction.
To secure the project, LED offered a customized incentive package to Nucor, including $160 million in performance-based financial assistance over approximately six years provided that all five project phases are initiated as scheduled in the company's cooperative endeavor agreement, or CEA, with LED. Nucor also is expected to apply for a Gulf Opportunity Zone bond allocation of $600 million and the state's Quality Jobs program.
An extended local property tax exemption of approximately 20 years will be made available to the company through the local government; however, Nucor will make an annual payment in lieu of taxes to support the local school system, parish and sheriff. These payments will begin at $850,000 per year and eventually will increase to $4.5 million per year provided all project phases are completed according to the timelines required for Nucor to receive all the incentives detailed in its CEA with LED.
The CEA between the state and Nucor allows the company to select the order of execution of the remaining four phases of the project; however, all four phases must be initiated by 2015 for the company to receive the full value of the incentive package proposed by LED. If all phases are executed according to Nucor's CEA with LED, peak employment of approximately 1,250 direct jobs is expected by 2019.
An economic impact analysis developed by Louisiana State University indicates the project, if executed as scheduled in the CEA, will generate approximately $563.5 million in new, state tax revenues, as well as $122.6 million in new, local tax revenues over the life of the CEA, which is structured to run through 2033. Additionally, LSU's analysis indicates about 4,800 indirect jobs will be created by 2019, resulting in a total of more than 6,000 new, direct and indirect jobs provided the company meets all of the benchmarks in the CEA required to receive the full incentive package.
"In terms of capital investment, jobs, tax revenues and the overall signal it sends about Louisiana's economic momentum, Nucor's decision is one of the most significant wins in our state's history," said Moret. "We are focused on positioning Louisiana's economy to continue to outperform the South and U.S. on a consistent basis. Nucor's multiphase project, combined with our state's many business development successes since 2008, will certainly help us achieve this goal."
Nucor will break ground on the first phase of the five-phase project as soon as it completes environmental permitting, which we currently expect will be early 2011” Moret told Bayoubuzz by email. “It is possible they will begin site preparation activities even sooner.”
"I am excited to have Nucor steel joining our vast growing industry, providing better opportunities for our residents and attracting new residents to the parish," said Hymel. "My plan for the parish is to continue to drive economic growth into St. James while keeping the green and peaceful vision intact. It is an honor Nucor would choose St. James Parish for their investment."