The beginning of September will mark one year since a California-based solar silicon manufacturer chose Lowndes County for its sprawling new facilities. But after pushing the start date back several times, the company may soon be faced with having to request an extension or risk losing the hefty incentive package that state and local officials worked so hard to craft.
Silicor Materials, formerly Calisolar, must begin phase one construction by Sept. 2 and phase two construction by Dec. 31 or the company’s $94.25 million incentive agreement with the county and state will become null and void.
So far, no site work — not even environmental testing — has been done by Silicor, Lowndes County Board of Supervisors President Harry Sanders said Monday. And although a memorandum of understanding and two fee-in-lieu agreements have been drafted and verbally agreed upon, no one from Silicor has signed the documents.
State lawmakers approved a $75.25 million incentive package last September to lure the company to Mississippi. The plan includes a $59.5 million equipment and construction loan, along with $11.25 million for infrastructure and an additional $4.5 million for local workforce training. Lowndes County gave an additional $19 million in financial incentives.
In exchange, Silicor officials were to build a 1 million-square-foot silicon metal production and purification facility on 258 acres of land east of Industrial Park Road, directly behind Mitchell Beer Distributing. An estimated 1,000 construction workers — making as much as $2,000 per week — were expected to arrive in town at the beginning of the year, adding needed revenue to local coffers and beginning site work to fulfill the company’s phase one commitment.
Based upon the memorandum of understanding, Silicor is required to invest at least $500 million in the two-phased project, promising 951 full-time jobs with an average annual salary of $45,000. If the company defaults on those commitments, there are steep monetary penalties, as outlined in the document.
Promises and preparations
At the Columbus-Lowndes Development Link’s quarterly luncheon in March, Link CEO Joe Higgins said the start date had been pushed back to a “best guess” construction start in June.
But last week, via voicemail, company officials assured him they still plan to sign their paperwork and begin construction by the Sept. 2 deadline, and he said at least one employee has been in the area, scouting for real estate.
There’s some latitude — within reason — in the deadline, he said.
“If everything’s coming together, I don’t think we’re going to kick somebody to the curb for a two to three-week delay,” he said Tuesday. “If you find them needing another week or two, or 30 days, I don’t think anybody’s going to walk away. Now, if we think it’s going to be long term, I wouldn’t expect we’d hold a package aside.”
But company officials are doing everything they can to meet the deadline, said David Stickler, senior managing director for Global Principle Partners, which is responsible for structuring and raising capital for the project.
The problem is they have not yet received a commitment from their European banking partners, Stickler said Tuesday via telephone.
He confirmed a large international silicon producer, which he declined to name, will own 63.5 percent of the company and will provide $235 million toward the project. Other investors, some of whom he said were investors in Severstal, will own the remaining 37.5 percent.
“We are spending hundreds and hundreds of man hours and millions of dollars to try to meet that (Sept. 2) date,” he said. “We’re well aware of that date, and we’re doing all we can to meet it.”
He said company officials will sign the memorandum of understanding and fee-in-lieu agreements at the ground-breaking, adding that they’ve already ordered the custom-made silver shovels that will be used for the ceremony.
What about Ohio?
“The only thing I know is we’ve given them until Sept. 2 to start construction and give us their financial information, and if they don’t, our incentive package is off the table and we have to start all over again,” Sanders said.
The scenario calls to mind what happened with the same company in Mansfield, Ohio, he added.
Company officials, including Executive Chairman John T. Correnti, former CEO of SeverCorr (now Severstal) began negotiations last April to take over a vacant General Motors plant in Mansfield, promising to create between 830 and 1,300 jobs averaging a salary of $45,000 per year.
The U.S. Energy Department awarded what was then Calisolar a $275 million conditional loan guarantee, but the company rejected it in July, saying they would not be able to meet the September deadline to begin construction.
Instead, in September, Higgins announced the company was coming to Lowndes County.
But Stickler said the company rejected Mansfield and turned down the incentive package because it involved dealing with the federal government’s red tape, which he said is difficult on large projects and made them uncomfortable.
But Correnti and others had a good experience working with Lowndes County, the Link, and East Mississippi Community College on the Severstal project, and they’re looking forward to having that same experience with Silicor, he said.
The risk factor
You have to assess the risks of a project like this, Higgins said, because once you get involved, you’re taking yourself out of the running for other projects and may even lose potential deals with other industries who don’t want to compete for resources or employees.
It also ties his hands when it comes to recruiting suppliers, many of whom have expressed interest in relocating to Lowndes County but are waiting to see progress from Silicor.
Last month, the Amory Board of Aldermen officially gave up on their long-awaited Correnti project.
Correnti and several other leaders in the steel industry joined together to form Steel Development Co. LLC, with the intention of building steel mills for niche markets. The company leased waterfront property in Amory to build Eco Steel Recycling LLC, a rebar micro-mill, and broke ground in October 2008, but the project fell through for lack of money.
During a June 19 board meeting, the Amory aldermen terminated their project site lease with Eco Steel.
“It’s literally a two-edged sword,” Higgins said. “You want to give the company adequate time and support, but you also have expectations. We’re six weeks away (from deadline), and we’ve got to sit here and wonder, ‘Are they going to be able to meet their obligation, and if not, when are they going to tell us?'”
He and Sanders said the county and the Link have done their part, now they’re just waiting for the rest of Silicor’s pieces to fall into place.
“I’ve been busy on my side making sure I can deliver on my end of the bargain, and I’m assuming they’re doing the same on their side,” Higgins said.
Carmen K. Sisson is the former news editor at The Dispatch.
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