The legislature met in special session last week and voted $247 million in state incentives (sweeteners) for Steel Dynamics’ new $2.5 billion recycled aluminum plant and other investments. The plant is to be built in The Golden Triangle. (Starkville-Columbus-West Point area) in Northeast Mississippi. The justification for the incentives is jobs, related investments, and other economic multiplier effects.
We’ve heard this justification before. Remember Kemper’s $7 billion failed lignite to synthetic natural gas experiment, Kior’s $76 million pine trees to diesel fantasy, Stion’s $75 million unworkable solar panels, Twin Creeks Technologies’ $24 million silicon panels bankruptcy, the infamous Beef Plant hustle, etc.
But it appears we learned something from those embarrassing fiascos. They left taxpayers on the hook while promoters and celebrity directors skated. (Remember Condoleezza Rice with Kior stock options gushing about its imaginary technology?)
This time there are strings attached to the incentives to prevent repeats. But they probably won’t be needed. This project looks real. Steel Dynamics is a real company with a successful track record with real products, technology, know-how, and skin in the game. This looks like the Toyota and Continental Tire projects.
The plant is to be located in the Golden Triangle Industrial Park where Steel Dynamics already has a steel mill. The location is significant. Why? The area is an advanced manufacturing hub with $6 billion existing investments and 6,000 jobs. It has a labor pool of 500,000 people. Mississippi State graduates 600 engineers annually. Community colleges offer advanced robotic training for companies in the area. It’s a manufacturing cluster with critical mass and flywheel growth momentum.
It has good infrastructure: interstate highway network, access to the Tennessee-Tombigbee waterway, regional airport, rail service to industrial parks, and electricity from the Tennessee Valley Authority (TVA). Reliable and affordable electricity is essential for recycling aluminum.
TVA is the most reliable and likely the cheapest source of electricity in the state for such projects. It has a diverse generation fleet and a robust transmission system to directly serve large customers.
Coincidentally, it is (lightly) regulated by the Federal Energy Regulatory Commission (FERC) – not by the Mississippi Public Service Commission which brought us Mississippi Power’s Kemper County Lignite Plant. And now brings us solar generating plants with higher cost and less reliable electricity.
TVA is essentially self-regulated. Not surprisingly, it seems to deliver more affordable more reliable electricity than other utilities in the state subject to oversight by the PSC (assisted by the Mississippi Public Utilities Staff).
There is predictable opposition to the Governor’s special session and incentives for the aluminum plant. Critics say it’s not right to provide incentives to encourage economic development while ignoring pressing human needs problems. They cite Jackson’s perpetual water plant issues, unused potential Medicaid funding, rural hospital closings, and so on. They also play the race card.
The reality is competition drives incentives. Company executives play the: “I can locate my plant in Alabama or another state” card. It’s true to a degree. But there are fewer location options if the plant requires lots of affordable reliable electricity. These options are decreasing as more electric utilities contaminate their grids with intermittent green energy (solar and wind).
So the Governor holds some cards too. Other companies with plants requiring reliable electricity will likely find the Golden Triangle attractive. Unfortunately, they are less likely to find central and south Mississippi as attractive. That’s because Entergy and Mississippi Power have monopoly service areas there. Their electricity is becoming more expensive. Entergy is adding expensive, intermittent, less reliable solar power to its grid. Mississippi Power is shutting down older plants with cheap electricity in favor of more expensive electricity from PSC face-saving remnants of the Kemper debacle.
The Governor would hold more cards if these utilities were more competitive. Mississippi is crossed by one of the country’s largest concentrations of high-capacity natural gas pipe lines. It has the potential to add almost unlimited reliable generating capacity to attract other energy intensive manufacturing plants. Many companies with such plants are fleeing Germany and other countries where mandated green energy has destroyed their economies and impoverished their citizens.
Mississippi could be a haven for these companies. Not just in the Golden Triangle. The PSC could encourage and enable the utilities it regulates to seize this opportunity. Why doesn’t it? Why does it permit and encourage those utilities to do foolish things that are good for their investor shareholders but bad for customers? And bad for the state’s economic growth.
Capital goes where it’s welcome and stays where it’s appreciated. The CEO of Steel Dynamics said: “We are eager to expand our presence in Columbus, and we appreciate the warm welcome and support that we have received from Governor Tate Reeves and Mississippi.”
Today, smart money goes where there’s reliable affordable electricity. Kudos for the Golden Triangle’s success and FERC / TVA’s contribution of cheap reliable electricity. Rotten tomatoes for the PSC / Entergy / Mississippi Power’s more expensive less reliable electricity in the rest of the state.
Bigger Pie Forum sponsored this post. The post was authored by Kelly Williams.
22 comments:
That is about $85.00 from every man, woman, and child in Mississippi. Whether that is good or bad, I don’t know. Do you?
Stay away from "wanted." Hahahaha.
This plant, and the Golden Triangle Industrial site will provide great paying jobs for many years into the future. If folks choose to relocate to that part of the state, they will find political leadership witha servant attitude and care for the publc good. I can see a day when this part of the state leads in all categories of life quality in Mississippi.
I wonder how they came up with that figure and not $200 million or less.
Do they have a competitor and have they researched what their competition is actually?
I wish I didn't think it was "bubbas" throwing around numbers over bourbon.
Bribes
Takes money from the state and the people who actually comprise the state and for what?
Promise of jobs which will not happen and for which there is no recourse.
It’s a sham.
Another MSGOP funded boondoggle at the expense of the ignorant taxpaying public!
The Hyundai auto plant near Purvis will be the next big project.
@12.27 PM
I disagree that this is a sham. BPF has it right: Steel Dynamics (NASDAQ: STLD) is a legit company with an $18B market cap and over $20B in annual revenues. This is not another Kior or beef plant. A publicly-traded company is not going to spend a pile of its shareholders' money to build a plant if they aren't going to run the plant, which means hiring people.
$92M of the package is tax incentives and rebates which represent tax dollars that the State will forego but not actually pay out. If STLD didn't build the plant, the State wouldn't get those tax dollars anyway. Another $18M is a loan to Lowndes County for purchase of the land for the plant, which the state should get back unless Lowndes welshes on the debt (doubtful). And $25M is for road work, which presumably will have some benefit to the community at large, beyond the plant itself.
Of course, the State could do nothing and let STLD build their plant elsewhere, while Mississippi continues to lose businesses, population and tax dollars and slide back toward the 19th century.
Kior, beef plant, Solarama - those were shams. Steel Dynamics (like Continental) is a real, job-producing project. If Mississippians can't create their own jobs through healthy, growing businesses (name the last home-grown MS company that created 500+ jobs in the state), then the State may just have to go out and buy them.
That is about $85.00 from every man, woman, and child in Mississippi. Whether that is good or bad, I don’t know. Do you?
The $85 the state takes from me to pay for this will yield more good and result in more net tax dollars than if the state takes $85 from me to pay for the public works disaster, incompetency and corruption in Jackson.
Gee, I wonder why anyone would "contaminate their grids with intermittent green energy (solar and wind)"? Y'all spend a minute Googling "methane levels" and "CO2 levels" and "Blue Ocean Event" and "tipping points." Don't even read the opinions of people who have been studying this their entire professional lives if you don't want to, just look at the numbers yourself.
These people are paid shills of the energy sector. If you make your own electricity, they lose money.
Like Gov. Fordice said, Nissan will never pay for the deal.
You tell them, @November 30, 2022 at 2:17 PM. We don't want none of that reliable electricity, or natural gas around here. We want to be like Europe. Folks that can't keep their homes warm, or run their industries.
As for the planet. It won't matter what our carbon footprint is if we are starving to death, freezing to death living in the wild.
5:06, Nissan has been employing directly and indirectly thousands of Mississippians for almost 20 years. Governor Fordice passed away in 2004. If you have proof of your reference, put up or shut up.
“ It has good infrastructure: interstate highway network,”
Could you elaborate a little more on which interstate(s) run through the Golden Triangle area?
Asking for a friend.
1227 - evidently you speak of what you don't know.
Much of this money is in 'tax abatements' - if the jobs dont occur, then they don't get the 'money'. Also, there is a serious clawback control inserted in the deal, and its not just for the operations that are being constructed, but the clawbacks go to the base corporation, a multi-billion dollar company - so the clawbacks would be collected.
But, I do realize that it is a lot more fun to bitch about crap whether one knows anything about it or not and that some low-knowledge folks get their kicks off on posting crap on blog sites just for the hell of it without bothering to learn anything about the subject.
Eat a few more cheetos and make sure you wipe your hands before they become occupied satisfying your other mind with aimless activity.
5:06, that wasn't the only thing Fordice was wrong on - but hell, who's counting. Other than you and those that don't bother to really count.
Granted, Nissan 'cost' the state a hell of a lot more than this deal did, and the payback has to be in actual dollars due to the difference in how the deals were structured.
It took longer for Nissan to 'pay for the deal', but it did actually happen.
Does an aluminum recycling plant in MS enable WM to pick cans up from residential maybe once a month?
Commissioner Presley,
Please respond succinctly to this article on behalf of the Public Service Commission. Thanks very much...
STARTUPS……that is how the State lost money.
How much of a factor is TVA? Other utilities offer industrial discounts around the state.
Latest update on the Kemper fiasco: https://www.nacva.com/content.asp?contentid=307#4
A Saga of Clean Coal Electric Power: The Multibillion Dollar Southern Company Fraud | Full Article (PDF)
Amanda M. Grossman
Steven D. Grossman
D. Larry Crumbley
Abstract: From a wanton lack of proper accounting disclosures in its public annual reports from 2013 until 2020, Southern Company is accused of perpetrating a fraud regarding the construction of a “clean coal” power plant near De Kalb, Mississippi, with a population of 947. Southern Company lost close to $7 billion from the ill-fated project. Evidence suggests that the company knowingly, and with intent to deceive, misrepresented the costs and time associated with the plant construction. The ongoing deception fostered the company’s ability to maintain tax credits and receive millions of dollars in funding from the Department of Energy. Southern Company was sued by shareholders, and recently, Deloitte & Touche, LLP, the company’s external auditors, also have been sued. Deloitte provided unqualified audit opinions over the aforementioned timeframe, although every indication suggested that Southern Company was hiding the financial condition of the power plant. This article presents and discusses the acts and financial disclosures of Southern Company, and based on these data, one could conclude that Deloitte appears grossly negligent.
Keywords: Southern Company; Mississippi Power Company; Deloitte & Touche; Kemper Power Plant; Base Load Act; fraud; external auditors; carbon recapture
FULL ARTICLE PDF: http://web.nacva.com/JFIA/Issues/JFIA-2023-No1-4.pdf
JFIA= Journal of Forensic and Investigative Accounting
Link to current issue with Kemper paper: https://www.nacva.com/jfia-current
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