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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
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