Blanco trying to lure steelmaker; State is competing for giant steel mill

BYLINE: By Robert Travis Scott, Capital bureau

BATON ROUGE -- Gov. Kathleen Blanco is leaving the door open in the upcoming special Legislative session for an incentives package to lure a giant steel plant to Louisiana, a coveted economic development project being pursued by three southeastern states.

ThyssenKrupp AG, Germany's largest steelmaker, still plans to build a $3 billion steel mill complex in the United States, executives said at the company's annual news conference Friday, according to Reuters.

Two months ago, Blanco fended off Republicans' demand for a November special session by saying she might need a session in December to approve incentives for a major jobs project that was nearing a decision.

The steel company months ago narrowed its search to sites in Louisiana, Arkansas and Alabama and has since been in the bargaining stage with the states. Delegations from all three states have visited company officials in Germany.

In Louisiana, ThyssenKrupp has considered a site on the east bank of the Mississippi River in St. James Parish for a 2,000-employee steel plant on 4,000 acres.

"Louisiana is still very much in contention for the project," Louisiana Department of Economic Development spokeswoman Lana Sonnier said Monday. The department's understanding is that the steelmaker is still planning to build the massive complex and that all three states are still in the running, she said.

Based on the company's current timeframe, the steelmaker is not likely to have reached a decision on a plant site in time for the special session, which runs Dec. 8-17, Sonnier said.

"It's really in the company's hands," Sonnier said. "The process sometimes takes longer than expected."

The governor's agenda for the session is broad enough to include a variety of incentive packages for the steel plant or "numerous other projects" the department is seeking, Sonnier said. Sonnier would not say whether the governor's plan is to make contingency legislation for the steel plant during the session, but she said the agenda would make it possible to do so.

Items on the governor's call that could apply to industry incentive packages include tax breaks for steel works, the creation of special dedicated funds and a bill to back unspecified state construction projects. Businesses across Louisiana would benefit from other tax breaks in the call, including a reduction in sales taxes on utility payments and a faster phaseout of taxes on business investment, Sonnier said.

Quoting ThyssenKrupp's chief executive, Ekkehard Schulz, Reuters reported that the company plans to go forward with its U.S. steel mill plans irrespective of whether the company can complete its acquisition of Dofasco Inc., a Canadian steel interest.

ThyssenKrupp has been stymied in its takeover attempt since an independent foundation was formed to shield Dofasco from the deal. Schulz's comment removed doubts over whether ThyssenKrupp would follow through on its new steel plant if the Dofasco deal works out.

The German steelmaker is in an acquisition mode and will ask shareholders in January to allow it to raise cash to finance growth. Global demand is strong for high-quality flat steel, an important material in the auto and appliance manufacturing industries. ThyssenKrupp wants 10 percent of the world flat-steel market, Reuters reported.

Louisiana Economic Development Secretary Michael Olivier has said that, to compete, the Louisiana site will need extensive preparation that could cost several hundred million dollars.

Arkansas media have reported that the company is considering a site near Osceola, a town 40 miles north of Memphis, Tenn., that is flanked by the Mississippi River and Interstate 55.

The Mobile (Ala.) Press-Register has reported that a site near Mobile is on the company's short list. Alabama is pursuing the plant under the code name "Project Compass" and has slated about $900 million in tax-exempt Gulf Opportunity Zone Act financing.

Alabama Gov. Bob Riley has said Louisiana has an advantage in the deal because it has far more GO Zone financing available. The financing was created by Congress to aid hurricane recovery.

Riley referred to the competition between Louisiana and Alabama by saying "both sites have negatives," the newspaper reported. For the Alabama site, materials would have to be unloaded from ships, put on barges and brought inland, the report said.

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Robert Travis Scott can be reached at rscott@timespicayune.com or (225) 342-4197.