FILE - Braidy Industries Inc. CEO Craig Bouchard, right, and then-Republican Kentucky Gov. Matt Bevin speak with reporters in Wurtland, Ky., on April 26, 2017. Braidy Industries still needs to raise $500 million to build a long-promised $1.7 billion aluminum plant in Appalachia, a top company executive told Kentucky lawmakers on Tuesday, July 19, 2022. (AP Photo/Adam Beam, File)

A steel producer has announced plans to build and operate an aluminum mill in the southeastern U.S., after reaching a deal with the company that so far has failed to deliver on its promise to put the plant in Kentucky — even with financial backing from the state.

The announcement this week was the latest chapter in what has been a long, tortuous effort to build a new aluminum plant in an Appalachian region struggling to create jobs.

Steel Dynamics Inc. said this week that its board approved plans to move ahead with construction of the $1.9 billion plant, though it did not specify where other than to say it will be somewhere in the Southeast. Steel Dynamics said it will own more than 94% of the facility through a joint venture arrangement with Unity Aluminum. The Steel Dynamics plan is much larger in size and scope than what Unity had contemplated. And a Unity spokesperson offered assurances that the state of Kentucky will recoup its investment.

Unity, formerly known as Braidy Industries, had intended to build an aluminum mill near Ashland in northeastern Kentucky but struggled for years to line up sufficient financing for the project.

The Ashland-area site — about 240 acres (97 hectares) — is “insufficient to meet the size and scope requirements” of the new project, a Unity spokesperson told The Associated Press on Wednesday. Steel Dynamics did not respond to emails and calls seeking comment on where its new mill would be located.

Kentucky Gov. Andy Beshear's administration signaled it will make a pitch to try to retain the project. The state's economic development cabinet has not been approached by Steel Dynamics, but a cabinet spokesman said Wednesday that “we are actively reaching out to discuss possibilities.” Unity's plan to build in Kentucky was a pet project of the Democratic governor's predecessor.

Indiana-based Steel Dynamics said Tuesday that investment for its project is estimated to reach $2.2 billion, which includes two supporting aluminum slab centers to be built elsewhere. Commercial production is planned to begin in early 2025, the company said.

“We are incredibly excited to announce this meaningful growth opportunity, which is aligned with our existing business and operational expertise,” Mark. D. Millett, chairman and CEO of Steel Dynamics, said in a news release.

Unity Aluminum promised in 2017 to build the aluminum plant near Ashland and to hire 550 people. The Appalachian region has lost thousands of jobs amid deep declines in the coal industry and manufacturing. The company planned to have the mill open in 2020. But the company underwent a management shakeup and name change in its long and ultimately unsuccessful quest to raise sufficient capital to proceed.

The Unity spokesperson said the company will have a small ownership stake in the new project.

Kentucky has its own stake in the project — a $15 million investment that then-Gov. Matt Bevin, a Republican, persuaded state lawmakers to approve. Frustration mounted as the years passed without construction beginning. This year, lawmakers considered a proposal to recover the state's investment but the measure died.

The Unity spokesperson said Wednesday that the state will recoup its investment when the deal with Steel Dynamics closes.

The Steel Dynamics mill is expected to produce 650,000 metric tons of low-carbon flat rolled aluminum each year — nearly double the original proposal for the Kentucky location, the Unity spokesperson said. Steel Dynamics also hopes customers will locate operations at the mill site to save money, also contributing to the need for more space, the Unity spokesperson said.

As for Unity's role, Steel Dynamics said Unity employees will provide expertise to the project.

Steel Dynamics said the plant will supply the beverage, automotive and common alloy industrial sectors. It pointed to a “substantial and growing supply deficit” in the North American flat rolled aluminum industry, based on growing demand from the automotive and beverage industries. And a significant number of its steel customers also have demand for aluminum, it said.

The project will be funded with available cash and cash flow from operations, the company said.

Steel Dynamics said it will completely own the two supporting recycled aluminum slab centers — one to be built in the southwestern U.S. and the other in Mexico.

News from © The Associated Press, 2022