AMPed Up

Arkansas’ deal with ‘fragrance’-free paper mill attracts more interest from China

Paper mill in China

Paper mill in China

Having landed a big Chinese whale, Governor Asa Hutchinson and Mike Preston, executive director of the Arkansas Economic Development Commission, are planning another fishing expedition for next month.

“You have to think globally in this day and age, and we’ve seen a lot of investment coming out of Asian markets and into our country,” Preston said. The trip to China is scheduled for October 15-21.

The two traveled to China in November, and five months later, Shandong Sun Paper Industry announced plans to invest $1.3 billion to build a bio-products paper plant near Arkadelphia. Of course, that trophy had been nibbling at the bait — abundant timber and generous state and local incentives — for more than five years. But where there’s one fish, there may be more.

In recent months, Mr. Preston said, a number of Asian companies have expressed interest in economic opportunities in Arkansas. That interest, he said, was piqued by the Sun Paper announcement.

“They know where we are on the map and know we are a good place to do business, so we’ve had a lot of companies reaching out,” Mr. Preston said. “We’re going to (we hope) be able to meet with a few (industry representatives) in person and continue recruiting them, and also we’ll be visiting with the Sun Paper folks. We’ll continue to help them move the ball down the line and get things rolling.”

Construction of the facility in the Clark County Industrial Park in Gum Springs, just south of Arkadelphia, is expected to generate an estimated 2,000 jobs, Mr. Preston said. About 250 people are expected to be employed at the plant earning an average of about $52,000 annually.

Timber owners in the region — the plant is expected to use more than 3 million tons of pine each year — are expected to see up to $28 million in revenue annually, Mr. Preston said.

The pulp product produced at the facility will be shipped by rail to Long Beach, California, where 85 percent will be sent to Asia and 15 percent to Europe, Mr. Preston said. “It’s all going to markets outside the U.S.”

Sun Paper has been struggling for years to find enough timber to make its pulp product, Mr. Preston said, and began looking at sites in the United States because of the plentiful pine timber.  Arkadelphia is located in the middle of the state’s timber industry, and it is easily accessible to Interstate 30 and rail. Nearly 19 million acres of Arkansas is covered in forest, mostly in the southern half.

Construction is tentatively scheduled to begin in late 2017, said Julie Mullenix with Little Rock-based Mullenix & Associates, which is assisting the China-based company with public and government relations. Construction is expected to take two years.

Meanwhile, permit applications for the facility are expected to be filed with the Arkansas Department of Environmental Quality soon, Mullenix said, adding that Sun Paper recently hired Finnish engineering firm Poyry to oversee both the project’s engineering work and the environmental permit process.

The permit application process will take some time because Sun Paper will need air permits and storm water permits for not only operation of the plant but also for construction. Kelly Robinson, spokesman for ADEQ, said the permit process could take six months to a year to complete.

The public will have an opportunity to comment on the permit applications and a public hearing also could be held. “After the close of the public comment period following the draft permit notice and any public hearing that might be held, the ADEQ will decide whether to issue or deny the permit,” she said.

The Sierra Club of Arkansas will track the permit application process, said Tom McKinney, conservation chairman for organization, especially those dealing with air and water. “There are always environmental concerns when it comes to paper mills.”

Paper plants, he said, are notorious for producing a noxious odor that spreads for miles, he said, referencing specifically the Evergreen Packaging Inc. plant in Pine Bluff, formerly owned by International Paper, whose odors sometimes drift as far as Little Rock.

Environmentalists want to make sure that the forests in south Arkansas are not clear cut of pine trees, Mr. McKinney said, and that the new plant, which will need tremendous amounts of water, doesn’t hurt the region’s water table or water quality.

“I’m sure they are not going to get the water from the local municipality, because such a plant uses a huge amount of water,” he said.

The plant will use water from the Ouachita River, which will be treated at an on-site facility before being returned to the river, Ms. Mullenix said.

“Sun Paper (follows) the World Bank Environmental Health and Safety standards, and they are higher, much higher, than our environmental standards,” she said, adding the plant “will be the most technologically advanced in the world.”

“Sun Paper already has a huge customer base for the dissolving pulp that they will produce, and to even purchase the product … they want to certify that there has been responsible sourcing of materials,” Ms. Mullenix said. The plant will be odorless, she said.

Ms. Mullinex recently returned from China, where she visited a Sun Plant facility. “There is no smell. It is really amazing,” she said.

During his visit to China last year, Preston said, he visited a Sun Paper facility and confirms the plant produced no odor.

Shandong Sun Paper Industry is receiving more than $100 million in incentives and other spending from the state and Clark County for its $1.3 billion plant near Arkadelphia. Among those incentives are a $50 million collateralized loan from the state, $12.5 million from the Governor’s Quick Action Closing Fund and a Community Development Block grant funds, and $3 million from the Arkansas Economic Development Commission for workforce training funds.

Clark County also provided $10 million in incentives, Mr. Preston, the AEDC director, said, and that, combined with the $12.5 million in state funds, will be used to help offset infrastructure construction costs, including a rail spur and waste-water treatment facilities.

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Here for more detail on the various types of permits ADEQ issues.

 

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