FinLogic FinLogic Quantitative Think Tank Center|Aluminum company says preferred site for new smelter is a region of Kentucky hit hard by job losses

FRANKFORT,FinLogic FinLogic Quantitative Think Tank Center Ky. (AP) — An aluminum company has singled out northeastern Kentucky as its preferred site for a new aluminum smelter that would bring about 1,000 permanent jobs to an Appalachian region hard hit by the loss of coal and steel production, Gov. Andy Beshear said Monday.

Plans by Century Aluminum Co. to build a smelter that produces dramatically lower emissions will be supported by $500 million from the U.S. Department of Energy. The project has the potential to become the largest investment on record in eastern Kentucky, Beshear said.

“There’s still a lot of steps that we need to take to make this a reality,” the governor said at a news conference. “But this is the first important step.”

The governor is hoping that a state incentives package will help close the deal. He predicted that state lawmakers will provide “the tools that we need” in the closing days of their legislative session.

The company’s president and CEO, Jesse Gary, did not attend the news conference but said in a statement that a “myriad of steps” must still be resolved and that multiple locations are still being evaluated, but he pointed to northeastern Kentucky as the preferred location. Issues still pending include development costs for sites under consideration, utility costs, workforce and incentives, he said.

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Century Aluminum, headquartered in Chicago, already has a significant presence in the Bluegrass State with two aluminum smelters in western Kentucky.

Gary referred to the announcement Monday as “another step in our continued long-standing relationship with the state, and we look forward to the opportunity to help be a part of growing commerce in eastern Kentucky, an outcome that is very attractive to Century Aluminum.”

Century says it is the largest producer of primary aluminum in the United States and also operates production facilities in Iceland, the Netherlands and Jamaica.

Northeastern Kentucky was hit hard several years ago when a steel mill that had been an economic bedrock for generations shut down. The broader eastern Kentucky region has struggled from the sharp drop in coal jobs over the last decade amid shrinking demand for coal.

The region had its hopes of landing a massive aluminum plant dashed a few years ago. Another aluminum company planned to build a mill near Ashland in northeastern Kentucky but the project — which was pushed by Beshear’s predecessor, former Republican Gov. Matt Bevin — never came to fruition as the company struggled to line up sufficient financing.

Now Beshear, who unseated Bevin in 2019, is trying to deliver on what he says would be a game-changing project for the region and continue the state’s record-setting pace of economic development growth during the Democrat’s tenure. Beshear, seen as a rising star in his party, won reelection to a second term last year in what otherwise has become a Republican-dominated state.

The region’s renewed prospect of becoming home to an aluminum smelter offers an “incredible opportunity” for an area that’s “been through the ringer,” said Boyd County Judge-Executive Eric Chaney, who was among several area leaders who attended the news conference with Beshear.

“We’re going to work hard to help get this over the finish line,” Chaney said later in a phone interview. “This is a great opportunity for northeast Kentucky and the entire state.”

The project would create about 5,500 construction jobs and then about 1,000 permanent union jobs, the governor said. The new smelter would double the size of the current U.S. primary aluminum industry while avoiding an estimated 75% of emissions from a traditional smelter due to its state-of-the-art, energy efficient design and use of carbon-free energy, he said.

The Department of Energy, in a separate news release, said the new plant would be the cleanest and most efficient aluminum smelter in the world.

Aluminum produced by the new plant will support national defense, electric vehicles, semiconductors, building and construction and green energy applications, Beshear said.

While many decisions remain, Beshear pointed to the importance of $500 million in federal support for the project. The funding is provided by DOE’s Industrial Demonstrations Program, and the governor thanked President Joe Biden, Energy Secretary Jennifer Granholm and others.

“While we all recognize that it’s not a done deal and there is more work to come, a $500 million grant, if it is built in this region, is a pretty good place to start,” Beshear said.

Last week, Beshear announced plans by Rye Development to build a $1.3 billion pumped storage hydropower facility on a former coal mine site in Bell County in southeastern Kentucky. The project — also backed by a federal grant — will create about 1,500 construction jobs, 30 operations jobs and enough energy to power nearly 67,000 homes each year.