Negotiations Ongoing With City Regarding Land Acquisition
The county and hospital district this week approved tax abatements for Ashoka Steel Mills, LLC, clearing two more steps for the company to invest $245 million in construct of its first plant in the United States on the city-owned old coal mine property on FM 1870 in Sulphur Springs.
Sulphur Springs-Hopkins County Economic Development Corporation Executive Director Roger Feagley asked Hopkins County Commissioners Court Monday morning, Oct. 24, 2022, to consider approving a 10-year tax abatement for the company.
Hopkins County Hospital District Board of Directors then was asked Tuesday night, Oct. 25, 2022, to consider granting a tax abatement to Ashoka Steel Mills, LLC.
The company plans to build a 350,000-square foot steel mill facility in multiple buildings on the property. Feagley Monday told the Commissioners Court that Ashoka anticipates taking 24-36 months to to get the project up and going. Between now and that time, the county will continue to receive 100% of the taxes for the property.
The agreement with the county shows the company is to attain a certificate of occupancy by March of 2026. The company agrees to hire 315 full-time or equivalent employees, at an average annual salary of $55,000 a year, with sick leave, vacation time and benefits, excluding personnel earning a salary and not an hourly wage beginning Dec. 31, 2026, and maintain the 315 personnel.
In exchange for the sizeable investment and jobs creation, Hopkins County Commissioners Court and Hopkins County Hospital District Board of Directors each agreed to grant the steel manufacturing business a 10-year tax abatement, waiving 70% of county taxes the first five years of the agreement and 50% the remaining five years of the agreement. The abatement would begin after Ashoka is issued a certificate of occupancy, according to the agreement between the county and Ashoka.
When a commissioner Monday asked why the agreement was different from the usual abatements granted, Feagley said officials had negotiated the best deal they could with Ashoka, which was the one presented.
Ashoka’s first US plant is to be located off FM 1870, and the property will be accessed from FM 1870 and State Highway 11 east, roads that Texas Department of Transportation is responsible for maintaining.
The proposed building site for the property is located within the old Thermo/Luminant coal mine, property now owned by the City of Sulphur Springs. The City Council on July 5, 2022, approved an ordinance establishing a reinvestment zone for a commercial-industrial tax abatement. The property in question to be used is within the zone. In August, Sulphur Springs City Council passed an Ordinance No. 2808 amending Ordinance No. 2395, expanding the list of local incentives offered and nominating Ashoka Steel Mills LLC to the Office of the Governor, Economic Development and Tourism, through the economic development bank as an enterprise project.
On August 23, 2022, a land sale agreement was struck in principle between the City of Sulphur Springs and Ashoka, which notes a two phase plan by the business to attain and construct facilities on a total of 400-acres of the mine property. The agreement allows the business to build on 250 acres of the 4,857-acre city property during Phase 1 of construction. In Phase 2, Ashoka would expand the business onto 150 adjacent acres within 5 years.
The property, according to the agreement struck in August with the City, comes with a $6 million lien until the plant is complete and production begins. If that doesn’t happen, the property reverts back to the City of Sulphur Springs. City Manager Marc Maxwell was authorized to negotiate with Ashoka and sign necessary documents regarding those negotiations, which were still ongoing earlier this week.
The City of Sulphur Springs is still scheduled at their next regular meeting to consider approving a tax abatement for Ashoka Steel Mills LLC. City and Ashoka officials continued working on and were believed to have reached an agreement on the process for Ashoka to obtain the land from the City. With city approval of a tax abatement and final approval of the land agreement, Ashoka plans to move forward with construction, which they would like to include a groundbreaking in January 2023, Feagley told the Hospital District Board Tuesday night.
The proposed electric arc furnace steel mill would produce approximately 350,000 tons of rebar annually. The Ashoka Steel Mills, Inc., facility, according to documentation in a Chapter 313 application submitted in April 2022 to Sulphur Springs ISD, would use an electric arc to heat metals instead of a blast furnace. That means no smoke stack emitting into the air. The mill estimates 402,500 tons of scrap metal from local areas would be used to produce the rebar; the steel recycling, according to the application, would reduce carbon emissions, further making it a clean green manufacturer.
The scrap metal would be brought in mainly by rail, amounting to an estimated 8,000 railcars a year, and about 40 trucks. A spur would be built off of the current short line rail that runs through the old Thermo mine property. The company would contract with what is currently known as the Kansas City Southern rail as North East Texas Connector, the division of Freedom Rail that serves as operator for the Northeast Texas Rural Rail Transportation’s (NETEX) railroad.
HCHD Board member Chris Brown noted use of the railroad would be beneficial in helping to build up capacity along the NETEX line, which would allow for more improvements to the rail itself and allow for additional potential uses of it as well.
They were told the facility will not require a huge amount of water, and what is used in cooling will be recycled. There will be no air pollution from the plant, which will require a permit from Texas Commission on Environmental Quality, HCHD Board was told Tuesday night.
A lot of utilities infrastructure will have to be put in place before actual construction can begin on the manufacturing facility, however. In fact, part of the terms of the agreement with the City requires the City of Sulphur Springs to build the road, Feagley and Maxwell noted this summer.
The City of Sulphur Springs received notification in early September that the U.S. Secretary of Commerce’s Economic Development Administration (EDA) is awarding the City a $2.4 million grant for roadway improvements needed to boost business growth at the Thermal Industrial Park. This grant is funded by the American Rescue Plan and EDA’s $300 million Coal Communities Commitment program.
This project will redevelop East Haul Roadway to accommodate heavy truck traffic in a region impacted by the declining use of coal. The EDA investment will be matched with $595,392 in local funds and is expected to create 180 jobs and generate $250 million in private investment, according to grantee estimates.
In addition to the road, the City of Sulphur Springs will also have to replace a major water line. There’s an 8-inch line to the site, but it needs help, possibly replacement with a larger line, ECD and city officials said in August.
Ashoka Steel Mills LLC is being developed in collaboration with MELWA Group, established as a global premium steel manufacturer in 2002 in Sri Lanka. The MELWA Group is headquartered in Sri Lanka and Ashoka Corporate Group in the USA is headquartered in Plano and registered as ASM, LLC, in 2021. The business operates 7 steel mills in Asia and Africa, producing 1 million metric tons of rebar per year. ASM, LLC, in the USA will be working with Melwa group to establish steel mills across the United States, according to the company’s website. The Sulphur Springs mill is planned as the first of at least five planned in the USA
The two Ashoka officials who joined site consultant Linda Burns Monday in the Commissioners Court and Hospital District Board meetings indicated they anticipated, where possible, around 90% of the contractors such as metal and plumbing to be used during construction will come from the Sulphur Springs area. For instance, the business group noted, when concrete is needed, they prefer to utilize a local contractor. The Ashoka officials told the Hospital District Board Tuesday night that people from a company out of Italy would also be working on site during construction of the Sulphur Springs plant.
Ashoka’s first US facility as planned would require 60 megawatts of power. HCHD was told the business wants to have an area established to take advantage of solar energy as well.
At the conclusion of Hopkins County Commissioners Court Monday morning, Precinct 3 Commissioner Wade Bartley made a motion, which Precinct 1 Commissioner Mickey Barker seconded to approve the resolution approving the tax abatement agreement with Ashoka Steel Mills, LLC, and authorizing Judge Robert Newsom to execute a tax abatement agreement with Ashoka. The Commissioners Court Unanimously approved the motion Oct. 24, 2022.
Hopkins County Hospital District Board member Chris Brown made the motion, which member Dr. David Black seconded, to approve a tax abatement for Ashoka Steel Mills, LLC. The HCHD Board members present at the Oct. 25, 2022 meeting also unanimously agreed to grant the tax abatement.