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Aluminum February 23, 2024 05:11:45 AM

New Projections for Alabama Aluminum Plant: $4.1 Billion, Late 2026 Completion

Paul Ploumis
ScrapMonster Author
The incentive package totals to about $123 million total in tax abatements, infrastructure improvement and economic incentives.

New Projections for Alabama Aluminum Plant: $4.1 Billion, Late 2026 Completion

SEATTLE (Scrap Monster):  An aluminum manufacturing plant under construction in North Baldwin County is rivaling the most expensive projects in Alabama history after Novelis announced earlier this month that project costs have escalated more than 60% over original projections, to $4.1 billion.

The new capital costs for the plant in Bay Minette were included in an earnings report released on Feb. 12. Also included was an updated timeline for the project that extends the construction from an early 2025 completion to late 2026.

“We are building this plant not just for today, but for the next 40 years and beyond,” said Steve Fisher, president and CEO, Novelis Inc. “Bay Minette will be a true plant of the future, combining our decades of experience with the latest technology to improve safety, efficiency, and the sustainability of our products, while also providing the ability to double future capacity in a cost-effective manner.”

Fisher said the company remains confident in the profitability of its investment into Alabama.

“With customer contracts for beverage packaging already signed, and automotive contracting proceeding as planned, we remain confident int he double-digit return of this historic investment,” he said.

The plant has been under construction since October 2022, when ground was initially broken on the project. Initially projected to cost $2.5 billion, the manufacturing plant is expected to consume much of the 3,000 acre South Alabama MegaSite property. Also initially projected was the plant bringing approximately 1,000 new jobs with an average annual salary of around $65,000.

It’s unclear on if the increased project costs will lead to an expansion of the original project, or if more employees will be added. It’s also unclear if the project expansion will alter any of the original incentives offered to the company by Alabama state, and local officials.

Callie Cox, spokeswoman with the Novelis project in Bay Minette, declined to go into further detail, saying the company “is currently in a quiet period due to restrictions imposed by U.S. federal securities laws.”

Baldwin County Commission Chairwoman Billie Jo Underwood said they were unaware of any anticipated additional requests from Novelis, excepted to extend the timeline for the project’s completion.

“The Baldwin County Commission has been in constant and consistent communication with Novelis leadership since the start of their project in Baldwin County,” Underwood said in a statement to AL.com. “We could not be more pleased with the corporate partner and investor Novelis has been so far. After the earnings call last week, Novelis leadership immediately made the Commission aware of the revised investment and timeline for the Bay Minette project and communicated their unwavering support for the project and Baldwin County.”

She added, “Given that the new completion date announced by Novelis last Monday is now 2026, we expect a request to amend our existing agreement to accommodate the new completion date. There are no other known anticipated requests from Novelis.”

Lee Lawson, president & CEO with the Baldwin County Economic Development Alliance, said he is also unaware of any additional requests for incentives.

The incentive package totals to about $123 million total in tax abatements, infrastructure improvement and economic incentives.

A representative with the Alabama Department of Commerce & Economic Opportunity did not respond to a request for comment.

“We are appreciative of Novelis in the community,” said Lawson. “We understand their investment (project costs change) is a significant revision and a positive one for the community. Their CEO statement in the earnings release says they are committed to the project and the community. From that, my reaction is it’s a positive and the company is showing their commitment to the project and us as a community.”

The adjusted project costs will put the Novelis plant on par with some of the most expensive developments in Alabama’s history.

Lawson compared the costs to Thyssenkrupp, a steel manufacturing plant in Mobile County that has an estimated price tag north of $4 billion. By way of comparison, the Toyota-Mazda plant in Huntsville had an estimated price tag of under $2 billion.

Courtesy: www.al.com

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