Construction of new Alreco plant will begin soon; Production, hiring will start in about a year

Since the announcement of the new Alreco aluminum processing plant, Tom Harned, the executive director for the Logan Economic Alliance for Development (LEAD) has heard all kinds of positive comments about the county’s newest industry.

“People have been very enthusiastic about it,” Harned said.

People have also been inquiring about when the new business, which will start out with about 30 new employees, might begin hiring for those positions.

“They are going to begin the construction phase in early 2012,” Harned said. “They will be hiring some management people, but they won’t be starting production until early in 2013.”

So it might be about a year or so before the new industry begins hiring its full workforce.

Alreco, which is owned by the Australian company MHM Metals, purchased the old ITW property on Clarksville Road, which has been vacant since 1991.

But much of the new processing facility will be built new on the property.

“They’re going to us existing building for warehousing and offices,” Harned said.

Harned added that MHM Metals will be building a new railroad spur on the site in addition to the new processing building.

“They are going to be having quite a bit of construction going on,” he said.

There is plenty of room for growth as well.

The entire site occupies some 115 acres, many of which can be utilized if additional space is needed.

“We hope they need to build many new buildings out there,” Harned said.

Alreco will be processing aluminum salt cake and aluminum black dross, which are by-products of the aluminum recycling industry. More than 2 billion pounds of these products is produced within the U.S. each year, largely disposed of in landfills.

MHM Metals’ exclusive technology allows the company to produce its product through an environmentally sound process that eliminates any materials going to a landfill.

When up and running, the Alreco plant will be the only one in the United States using this environmentally friendly process.

To encourage the MHM Metals to locate its facility in Russellville, the Kentucky Economic Development Finance Authority preliminarily approved the company for tax incentives up to $825,000 through the Kentucky Business Investment Program. The performance-based incentive allows the company to keep a portion of its investment over the term of the agreement through corporate income tax credits and wage assessments by meeting job and investment targets.

The city of Russellville, Logan County and the Logan County Industrial Development Authority have approved a further $250,000 infrastructure grant to Alreco. These funds will be paid against expenses incurred for development of site infrastructure including a rail spur, electrical transmission, water and gas lines and site preparation works up to the agreed $250,000 cap.

In all, Alreco will be putting some $25.1 million in capital investment toward the new industry.

In a recent report, MHM Metals said the Russellville site was selected from 30 possible locations in southern Kentucky and middle Tennessee.

The reasons given for choosing Russellville included:

• Identification of in excess of 350,000 tons per year of salt slag and black dross within an economic radius of the plant site

• Large acreage providing Alreco the opportunity to grow and assimilate planned future technology developments

• Government support and incentives, not only financial but also the pro-business environment in Logan County

• A highly skilled local workforce and availability of workers

• Availability of rail, with a high-quality rail operator

• Availability of ample electricity supplies to the property for initial and future requirements

While MHM had initially favored a site in southern Tennessee close to two large salt slag producers, management made the strategic decision to locate further north. The Russellville location remains an economic distance from these two secondary aluminum companies, but makes the facility less dependent on volumes produced by these two companies by introducing additional salt slag and black dross producers further north. This strengthens MHM’s negotiating position for future contracts, with Alreco’s facility less reliant on any volume fluctuations from the two large producers on account of a changing business environment. As most US secondary aluminum producers operate on short-term contracts, the supply of salt slag over the long term can fluctuate and as such it is in Alreco’s best interests to locate further north to access additional producers to lower supply volume risk over the long term.