Louisiana Gov. Bobby Jindal and Matthias Jaeger, CEO of German steelmaker Benteler Steel/Tube, announced Friday that they have reached a deal for the construction of a $900 million hot-rolling tube mill in Caddo, LA, strengthening the company’s position in the North American oil country tubular goods market.
“With the growing demand for high-quality steel tubes for exploratory drilling in the U.S. and Louisiana ‘s proximity and access to energy customers, Benteler Steel/Tube’s Caddo Parish plant is poised to play an important role in meeting U.S. domestic energy needs,” Jaeger said.
Louisiana was selected as the site of the plant after a lengthy, competitive site-selection process that included more than a dozen states and 100 potential sites. Groundbreaking on the facility is slated for spring of 2013 and completion is planned for the second half of 2015, the company said.
A memorandum of understanding has been agreed upon between Benteler, the state of Louisiana, the Louisiana Economic Development (LED), the North Louisiana Economic Partnership, The Port-Caddo-Bossier, The Red River Waterway Commission (RRWC) and other key community partners in Caddo Parish, according to the Republican governor.
To secure the project, LED offered Benteler a customized incentive package that includes performance-based grants totaling $57.4 million to reimburse site development, infrastructure and equipment costs incurred by the port. The RRWC will contribute $6 million, The Port of Caddo-Bossier will cough up $3 million, and the Caddo Parish Commission has agreed to provide $2.6 million.
The proposed steel plant would create approximately 675 direct jobs and 1,540 indirect jobs. Louisiana State University estimates that it will result in total new earnings of $2.7 billion (approximately $150 million per year at full employment) in northwest Louisiana and a total, cumulative economic impact of $16.2 billion in the region.
In addition to being used in oil and gas applications, the tubing to be produced in the facility would be used for the generation of power and mechanical applications.
Currently seamless steel tube facilities of various manufacturers in North America (i.e. automotive and construction) are concentrated in Alabama, Ohio, Pennsylvania and Mexico. The output of the plant primarily would be destined for locations in in Illinois, Indiana, Ohio and Texas, according to Benteler.
Benteler Steel/Tube is part of Benteler Group, which is headquartered in Salzburg, Austria.
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