Plans for the new Alreco aluminum plant on Clarksville Road have fallen a little behind schedule as the parent company, MHM Metal, is working to perfect the process in which it will be recycling aluminum recycling byproducts at its new site in Logan County.
The plant will be the first of its kind in the U.S. Alreco already has a similar facility operating in Australia, where MHM Metal is based.
“It is a new process, and I don’t think they got up to full production in their Australian plant as quickly as they anticipated,” said Tom Harned, the executive director for the Logan Economic Alliance for Development. “They are still pretty much on the same timeline. They are working on their design and engineering of their process. We are anticipating seeing that get going over the summer.”
Once they have all the kinks worked out, Harned said he expects the company to finish work at the old ITW facility on Clarksville Road.
“We want them to have it working as smoothly and efficiently as possible before they commit to the facility here,” Harned said.
Alreco has already done some work at its Logan County facility. The office building has been remodeled, a new parking lot was constructed and the old water tower was taken down.
“They have already made some significant improvements out there,” Harned said. “They have bought the site, so there is no question that they are committed to it.”
The entire site occupies some 115 acres, many of which can be utilized if additional space is needed.
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 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.