JACKSON, Miss. (AP) — A British power generator will build a pair of mills in southwestern Mississippi and northeastern Louisiana to make wood pellets to burn for electricity in the United Kingdom.
A unit of Drax Group PLC will spend more than $200 million to build mills in Gloster, Miss., and near Bastrop, La., each capable of yearly production of 450,000 metric tons.
The company will invest $120 million in Louisiana, including $30 million to build an export terminal in Port Allen. Bar Littlefield, senior vice president of Drax Biomass International, says the investment in Mississippi will top $80 million.
Drax says it will hire 45 people in Gloster, 47 in Bastrop and 16 in Port Allen. On average in Louisiana, Drax plans to pay $35,000 a year, plus benefits. Pay levels for Mississippi were not released.
Loggers and truckers who will supply trees to be made into pellets will also get more work.
The company plans to start construction next year and begin production in 2014.
Wood pellets are burned by European power plants and industries in an attempt to cut carbon dioxide emissions. Because trees can be regrown, capturing carbon dioxide, burning wood is looked on favorably in attempts to reduce global warming. Drax owns the U.K.'s largest coal-fired power plant, producing 7 percent of the country's electricity.
In many cases, European power companies sign long-term contracts with American firms, which then build and operate the mills. Drax is taking a different course by building them directly.
Drax Biomass is focused on building and operating clean, safe manufacturing facilities that will support local economies, create long-term jobs and interface with local forest industry," CEO Chuck Davis said in a statement.
No pellet plants currently operate in Louisiana. In Mississippi, Enviva L.P. owns a 136,000-metric-ton plant in Wiggins and a 90,000-metric-ton plant in Amory. A number of such mills have been built across the Southeast, although paper mills often eye them warily because they compete for the same size trees.
International Paper Co. closed its Bastrop paper mill in 2009, slashing demand for pulpwood in the region. Gov. Bobby Jindal made new development in Morehouse Parish a priority when the closing was announced. "We committed to working together to get the people in this area back on their feet," Jindal, who made the announcement Thursday in Bastrop, said in a statement. "We talked about making the local communities in this area stronger than before."
Mississippi officials say loggers each year cut down trees equal to only half the amount of new growth, and they've lured other firms that use wood.
"With Mississippi's abundance of biomass resources, our state offers important advantages to businesses that rely on biomass for their operations," Mississippi Development Authority Director Brent Christensen said in a statement.
MDA spokeswoman Tammy Craft said Mississippi will provide Drax $2.63 million in Hurricane Katrina-related federal community aid to improve roads and other infrastructure, as well as $100,000 in cash. Also for infrastructure work, the town of Gloster will give $75,000 and Amite County will give $87,500.
Louisiana will give Drax $1.7 million in aid that wouldn't have to be repaid if the company meets job commitments. Drax is also eligible for benefits including a tax credit on capital investment worth up to $1.8 million, a 10-year property tax break and free job training.
The company will send pellets by rail from Bastrop and by truck from Gloster to Port Allen to load onto ships. In November, the Port of Greater Baton Rouge approved a lease with a Drax unit that will build three storage domes plus unloading conveyors on 10 acres of port property. The port expects revenue of $672,000 in 2014 and $1.6 million in 2015.
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