NEW YORK — John D. Correnti’s proposed $1.1-billion steel project in Osceola, Ark., aims to displace steel imports by offering higher-grade product domestically, the steel industry veteran says.

"We hope to sell a lot of steel that today is imported into the country for whatever reason—price consideration is one, but more than likely it’s size and a grade situation where some of the mini-mills won’t be able to make (product)," Correnti told AMM. "We’re always importing steel here. In robust times, we import a lot more than (in) recessionary times ... and, of course, freight and logistics are very important factors."

Correnti’s new venture announced last month, Big River Steel LLC, is contingent on the state legislature authorizing the issuance of $125 million in general obligation bonds under Amendment 82, which allows the legislature to approve up to 5 percent of Arkansas’ general revenue budget for bonding of "superprojects." The money generated by the sale of the bonds would provide a $50-million loan to the company, $50 million for site preparation, $20 million associated with piling and subsurface stabilization and $5 million for bond issuance costs.

Once the bill is officially referred to the state’s House of Representatives and Senate by Arkansas Gov. Mike Beebe—expected later this week—the legislature has 20 business days to conduct an economic impact study, after which it will advance through the usual committee process and be scheduled for a vote.

After the governor officially sends the measure to the legislature, "the clock starts clicking. At the end of that, it will be debated and voted on," Joe Holmes, director of marketing and communications at the Arkansas Economic Development Commission, told AMM. "If the deal is approved, it will move forward."

The new mill is expected to produce hot-rolled, cold-rolled, galvanized, and pickled and oiled coil for the automotive sector; grain- and non-grain-oriented electrical steels for the electrical sector; and substrate for the pipe and tube sector (amm.com, Jan. 29). Correnti said the mill would have an annual capacity of 1.7 million tons, and would have the ability to make 76- to 78-inch-wide by 1-inch-thick coils

The proposed mill in Mississippi County will face some opposition. Charlotte, N.C.-based steelmaker Nucor Corp.’s sheet mill in Hickman is in the same county, as is Luxembourg-based steelmaker Tenaris SA’s mill, also in Hickman.

"With Nucor (as a competitor), one problem would be the competition for scrap. (Also), I’m not sure if Hickman aims for the auto market, but they have a (vacuum) degasser, which would allow them to get into the auto market," Charles Bradford, president of New York-based Bradford Research Inc., told AMM. "When it comes to pipe and tube, that’s a market all the flat-rolled mini-mills go after because the product is pretty ideal."

While Correnti declined to comment specifically on competition, he noted that "there is always room for a low-cost, quality producer. In my tenure at Nucor, that’s how we grew the company. In the U.S., there’s always capacity shortfall."

Arkansas Economic Development Commission executive director Grant Tennille said during a Senate committee meeting Feb. 4 that Correnti’s track record in steel is proven and that he feels "very good" about Big River’s projections for the Arkansas plant, according to local media reports. He added that Big River believes there’s a 20-percent overlap with products made at Nucor’s Mississippi County plants, but representatives from Nucor had told Tennille that the "percentage might be low."

Market participants have noted that ThyssenKrupp AG’s plant in Mobile, Ala., is on the market and would be a good option for investment. But Correnti said he was not interested in the mill as he would need to install a melt shop, gassers and continuous casters, which would have a difficult cost structure.

Even if the bond sale is approved, the state will not invest any money until $300 million in equity from company investors and commitments from other lenders is deposited into an escrow account, Holmes said. He added that $250 million of company money must be spent before any bond proceeds can be given to the project.

"This amendment was put in place not by the legislature, but by the citizens in Arkansas to attract industry," Correnti said, adding that the proposed mill would provide some 525 permanent jobs and 2,000 construction jobs.

Nucor and Tenaris could not be reached for comment.

Editor’s note: This story was updated March 22, 2013, to clarify the products that are expected to be produced at the proposed Big River mill in Arkansas.