County, hospital vote on tax abatement for Buzzi Unicem

September 25, 2013

A proposal for a modernization project for the Buzzi Unicem plant in Maryneal was presented to two groups on Monday--the Nolan County Commissioners and the board of directors of the Nolan County Hospital District (NCHD).
The presentation offered a recap of the previous project in Maryneal, an update on the industry as a whole, a group overview of Buzzi Unicem USA, the current status of the plant, and the proposed project.
In 2008, Buzzi Unicem USA approached the taxing entities in Nolan County for a tax abatement related to a $300 million plant modernization project. 940 acres were declared as a reinvestment zone.
However, in March 2009 the company withdrew applications for a property tax abatement. While major projects were stopped, the Maryneal facility continued with a $40 million project for a new finish mill without a tax abatement.
But due to improvements to the overall economic environment and continuous problems of cost competitiveness at the Maryneal plant, Buzzi Unicem USA is reconsidering the modernization and upgrade of the local plant's production capacity.
Since 2008, the U.S. cement industry saw 18 plants close either on a temporary or permanent basis. Among them were two Buzzi Unicem USA plants located in Kansas and Illinois.
Although the economic recovery varies by region, the housing recovery and the energy exploration/generation are the main driving factors for the upturn.
Buzzi Unicem USA has seven cement plants with over 8 million metric tons of cement capacity. With 30 distribution terminals in 15 states, the company has approximately 1,300 full-time employees.
The company is committed to being a leader in the industry by being cost-competitive, through efficient operations, being environmentally responsible and offering a safe workplace. Along with the $40 million project in Maryneal, another project was completed in 2009 in Festus, Missouri.
Presently, Buzzi Unicem USA is working toward environmental compliance, in which $16 million will be spent in Maryneal between 2013 through 2015. And beyond the plant expansion in Maryneal--a plant that has been around since 1951 (most cement companies typically last only 50 years in business), two other plants are potentially being considered for investment opportunities to replace or expand the old capacity.
The existing Maryneal facility began with 2 kilns, in which a third kiln was added two years after its inception. Currently, the plant operates with 3 raw mills, 3 coal mills, 3 kilns and 6 finish mills.
Although the $40 million finish mill project was commissioned in June 2013, all of the remaining equipment is technically outdated, resulting in Maryneal being the highest cost plant in the Buzzi Unicem USA group. Annually, the facility has a maintenance cost between $8 and $9 million.
However, the plant currently employs over 100 full-time workers, with over 80% of them living in Nolan County--a benefit to the area. The company accounts for nearly $7 million in annual revenue to the county and its residents, which is expected to increase during and after the proposed project.
The proposed project, at the minimum of a $225 million capital investment, would essentially double the plant's size by building a brand-new production line with state-of-the-art equipment, including a new kiln system, related material receiving and processing systems, and additional finish grinding capacity. It would yield a new capacity of 1.2 million tons/year of cement; create a more productive, efficient and cost-effective plant; and retain and secure jobs.
Its impact on the community would be evident, as the project is estimated to create over 150 full-time jobs during the 24-30 month construction period. Additionally, the "environmental footprint" of the plant would be reduced and the long-term continuation and success of the Maryneal plant would be ensured.
The advantages and disadvantages of the projects were noted, as the quantity and quality of quarry reserves and its proximity to the oil well business is beneficial. However, high shipping costs for materials, high dependency on railroads and high property taxes would result as well.
The board of directors for Buzzi Unicem will make a final decision later this year. Should the board give approval, construction could begin by the end of 2014 with commissioning in 2017.
Buzzi Unicem USA wants to continue its business in the area, in which they believe that expanding the plant's production capacity will help achieve this goal. Thus, they presented and requested a property tax abatement for the new constructed plant, pursuant to Chapter 312 of the Texas Tax Code.
At the Nolan County Commissioners' meeting held on Monday morning, a public hearing was held on the application for tax abatement for the company. However, no input was heard, and the commissioners approved the re-investment zone for the Buzzi Unicem plant expansion.
Additionally, during the Monday night meeting of the NCHD board of directors held at Rolling Plains Memorial Hospital, the tax abatement application for Buzzi Unicem was reviewed and unanimously approved.

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