By Tom Latek
Kentucky Today
Top management at Braidy Industries briefed lawmakers Tuesday on the status of the aluminum mill project in northeastern Kentucky and the recent removal of Craig Bouchard as CEO and chairman of the board.
Braidy’s board of directors removed Bouchard last week, replacing him with Kentuckian Charles E. Price as chairman and Tom Modrowski as CEO. Bouchard remains a member of the board, according to a release.
In 2017, the state invested $15 million in the proposal to build a state-of-the-art $1.7 billion aluminum plant near Ashland. Executives told the panel they need to raise $500 million by the end of the year.
Braidy CEO Tom Modrowski meets with Senate committee. (Photo by Tom Latek/Kentucky Today)
Braidy broke ground on the mill in June 2018 but it has not started construction on the plant. The company has said it will be operational by 2022.
In an appearance before the Senate Appropriations Committee, Modrowski said, “The Braidy Mill is an important project for Eastern Kentucky, more so now given the shutdown of AK Steel and Our Lady of Bellefonte Hospital.”
While saying he is as confident now as he was three years ago at the start of the project, Modrowski said, “As you know from news reports, we have made some leadership changes. The board made these changes because they want to see more progress, faster. The board is eager – like you – to get this project built. And, we’re confident the changes we have made will yield progress.”
He also read a letter from Price, who couldn’t attend due to a previous commitment.
It said, in part, “Providing opportunities for individuals to engage in productive, well-compensated employment is central to Braidy’s vision. An economic impact report found that Braidy will generate 8,247 additional jobs in the six-county Eastern Kentucky area and 18,025 additional jobs in Kentucky overall. Braidy is all about the people who will work there and the hundreds of Kentucky residents financially invested in it.”
Price also gave his view of the future: “Through the first year of production, it has been estimated that local government entities in the mill’s six-county area will receive $35.31 million in tax receipts, and the commonwealth will receive $75.40 million overall. As you can see, the return on the commonwealth’s investment will be beneficial to our communities and residents.”
When asked by Sen. Chris McDaniel, R-Taylor Mill, the committee chairman, why Bouchard was replaced, Modrowski said, “I think that’s a better question for our board. We’re here today to answer questions and give you an update on the project. Those issues are between Craig and the board.”
McDaniel responded, “We would appreciate the board providing written follow-up to the committee.”
Modrowski testified the project is currently shovel-ready and could start production 27 months after construction begins.
“We would expect to have full funding and a notice to proceed with our contractor by the fourth quarter of this year,” he said. “At that time, we would start to place equipment and orders for all of our long lead time items and the structural steel for the facility.”
Senate Minority Leader Morgan McGarvey asked about the money they have on hand and how much they need to get started.
Modrowski said: “We have $65 million on hand, we have commitments for $200 million, and we need another $500 million,” which he said he hoped to have by the end of the year.
The $65 million includes $15 million from Kentucky taypayers, so the company must raise $435 million by the end of the year. The Rusal, a Russian aluminum company, offered to put $200 million into the Braidy mill last year but could pull out. Rusal’s agreement contained a provision that it could exit the deal if Braidy failed to raise $300 million by the fourth monthly anniversary of the closing of their deal, in July of last year, according to SEC filings.
McDaniel instructed Modrowski to provide more information to the committee.
“I would like for you to give us a quarter-by-quarter rundown to the point of, this is when you’re operational, this is when you’re selling aluminum to the world. Not in terrible depth, but some things that this committee can look and say, ‘Did you hit the deliverables as expected?’
“The idea is, we will celebrate your successes, quarter-by quarter, but also there will be accountability to make sure you are holding to that.”
McDaniel wanted it within the next month to six weeks.
Sen. Robin Webb, D-Grayson, in whose district the plant would be located, said, “$15 million is a substantial taxpayer expenditure, but It’s also a good business investment. We’ve had successes with these programs and we’ve had failures with these programs.”
She also noted the project is getting a lot of scrutiny.
“We’re not in Louisville, we’re not in Lexington, we’re not in the Golden Triangle, we’re stuck up there in northeastern Kentucky. I just hope that every project with any level of investment gets the same kind of accountability and scrutiny.”
