A joint announcement by Governor Bobby Jindal and Yuhuang Chemical CEO, Charlie Yao, states that the chemical company will make a $1.85 billion capital investment in a local Louisiana methanol manufacturing complex on the Mississippi River. The project represents the first major foreign direct investment by a Chinese company in the state of Louisiana.
The facility
The manufacturing facility, located in Vacherie, LA, in St. James Parish, is expected to establish 400 new, direct jobs, as well as an additional 2,365 indirect jobs, according to the Louisiana Economic Development Corporation (LEDC). Yuhuang Chemical estimates that the project will create over 2,000 construction jobs at peak building activity. Construction is scheduled to begin in 2016, with operations starting in 2018. Shandong Yuhuang Chemical is one of China’s leading chemical companies, recording over $4 billion in 2013 sales and employing close to 6,000 employees worldwide.
According to Michael Hecht, GNO, Inc. President and CEO, “This is a major announcement for a number of reasons: One, it is the first announcement of a major mainland China chemical company investment in Louisiana history; second, it is over 2,700 total jobs; and third, the average salary for the direct jobs is $85,000, plus benefits. Finally, this heralds a new chapter for investment in Greater New Orleans, as we begin to develop and benefit from promising relationships across Asia.”
Governor Jindal says that the state will continue “to raise the bar for attracting high-quality, world-class foreign direct investment projects. Foreign direct investment projects add great value to our state by creating high-paying jobs, increased levels of international trade and extraordinary career opportunities for the families of Louisiana. It’s no accident that we now have a record-high number of people working in Louisiana and companies from around the world continue to make huge investments in our state.” He also sited recent deals with Sasol (South Africa) and Benteler Steel/Tube (Austria) in his remarks.
Where is it, and what are the next steps?
Yuhuang Chemical has secured over 1,000 acres next to the Plains All-American Pipeline terminal for its three-phase project. Once the methanol plant is finished, Yuhuang will then build a second plant, reaching an annual capacity of three million metric tons of methanol. The final phase will include a methanol derivatives plant producing intermediate chemicals. Most of the methanol will be exported for use in Yuhuang’s parent company’s production of downstream chemicals, with 20 to 30 percent being shipped by rail and barge and sold to customers in North America.
Yao expresses, “Building a new world-scale methanol unit in Louisiana is Shandong Yuhuang’s first major step in becoming a global player in the petrochemical industry. This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides. Our goal is to maximize technology innovation and develop our company into a petrochemical and fine chemical world leader, with an equally important reputation for being a resource-efficient and environmentally friendly global enterprise.”
China’s Huanqiu Contracting and Engineering Corp. (HQC) has been selected to undertake the engineering work for the project. Hiring will start in 2015, and employment is projected to reach 200 by 2017; 400 by 2023.
The incentive package
Louisiana offered the Chinese company an incentive package including two performance-based grants to secure the project. The first grant of $9.5 million will be paid over five years starting in 2017, and the second grant of $1.75 million will be paid over ten years to defray the necessary costs of riverfront access and development. The company will also receive workforce solutions from LED FastStart, and will likely utilize Louisiana’s Quality Jobs and Industrial Tax Exemption programs.
