Braidy Industries, which plans to build a $1.7 billion aluminum mill near Ashland, will partner with a Russian company previously blacklisted by the U.S. government for alleged meddling in the latest presidential election.
Rusal, one of the largest aluminum producers in the world, announced in a news release Monday that it will invest in the project, taking a 40 percent ownership share of the mill, and provide aluminum to Braidy Industries.
The two companies have entered into a Letter of Intent, and expect to sign a binding document in the second quarter of 2019, according to the release.
The partnership represents a potential $200 million lead investment by Rusal, said Jaunique Sealey, Braidy’s Executive Vice President of Business Development, during a news conference at the New York Stock Exchange.
“Rusal is the only company worldwide which could supply low carbon aluminum at the scale required by Braidy Industries,” Sealey said.
The U.S. Treasury Department removed Rusal from its sanctions list in January after its owner agreed to reduce his holding in Rusal’s parent company EN+, according to a report from the Wall Street Journal.
The partial owner, Oleg Deripaska, remains under sanctions, however, and sued the U.S. government in March in hopes of having those sanctions lifted, according to The New York Times.
Deripaska is considered to be a close associate of Russian president Vladimir Putin, and was hit by a round of sanctions imposed on Russian oligarchs in retaliation for election interference and the country’s involvement in Ukraine.
Rusal will supply Braidy Industries with slab alloy and primary metal from an aluminum smelter that is currently being constructed in Siberia, according to its press release.
The Kentucky project’s debt will be raised “from several financial institutions,” according to the release.
Gov. Matt Bevin praised the partnership Monday morning, saying “there’s so much to celebrate at so many levels.”
“The highest quality aluminum alloys made in the world, with the lowest possible carbon footprint and at the lowest price available, are going to be made with pride in the commonwealth of Kentucky,” Bevin said.
Braidy Industries has been touted by Kentucky officials as a potential lifeline for Eastern Kentucky’s faltering economy.
During a town hall in Martin County this weekend, Bevin said the mill will foster growth in the counties far from the mill itself, including in Martin County.
Vince Doty, the assistant judge-executive and economic administrator of Lawrence County, said local officials there are hopeful the project will come to fruition, and bring job opportunities for residents of neighboring counties.
Lawrence County is a partner in the EastPark Industrial Center, where Braidy plans to build its mill.
Doty said the company agreed to hire about 15 percent of its workers from each of the five counties in the FIVCO Area Development District — Boyd, Greenup, Lawrence, Elliott and Carter.
“We’re hopeful that with Braidy coming along it will have a domino effect on the whole area,” Doty said. “Almost every month it seems like it’s progressing.”
The company received an unusual $15 million capital investment from the state in 2017, making all Kentuckians partial owners of the company. It also benefited from a $4 million Abandoned Mine Lands grant that will build support piers and columns at Braidy’s industrial site.
Last year, SEC filings showed the company still had to raise $300 to $500 million before it could begin construction for the $1.7 billion plant.
It hopes to create 1,000 construction jobs and 600 full-time jobs once the plant opens in 2021.
Boyd County Judge-Executive Eric Chaney said the company could help Boyd and other northeastern Kentucky counties rebound after the decline of multiple industries.
AK Steel announced earlier this year it would officially close its Ashland plant by the end of 2019. That closure will affect about 200 employees — in 2015, the plant laid off about 600 workers.
This month, CSX closed its locomotive shop in Greenup County, laying off more than 100 people, according to The Daily Independent.
Chaney said residents are “cautiously optimistic at all times, and that’s with everything,” not just Braidy Industries promise of 600 full-time jobs.
“All up and down the river here, we’ve just been hit time after time after time,” Chaney said. “(Braidy’s announcement) is pretty big news for us.”
Executive chairman of EN+ Gregory Barker, Rusal’s parent company, said the low-carbon production at Braidy will provide environmentally-friendly economic opportunity.
Barker will assume the position of co-chairman at Braidy as part of the partnership, Sealey said.
Barker said EN+ also hopes to use its Braidy site to build future partnerships with U.S. automotive producers.
“That’s why we are delighted to be at the very, very outset, the first steps, towards forging a long-term strategic partnership that, as the governor said, is going to have so many benefits,” Barker said.