‘Played for fools.’ KY lawmakers want their $15 million back from aluminum mill.

The $15 million Kentucky invested in a company that promised to build a massive aluminum mill in Eastern Kentucky has yet to produce any return for the state and legislators’ patience has worn thin.

Unity Aluminum, previously Braidy Industries, promised to build a $1.7 billion aluminum mill near Ashland after the legislature approved an unprecedented $15 million direct investment in the company in 2017. It promised to create 550 well-paying jobs in a region devastated by the decline of the coal industry.

Four years later, Unity Aluminum has not started construction or began production, despite an original projection for the mill to be complete in 2020 and to be producing sheet aluminum for the automotive industry, as promised by former CEO and founder Craig T. Bouchard.

The company has not met its goal to raise $1 billion for construction and equipping the mill. Unity Aluminum has asked Commonwealth Seed Capital, the entity within the Cabinet for Economic Development that made the investment, for several extensions to reach its goal before having to repay the money. The latest approved extension runs through the end of March.

On Friday, Unity Aluminum leaders answered questions from the legislature’s Interim Joint Committee on Appropriations and Revenue, which voted to support the project several years ago.

Nate Haney, senior vice president of global affairs and commercial operations, said Unity Aluminum is “cautiously confident” after “a roller coaster ride over the last couple of years.”

Sen. Christian McDaniel, the committee’s co-chairman, was not as hopeful about the future success of the aluminum mill.

“I believe one of the worst financial votes I have ever taken was this one,” said McDaniel, R-Taylor Mill. “I feel like two administrations now and multiple General Assemblies have been played for fools and written down the road.”’

McDaniel asked Haney why, if Unity has raised $165 million, it doesn’t repay the $15 million to the state to avoid questioning from the committee.

Haney deflected, saying he could not answer because that decision was not up to him and the company must keep parts of its financing confidential.

He said Unity would love to have the state’s support and “investors have made very clear that they also want to have Kentucky’s support.”

McDaniel said the committee wants to see a successful mill operation in Ashland, but he does not want the state to be financing the project after not getting answers to his questions.

“I will be filing a bill this year that demands your repayment of these incentives and I hope I can enjoy the support of those members on the committee,” McDaniel said.

Sen. Michael Nemes, R-Shepherdsville, told company executives they need to provide more information since the state is Unity’s partner because of the taxpayer funds they “regret giving.”

Co-chairman Jason Petrie, R-Elkton, said he voted for the mill’s funding but it is a “vote that still hangs around in the back of my mind.” Petrie said his role on the committee is to ensure a return on investment and on this $15 million investment he has seen nothing.

“My bandwidth, my landing strip, my capacity for let’s hope and pray further has come to an almost complete stop,” Petrie said.

Haney said he anticipates Unity will reach its fundraising goal by the deadline and complete construction on the 240-acre property in 2025.

From Braidy Industries to Unity Aluminum

Unity Aluminum has made significant changes since the state’s investment. Last year, Bouchard was pushed out of Braidy Industries after the company accused him of misspending $330,000 on travel and meal expenses for himself, chartering unauthorized private planes and awarding himself bonuses, against the company’s policy.

The company named a new CEO, Don Foster, in June 2020, who later stepped down to serve on the board of directors. Terry Gill was named CEO. He was former Gov. Matt Bevin’s secretary of the economic development cabinet, who arranged the investment. Gill became a contractor with Unity Aluminum in April 2020.

Haney also was a member of the Bevin Administration.

The company renamed itself Unity Aluminum in October, dropping Braidy Industries, which was named after one of Bouchard’s kids.

The company also generated controversy by attempting to partner with the Russian aluminum company Rusal, which previously faced U.S. sanctions and offered to invest $200 million in the aluminum mill.

Haney said Rusal is no longer part of Unity’s financing.

“We will not have any further Russian ownership at all in Unity Aluminum as the financial flow,” Haney said.

Unity does have an agreement with Rusal to supply aluminum slab, but Rusal will have no ownership and there will be no other collaboration with the Russian government or Russian citizens, said Barnardo Bulnes, Unity’s raw materials manager.

Braidy Industries also received a $4 million Abandoned Mine Lands pilot program grant in 2017 for site development. Haney said the grant helped with drainage, which was a “good project for whoever ends up being there.”

This story was originally published September 27, 2021 at 1:58 PM.