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Titan Drops Plans For Castle Hayne Cement Plant

By Staff Reports, posted Mar 10, 2016
A company that has been at the heart of an economic development controversy for several years has decided not to pursue its plans to build a facility in New Hanover County. Titan America LLC officials announced Thursday that the firm will "suspend construction" of its proposed cement plant in Castle Hayne.
 
The project no longer makes financial sense for the company, officials said.
 
“Our decision to suspend construction on the cement plant in Castle Hayne is driven by basic project economics,” Bill Zarkalis, Titan America’s CEO, said in a press release. “The pace of demand growth in the specific markets does not seem adequate to justify the addition of substantial new production capacity – more so because the costs to construct a new cement plant in the United States have risen substantially in the past few years. Finally, the overall risk profile of the project has worsened as new coastal capacity in North Carolina could be vulnerable to cement imports, considering the strong US dollar, the global cement supply situation and low ocean freight costs.”

The cement plant proposal was first floated in 2008 for the former Ideal Cement site. At the time, Titan officials said the facility would result in 160 permanent jobs with an average annual salary of $75,000, and produce more than 2 million tons of cement a year.

Thursday's announcement was met with sadness from some, elation from others. A controversial project, it had prompted debate almost immediately, about whether it should receive millions in tax incentives and potential environmental impacts from burning coal in its industrial process. Opposition groups formed, and lawsuits were filed about its air quality permit with the state, while other groups and individuals continued to support the plan as a project that would bring in new jobs.

"It's a sad day in New Hanover County. We lost a $500 million investment in addition to our tax base -- that would have been part of our tax base for the next 50 years or more," Bob Warwick, a manager at business consulting firm RSM US in Wilmington and founder of the Coalition for Economic Advancement, said Thursday. "We lost 160 good jobs that would have provided employment for individuals and income for families over the next 50 years, plus a lot of other economic activity that would result from having the plant in our area."

Those who have been opposed to the plant welcomed the news. "This is the best news I've heard in eight years," said Mike Giles, coastal advocate at the N.C. Coastal Federation, referring to how long it's been since the project has been in discussion.

On Thursday afternoon, the N.C. Sierra Club expressed a similar opinion in a statement.

"Today's announcement is a victory for the thousands of citizens who have fought tirelessly for years now to protect their community and our coast," the statement read. "The proposed facility would have drastically and negatively impacted the region's clean air and water."

That opinion was refuted by Titan officials. The company had received an air permit for construction from the state's Division of Air Quality, and subsequent court challenges from opponents to that permit failed. As of Thursday's news, those opponents had been waiting to find out whether the N.C. Court of Appeals would hear arguments in the case or make a decision based on briefings, said Geoff Gisler, senior attorney with the Southern Environmental Law Center. 

Gisler said the center would continue with the challenge as long as Titan still holds a valid air permit. The permit is effective until Oct. 1 of this year, he said. 

New Hanover County commissioner Woody White, who is running for re-election this year, had a different take on Titan's announcement. 

"There was tremendous conflict in the community about whether Titan should or should not be permitted to do business here, and it created paralysis in the community about what our real economic development plans should be because of its extraordinary environmental footprint that it would have caused. I guess the best way to put it is, the 800-pound gorilla has decided to move out of town, and now the community can come together and have a real, meaningful discussion on what our economic development future would look like," he said.

New Hanover County commissioner Rob Zapple said he wished Titan well and hates to see a potential business pull out of the county, but he said the news was also a relief.
 
The Titan issue “has divided a lot of different groups in this community” for the past eight years, he said.

“It has been impossible to have a conversation about economic development without it turning into a statement about Titan,” Zapple said. “This will give us the opportunity focus on other economic development issues that are in front of us, like the [U.S.] 421 corridor. Those conversations will be much more productive without the specter of Titan Cement hanging over them.”

The opposition didn't lead to Titan's latest decision about the plant, said Bob Odom, general manager of Titan subsidiary Carolinas Cement Co.

"It comes right down to economics," he said.

For Warwick, that knowledge makes the loss of Titan even worse, he said.

"The world economic base has changed over the last seven or eight years, but if we had allowed them to go forward when they first asked us to, the plant would have been in operation, and it would have stayed in operation because it would have been the most modern and efficient cement plant in the world," Warwick said.

The company, however, did not shut the door completely on returning to the project in the future. Titan will continue to run a cement terminal, which has been in operation since the 1990s, on the site and does not have plans to sell the property, officials said.

“Current economics, along with supply and demand, have driven our decision. Titan America will maintain the property and if these conditions change the project will be reviewed,” a company statement said.

Titan officials said the decision to suspend its plan in Castle Hayne would not affect the rest of Titan America’s operations in North Carolina, and no jobs would be impacted.
 
“Titan America will continue to serve its Carolina customers from our Roanoke cement plant in Virginia, using our integrated logistics network of cement distribution terminals, warehouses and ready-mix concrete plants,” a statement about the decision said.
 
Despite the announcement, Titan’s parent company remains “committed to long-term growth in the United States,” Zarkalis said.

“To fuel our growth, we are investing in excess of $250M between 2014 and 2016," he said. "Looking to the future, Titan America continues to evaluate opportunities for accelerated and sustainable growth. The Castle Hayne option simply does not meet our economic criteria.” 

Giles said Titan's announcement raised several questions for the Coastal Federation, including what the company might do with the rest of the land it had purchased for the new facility.

"This is an opportunity [for Titan] to do something positive with that land that would benefit the community," he said.
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