Port board to consider financing for new plant

2/23/2006

A first step toward financial assistance for a proposed beryllium refining plant at the Brush Wellman complex in Elmore is to be considered today by the Toledo-Lucas County Port Authority board of directors.

If approved, the bond inducement resolution on today's agenda will direct port staff to begin formal negotiations with the Cleveland beryllium company for up to $7.5 million in bonds from the Northwest Ohio Bond Fund and for port sponsorship of a $3 million state loan for the plant, which may cost up to $60 million to build.

The port authority would own the building and lease it to Brush until its construction debt is paid off, at which time Brush would have an option to buy it for $1.

Brush must decide whether to build the plant in Elmore or near its beryllium ore mine in Delta, Utah.

Greg Gregory, the company's program manager, said that there are equal chances of either site being chosen.

Mr. Gregory said the level of local economic support for the project "is going to have a major impact on the decision."

A memorandum by the port authority's staff about the proposal notes the siting uncertainty and states that port authority support for financing would "solidify its commitment to the project and promote Ohio as the choice for the new facility."

Jerry Arkebauer, the port authority's vice president for finance, said the proposed port ownership for the building would eliminate state sales taxes on construction materials and equipment.

The port authority would not be liable for any of the project's debt should Brush default, Mr. Arkebauer said.

In December, Brush received a $9 million federal contract to design a new facility for producing primary beryllium, which is favored for use in certain defense and energy-related uses because of its extreme stiffness, a feature that reduces vibration.

Construction of the plant, expected to employ 25 people, is slated to begin in the fourth quarter of 2007, Mr. Gregory said.

John Papcun, president of the Ottawa County commissioners, confirmed that county officials have held tax-incentive discussions with Brush.

However, he said any specifics would be decided after the company decides where to put the plant.

With more than 500 employees in Elmore, Brush is the second-largest employer in the county, Mr. Papcun said, and the new plant would increase the work force by about 5 percent.

"Twenty-five jobs is 25 jobs, and Brush pays well," he said.

Brush Wellman, a unit of Brush Engineered Materials Inc., closed its previous beryllium-making facility in Elmore in 2000 after the U.S. Defense Logistics Agency said it would begin selling beryllium from a national stockpile.

However, the stockpile now is expected to be depleted by 2011, while a U.S. Department of Defense report to Congress last year predicted increasing demand for the metal.

The old plant's closing also followed by a year a series of Blade articles reporting that about 1,200 current or former beryllium industry workers had contracted berylliosis, a potentially fatal lung ailment, since the 1940s.

Brush Wellman was sued by ill employees alleging the company failed to warn of danger from exposure to beryllium dust.

The new facility, Mr. Gregory said, will have state-of-the-art safety features and be heavily automated.

"Because of the health and safety issues with beryllium, we want to minimize the amount of beryllium contact with plant operators," he said.

A resolution authorizing the issuance of bonds would come before the port authority board during its March 23 meeting if formal negotiations for bond inducement

produce an agreement.

Contact David Patch at:

dpatch@theblade.com

or 419-724-6094.