Pipeline Project Spurs Manufacturing Investment and Job Growth
Unique combination of infrastructure, collaboration and location lead to foreign direct investment on a national-profile project
Published: Mon Mar 25 2019
A new natural gas pipeline in Northeast Ohio is transforming a corner of the state into a region attracting hundreds of millions of dollars of investment.
Petmin Holdings, South Africa’s largest producer of metallurgical anthracite coal, is investing in the U.S. market and building a nearly $350 million high-grade nodular pig iron plant in Ashtabula. Petmin elected to build the plant in Ohio, as opposed to a number of other North American sites assessed over a number of years, primarily due to the area’s reliable supply of energy, as well as its logistical advantages.
“This is the goal,” said Dana A. Saucier, JobsOhio vice president and head of economic development. “Petmin’s planned investment will bring to Ohio and the U.S. a world-class nodular pig iron production facility. This was made possible by a strategic pipeline investment leveraging homegrown energy. We and our partners are excited Petmin chose Ashtabula to invest in this advanced technology, which will support customers throughout North America and Europe.”
Bradley Doig, Petmin USA president and CEO, explained the decision to locate the plant in Ashtabula.
“We were incredibly impressed by the collaboration and support demonstrated by our public and private partners at all levels, including JobsOhio, Team NEO, the Growth Partnership of Ashtabula, the city of Ashtabula, its Port Authority, and many others,” Doig said. “We selected Ashtabula for a number of reasons, including access to a port, manageable electric and natural gas costs and proximity to our future customers.”
The company estimates that construction of the plant could employ more than 600 workers. When it is completed as early as 2021, the plant will employ 110 full-time employees.
“We have been working on attracting this project for nearly four years now,” said Sean Ratican, executive director of the Ashtabula County Port Authority. “The Ashtabula location is logistically advantageous. It offers international shipping access, direct rail access and close proximity to highways. With the availability of water and gas, this is a perfect location.”
Just a few months ago, the clean and abundant natural gas feedstock the plant will rely on would have been unavailable. Supply to this region of Northeast Ohio had been tapped out for decades and local leaders had begun to worry it was crimping economic development in the area.
“We have incredible local manufacturing talent, but when you’re missing some of the basic infrastructure and resources to serve certain industries, it becomes difficult to compete,” said Greg Myers, executive director of growth partnership for Ashtabula County.
Recognizing the region’s significant potential for investment, JobsOhio partnered with pipeline provider RH energytrans on the development of the 28-mile, 12-inch wide natural gas Risberg pipeline. JobsOhio provided a $4 million loan to help bring the $86 million project to fruition, but more crucial to the process was critical support to navigate the myriad agencies and regulations that are common in an interstate pipeline.
“Projects like these can be enormously complex, which makes having a partner like JobsOhio instrumental to their success,” said Dennis Holbrook, spokesman for RH energytrans.
The pipeline was a critical piece when landing the Petmin USA project and could help spur more activity.
Ohio has seen a flurry of investment in its energy industry. Through 2017, the Utica Shale benefited from $70 billion being invested into its upstream, midstream and downstream supply chains. Now, the region of Ohio, Pennsylvania and West Virginia, commonly referred to as the Shale Crescent, is home to the lowest natural gas prices in the developed world. If this region were its own country, it would rank third in natural gas production in the world, behind just Russia and the United States as a whole.
The first of its kind in the U.S., the Petmin Ashtabula plant will produce high-purity nodular pig iron (NPI). This product is notably lower in impurities than other similar commodities, making it important in the metal-casting industry. The primary customers will be casting foundries based in North America and in Europe.
“The majority of the plant’s customers are located in the Great Lakes region,” said Petmin’s Doig. “All of the high-grade pig iron to be produced by the Ashtabula plant is currently imported from Brazil, Russia and the Ukraine.”
The $33 billion per annum metal casting industry in the U.S. relies on this niche product. For the first time, the industry will have a U.S. supplier. The local community should see real economic benefit from the investment. The plant’s estimated 110 full-time workers should generate an annual payroll of nearly $7 million. According to the Growth Partnership of Ashtabula County, the operation of the plant is expected to support more than 300 additional jobs in the area and provide millions of dollars of impact to local tax rolls.