LignoTech Florida considers locating plant in Fernandina Beach

Submitted by Suanne Z. Thamm

Reporter - News Analyst

February 3, 2016 2:16 p.m.

Ending weeks of speculation, representatives of Rayonier Advanced Materials, Borregaard and the Nassau County Economic Development Board appeared before the Fernandina Beach City Commission (FBCC) at their February 2, 2016 Regular Meeting to present plans and answer questions about LignoTech Florida, LLC. Borregaard, the Norwegian company that would be the majority owner of the joint venture, was seeking reassurance that such an operation would be well received by local government and citizens alike. Sentiment among commissioners and citizens in attendance ranged from cautiously optimistic to highly enthusiastic.

A newly formed joint venture between Borregaard and Rayonier Advanced Materials, LignoTech Florida is evaluating the prospect of locating a facility for the advanced manufacturing of high purity, natural lignin-based products in Fernandina Beach on industrial property within the confines of the Rayonier facility on Gum Street. The project is expected to require $110-130M in capital investment and create approximately 50 high wage jobs.

The new plant would lie south of the existing plant, left of center in photo.

Rayonier Advanced Materials is hosting an open house at their Gum Street plant on Friday, February 12 from 3:00-6:30 p.m. to give local citizens and elected officials an opportunity to speak to Borregaard and Rayonier officials with knowledge about both the scientific and business aspects of the operation. Additionally, the parties have agreed to provide written answers to questions posed by commissioners and citizens at the February 2 meeting prior to the open house.

If a final agreement is reached, Rayonier Advanced Materials will become a 45 percent owner in the joint venture with Borregaard owning the remaining 55 percent. The project is undergoing a comprehensive evaluation process before a final decision is made, including an economic analysis that will validate the viability of this project. State and local government assistance and incentives are critical to ensure that Fernandina Beach maintains an edge over competing locations. Another important factor that will influence Borregaard’s decision is community reaction. They want to locate this operation in a welcoming community and do not want to proceed if there is strong, vocal pushback from government or citizens.

Anders Sjode Skypes the meeting.

In what was probably the first presentation of its kind, Borregaard’s corporate business development representative Anders Sjode spoke via Skype from Sarpsborg, Norway. He was joined by Jerry Gargulak, onsite business development representative from LignoTech USA; Mark Homans, manager of special projects for Rayonier Advanced Materials; and Laura DiBella, executive director of the Nassau County Economic Development Board.

The slide presentation focused on Borregaard as a global leader in biobased products, the nature of lignin, environmental impacts of the proposed project, jobs and business incentives.

Sjode explained that currently, Rayonier burns the lignin produced as a by-product of its industrial processes. Lignin, he explained, is the glue that makes trees stand up. It is used in industry as both a binding agent and a dispersing agent. It allows builders to use less cement and enhances the rechargeability of car batteries by a factor of ten. It is also used in agriculture in feeds. There is a growing market for this product in the Americas and Asia. Sjode said, “You can make anything out of this but money.”

Locating such a project adjacent to the Rayonier Advanced Materials plant would save Borregaard the expense of transporting the lignin off site. Meanwhile, Rayonier would stop burning lignin as fuel and convert to natural gas. The change over would remove air emissions equivalent to 500,000 cars. By removing sulfur dioxide from the air, the distinct odor of rotten eggs would also disappear. Sjode confirmed that the joint venture would only process lignin produced on site and not import lignin from other mills. There would be no additional toxic chemicals used on site beyond those Rayonier already uses. The end product would be transported to ports in Jacksonville or Savannah for shipment and storage.

Rayonier Advanced Materials representative Mark Homans

The facility, which would not be a tall structure, would be located on land immediately to the south of the current Rayonier plant where some warehouses currently exist. All raw materials are already on site.

Rayonier representative Mark Homans added that this would not involve an expansion of the Rayonier plant. If the project is greenlighted, Rayonier will extend an existing rail line south and redevelop a road on property to connect to the new LignoTech plant. He said that the parties are working with the Florida Department of Environmental Protection and the city of Fernandina Beach to assure that all permit requirements are met. He also said that adding this operation to the Rayonier site is consistent with the company policy promoting asset optimization.

NCEDB Executive Director Laura DiBella

Laura DiBella addressed incentive options available for the joint venture. Eighty percent of the options would be covered by the state of Florida, with 20 percent left to local government. The Qualified Industry Tax Refund (QTI) is available to companies that create high value-added industries. The local cost share is $20,500 annually to occur between 2019-2022. That cost would be split between the county and the city. The state provides certain tax breaks if the company creates jobs that pay at or in excess of 150% of the average annual wage in Nassau County. The starting salary without benefits for the new jobs would be $54,000 and therefore meet that requirement.

Another incentive program, known as the Road Fund, would provide up to $3M to fund the anticipated road improvements and new rail spur. There is also a local economic development grant available to new industries that create at least 10 new jobs, add to the tax base and/or make a significant investment in the community. Under this program, the joint venture would not pay ad valorem taxes in its first year. Their 100 percent refund would be reduced to 20 percent over five years.

Medardo Monzon

Other incentives and grants are also being pursued at this time. Eight citizens joined city commissioners in asking questions about the proposal, ranging from compliance with the city’s Comprehensive Plan to impacts on the aquifer and the tourism industry. While citizens seemed generally pleased about the positive environmental implications (reduced emissions, less pollution, no noise), a couple people expressed opposition to tax incentives. An uptick in truck traffic was also viewed with some concern. There was also some skepticism from speakers who felt that the project sounded too good to be true.

Medardo Monzon, a local citizen who has worked as a chemist in industry, said that he was impressed by the care taken by Nordic countries to protect the environment and promote sustainability. He said that the open house would be helpful to the public in better understanding the plans and processes. He questioned the need for tax incentives. He called the project “a beautiful joint venture.”

Julie Ferreira

Michael Harrison, an engineer, said that he was favorably disposed toward the project and saw no “show stoppers” in the audience questions.

Environmental activist Julie Ferreira expressed concerns about depleting the aquifer and the potential for saltwater intrusion in addition to possible noise from the new plant.

City commissioners, who had met individually with project representatives in advance of the meeting, seemed positive about the project. Commissioner Len Kreger reminded people that by switching to natural gas as a fuel, Rayonier Advanced Materials would be paying more franchise fees into city coffers. He asked that the city’s finance staff review the plans and asked that the Comprehensive Plan issues be addressed. Commissioner Roy Smith asked about the new venture’s water use. He was informed that the plant’s use of water would be significantly lower than that of Rayonier.

Commissioners Len Kreger (l) and Roy Smith

Vice Mayor Robin Lentz told the audience that while the city would not immediately reap full tax benefits, it would over time. She also verified that clawbacks exist to insure that the venture lives up to its commitments.

Mayor Johnny Miller

Mayor Johnny Miller asked a series of questions that had been forwarded to him and invited citizens to submit even more. Responding on behalf of Borregaard, Sjode said that lignin is not a hazardous material and that there would be no noise emanating from the new plant.

Commissioner Tim Poynter said that he was excited about the prospect of adding a clean industry to the city’s tax base. He added that he was pleased to be able to also help a local industry—Rayonier Advanced Materials. In responding to concerns about tourism, Poynter said that he appreciates the diversity in our local economy, adding that he does not want Fernandina Beach to become a Hilton Head—a community mainly dependent on tourism. Lentz concurred, saying, “A diverse economy sustains us.” Miller said, “I can’t think of anything that’s been said today that is not good. We are not against industry; we are just against dirty industry.”

In response to City Attorney Tammi Bach’s request for guidance from the commission, Lentz asked that the project be placed on the agenda for action at the February 16 meeting. Bach said that formal action may be taken in the form of a resolution that endorses the project and designates the Nassau County Economic Development Board as the responsible party for ensuring compliance with state established benchmarks.

City Attorney Tammi Bach

Bach indicated that the city would address Comprehensive Plan concerns in the resolution and that the city would perform a cost benefit analysis.

After some discussion, Poynter asked that the parties provide written answers to all the questions raised by the commissioners and citizens before the February 12 open house.

Should local government and Borregaard’s directors both approve the project, Phase I construction could begin in the second quarter of 2016. Phase I production would begin in the first quarter of 2018. Phase II would begin in 2021 and go online the following year.

Anders Sjode expressed a strong desire to locate in Fernandina Beach. However, he was very clear that positive community reaction was important. “If there is massive resistance,” he said, “it would be difficult to sell the project to the board.”

Editor's Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne's many contributions to the Fernandina Observer.