May 1 deadline for $1.3 billion Sun Paper ‘superproject’ likely to be extended until summer

An upcoming May 1 deadline to find a site location for a $1.3 billion superproject that China’s largest privately-held timber company hopes to build in south Arkansas is expected to be extended until later this summer, state economic development officials said Thursday.

During an eight-day trade mission to the Far East in the fall, Gov. Asa Hutchinson and Arkansas Economic Development Director Mike Preston signed a letter of intent with China-based Shandong Sun Paper Industry Joint Stock Co. to pursue the multibillion dollar pulp mill to be located in state’s timberland region.

The original letter of intent had set a May 1, 2016 date to finalize a site for the project, which Hutchinson said would create “hundreds of direct jobs” and result in “very significant” indirect jobs in the logging and timber industry in south Arkansas. At the time, the governor said specifics beyond those numbers would be difficult to estimate in ongoing negotiations.

In response to a query concerning the May 1 deadline only three weeks away, AEDC spokesman Scott Hardin told Talk Business & Politics that negotiations with Chinese officials are still underway but there is still work to be done.

“We are getting closer to a decision on the Sun Paper project but the May 1 deadline mentioned in the letter of intent will likely be extended,” Hardin said in email response. “We are in contact with the company on a daily basis and anticipate a final decision will be made by early to mid-summer.”

In addition to finding a suitable site location for a “fluff pulp” factory that would primarily create materials for baby diapers and other products, the Nov. 22 pact also states that pre-engineering would begin after May 1 as well as environmental permit activity and an intermodal railroad facility study.

Hardin said some of those studies are already underway by the Chinese timber giant, but have taken longer than expected. If the plant moves forward, it would be Sun Paper’s first North American operation.

According to the company’s website, Shandong Sun Paper is the largest privately-held papermaking company in China, pulling in about $26 billion (Yuan) annual, or the equivalent of about $4 billion in U.S. currency. In 2015, the 10,000-employee company produced 4.5 million tons of pulp and paper at 15 branch companies located in China, Southeast Asia and U.S. The head office of Sun Paper is located in Yanzhou City, the hometown of Confucius and Mencius.

AEDC’s Preston said following his trip with the governor to the Far East that the Sun Paper deal will not likely result in the need for a legislative superproject special session. He said the governor’s Quick Action Closing Fund and existing economic incentives already on the books will come into play to wrap up the Sun Paper project.