One of the world’s largest trading companies will buy Ormet Corp.’s Burnside Terminal for $28 million and invest $100 million to make the facility one of the country’s largest coal and bulk cargo handlers.
The deal does not include Ormet’s alumina refinery, which is near the terminal, and other acreage. The refinery has been idle since December 2006, but Ormet plans to reopen it with a $21 million investment that will revive about 250 jobs.
Trafigura Beheer BV, through subsidiary Impala Warehousing LLC, announced that after it reopens the Burnside terminal, the facility will mainly handle coal exports. It also will import bauxite for Ormet and send alumina shipments from the refinery upriver.
Trafigura said the terminal will become the only facility with the possibility of both rail-to-vessel and barge-to-vessel capabilities on the Mississippi River.
Trafigura’s goal is 11 million tons of shipments through the facility, using bulk cargo ships with a capacity of up to 132,000 tons. Trafigura expects to create about 100 permanent jobs at the facility.
“We are aware that currently the U.S. faces real constraints in supplying coal,” Simon Collins, a director of the Dutch-registered commodities trader, said in a news release. “The 20 or so terminal facilities across the country are simply maxed out. The development of Burnside as one of the country’s biggest terminals will create new opportunities to establish optimized flows of coal, both in and out of the USA.”
Burnside’s expansion will reduce the pressure on existing facilities while providing a vitally needed multimodal-logistics platform on the Mississippi, he said.
Andy Smolenack, a Trafigura coal trader, said when it was built the terminal was sort of “a crown jewel” for Ormet’s operations on the lower Mississippi.
Trafigura’s plans to spend millions of dollars upgrading the facility will return the terminal to its former status, Smolenack said. The improvements are expected to take about 12 to 18 months to complete and will create about 200 construction jobs.
Jay Hardman, executive director of the Greater Baton Rouge Port Commission, said the deal is good for the port and Ascension Parish.
“Man, that’s wonderful,” Hardman said. “That’s all good news.”
The more vessel and barge movement there is, the better it is for everybody, Hardman said.
Ormet built the facility in 1956, then sold it to the port, leasing back the terminal for more than 40 years. In 1999, Ormet bought the terminal from the port in a $10 million deal, which included guaranteed shipping fees and lease payments. When the company declared bankruptcy in 2004, the port lost out on around $2 million in revenue from the terminal. The terminal has been idle since 2008.
Hardman said the port was disappointed when Ormet closed the facility because the terminal handled other commodities besides the bauxite used at Ormet’s alumina plant.
Alumina is used in the production of aluminum, as well as water treatment chemicals, flame retardants and detergents.
Trafigura is the world’s third-largest independent oil trader with more than $1.9 billion in industrial assets worldwide, including mining storage facilities in South America, Africa and China, according to its website. The privately held company handles every element involved in the sourcing and trading of crude oil, petroleum products, renewable energies, metals, metal ores, coal and concentrates for industrial customers.
Trafigura has about 4,000 employees in 67 offices worldwide.