By Roland Murphy for AZBEX
The LG Energy Solution battery plant in Queen Creek continues inching closer to reality, and this week the Pinal County Board of Supervisors will meet to discuss and vote on agreement updates to keep that progress advancing.
Under consideration are an amendment to the development agreement between LGES, Pinal and the Town of Queen Creek for the plant development; an amendment to the intergovernmental agreement between Pinal, Central Arizona College and the Arizona Commerce Authority for the Workforce Training Facility required under the development agreement; and an agreement between Pinal and ACA for Pinal to provide American Rescue Plan Act funds for the design and construction of the training facility.
The Development Agreement Update
The original development agreement, dated April 19, 2022, needs to be updated to reflect LGES’ expanded plans for the site and also to address cost increases and other inflationary pressures.
The original development agreement, which AZBEX was the first news outlet to cover, was the first public indication of the project’s existence. (AZBEX, March 18, 2022)
It should be noted that even though LGES announced in March of this year that it plans to build two plants—a cylindrical battery plant for electric vehicles and a lithium iron phosphate plant for battery energy storage systems—for a total investment of $5.5B—the agreements currently in place only address the originally planned $2.8B cylindrical battery plant.
The agreement covers three primary components: The development of the plant, the creation of a Workforce Training Facility to train workers, and a series of infrastructure improvements to support the site. In addition to updating costs for the various components, the amendment also revises some of the timelines associated with the developments.
Foremost among the amendments is an increase in LGES’ planned investment and costs. While the original agreement set the investment at $2.8B, that number has now risen to $3B, “a portion of which is due to increased construction costs, supply chain issues, and inflation, but a significant portion is attributable to increasing the size of the manufacturing facility for the Project,” according to the amendment text.
The end result will be, “An approximately 1,031,614 square foot manufacturing facility with mezzanine, together with associated warehouse, office, training, storage and distribution space of approximately 328,450 square feet under roof. The Required Improvements shall also include associated site improvements inclusive of parking facilities, utility improvements, landscaping, sidewalks, retention areas, and recreational areas,” according to the exhibits.
Queen Creek started preparing the site for infrastructure improvements earlier this month. Street and water and wastewater improvements are required on Germann, Ironwood, Pecos and Kenworthy roads. Under the updated timelines, Phase I of the water and wastewater improvements will be completed by next February, road improvements to Ironwood and Pecos must be finished by March 31, 2025, and all infrastructure improvements are due by Oct. 19, 2025.
The amendment also addresses the employment incentives provided to LGES, which has until Dec. 16, 2033 to reach its full employment objective for the plant. Among other considerations, starting on Aug. 31, 2025 and repeating on or before Aug. 31 every year, Pinal will make an Employee Education Incentive payment of $3K for every Pinal County resident trained and employed at the facility and $1.5K for every non-Pinal County resident until the full employment objective is met.
Workforce Training Facility
The creation of a Workforce Training Facility was a key provision of the original development agreement and remains central to the project moving forward. While there was not much apparent movement on the plan for some time, the extent and depth of both the IGA amendment and the funding grant show a great deal of effort went in behind the scenes.
The IGA amendment covers the agreement between Pinal, the ACA and Central Arizona College to build the training facility at CAC’s Superstition campus in Apache Junction. Pinal will pay up to $9.3M for the development of the training facility, including up to $500K for fixtures, furniture and equipment. Pinal will give CAC an upfront payment of $500K for operations and maintenance costs associated with the facility, and LGES will have priority use of the facility for five years.
After the first five years, LGES will continue to have priority use if it reaches a separate agreement with the college for operations and maintenance costs.
The $9.3M Pinal will pay ACA comes from the County’s ARPA allotment. ACA will use the funds for design and construction of the Workforce Training Facility and will be responsible for all the reporting and recordkeeping requirements associated with the project.