By Roland Murphy for AZBEX
Even though not a single brick has been laid and the first product is two to three years from rolling out the doors, the LG Energy Solution battery plant in Queen Creek is already being hailed as a success story.
Also, despite a narrowing window to put all the necessary bureaucratic and process components in place, local and company officials remain optimistic about breaking ground this year.
An Aug. 16 blog post from the advocacy group U.S. Environmental Defense Fund names the project as one of five high-profile endeavors benefitting from incentives under the Inflation Reduction Act—a Biden administration incentive program to promote clean energy investment in the United States. Having recently marked its first anniversary, the IRA is playing a major part in President Biden’s 2024 reelection campaign.
The LGES plant is planned for a total investment of $5.5B to create two battery plants on the 300-acre site at Ironwood Drive and Germann Road. Upon completion, the project will create thousands of direct and indirect jobs and make LGES Queen Creek’s largest employer.
According to a March announcement from the Arizona Commerce Authority, the planned development consists of a $3.2B electric vehicle cylindrical battery manufacturing facility with a total capacity of 27 GWh and a $2.3B lithium iron phosphate pouch-type battery plant with a capacity of 16 GWh for energy storage systems. BEX Companies’ research has estimated the construction-specific costs for the two plants at between $1.5B and $2B.
Multiple announcements and sources have cited the Queen Creek plan as the largest single investment for a stand-alone battery manufacturing facility in North America.
Project Alpha: A Brief Review
AZBEX was the first news outlet to report on a proposed development agreement between LGES, Pinal County and the Town of Queen Creek in March 2022. Codenamed Project Alpha, the initial investment element was set at $2.8B in the agreement, though further progress set the actual investment plan at $1.4B. Plans included project and workforce development incentives for a 1MSF battery production facility, creation of a workforce development program with a workforce training facility, and $50M in infrastructure improvements around the plant site. (AZBEX; Mar. 18, 2022)
Three months later, AZBEX was also the first to report the project had been put on hold. Contractors involved with the project estimated the hold time to last anywhere from four-to-six months and said construction could be delayed by two-to-three years. Shortly after our story ran, LGES confirmed the project’s on-hold status, and The Korea Bizwire quoted company officials saying the decision was prompted by global inflation and a drop in the South Korean currency causing development costs to balloon. The company said the hold was implemented to give it time to evaluate all its global investment plans. (AZBEX, June 24, 2022; July 8, 2022)
As of this January, media inquiries reported no change in status as the company continued to review its investment strategies.
In March, however, AZBEX was among the first in the U.S. to report the project’s potential restart based on LGES’ North American subsidiary providing the Arizona Commerce Authority with a sworn certification that it intended to make at least $50M in capital investments to build the facility and the approval of an intergovernmental agreement between Queen Creek and the Arizona Department of Revenue for partial reimbursement of the Town’s planned infrastructure improvements. The certification cited incentives under the IRA as contributing to the decision to move forward with the development. (AZBEX, Mar. 8, 2023)
Shortly afterward, LGES confirmed its commitment to the project in a news release. Later that month, LGES and the ACA rocked the economic development community with an announcement that the project would not only move forward, it would expand the initial facility and $1.4B investment to include both planned factories and a total investment of $5.5B.
The announcement said both facilities were planned to break ground in 2023.
Project Still a ‘Go,’ but Window is Narrowing
With the exception of citations in various “State of Economic Development/Advanced Manufacturing” stories, there has been little progress reported in the last few months.
When we saw the EDF post celebrating the project as a win under the Inflation Reduction Act, we reached out via email to both the Town of Queen Creek and LGES for updates. Both responses were carefully couched and devoid of specifics, but both also affirmed the project’s intent to move forward.
Responding by email, Queen Creek Economic Director Doreen Cott said, “Town staff continues to work with the LG Team and is making progress towards a groundbreaking in the next few months. LG representatives also met with regional workforce partners to identify training opportunities.”
In a separate email, LGES Sales Operations Analyst Sophia Kim said, “Unfortunately, at the moment, there’s nothing we can share, other than the fact that the Arizona facility is expecting its groundbreaking within this year.”
The most recent status update to the LGES entry in the DATABEX project said, “As of 8/20/23, no updates are available and the project is still in planning and permitting with the city.”
Still, if, as the saying goes, past performance is the best indicator of future behavior, the LGES email is cause for optimism. When there is no good news to report, the company has typically not responded to requests for updates, whereas they have been relatively accessible when the outlook is good. The response to this particular inquiry came within six hours.
The lack of publicly available progress information should not be taken to mean progress is not being made behind the scenes. Even though, generally speaking, the window is narrowing to put all the pieces in place for a groundbreaking to happen before the end of the year, a project of this size and scope can move rapidly once everything aligns.
Inertia is a similar principle in both physics and in project development. It takes a great deal of applied force over time to get a massive boulder rolling down a hill, but, once the tipping point is reached, that boulder—or that project—can quickly gain enough momentum to become a force unto itself.
