E-Waste Mining Center Digs Up NMTCs

  Download pdf: E-Waste Mining Center Digs Up NMTCs A new electronic waste (e-waste) recycling center under construction in Osceola, Ark., has project partners calling it “the place where the Silicon Valley meets the Mississippi Delta.” Developed by California-based BlueOak Resources Inc. using federal new markets tax credit (NMTC) financing, the BlueOak Arkansas facility will use a high-temperature furnace to extract precious metals found in electronics, such as circuit boards and cell phones. Priv Bradoo, BlueOak’s co-founder and CEO, said that the concentration of precious metals in electronic scrap, such as printed circuit boards, is more than 100 times greater than precious metals in the same amount of virgin ore. With more than 50 million tons of e-waste being generated around the world every year, she said people have a responsibility to recognize these waste streams as a valuable resource. Bradoo said the Osceola facility will be the first of its kind in the United States dedicated to recovering high-value metals from electronic scrap. Once BlueOak begins operations at the end of 2015, it will be able to process at least 15 million pounds of e-waste annually with technology designed to be both efficient and environmentally friendly. “If the BlueOak technology works, it will not only lessen environmental degradation resulting from mining, it will also dramatically lower the amount of harmful pollutants emitted from current recycling processes, as well as drastically reduce the toxic exposure currently confronted by individuals involved in e-waste recycling around the globe–many of whom are already suffering from living in deep poverty,” said Deborah La Franchi, president of National New Markets Funds, which was one of BlueOak’s NMTC allocatees. Bradoo said many recycling centers in the United States ship e-waste to developing countries, posing a significant environmental and health hazard due to improper and unregulated recovery methods often used in those regions. She said that BlueOak’s Osceola facility has the ability to process high-value electronic scrap domestically for the first time and she believes this will further spur domestic e-waste recycling efforts. Others agreed. “This is the prototype to prove it works,” said La Franchi. “BlueOak has the potential to revolutionize how e-waste is treated and recycled around the world.”

Rural Community Strikes Gold with New Facility

Building BlueOak in Osceola is expected to be a gamechanger for the local economy, said David Stickler, the senior managing director of Global Principal Partners who worked on BlueOak’s site selection, permitting, logistics and NMTC structure. Osceola has historically been an agricultural community, but when advanced machinery reduced the need for manpower in the fields, the town’s workforce shifted its focus to manufacturing. Several textile factories and the local military air base later closed, pushing Osceola’s unemployment rate to double digits in recent years. However, Osceola’s Mayor Dickie Kennemore said that the city is “pulling itself up by its bootstraps” and part of its recovery plan is attracting new businesses and jobs. “We hope that this’ll be the central [recycling] headquarters on the eastern side of the Rockies,” said Kennemore. Mississippi County donated 33 acres of land in the city’s industrial park to BlueOak and the city of Osceola installed the necessary power and water infrastructure for the building. This widespread local support for BlueOak was one of the main reasons why Osceola was chosen from more than two dozen cities under consideration, said Stickler. Another reason was Osceola’s geographically central location, which will allow BlueOak’s primary e-scrap provider, Jefferson Iron & Metal Brokerage, to truck in materials from all over the country. Development of the facility will create 75 permanent jobs and Stickler predicts that many of the positions will be filled by local workers. BlueOak plans to partner with nearby Arkansas Northeast College to train students for jobs at the recycling center, so no previous experience working in e-waste recycling would be necessary. Salaries will average about $50,000 a year, significantly more than the city’s median family income of $35,000.

Financing

The amount of revenue and jobs that BlueOak is expected to generate was extremely attractive to the community development entities (CDEs) involved with the project. National New Markets Fund contributed $15 million in NMTC allocation and Heartland Renaissance Fund provided an additional $15 million of its own allocation. “This is something that can be big, not only in terms of changing the paradigm of how e-waste is recycled, but one that can transform one of the poorest regions in our country,” said La Franchi. Leslie Lane, senior vice president of Heartland Renaissance Fund, felt the same way. “As an Arkansas CDE, the impact means more for us,” he said. “It’s our mission and reason for existence, to help communities in Arkansas get out of poverty.” Sam Walls, president of Heartland Renaissance Fund, added that BlueOak makes social, environmental and economic sense. “They’re doing well by doing good and the business itself has a viable business model,” said Walls. “They’re making money, being green and solving major problems.” BlueOak was also financed using $21 million in third party debt and equity and $9.4 million in tax credit equity from U.S. Bancorp Community Development Corporation (USBCDC). Although the Osceola site will be BlueOak’s first operational facility, project partners expect to expand operations to more locations nationwide. “There’s a larger hope that this facility can demonstrate that e-waste recycling in the U.S. is a viable business model that could be replicated across the country,” said Joe Hennessee, project manager for USBCDC. Bradoo agreed and said that although Europe currently leads the United States in terms of e-waste recycling capabilities, BlueOak could turn the tide. “This allows us to put our stake in the ground,” said Bradoo. “We’re committed to maximizing recycling and recovering value from electronic waste, and one day we’ll be able to say that it all started in Osceola.” Source: Teresa Garcia, Staff Writer, Novogradac & Company LLP This article first appeared in the October 2014 issue of the Novogradac Journal of Tax Credits. © Novogradac & Company LLP 2014 – All Rights Reserved