Recycling plant in Osceola falls short of ’14 aim

State, retiree system cash flowed into BlueOak site

OSCEOLA — Touting itself as the nation’s first “urban mining” electronic-waste recycling plant, BlueOak Arkansas hasn’t yet lived up to its billing, either as a recycler or as an investment, but its chief executive officer said last week that he believes the company will meet the goals it set in 2014.

BlueOak got its start amid high expectations and mostly with state money.

Former Vice President Al Gore attended the groundbreaking ceremony in Osceola in 2014 for the $35 million plant, where up to 75 workers making average annual wages of $50,000 were to recycle gold, silver, copper and other metals from discarded cellphones, computer circuit boards and other electronics through an environmentally friendly high-temperature electric plasma furnace.

“If you want to get 10 ounces of gold from ore, you have to mine 100 tons, but you can also get 10 ounces of gold from 1 ton of used [computer] circuit boards,” Gore, a partner in a venture capital firm

that invested in BlueOak Resources, the California-based parent company of BlueOak Arkansas, said at the event, according to the Blytheville Courier News. “Osceola has literally struck gold today.”

BlueOak “has not yet reached those targets,” Ahab Garas, the company’s president, said Monday by telephone. The company still plans to recycle electronics in Osceola, he said. BlueOak is in the “final stages of signing a strategic agreement with an off-shore partner” that will help the company ramp up its workload, Garas said.

Garas declined to give other details about that agreement or on how many people work at the plant and the hours or how many days a week they work. The plant’s parking lot was virtually empty about noon Oct. 31 when a Democrat-Gazette reporter passed by.

BlueOak came to Arkansas as part of the steel industry’s rise in Mississippi County, where four steel mills and steel-related businesses have hired more than 6,000 workers and invested billions of dollars since 1987. Construction started and ended on schedule, but its progress was stopped cold three years ago with a leak and fire during testing of BlueOak’s plasma furnace.

Arkansas entities have invested heavily in BlueOak:

■ The Arkansas Teacher Retirement System’s board of trustees has invested $16 million in BlueOak Arkansas, for a majority-ownership stake of about 41 percent. The board voted in March of 2014 to invest up to $18 million, with an initial round of funding of $14.8 million. (The system, with more than 100,000 retired and working members, has $17 billion in investments.)

■ The Arkansas Development Finance Authority invested $3 million, for an ownership stake of about 8 percent. “We’re still an investor and right now we’re just waiting through the issues they’ve got related to their fire,” said Derrick Rose, its spokesman.

■ The Arkansas Economic Development Commission lent BlueOak almost $3 million in March of 2015 but hasn’t received a payment since January, said Brandi Hinkle, a spokesman for the commission. Interest payments were to have been made quarterly until 2020, at which time the balance was due.

BlueOak built its plant on property owned by the city of Osceola, so it is exempt from property taxes.

The company in 2014 also was eligible for the state’s Tax Back incentives program, which provides refunds on sales-and-use taxes on the purchase of building materials and qualified machinery and equipment, but didn’t file any claims, according to the Arkansas Economic Development Commission.

The company also was eligible from 2015-17 for Advantage Arkansas, which provides a state income tax credit based on employment levels and payroll. Those numbers weren’t immediately available because state law requires a seven-day notice to the company.

The fire and legal ramifications since have limited the work for employees to sorting through bargeloads of junked electronics shipped down the Mississippi River to Osceola, separating the recyclables from the trash for recycling overseas.

BlueOak’s first-year goal was to recycle up to 15 million pounds of electronic scrap, a small percentage of the 3 million tons of electronic waste the country produces each year, according to the U.S. Environmental Protection Agency.

On Nov. 16, 2015, as BlueOak was still testing its furnace system, a leak developed, causing molten metal to spread across the plant and spark a fire, according to a lawsuit filed in federal court by BlueOak’s insurance company, Liberty Mutual Fire Insurance Co., against a manufacturer of a section of the furnace.

“The molten metal breakout destroyed the furnace and resulted in fire, heat, and smoke damage to the concrete slab formation supporting the furnace, as well as damaging (or) destroying electrical and filtration equipment, hydraulic cylinders, hoses, wiring, and conduits associated with the plasma recovery system,” according to the lawsuit. BlueOak isn’t a party to the lawsuit.

“Thank God, no lives or limbs were lost, but it was a catastrophic failure,” Garas said. “Even after that first failure, we have kept staff.” Garas is a partner in Global Principal Partners of Cleveland, another investor in the Arkansas project.

In its lawsuit against RHI US Limited, Liberty Mutual is seeking to recover more than $10.5 million that it says it paid to BlueOak Arkansas in the insurance claim. Liberty Mutual claims refractory material needed for the high-temperature furnace was defective, and that RHI knew or should have known about the defect.

In its response to Liberty Mutual’s lawsuit, RHI’s attorneys “admit that a hole developed in the (f)urnace’s hearth during multiple unsuccessful attempts,” resulting in the fire, but that the company and its personnel weren’t responsible.

Trial has been set for early 2020 in U.S. District Court in Jonesboro.

BlueOak has received a second furnace and began “commission” attempts on that furnace last year, Garas said.

He declined to comment on how the installation of that furnace is progressing.