Kentucky recoups $15 million investment in failed Braidy Industries aluminum mill

LOUISVILLE, Ky. (WDRB) -- Kentucky recouped its controversial $15 million investment in a proposed aluminum mill near Ashland that wasn't built, Gov. Andy Beshear said Thursday.

Without disclosing the project, state legislators appropriated the money in the final hours of the 2017 General Assembly at the urging of former Gov. Matt Bevin's administration. It was later revealed that the recipient was Braidy Industries, a company that planned to open a mill in Boyd and Greenup counties in 2021.

But that deal missed a series of deadlines and ultimately faltered. Unity Aluminum, the renamed Braidy Industries, is now part of a joint venture with Steel Dynamics to build the plant elsewhere in the U.S. Unity had promised to repay Kentucky's direct investment.

Beshear said the Unity-Steel Dynamics venture agreed to donate the 200-plus-acre site to the Northeast Kentucky Regional Industrial Authority, which previously owned the land, and is negotiating to sell other parcels.

Citing other economic development activity in the state, Beshear said he is "confident we will secure a significant project on the property, as it is a great site for a potential employer."

The aluminum mill was touted as a manufacturing boost to a hard-hit part of eastern Kentucky. Braidy CEO Craig Bouchard, who started the company in 2017 with the $15 million in Kentucky taxpayer funds, envisioned a $1.7 billion plant about a half hour from Ashland with 600 well-paying factory jobs.

More than 11,000 people showed interest in working there, WDRB News reported in late 2019, and the company created a two-year training program at Ashland Community & Technical College for potential workers.

Braidy Industries got a boost in 2019 when it landed a $200 million pledge from Russian aluminum giant Rusal in exchange for 40 percent of the mill. That came not long after former President Trump's administration lifted economic sanctions on Rusal and its parent company tied to Oleg Deripaska, an ally of President Vladimir Putin.

But Braidy nevertheless struggled to complete a complex financing deal for the mill. And in 2020, as the company disclosed that it might run out of money, Bouchard received a $6 million settlement to step aside.

By early 2021 and under its new name, Unity Aluminum was pleading for another 18 months to raise the needed equity and debt, according to letters obtained by WDRB under the Kentucky Open Records Act.

Kentucky could have asked for its $15 million back in February 2021, but the state agreed to hold off for more than a year to give the company more time to complete its financing.

But the repeated delays infuriated some Kentucky legislators, including some who initially supported the plan. Early in the 2022 General Assembly, Kentucky Sen. Chris McDaniel, chair of the Senate Appropriations and Revenue Committee, introduced a bill to demand the money back.

The measure also would have kept Commonwealth Seed Capital, the public corporation that made the investment in 2017, from giving Unity more time to raise money.

Senate Bill 48 passed the Senate unanimously but wasn't assigned to a committee in the House and died there. The office of House Speaker David Osborne did not answer a question posed Thursday about why the bill didn't move in the chamber.

McDaniel, R-Ryland Heights, said Thursday he's glad Kentucky is getting its initial investment back, although he noted that the state won't receive an inflation-adjusted amount.

"I would have rather had a functional aluminum mill in Ashland, Kentucky," he said. "But the fact is: Craig Bouchard sold a fraudulent vision and peddled in hope and when the going got hard, he took off with millions of dollars and left Kentuckians holding the bag."

In a statement, House Speaker Osborne said now that the state money has been returned and the project site is once again available, "the people of this region can continue their efforts to attract future opportunities.”

The $15 million has been sent to Commonwealth Seed Capital, which will forward the money to the Kentucky Economic Development Finance Authority incentives board, according to a press release from Beshear's office.

Unless told differently by state lawmakers, the authority will spend the money on private investment of at least $1 billion in one or more places in Kentucky, as the law provides.

This story may be updated.