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Braidy leadership testifies, but doesn’t reveal much

The room was packed for this morning’s session of the Senate Appropriations and Revenue committee. The chair, Senator Chris McDaniel (R-Kenton), joked that he was pleased so many people were there, including the media, for another hearing about the budget. But of course, it wasn’t the budget; it was the sort-of-command performance of the leadership team for Braidy Industries.

Did they have the money they need to build? If not, when will they get it? And if they don’t, what happens to the $15 million the state put in? When are they going to start construction? When will the plant actually start producing aluminum? And, of course – what happened with Craig Bouchard, and why was he replaced?

All of these questions, and more, were on the minds of the committee, and most of them got asked. Unfortunately, not all of them got answered.

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The session opened with introductions, and the news that the new chairman of the board, Charles Price, would not be there. The new CEO, Tom Modrowski, was present, and he read a statement from Price, in which Price said he was committed to the success of the project and convinced it would succeed.

In his statement, Price said “I got involved in this project because I’ve always believed Kentucky can lead.” He noted that the economic impact study said that the plant would result in over 8,000 additional jobs in eastern Kentucky, with tax receipts to the six counties around the plant at about $33 million a year, plus millions more to the state each year.

Next was a video about the plant, using animation to show the plant being built on the new site, and what it would look like when finished. During the video, the leadership team shared various facts about the plant, the machinery, the market advantage, and so forth.

After that, the leadership team delivered prepared remarks. Some of the points they shared:

  • They have received all air and water permits, so it is now a “shovel-ready project.”
  • The business case for the plant remains strong. Other U.S. mills are already operating near or at capacity. Braidy already has commitment for over 50% of the plant’s output, once production starts.
  • The main reason for the leadership change (replacing Bouchard) was that “the board wants more progress, faster.”
  • The current leadership team has decades of experience in metals.
  • They have spent two years designing the mill and planning the entire project, from construction to ramp-up to fully functional.
  • They have built capabilities into the mill design that customers have said they want for the future, and that are not currently available anywhere else.
  • This will be the first new mill in North America in 40 years. It will have a level of automation greater than any other mill, including much use of artificial intelligence to enable greater efficiency.

Chair McDaniel then let Senator Robin make a statement, since she represents that area. She said “I believe in this project.” And later: “I have a lot of confidence in Mr. Price.”

Finally, it was time for questions from the committee. Here are some of the Questions, Answers, and committee Responses from the morning.

Q — You said the change in management was due to board’s desire to move faster — why was Bouchard replaced?
A – That’s a question that the board should answer.

Q — Your financial filings list certain companies as part of Braidy. Are there any others that aren’t listed in your forms?
A — No.

Q — (to CEO Modrowski) — What type of background do you have in the metals industry?
A — I started with US Steel, progressed, became more entrepreneurial. But the key here is not one individual, but the team.

Q — In an offering statement, it says that Mr. Bouchard has issued convertible note to a third party. Who is the third party?
A — I’m not at liberty to disclose that.
R — We will expect a written follow-up on that issue.

Q — PSC refused to run the power line to the mill because of lack of financing. What are you going to do for power?
A — We have worked with the power company around siting the substation and the demand. The timeline to build the mill is 27 months. We have plenty of time to work out the power.

Q — We’ve heard the site is not capable of holding up the site.
A — We think there is confusion with the original site. This site will work.

Q — In your agreements with the state, you are supposed to have $1 billion worth of development in the ground by a certain point. Since that is not going to happen this year, when will that happen?
A — We expect to have full funding and begin work by Q4 of this year.

Q — How much do you have on hand, and how much more do you need?
A — We need $500 billion more.

Q — You purchased some other companies in order to use their technologies. We understand there is some concern about scaling those technologies. Are you dependent on the technologies from the other companies?
A — No. We hope to take advantage of those technologies in the future, but we do not need them to start production.

Q — What other government incentives have you received?
A — East Park received some federal monies for abatement of mining land, which they are using on our site. We have not received any other federal funds.

Q — As we sit here today, you are not prepared to start construction. Will you be doing that before the end of this year?
A — We have every expectation that we will.

Q — If you don’t, will the Commonwealth be in a position to recover its money?
A — We don’t do hypotheticals.

Q — You have $65 million in hand, plus $200 million promised. You need $500 million more by the end of this year. What happens if you don’t get the full amount?
A — We have every expectation that we will get all the funding.

Q — Surely you’ve thought about what you will do if you don’t get the full amount. Could you start before you get the $700 million?
A — Depends on the level of confidence as to raising the rest.

Q — So, if you begin construction in Q4 of this year, and it takes 27 months to build the plant, in Q1 of 2023 there will be product coming out?
A — There is a rampup curve, including training, first products, first customers. But yes, that timeframe is correct.

Q — Is the $200 million committed dependent on raising the $500 million, and is there a deadline for that?
A — The short answer is yes.

As the Braidy part of the hearing came to a close, Chair McDaniel again thanked the Braidy people for coming, and concluded by noting that the committee will want frequent updates from Braidy, including some in writing in answer to committee questions.

After the hearing ended, Chris Otts, who has covered this story from the beginning, tweeted this:

Followed by this, just to clarify:

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