By ROBIN SHANNON

L’Observateur

GRAMERCY – Officials with Imperial Sugar, Cargill Inc. and Louisiana Sugar Growers and Refiners Inc. (SUGAR) announced this week the three sides have officially closed on a deal to construct and operate a proposed $145 million sugar refinery in St. James Parish.

The venture, known as Louisiana Sugar Refining LLC, will completely revamp operations at Imperial Sugar’s Colonial Sugar Refinery in Gramercy. The new facility will utilize existing parts already in place and ready to be updated and integrated into the new refinery.

“The existing refinery is operating and producing sugar now. The machinery is up and running as we speak,” said Lonnie Champagne, chief executive officer for SUGAR. “Construction of the new parts of the facility will also begin immediately. We hope to have the new components up and running by the first half of 2011.”

The refinery project was originally proposed as a joint venture between Cargill and SUGAR to construct a completely new facility in Reserve. Officials broke ground on the site, located on River Road adjacent to an existing Cargill grain elevator, in April 2008, but the deal fell through a year later when the national economic downturn made funding for the project harder to come by.

Jeff Cotter, assistant vice president of business development for Cargill, said the move to St. James Parish would instantly save the project about $20 million in existing infrastructure at the Gramercy refinery. He said the parish council also approved use of about $100 million in Gulf Opportunity Zone bonds for working capital. Each member also agreed to contribute $30 million in cash or assets as equity.

According to a release from Imperial Sugar, the company will operate the existing refinery on its own until Dec. 31, 2010. During that time, the company is obligated to complete about $6 million in improvements to existing facilities. The equipment and property will then be transferred to the Louisiana Sugar Refining joint partnership on Jan 1, 2011. Construction and start-up is expected to take between 18 and 24 months.

“The new facility will be good for the long term viability of the sugar industry,” said Alan Willits, president of Cargill Corn Milling. “It links SUGAR’s cooperative growers and mills, Imperial’s existing assets and infrastructure and Cargill and Imperial’s marketing capabilities.”

Willits explained raw sugar cane for the refinery will be supplied by SUGAR through an evergreen raw sugar supply agreement. He said Cargill would serve as marketer of the refined sugar that is not sold to Imperial.

The new refinery, which has been hyped as one of the largest in the nation, is projected to handle about 75 percent of all the raw sugar in Louisiana, as well as 10 percent of the nation’s. All three groups stand to gain a share in the profits. It marks the first time that the state’s cane growers would enjoy a large stake of refining operations in Louisiana.

The construction project is expected to create about 500 contractor employees. When the new elements are in place, the refinery will have about 145 permanent jobs.