The Beatrice City Council approved requests totaling $326,800 in LB840 funds during its Monday meeting.
The two requests were each made on behalf of Rare Earth Salts, a startup company hoping to launch a pilot program in Beatrice next year.
Rare Earth Salts CEO Allen Kruse has stated the company will use new techniques to harvest rare earth elements from would-be mining waste around the world.
He claims the company can extract trace amounts of the elements, which are used in items from cell phones to televisions, from the waste.
Kruse and the NGage economic development group presented the applications during Monday’s meeting.
The first request of $76,800 was for a year’s rent in the business campus in west Beatrice.
Councilman Ted Fairbanks made an amended motion to reduce this amount to $38,322, saying the building’s price of $12 per square foot for the year’s lease was 3-4 times higher than many similarly-sized locations in Beatrice, and asked why the business campus was considered.
“I think he could have gotten a better deal someplace else and if I would have been your board… back in June or July when he came to me and said ‘We’re looking at this, it’s going to be $12 a square foot,’ I would have said we can look on our website and pull up at least four different buildings in Gage County that you can get for $3 a square foot,” Fairbanks said. “You’re asking me to vote and trust you with public funds when I can look at this and say in at least one instance, you didn’t do your due diligence.”
Fairbanks also pointed out the lease started Oct. 1, and a full year lease wasn’t needed.
Kruse responded that Mike Ayars, owner of the business campus, was the only owner willing to convert the area to a needed wet/dry lab, which he said typically costs more than warehouse space.
Fairbanks’ motion to reduce the amount of the request failed with a vote of 2-5, with Fairbanks and Rich Kerr voting in favor. Councilman Robert Morgan, who also serves as the Council’s representative on the NGage board, abstained from voting and the discussion.
Councilman Kerr was skeptical of the company, citing past issues with companies that fail to deliver on their claims.
“Over the years we’ve funded many projects,” he said. “A lot of them we’ve been left holding the bag on. For some reason they always came forward to us, the companies did. This just bothers me that NGage had to bring this forward. Why didn’t these… gentlemen come forward with the application themselves? I don’t know the reasoning why they didn’t.”
Andrea Schafer, president of the NGage board of directors, said what Rare Earth Salts is offering the community is different from proposals in the past.
“We are doing the job that the City Council has asked us to do and we have an opportunity in front of us to bring high-wage jobs to Gage County,” Schafer said. “This is the project we have been waiting for. This isn’t something that has been considered in the past. This is a different type of project. These are much higher wages.”
The vote to then give Rare Earth Salts $76,800 in LB840 funds for a year’s lease passed 5-2, with Fairbanks and Kerr voting in opposition.
The second request made for $250,000 to be distributed to Rare Earth Salts in three increments was approved with the same vote. This phase is dependent on job creation and capital improvements.
The first $100,000 will assist in “speed to market” and will be used for incentive packages to draw employees.
The second phase of $75,000 will be for the creation of four additional jobs by April 1, 2015. These jobs include a chemical engineer, inorganic engineer and two lab technicians. The second phase of funds is also contingent on the company raising $6 million in capital by April of next year.
The final $75,000 is for creating four more jobs by July 1, 2015. These include an electrical engineer, analytical engineer and two additional lab technicians. Rare Earth Salts currently has eight employees.
If the company is sold or moves operations out of the County, it would be required to repay the $250,000.
NGage executive director Glennis McClure said the company’s operation will not pose an environmental risk, unlike similar operations using older technology overseas.
“They have an old technology that they use and it’s not environmentally friendly,” she said. “I think it’s quite an honor, if you will, that we have a company that has selected Beatrice to come and do the research. They’ve been doing the research and are ready for the next step. The research has more to do with the green technology… they are not emptying acids into our soils and they’re not destroying our place here.”
Kruse previously said a typical mining operation extracts waste material from the mine with a concentration of 7-8 percent of rare earth elements and Rare Earth Salts has developed a cost-effective way to extract even smaller percentages.
In late October, Rare Earth Salts announced a joint development agreement with what it claims to be one of the 10 largest mining companies in the world. That company remains confidential.