74th Legislative Session -- 1999

Committee: Joint Appropriations

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P      Sen. Frederick, Co-chair
P    Rep. Richter, Co-chair
P      Sen. Drake, Vice-chair
P    Rep. Putnam, Vice-chair
P    Rep. Burg
P    Rep. Cerny
P    Rep. Clark
P    Rep. Derby
P    Rep. Klaudt
P    Rep. Pummel
P    Rep. Sutton
P    Rep. Wudel
P      Sen. Dennert
P      Sen. Duxbury
P      Sen. Lange
P      Sen. Benson
P      Sen. Bogue
P      Sen. Hainje
P      Sen. Kleven
P      Sen. Staggers

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Chair Frederick.

South Dakota Cement Plant

Mr. Jerry Baldwin, Chairman, Cement Commission, provided an overview of the cement plant operations. He noted this year's audit report was clean, as it has been for a number of years. The dividend payment to the state will be $12 million for FY99, and the commission projects a dividend of $12 million for FY00. Between 1979 and 2000 the cement plant will have paid $231 million in dividends to the state.

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Chairman Baldwin noted the construction of a new rail out facility. The plant is continuing to make capital improvements. While the plant is in a state of high maintenance, the control systems are state-of-the-art. The plant has an excellent work staff and continues to reduce the workforce. Regarding raw materials, the current limestone reserve is expected to last only 16 additional years. For this reason, the plant acquired a limestone reserve in southwest Custer County this year. The top priority of the plant continues to be maintaining a sufficient amount of cement for South Dakota.

The plant uses rail service to ship cement to Sioux Falls and Denver. Denver is the farthest market from the plant. The plant does not pay sales tax. Discussion followed on the use of alternative fuels. Tires can be used as a supplemental fuel, but the public's perception of the process is negative. The plant is taking a wait-and-see approach.

The Dakota Minnesota and Eastern (DM&E) railroad expansion will benefit the plant. One of the current limitations of the plant is rail cars. High-speed rail service will be helpful. The plant will need to establish a link to the DM&E rail line. The limestone reserve in southwest Custer County is close to the DM&E - Burlington Northern railroad junction.

Senator Benson inquired as to the cost of retrofitting the plant for the use of alternative fuels. Mr. Steve Zellmer, Dakota Cement, estimated the cost to be $250,000 to retrofit a kiln to burn tires. The cost of a new plant is estimated at $200 million for a plant that would produce 1 million ton of cement. It would cost $60 or $70 million to add just a new kiln. Much of the raw material needed for cement production is available near the limestone reserve in Custer County. The exception is iron ore, which can be shipped in. The new DM&E rail line will cut down on shipping times. Sixty percent of cement produced at the plant is shipped by rail.

South Dakota accounts for 40% of the cement plant's business, Colorado for 25%, and Wyoming for 15%. The acreage of the limestone reserve area is 13,000. The land was purchased for $236 per acre. A part of the land is being leased to a rancher.

MOTION:      ADJOURN

Moved by:      Representative Putnam
Second by:      Senator Frederick
Action:      Prevailed by voice vote.

Deborah Rumrill

Committee Secretary