Little Rock, Arkansas, USA 28 April 2016 -- (Arkansas News Bureau) -- Chinese pulp and paper manufacturer Sun Paper will spend more than $1 billion to build a mill in Arkadelphia that will employ about 250 people, Gov. Asa Hutchinson and the company's chairman and founder, Li Hongxin, announced this week.

The mill, which will be Sun Paper's first in North America, will turn Arkansas timber into pulp, most of which will be shipped to China for use in paper and other products. The company hopes to begin construction sometime in the first half of 2017 and begin production in late 2019.

In a ceremony at the state Capitol, Hutchinson and Li signed a memorandum of understanding stating that Sun Paper agrees to hire up to 250 people within four years at average annual salaries of $52,000 and that it will receive a variety of economic incentives for the project.

"This is one of the largest private investments in the history of the state of Arkansas," Hutchinson said. "It will result in the creation over time of 250 direct jobs, but in a broader context, it will result in a real boost to the economy of South Arkansas throughout the timber industry."

Li said, through an interpreter, that the company will invest between $1 billion and $1.3 billion in the project. In addition to the 250 people directly employed by the plant, more than 2,000 construction jobs will be created during the construction phase and up to 1,000 new jobs are expected to be created indirectly, he said.

"This project will be the most modern, the highest-efficiency and the most environmentally progressive factory in the pulp and paper industry in all of North America," he said.

Li said the company considered many possible locations in North America but chose Arkadelphia because of its rich timber resources and the personal relationships the company established over the past several years with Hutchinson, former Gov. Mike Beebe and Arkadelphia and Clark County officials.

Hutchinson said he discussed the project with Sun Paper officials during a trade mission to China in November.

The project will require approval from regulators with the Arkansas Department of Environmental Quality and the federal Environmental Protection Agency. Arkansas will expedite the state permitting process, Hutchinson said.

State incentives for the project include a $50 million loan from multiple state sources; $12.5 million from community development block grant funds and the Governor's Quick Action Closing Fund, for site preparation and equipment; a cash rebate equivalent to 5 percent of payroll for 10 years; sales tax refunds on building materials, taxable machinery and construction equipment; and up to $3 million from the Arkansas Economic Development Commission for workforce training.

Local incentives include a 65 percent abatement of property taxes for 20 years, which is projected to total $92 million, and $10 million in revenue from a half-cent sales tax for economic development.

Based in China's Shandong Province, Sun Paper is one of the world's largest pulp and paper makers, employing about 10,000 people worldwide.