After two years of offers and counteroffers from its contract terminal operator, Warren County Port Commission officials appear to be back at square one in finding a long-term deal to handle cargo at the Port of Vicksburg.

Talks have broken down between Kinder Morgan and Russian steel giant Severstal to hammer out a deal to ship components to the SeverCorr plant in Columbus by an Oct. 1 deadline. The creation of that deal was tied to a renewal of Kinder Morgan’s lease with the commission to operate the 11-acre terminal, providing loading, unloading and storage services and paying rent or sharing fees with the county.

“I’m sorry to report we are at an impasse,” read a letter from Tom Murphree, regional sales manager for Kinder Morgan’s Memphis regional office. “We will not achieve this October 1 deadline.”

While the short-term implications were clear — commissioners will put out proposals to maritime cargo handlers before the contract with Kinder Morgan expires Dec. 31— long-range predictions were more difficult, though running the port free of second- and third-party operators has not been ruled out.

“There’s really two options,” Port Commission executive director Wayne Mansfield said. “We can continue as we are and, hopefully, Kinder Morgan will come up with a deal, or we need to advertise for bids for an operator at the port.”

In June, port and company officials agreed on a base rent of $235,000 annually after the first of three, five-year options to kick in Jan. 1, plus 8 percent if yearly revenue tops $2.225 million. A per-acre lease for about six acres adjacent to the terminal was to net the commission $72,000 annually. Under the existing agreement signed in 2005, base rent is $135,000 and performance-based payments to the commission total 8 percent if the gross tops $1 million and 15 percent if it tops $1.4 million. A pair of one-year options begins in January, should the commission decide to pick them up.

Warren County Board of Supervisors President Richard George, a regular at meetings since Mansfield was named director in September 2007, advised taking proposals outside of the bid process was permissible and could create jobs whether the commission contracted out or hired about 10 to 15 deckhands.

“There’s an awful lot of people out of work,” George said. “These Kinder Morgan people need to find out you’re not afraid to hire some quality people to run the thing.”

Houston-based Kinder Morgan is the largest independent terminal operator in the United States, owning or operating more than 37,000 miles of pipelines and 170 terminals in North America and employs about 8,000, including 10 to 15 in Vicksburg. It took over operations in Vicksburg when it bought out River Transportation Co. in 2001. Vicksburg’s 120,000 square feet of terminal space is among the smallest of the company’s operations in the Southeast, making it a challenge for modern-day shipping in large, multipurpose sea and land containers.

Port revenue is just less than $800,000 for the year, barely half the $1.75 million in 2008. The 2008 total is about $500,000 more than in 2007 when the dock was shuttered. Tonnage this year has consisted mainly of scrap metal, wheat, soybeans and corn.

Commission chairman Johnny Moss said marketing the port would amp up if the five-member commission decides against contracting out port operations.

“We’ll put out feelers,” Moss said, adding later what was obvious if proposals don’t net the revenue the current offer already provides. “We may be running it ourselves.”

“Writing them another letter is getting old,” commissioner Mike Cappaert said, adding the specific skill set needed for dockside labor may not provide much turnover. “What you get is the same people coming to work for you.”

Since fall 2007, commissioners and company officials sent offers and counteroffers across the table concerning renewal of the lease — with the steel deal remaining the sole goal ever since, as multimillion-dollar capital projects continue.

In December 2007, Severstal bought out a key minority stakeholder and the shares of three senior executives, making it the prime negotiator in the effort to ship steel via the Port of Vicksburg to the firm’s $880 million plant in Columbus.

The T-dock crane support platform was replaced in 2008 with a stronger, more fortified structure after years of barge hits, but was down again shortly thereafter when heavy loads of pig iron, a key steelmaking component, cracked the new concrete. Shipments of the heavy ore were halted for about five months, and county engineers suggested topping the surface with a metallic-aggregate substance, but report no sign-off on the part of local Kinder Morgan officials.

Vicksburg-based Riverside Construction took the commission to court, saying time constraints on its $3.4 million contract were unreasonable and damages incurred should be lowered. A counterclaim filed this week in circuit court by commission attorneys said those damages equal $549,000 because the company has now said additional work remained to be done.

A $7.3 million project to replace the bridge entering the port from E.W. Haining Road has begun and is expected to be done in 2011. Costs of a new 15-ton crane and housing structure have been pegged by engineers at $12 million, a project for which port improvement grants were secured three years ago but won’t cover the entire price tag. 

Federal intermodal connector money has been requested for Industrial Drive to improve the driving surface.

Besides Kinder Morgan, 17 industries operate along E.W. Haining Road and Industrial Drive. One, Shell Lubricants, will close in December while another, Vicksmetal Company, plans to open full production of a steel processing plant by year’s end. Five Stars Lighting Ltd., a lighting products parts assembler, opened at the port in July.

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Contact Danny Barrett Jr. at dbarrett@vicksburgpost.com