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The Iran war is delaying progress on a western Maine data center, the second time recently that President Donald Trump’s policies have interfered with the redevelopment of an old paper mill in a town that has staunchly supported him.
A Pakistani company that bought the retired paper machinery can’t remove it so construction can begin, the data center’s developer said. That’s because Iran has blocked ship passage through the Strait of Hormuz, a major maritime route, since the war started in late February.
Late last year a separate project to redevelop the mill site fell apart when the Republican president’s tariffs became too burdensome for the forest products company that wanted to set up there.
The delays in rehabilitating the former Androscoggin Mill, the cornerstone of Jay’s economy for 60 years before closing in 2023, demonstrate how two of Trump’s most significant policy decisions quickly threw wrenches into the town’s economic revival.
The Jay data center project is so important to the area that it prompted Gov. Janet Mills to veto what would have been a first-in-the-nation moratorium on such centers. Days later, she dropped out of the Democratic U.S. Senate primary.
The policies of Trump, whose election in 2016 turned voters in the struggling mill town from Democrat to Republican, fan out even broader to affect businesses. Middle East tensions have pushed up diesel fuel costs for forest product companies to truck wood and run equipment, and tariffs are making it too expensive for companies wanting to invest in the state, said Eric Kingsley, vice president at Portland-based consultancy Innovative Natural Resource Solutions.
“Anyone looking to build or add to an existing facility is facing higher equipment costs because of steel tariffs,” he said. “Some are delaying because it is more expensive or making projects smaller.”
The policies put Tony McDonald, owner of the mill site and a partner in The Boulos Co., in a tough spot. He needs to get all of the machines out and have the site cleaned and ready for conversion to a data center by the end of this year, he said in a recent interview. But that deadline is in flux, and he is unsure how much of a delay closing of the strait will cause.
On Sunday, the White House told reporters it was close to reaching a deal with Iran to end the war and reopen the strait.
The plan for the data center, to be built by a national company called Sentinel Data Centers, was first reported by the Bangor Daily News in March. McDonald and his associates bought the Jay mill last fall after the previous project, a mill where Godfrey Forest Products planned to make a type of engineered wood, collapsed under high tariffs.
That forest company, owned by Bangor native John Godfrey, needed to import steel from Canada to build its factory, equipment from Europe to make the board and electrical components from China. At the time Godfrey told Maine Public that Trump’s tariffs and the higher costs they caused were “a double whammy of raising the cost of building the factory and perhaps diminishing the market’s desire for our product.”
Turning the mill into a data center has been more controversial. Detractors in Maine and nationally have criticized data centers for eating up natural resources, such as water and using too much electricity. Pushback from residents helped kill data center proposals in Lewiston and Wiscasset even before Mills vetoed the statewide moratorium. Sanford voted Tuesday to pause data center development for 91 days, Bangor passed a six-month ban in April, and Westbrook is considering a moratorium.
Jay has been a different story. The town’s Select Board voted in March to greenlight the data center there, and work to clear out the buildings is scheduled to start in mid-July.
Selectman Gary McGrane preferred the board factory. In a March vote on the new data center, he abstained while the other four members backed the data center project. McGrane said he needed to know more about the data center and how it might change Jay, a Franklin County town of 4,700 residents.
“The factory sounded like a great endeavor,” said McGrane, who worked at the Jay mill for 18 years and who supported the proposal for a moratorium on data centers. “But Trump’s tariffs put a stop to it when he kept changing the rates. A business needs to know its costs to be able to invest.”
During a March Select Board meeting, McDonald said the data center he’s planning for Jay is smaller than the hyperscale data centers developed by Amazon and Meta. He said there would be no increase to electricity rates for residents, and the center would use less than 1% of the water the Jay mill used when it was operating. It would be cooled using a closed-loop system, meaning the water in it is continuously reused.
The board factory would have used more power than the data center and drawn more water from the river and dumped dirty water back into it, McDonald said.
“They would have had a lot of raw materials on-site, which are nasty stuff, and a lot of relatively dangerous processes going on inside the buildings, and no one would have said a word,” he said. “There’d be no moratoriums against it. There’d be no human cry.”
Lori Valigra reports on the environment for the BDN’s Maine Focus investigative team. You may reach her at [email protected]. Support for this reporting is provided by the Unity Foundation, a fund at the Maine Community Foundation and donations by BDN readers.
