THOMASTON – Dragon Products Co.’s plan for a $40 million expansion of its Thomaston plant moved a step closer Thursday when the Finance Authority of Maine approved a $25 million loan for the Spanish-owned cement manufacturing business.

“We haven’t gotten final approval from the parent company,” Dragon President Joseph Koch said Friday, noting that there are other negotiations in the works. Besides the FAME loan, Dragon’s owners, Cementos Portland and Cementos Lemona of Spain, as well as other banks, will contribute money, Koch said.

The town of Thomaston also helped the project along recently by approving a $40 million tax increment financing deal for Dragon, which benefits the town and the cement company.

Once all the financing is in place, there are engineering and construction bids to prepare, Koch said, adding that if the cost estimates come in higher than expected, the company may have to “rethink” the project.

“We don’t expect that to happen,” Koch said.

In the end, the project costs could total more than $50 million, Koch said, explaining that the expansion may require buying a new barge.

“We are optimistic about beginning [construction] in early 2003,” he said.

Dragon, with headquarters in Portland, employs more than 200 full-time workers statewide at 10 facilities. There are about 100 employees at the Thomaston plant, Koch said. The expansion project may add a few technical positions there, he said.

Once construction begins, it is expected to take two years to complete the major overhaul and rebuilding of the plant to increase efficiency and production.

By switching from a “wet” process to a “dry” process, the company anticipates a savings in energy by shortening the kiln time from 2.5 hours to 45 minutes and reducing fuel consumption by one-third. The improvements will allow the company to produce 700,000 tons of cement on the same amount of fuel now used to produce 500,000 tons. Production is expected to increase by about 40 percent.

“It is imperative that companies maintain state-of-the-art technology and equipment in order to stay competitive,” Charles J. Spies III, FAME chief executive officer, said in a prepared statement. “Dragon Products has been a part of Maine for a century. We are certain that the company’s investment will dramatically impact its business, and further solidify its important economic contribution to our state.”