The St. Joe Co. said Tuesday that it will lease 20 acres of its former paper mill site in Port St. Joe, Fla. to Eastern Shipbuilding Group of Panama City, Fla, to expand the company’s existing shipbuilding, vessel construction and repair and industrial steel fabrication operations.

The Port St. Joe facility is adjacent to one of only 14 state-authorized deep water ports in Florida. It will enable ESG to meet its current and upcoming contracts for vessel manufacturing, and potentially lead to new jobs, the companies said. ESG said it is already in the process of adding 500 new employees to its workforce.

St. Joe owns about 573,000 acres of land concentrated primarily in Northwest Florida. Miami-based Fairholme Funds is a major investor in publicly-traded St. Joe, and Bruce Berkowitz, who founded and heads Fairholme, serves as St. Joe’s chairman.