The North American lime industry
has suffered a volatile time since the 2008-09 downturn of the
global economy, which hit its main markets, such as steel and
the construction markets, hard.
But, while the sector is not back
yet to the pre-crisis levels, it has seen some improvement
during the past year.
“The US lime industry is doing
fairly well, although a number of plants remain shut. Some of
these are old and may never reopen in their present
state,” Michael Miller, US Geological Survey (USGS) lime
specialist, told IM.
“Production-wise, the industry
has recovered a significant amount of the sales lost during the
recession,” he added.
According to the USGS,
consumption/production fell by 20% during the 2008-09 recession
to less than 15.8m tonnes. Estimated production for 2011
bounced back to 19.1m tonnes, but that is still almost 2m
tonnes off the peak year of 2006, which saw production hit 21m
tonnes.
A source from a leading producing
company confirmed to IM that the North
American market “remains flat” as a result of both
the overall economic uncertainties abroad and in the US, while
production costs continue to rise.
“There are concerns over the
market and it is difficult to see how it will evolve during the
remainder of the year”, the source said.
The market remains slow and has
been since 2008 when new construction projects were
significantly reduced due to the economic slowdown, Kelvin
Reinhardt, executive director of the Lime Association of Texas,
told IM.
However, there has been more
encouraging signs. US Lime & Minerals Inc., a leading North
American lime producer, reported some improvement in its Q1
2012 lime and limestone revenues compared with the
corresponding period last year. The US company added that
increased demand, principally from its steel customers, plus
price increases for its lime and limestone products, boosted
its Q1 sales volumes.
“Demand for lime from the
steel industry has returned to pre-crisis levels faster than
anticipated,” Lhoist North America, the North American
subsidiary of the Belgian conglomerate Lhoist and the
second-largest producer of lime on the region, recently told
IM.
The company announced in May that
it was expanding capacity at its O’Neal plant in Alabama
by 400,000 tpa high magnesia lime products for use in the steel
industry. Lhoist’s operations in the south-east of the US
produce approximately 700,000 tpa high magnesium lime.
North American production
North America produced an estimated 21.2m tpa of quicklime and
hydrate in 2011, about 6.5% of world global production at a
value of about $2.2bn. Canada remains a small producer (1.9m
tpa in 2011) compared with the US, which ranks second with
19.3m, with India third (15m tpa). China is the world’s
leading producer with 200m tpa or 60.6% of global output.
According to the USGS figures,
there were 31 companies producing lime in the US at the end of
2011, which include 21 companies with commercial sales and 10
companies that produced lime strictly for internal use, for
example, sugar companies.
These companies own 72 primary lime
plants - plants operating lime kilns - in 28 states and Puerto
Rico.
The North American industry is
dominated by a small number of companies. The leading companies
are Carmeuse, Lhoist North America, Graymont Ltd, Mississippi
Lime Co., US Lime & Minerals Inc., Martin Marietta Magnesia
Specialties LLC, Southern Lime Co., and Arcelor Mittal USA
Inc.
The first three have plants in
Canada, Mexico, and the US, while Mississippi Lime is the
industry’s low-cost producer and has an ideal location for
its huge plant near the Mississippi River south of St Louis,
enabling the company to ship long distances by water and rail
as well as by truck.
However, as USGS’s Miller
explained, none of these companies have a full nationwide
presence. Lhoist probably comes closest, although it has no
plants in the Midwest. Carmeuse has no plants west of the
Mississippi River, while Graymont has no presence in the
South.
The four leading US lime companies
produced quicklime or hydrate in 24 states and accounted for
about 72% of US lime production in 2011. Alabama, Kentucky, and
Missouri, are the principal producing states, with more than 2m
tpa each. Nevada, Ohio, Pennsylvania, and Texas produce more
than 1m tpa each.
The past 50 years have seen
considerable growth in US lime output, despite significant
decreases during poor economic times and some major market
shifts.
As the USGS described in its
Mineral Industry Survey for the US lime sector,
between 1960 and 2009 lime production grew 67% from a reported
figure of 11.7m tonnes in 1960, to a peak of 19.6m tonnes in
1974. During the following 35 years, lime production was much
more volatile.
After becoming “fairly
stable” through the late 1970s, a 20-year low was seen in
the early 1980s. Production then started to recover, only to
slump again, before showing “ a prolonged period of growth
from 1987 to 1998”.
Production dropped for four
successive years from 1999, before rising for the next four
years, culminating in its output peak of 21m tonnes in 2006.
Lime production saw small falls in 2007 and 2008, before
plummeting in 2009 as the global economic turndown bit.
Carmeuse
Carmeuse Lime & Stone, North America’s leading lime
producer, provides lime and limestone products for a variety of
commercial and industrial applications, including flue gas
desulphurisation (FGD), construction, steel, glass and paper
production, water, waste and environmental treatment.
Carmeuse Lime & Stone is part
of Belgium-based Global Carmeuse Group, a €1.3bn company
founded in 1860. Carmeuse group has more than 90 production
facilities operating worldwide in 13 countries producing 13m
tpa lime in addition to 33m tpa limestone and aggregates.
The company is the largest producer
of lime and limestone products in North America, manufacturing
and distributing up to 7m tpa of finished products.
Its 32 manufacturing facilities -
including high-purity chemical limestone and aggregates and
high-grade silica sand - supply 33 states and provinces in the
eastern US and Canada, with more than 2,400 employees.
As Carmeuse reported in its Q1
financial results, volumes have been hit by poor winter
conditions, an increase in energy cost, and a slowdown in the
construction and steel industries, some of its main end
markets.
“Despite steel production
exceeding anticipated levels in North America, the sales
volumes performance has shown a decline across all products
especially in the FGD market and in the building and
construction sector,” Carmeuse said.
In North America, the group said
that the net turnover for Q1 increased by 7% “owing mostly
to continued strong sales to steel industry, which maintained
higher than expected operating rates, recording during this
first quarter the highest level of production since
mid-2008”.
Carmeuse, however, pointed out that
the mild winter and low gas prices led to some shortfall in
flue gas treatment activity.
Graymont acquires Western Lime
During the past few decades, the lime industry has consolidated
into a handful of companies, with the four leading companies
accounting for about 80% of production in 2009, according to
the USGS data. The most recent was made by Graymont, the
third-largest producer of lime in North America.
The company acquired on 30 March
this year its competitor Western Lime Corp. which was
previously North America’s sixth-largest producer.
This acquisition is consistent with
Graymont’s strategy for growth and its objective to become
the leading player in the lime industry.
In Canada, Graymont subsidiaries
have operations from New Brunswick to British Columbia. In the
US, subsidiary companies operate in Ohio, Pennsylvania,
Wisconsin, Washington, Oregon, Montana, Utah and Nevada.
Graymont also has a significant
investment in Mexico, with a minority equity interest in Grupo
Calidra since 2003, the largest lime producer in Mexico.
“With this acquisition
Graymont both strengthens its ability to reliably serve lime
customers, and its knowledge and expertise at all levels to
complement its customer value proposition,” Bill Dodge,
Graymont president and CIO, said at the time.
“We saw a natural alignment
with Western Lime in combining our operations. Both companies
operate on solid common values, a strong safety culture, a
shared commitment to their customers and employees, a
commitment to improving environmental performance and engaging
with the communities where they operate, and delivering value
to all of their stakeholders” he added.
The combination brings together
Western Lime’s 92 years and Graymont’s 64 years of
experience in the lime industry.
Western Lime is a sixth-generation
family-owned and operated business, with three lime plants in
Wisconsin and Michigan.
Martin Marietta expands
Martin Marietta Magnesia Specialties LLC Inc. (MMMS) announced
in May plans to significantly expand dolomitic lime production
with the addition of a sixth kiln at its Woodville, Ohio
plant.
MMMS is a wholly-owned subsidiary
of Martin Marietta Materials Inc., the US’s second-largest
producer of construction aggregates.
As reported by IM,
the new rotary kiln is the main part of a $53m investment
programme for the facility that will add 900 tpd dolime
production capacity (328,500 tpa) and which is expected to be
operational in Q4 2012.
The investment programme also
provides for additional product storage and load-out capacity,
and modifications to existing quarry production equipment.
MMMS’ Woodville facility is
the largest dolime plant in North America with 750,000 s.tons
pa. The majority of the lime produced in Woodville is sold as a
flux to the steel industry to purify steel and extend
refractory life.
“The expansion of the facility
reinforces the reliability that Martin Marietta Magnesia
Specialties has provided to its steel customers and also
supports the continued growth of our Magnesia Chemicals
business segment, a major user of high-purity dolomitic
lime,” John Harman, MMMS president, said.
MMMS is also the largest producer
of synthetic magnesia in North America (that is, magnesia
sourced from brines or seawater), at its Manistee, Michigan
facility. Production capacity is about 315,000 tpa intermediate
magnesium hydrate.
Challenges
The impact of the recession still casts a shadow over the
overall economy, bringing uncertainties for the rest of 2012.
Developing markets and increased production costs also remain
among the main concerns for the North American lime
industry.
North America’s leading lime
producer, Carmeuse group underlined in its first-quarter
financial results that energy prices - most notably crude oil -
have held up in recent months, reflecting geopolitical tensions
and the risk of supply disruptions.
“Overall increase of energy
costs negatively impacted the group’s operating
performance,” Carmeuse said.
A sudden shift in fuel usage
between coal and natural gas at lime plants has also been
observed in the industry. A leading lime producer confirmed
this trend to IM. “That is something we
are considering for the future in order to reduce our
production costs,” he said.
A similar shift from oil to coal
was seen in lime plants after 1973 following a 327% jump in oil
prices, which dramatically increased lime product costs.
Constructing new lime plants,
especially in what are termed non-attainment areas - parts of
the country that already exceed national air pollution limits -
is also a challenge for the industry.
“The industry usually tackles
this by replacing old, less efficient and expensive to operate
lime plants with new ones in the same area or location so they
can utilise the air emission permits from the old plant,”
USGS’s Miller told IM.
“The new plants/kilns are
usually larger in capacity but less polluting, so it becomes a
win-win situation,” he added.
Other factors include environmental
regulations and health and safety regulations. As Miller
confirmed, safety is a big concern in the lime industry at
present.
According to the Mine Health and
Safety Administration (MSHA), a US federal enforcement agency
responsible for the health and safety of the nation’s
miners, statistics indicate that the lime industry has a
significantly higher accident rate than similarly classified
sectors.
“As a result, the US National
Lime Association (NLA) and its members are developing new
education and training programmes in order to try to reduce
these numbers and make the industry safer,” Miller
said.
Steel & FGD
In 2010, the US economy was recovering from the longest
recession since the Great Depression of the 1930s.
“Lime consumption reflected
the nation’s economic recovery, strong in some sectors,
while lagging in others,” the USGS said.
Steelmaking remains the main end
market for the North American lime industry (30%) with $559m
sales in 2010, followed by FGD, construction, water treatment,
mining, precipitated calcium carbonate (PCC), and pulp and
paper (see US lime consumption by end markets in 2010,
right).
In steel refining, quicklime is
used as a flux to remove impurities, such as phosphorus,
silica, and sulphur.
Uncertainties are anticipated to
continue for the global steel industry, although 2011 was
described as a ‘solid year’, in a report issued by
the World Steel Association in its Short Range Outlook for
2012 and 2013 at the end of April 2012.
World steel demand grew by 5.6% in
2011, with 3.6% growth forecast for 2012 and 4.5% for 2013.
While steel demand is expected to
stall in Europe and Japan, US steel consumption could grow by
5.7% in 2012 and 5.6% in 2013, bringing it up to 99.5m tonnes -
92% of its pre-recession levels of 2007.
According to the World Steel
Association’s latest monthly report released on 20 June,
the US produced 7.7m tonnes crude steel in May 2012, up by 7.4%
on May 2011.
For the North American Free Trade
Agreement (NAFTA) region as a whole, apparent steel use will
increase by 5.2% and 5.1% in 2012 and 2013 respectively.
During the past few decades,
changing technology, economics, and environmental regulations
have also played large roles in some lime markets. As the USGS
pointed out, steel is the best example of where a change in
technology - the replacement of open-hearth furnaces with basic
oxygen furnaces - resulted in a dramatic change in the quantity
and kinds of lime used.
FGD, the capture of sulphur dioxide
emission, is one of the main end markets expected to see
significant growth in the future.
In FGD systems serving coal-fired
power plants, incinerators and industrial plants, lime is
injected into the flue gas to remove acidic gases, particularly
sulphur dioxide (SO2) and hydrochloric acid
(HCl).
It can also be used to stabilise
the resulting sludge before disposal. Many FGD systems at
utility power plants are now designed to produce gypsum as a
by-product from the SO2 emissions.
This by-product material is
suitable for use in manufacturing gypsum wallboard, as an
additive in Portland cement, and as a soil amendment in
agriculture.
The FGD market, which essentially
did not exist before the enactment of the Clean Air Act
Amendments in 1970, became significant for the lime industry as
the passage of this legislation and successive amendments were
made. It now accounts for some 21% of lime consumption in the
US.
“FGD is a steady market in
power plants, which has been growing significantly during the
past few years. It could become as important as steel at some
point for the lime industry,” a US lime producer told
IM.
Prices
“Lime prices remain surprisingly strong,” Miller told
IM, reporting a 4% increase in 2011.
According to Miller, lime prices
actually recorded their largest single-year increase during
2009 - the worst year of the recession - when overall lime
prices increased by about 14%.
A note of warning comes from
Reinhardt from the Lime Association of Texas, however, who
pointed out to IM that prices remain
“very dependent on fuel cost for production and
transportation”.
A source from the North American
industry confirmed to IM that prices have
risen, driven by increasing production and freight costs to
transport the products from the facilities. “As a result,
we see a lot of pressure on our margin prices,” he
said.
The industry has not seen any
decrease in the average price for all types of lime since 1998.
However, beginning in 2004, the industry “started pushing
through rather large price increases, at least compared with
historical lime price changes” said Michael Miller, USGS
lime specialist.
According to the USGS, lime prices
tend to fluctuate by only very small amounts, usually less than
$1/tonne, with the exception of the 1970s , when a number of
energy crises saw more extreme changes.
Lime prices stabilised in 2010
after moderate annual increases in preceding years and the
large increase recorded in 2009. The average value for all
types of lime sold increased slightly to $104.3/tonne, with the
average value for high-calcium quicklime sold rising by
$2.4/tonne to $100.6/tonne.
Reflecting increased supplies in
the Midwest from plants that were idle for all or part of 2009,
the average value for dolomitic quicklime sold decreased by
nearly 7% to $104.3/tonne. The average value of high-calcium
hydrate decreased slightly, while the average value of
dolomitic hydrate showed a small increase.
Although it is difficult to make
any predictions in the current economic climate, lime prices
are expected to increase, driven by production costs, but also
by an anticipated growth in demand.
The forecast growth in the steel
industry in 2012 and 201, is likely to maintain healthy prices,
while the predicted development of the FGD market is forecast
to boost prices in the longer term, as the industry responds to
more and more demanding environmental legislations.
“Environmental regulations
have become stricter in recent years and there are added
burdens to collect and report greenhouse gas emissions to the
Environmental Protection Agency,” Miller said.
Reinhardt also believes that
“competitiveness with other products, such as cement,
emulsion, and geogrid (a geosynthetic material used to
reinforce soils and similar materials), will likely continue
for some time”.
Outlook
The positive outlook for steel in 2012 and 2013 is expected to
see the North American lime industry maintaining a healthy
market during those years.
However, the general slowdown of
the global economy, notably affected by the European debt
crisis, brings addition uncertainties, making it difficult to
predict how the market will behave.
“We have no visibility about
what is going to happen in a just few months from here. It
makes it difficult to anticipate what direction the market
could take,” a source from the industry told
IM.
Carmeuse believes that “risks
to the global growth outlook remain high, despite signs of a
potential rebound in the US economy”.
“More pronounced contagion
from the sovereign-debt crisis in the euro area to the rest of
the global economy, and stronger spillovers between the
financial sector and industries, remain the largest downside
risk,” Carmeuse said in its Q1 financial results.
“If the Federal Government
does not come up with a transportation bill soon and the
economy does not pick up pace, the market for lime will
continue to be very challenging,” Reinhardt told
IM.
Flue gas desulphurisation could
bring further growth to the lime industry as environmental
regulations have become stricter in recent years in the US.
FGD accounted for nearly 21% of the
lime market in 2011 through the use of lime to remove sulphur
from primarily coal-fired power plants and industrial boilers,
or through the use of hydrated lime to treat acid gases
resulting from oxides of nitrogen (NOx) removal by selective
catalytic reduction.
An additional factor is highlighted by Miller.
“Something interesting to consider is the effect of the
sudden abundance of and low prices for natural gas and major
shift by utility companies from burning coal to burning natural
gas,” he said.
According to a recent report in the
US, coal usage could be expected to dip below 40% in 2012 and
under 30% by 2020. If this was to happen, it would impact both
FGD and the ancillary markets such as the treatment of acid
gases.
As natural gas contains only trace
amounts of impurities, the conversion of power plants from coal
to natural gas would wipe out segments of this market.
In addition, the coal-fired
utilities received another hit when the US Environmental
Protection Agency (EPA) issued new environmental rules that
tighten emission limits on SO2, NOx, and mercury.
According to a survey by the Associated Press released in
December 2011, these new rules alone could result in the
closure of from 32 to as many as 68 of the most polluting
coal-fired power plants in a dozen states in the US.
