IM 2012 Round-ups: Soda ash

By Emma Hughes
Published: Friday, 21 December 2012

2012 was a year of mixed fortunes for the soda ash industry. The impact of the global economic crisis, which had been building since 2008, seemed to wait until this year to bite deep into the soda ash market

2012 was a year of mixed fortunes for the soda ash industry. The impact of the global economic crisis, which had been building since 2008, seemed to wait until this year to bite deep into the soda ash market (see p.42).

Yet, while things started off tough, soda ash bounced back towards the end of the year as the economy started to regain strength and global exports of the mineral for construction end markets increased.

January kicked off with IM reporting that GHCL Ltd, one of India’s largest soda ash producers, had been served a closure order by the Gujarat Pollution Control Board (GPCB) for causing heavy water and air pollution.

GHCL’s 850,000 tpa synthetic soda ash plant, located in Sutrapada, Junagadh district, Gujarat, saw notice issued on 29 December 2011. Prior to this, the pollution board had served a 15-day closure notice that ended on 28 December.

With GHCL seeking an extension, the GPCB issued a fresh notice and extended notice period to 28 January 2012.

A joint field inspection comprising locals and the Gandhinagar GPCB office was conducted in response to complaints of air and water pollution at nearby villages including Sutrapada. The inspection revealed high levels of pollution owing to refuse from the plant being released into the air and water.

The growing influence of China’s state-owned enterprises (SOE) came under the spotlight in April following in a letter from the head of the American Natural Soda Ash Corp. (ANSAC) to US trade representative, Ron Kirk.

“China’s treatment of SOEs is of particular concern to ANSAC because nearly half (48%) of China’s soda ash production comes from producers that are either fully or partially state-owned, including two of its largest producers,” John Andrews, ANSAC president wrote.

The letter followed Kirk’s testimony before the House Ways and Means Committee on the US trade agenda. During that, Kirk “made clear that strong trade enforcement, especially with respect to China, is a priority”, Andrews said.

Later that month, Edward Flynn, president of FMC Wyoming, lent his support to a US bill put forward to reinstate a 2%-royalty on soda ash over the current 6% level.

Speaking in front of the US Natural Resources Committee, Flynn, who also sits of the board for ANSAC, gave a speech on the competitiveness of the US soda ash industry, which, he said, remains “far from certain”.

Flynn urged members to enact bill H.R. 1192: The Soda Ash Royalty Extension, Job Creation and Export Enhancement Act, which was originally raised by Rep. Cynthia Lummis in March last year.

Soda ash mined and processed in the US contributes nearly $1bn annually to the country’s balance of trade, Flynn said, as well as $20m in federal royalties and around 3,000 jobs.

The US should be allowed to compete globally “on a level playing field” Flynn argued. Since the introduction of the 6% royalty rate in January, exports have fallen below average export levels in 2011, he added.

The soda ash regulatory saga continued in July as the India Finance Ministry imposed definitive anti-dumping duties on soda ash imports from China, the EU, the US, Iran, Pakistan, Kenya and Ukraine.

The Revenue Department set a period of five years for the anti-dumping duty, following a petition filed by the Alkali Manufacturers Association of India. The anti-dumping duty was set at a range of $2.38-$38.79/tonne.

The body had filed on behalf of soda ash suppliers in the country, including Nirma, Gujarat Heavy Chemicals and Saurashtra. The Detergent Manufacturers Association of India had previously lobbied in 2011 to keep dumping duty low.

Then, in August, Tata Chemicals said that the global soda ash market could weaken due to a bearish demand outlook.

The company, India’s largest producer and global number two, said in its financial year Q1 results that while demand for soda ash was stable in the first quarter, “the demand environment could weaken”.

“Going forward, we see the demand for soda ash and other industrial chemicals weakening due to the global slowdown,” R Mukundan, Tata managing director, said.

However, there is still growth in India; with Tata saying that here demand will grow between 5-7% in the next quarter.

Elsewhere, Mukundan said that Tata faced “unprecedented challenges during the quarter, which adversely impacted the operating performance”. This included the flooding of the company’s Magadi soda ash plant in Kenya, following an unseasonably heavy rainfall.

The company’s North American arm Tata Chemicals North America had slowed down production due to “plant teething problems”. The issue, which was not disclosed, has now been resolved and output for June is on par with expectations, the company added.

At the close of the summer months, Belgian soda ash leader Solvay reported that its Italian Rosignano soda ash plant had to decrease production due to a shortage of water, caused by drought.

Solvay’s 1m tpa plant, which is one of its main soda ash production sites in Europe, was also affected by a shortage in local water supply.ÊOutput has been cut since the middle of August, the company said, although it did not say by how much.

Market conditions turned more positive towards the end of 2012 as soda ash exports begun to increase as the effects of the global economic downturn begun to lessen.

IM reported in September that exports of soda ash from Wyoming increased to South America, Mexico, Canada and Asia.

“Over the last few years, the percentage of soda ash being exported has increased to half that produced,” Wyoming Mining Association director Marion Loomis told IM, adding that the increase in exports was due to rising demand from Asia for use in construction and other end markets.

“There’s more growth outside than in the US,” he said.

“The economy is down, so soda ash used for construction is down. The demand in Asian markets has increased; there is just more demand in the rest of the world than in the US,” he added.

Finally, at the end of the year, Australia-based soda ash producer Penrice Soda Holdings settled an insurance claim relating to losses from a forced plant shutdown at its chemical facility in Adelaide two years ago.

The facility was shut due to the failure of a steam supplier in October 2010. Penrice Soda informed shareholders of the incident at the time and has since filed for Australian dollar (A$) 3.15m ($3.15m*) in losses.

The company has now announced a $2.5m settlement payment toward an expected $5m pre-tax loss payout.

“The settlement took longer than initially expected due to the scale, complexity and extended duration of the impact on the operation of the chemical facility,” Penrice Soda said in a statement.