Soda ash and its importance to the US market

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Published: Wednesday, 03 September 2014

Taking advantage of its natural trona resources, US is well positioned to develop a growing domestic soda ash industry, with cost and sustainability advantages compared with China.

By Chris Greissing*

In the industrial minerals category, few industries are as well positioned for growth both now and well into the future as US soda ash; an industry with a long, valuable history.

Soda ash has been used in the manufacturing of goods for centuries. The Egyptians first made glass containers using trona and the early Romans used it as an ingredient in medicines and bread.

Today, the majority of US soda ash is primarily used in glass manufacturing, including food, juice and other beverage containers, fiberglass insulation and flat glass for cars, houses and buildings. This versatile product is also used in laundry and dishwashing detergents, for water treatment and as an industrial air pollutant control agent.

 



An evolving industry


To meet the need to remain environmentally and socially conscious, while preserving the value of US soda ash, the US industry continues to successfully evolve. As long as investment continues to ensure evolution in terms of safe, reliable production, the industry’s trajectory promises to be a productive one.

In the US, soda ash is produced in one of two ways: from naturally occurring trona ore, a mineral primarily containing sodium sesquicarbonate, which is mined and processed into sodium carbonate, commonly known as soda ash; or, by mixing a trona-bearing brine with carbon dioxide to crystallise it into sodium bicarbonate, commonly known as baking soda.

Further processing and recrystallisation converts that sodium bicarbonate into soda ash.

With five US companies operating in just two locations, the US is fortunate to have two of the best natural soda ash deposits in the world. FMC, OCI Chemical, Tata Chemicals and Solvay, all operate in Green River, Wyoming, which is home to the world’s largest underground deposit of natural trona ore. The fifth US company, Searles Valley Minerals, uses a solution mining technique to extract the minerals from beneath a dry desert lakebed in Trona, California, to form soda ash and other minerals.

An important US export

Soda ash is the US’s largest inorganic chemical export, and is the second largest export commodity overall out of the Port of Portland, Oregon. The total value of production for the US industry was nearly $1.8bn in 2013, according to the US Geological Survey. The soda ash mined in Wyoming and California is shipped on rail and truck to customers in most of the lower 48 states.

The US soda ash industry has continued to see tremendous growth across the globe and currently supplies approximately one-fifth of the global demand for soda ash. It is this increase in global demand that leaves US producers confident that they will continue to see growth. In fact, global demand for US soda ash is projected to grow at a rate of 4-5% over the next five years, according to Industrial Minerals Association North America (IMA-NA) estimates.

IMA-NA reports that the industry exported approximately 3.9m tonnes of soda ash in 2000, which at the time was approximately 40% of total production. By 2013, those numbers had jumped to 6.7m tonnes of soda ash exported, which is approximately 56 % of total production.

The soda ash is shipped primarily from three areas, the Port of Long Beach, California, Port Arthur, Texas and the Port of Portland, Oregon. Due to the massive growth of the export business, these ports have become increasingly reliant on the business the soda ash industry provides. In the past year, the Port of Portland completed renovations of their terminal to help boost efficiencies and allow for the anticipated further growth of the industry.

Providing high-paying jobs

Even during the economic recession in 2008-2009, when businesses and industries were suffering and forced into making unwanted layoffs, the soda ash industry was able to remain strong due to the continued increase in global demand.

Overall, the US soda ash industry is responsible for about 3,000 jobs at its own facilities and at least 200 jobs at ports, according to IMA-NA statistics. In addition, more than 20,000 jobs are either directly or indirectly tied to this growing industry.

While the average 12-month per capita income in Wyoming is $28,858, the jobs at soda ash facilities, which are in rural areas, are typically high paying jobs at an average of about $90,000 annually. These jobs are the backbone of the communities in which the companies operate.

Not only are these jobs high paying, but they are also highly skilled. A large number of positions in the soda ash industry are technology-centric, requiring workers to operate highly sophisticated, multi-million dollar machinery on a daily basis. Accordingly, many soda ash producers in Wyoming rely heavily on their employees earning a technical education at institutions like Western Wyoming Community College, to provide potential industry workers with skills in welding, electrical work and other expertise they will need on the job every day.

Overseas competition

The US soda ash industry is one of the best success stories within the US in terms of global trade. As an industry, it contributes nearly $1bn annually to the US’ balance of trade, as well as considerable funds to the federal and state government via royalties. Even with its tremendous growth potential and positive outlook, the US soda ash industry is not without threat from competition.

Chinese companies are the largest competitors to the US industry. As a country, China has gone from a net importer of more than 1m tpa soda ash during the 1990s, to a net exporter of about 1.7m tpa soda ash.

While the US industry is fortunate to have two of the best natural soda ash deposits in the world, the Chinese produce their soda ash synthetically. Of all the soda ash produced worldwide, IMA-NA figures state that only 25% is produced naturally, and of that 25%, more than 90% of production comes from the five US companies.

After increased competition from China in the early 2000s slowed the growth of US soda ash significantly, the industry requested that Congress consider lowering the federal royalty rate back down to 2%, as was called for originally in the Minerals Leasing Act of 1921; the rate had ballooned up to 6% at this stage.

Congress approved the lowered royalty rate in 2006, leading to a revitalisation of the industry during the last eight years. The rate was not extended in 2011, however, when it was set to expire, and the industry saw its royalty rate increase back up to 6%.

Because of this dramatic increase, the industry was forced to go back to Congress to request that the royalty rate be lowered again, and Congress did lower the rate in 2013, this time to 4%, for a period of two years.

Chinese companies receive a 9% Value Added Tax (VAT) rebate on export shipments, which equates to an approximately $35m annual subsidy to the Chinese soda ash industry. The US industry, meanwhile, paid approximately $47m in royalty fees in 2013 alone. The industry remains hopeful that Congress will extend and lower this rate back to 2% in its next session.

Environment, sustainability, safety and stewardship

Despite this tax imbalance, the US’s natural soda ash industry has a significant advantage over their Chinese competitors in terms of environmental impact, energy efficiency, supply reliability and cost stability.

According to IMA-NA estimates, synthetic soda ash is almost twice as energy intensive as naturally produced soda ash. Synthetic soda ash production also results in significantly greater greenhouse gas emissions than natural soda ash production.

US soda ash producers are doing their part to make the extraction and production of their minerals safer and more efficient. Producers are constantly working to develop new solutions in mining and processing, hoping that these will lead to more efficient extraction techniques.

Using the secondary recovery process technology of solution mining, FMC injects recycled water into the old mine workings and then pumps that water back to the surface. This process substantially improves the recovery of trona ore that remained after traditional dry mining, ensuring that virtually no usable product is left behind in the mines.

Driven by demand from end users, more and more companies are requiring that their raw materials be produced both in an eco-friendly way and in a manner that ensures the safety of all employees. Combined with a more reliable supply and respective cost stability, the US soda ash industry should be preferable to all synthetic sources, especially to the more environmentally aware customers. Producers are currently working individually with their customers to help them understand and make use of the sustainability advantages of natural soda ash versus synthetically produced material.

US soda ash companies have been dedicated to fostering a culture of safety at their facilities. During the past six years, at least one of the US soda ash companies has won the safety award from the IMA-NA for the best overall safety record for a large company; FMC has won the past two years and OCI Chemical won the award for the four years prior. All of the US companies typically rank near the top of the list each year.

Each of the US soda ash producers understands the importance of community involvement and regularly gives back to local communities. In Wyoming, Solvay, Tata Chemicals, OCI Chemical and FMC are all involved in local community activities and continue to stress the importance of supporting the regions in which they operate by making financial contributions to the environment and conservation, education and science, health care organisations and arts and culture initiatives as well as ongoing volunteer projects.

In Trona, California, for example, Searles Valley manages the maintenance, electrical and air conditioning for the local senior centre. As part of its corporate initiative, it has also placed tremendous importance on being a positive force in the communities where employees live and work.

In Wyoming, both FMC and Solvay support STEM (Science, Technology, Engineering and Maths) education with mentoring, internships, college scholarships and curriculum development in order to foster a workforce with skills that can be applied to soda ash production and other technical and science led fields.

FMC also contributes to 'Cowboys Against Cancer’, the University of Wyoming Art Museum, Trout Unlimited and Green River, Rock Springs High School’s 'Make-A-Wish’ programmes and the United Way of Southwest Wyoming, which includes monetary contributions as well as employee volunteer efforts, like participation in the annual 'Helping Hands Day’.

Combining all these environmental and sustainability factors, the US natural soda ash industry is poised for extended growth, especially in the international market.

*About Chris Greissing

Chris Greissing is the vice president, government affairs of the Industrial Minerals Association, North America (IMA-NA) and the National Industrial Sand Association (NISA). Chris brings an extensive knowledge of Capitol Hill to IMA-NA.

Before coming to IMA-NA, Chris worked within the health care and food service industries lobbying and providing counsel to clients on a wide variety of federal legislative and regulatory issues impacting the industry. Prior to that, Chris began his career by working on Capitol Hill for Congressman Fred Upton.

Chris holds a BA from Georgetown University and a JD from California Western School of Law in San Diego, California. He has also been admitted to the DC Bar.