Salt has been used by humans for thousands of years and, in
2017, is set to be the most important non-energy mineral after
iron ore, in terms of quantity.
Salt is produced by the solar evaporation of seawater or
inland brines, mining of rock salt and solution mining of
brines. Solar salt typically accounts for around 40% of
global production compared to 35% for brine and 25% rock
salt, although these shares vary between years according to
weather-led demand, as rock salt is preferred for road
de-icing.
Salt’s main use is in the chemical sector,
primarily in the production of chlor-alkali and synthetic soda
ash. The other major end uses are de-icing and human
consumption. These four major markets account for over 75% of
salt demand, which varies between 300m and 330m tpa, depending
on weather conditions in the Northern Hemisphere. The remainder
is consumed in markets such as animal feedstuffs, water
treatment and industrial applications.
The importance of the four major markets differs markedly
between regions (see Figure 1). The Asian chlor-alkali
and synthetic soda ash industries are the largest consumers
using over 110m tpa of salt or around a third of the global
total. Asian countries are also the largest regional consumers
of salt in food. Road de-icing is usually the largest market in
North America (20-40m tpa) and is also important in Europe
(10-15m tpa).
| Figure 1: World consumption of salt by region
and market (%) |
|
| Source:
Roskill |
Chlor-alkali and chemicals
Chlor-alkali production is the biggest market for salt
worldwide, accounting for around 125m tpa. Regional consumption
of salt in chlor-alkali is concentrated in Asia (70m tpa),
North America (23m tpa) and Europe (22m tpa).
Chlor-alkali production involves the electrolysis of
purified salt brine to produce chlorine (Cl2) and caustic soda
(sodium hydroxide, NaOH) along with co-product hydrogen gas. On
average, 1.75 tonnes salt is required to produce 1 tonne of
chlorine, 1.12 tonnes sodium hydroxide and 2.8kg hydrogen.
Global chlorine capacity is just over 90m tpa, meaning it
has the potential to consume 160m tpa of salt. Over half of all
capacity (around 50m tpa) is located in East Asia, mostly China
(>40m tpa). Significant amounts of capacity are also located
in North America (>15m tpa) and Europe (10m tpa in the EU).
Nearly 3m tpa of EU capacity is based on mercury technology
which is due to be phased out by the end of 2017. Most of this
will not be replaced on cost grounds and regional chlorine
capacity could fall by as much as 1.5m tpa in 2018.
Around two thirds of chlorine is used in the production of
organic chemicals and the balance in inorganics. The most
important organic compound in terms of volume is ethylene
dichloride (EDC), the prime chemical precursor to polyvinyl
chloride (PVC). Caustic soda is a widely used alkali in many
industries, including the aluminium and food sectors, textile
production, soap and other cleaning agents, water treatment
and effluent control.
Markets for chlorine and caustic soda are cyclic and levels
of consumption rarely coincide. Chlorine consumption is the
main driver of chlor-alkali production because it is toxic,
cannot be easily transported and is expensive to store. Caustic
soda can be transported and stored relatively easily but can be
substituted for in many, though not all, applications.
Substitution occurs when supply, set by chlorine consumption,
is tight and prices are relatively high.
Rising demand for PVC and its precursors have been the main
factors driving chlorine production in recent years. Global PVC
capacity is over 45m tpa, of which some 24m tpa is located in
China where the huge construction sector has provided the main
stimulus. Remaining capacity is distributed equally between
other Asian countries (primarily Japan, South Korea and
Taiwan), Europe and North America.
Caustic soda also has a wide range of end uses, including
alumina production, pulp and paper manufacturing and chemical
processing. Global consumption of caustic soda is over 70m
tpa.
Synthetic soda ash capacity is around 48m tpa and is mostly
located in China (28m tpa) and Western Europe (10.5m tpa).
Production is based on variants of the ammonia-soda process,
which uses salt-in-brine, limestone and ammonia as primary raw
materials.
The Solvay process is the most widely used method globally,
but the Hou method is commonly used in China. Estimated global
production of synthetic soda ash rose from 22.7m tonnes in 2000
to almost 40m tonnes in 2015, representing an average annual
growth rate of around 4%. On a regional basis, estimated
production is concentrated in Asia, mostly China.
Operations in Western Europe, the CIS and Turkey account for
most of the remainder. Synthetic soda ash competes with natural
material, which is mainly produced in the US but also in
Turkey, China and Africa. Natural, mined soda ash has a much
lower production cost, but tends to be located long distances
from consumers.
The glass industry is by far the most important market for
soda ash, followed by sodium chemicals such as silicate and
bicarbonate. Global glass production is estimated at over
185m tpa and is concentrated in Asia, followed by Europe and
North America.
Container glass accounts for around 40% of the total market,
followed by flat glass at 37%, fibreglass at 7.5% and other
glass at 15.5%. The largest national market for glass is in
China where production has been stimulated by both rising
domestic consumption and exports.
Consolidation is currently underway in the Chinese soda ash
industry, where a number of small and medium sized producers
have closed or been merged into larger companies. The main
reason for this has been government efforts to curb
overcapacity, caused by a slowdown in the domestic
construction sector for the first time in decades.
Housing construction is expected to start recovering in the
near future and there remains a large backlog of housing
projects yet to be completed. Most of the subsequent increase
in demand for soda ash will be met by domestic synthetic
producers as natural sources in China are located far from
population centres and have high transport costs.
A greater proportion of Chinese synthetic output is likely
to come from the more salt-intensive Solvay process in the
future, which should mean that demand for salt from the Chinese
soda ash industry will rise at a higher rate than
production.
In India, domestic synthetic producers will meet most of the
anticipated increase in local demand as they are protected
from competition to a significant degree by import
tariffs.
Consumption is expected to grow in North and Latin America,
where most, if not all, demand will be met by natural material
produced in the US.
Consumption growth in Africa and the Middle East is expected
to be largely be supplied by natural sources in Turkey and
Kenya, in addition to traditional suppliers.
In Europe, EU demand is forecast to show little growth and
could even decline in some areas, such as the CIS.
De-icing
De-icing, the third-largest market for salt, tends to use
33-40m tpa on average but can exceed 50m tonnes in
exceptional years. Rock salt is the main type of salt used
for de-icing, accounting for over 95% of US and around 70% of
EU consumption.
North America is the largest market, followed by Europe and
Asia. The amount of salt consumed in this application depends
almost entirely on the severity of weather conditions during
winter and can show very large variations from year to year and
between regions.
Since 2002, US consumption of salt in de-icing has ranged
between 11m tpa and 23m tpa. European usage of de-icing salt is
smaller than that of North America, as the
continent’s winters are usually shorter and less
severe. The main markets in Europe are Germany (3m tpa) and the
UK (2m tpa), followed by Scandinavia (1m tpa).
In Asia, an estimated 3m tpa is used in China, Japan and
South Korea. Chinese investment in domestic infrastructure
and rising use of road transport may lead to greater use of
de-icing salt in Asia in the foreseeable future.
Food
The fourth major market for salt is in food and food
processing. The size of regional markets is directly related to
the size of populations, so the largest is in Asia, followed by
Africa then Europe and North America (see Figure
2).
Figure 2: Estimated consumption of salt
in food/food processing by region (%)
|
|
|
Source: Roskill |
The global population is estimated to have increased from
2.53bn in 1950 to 7.35bn in 2015, growing at an average rate of
around 1.7% per year. Most of this increase took place in Asia
(>3bn), Africa (>1bn) and Latin America
(>500m).
Asia accounts for almost two-thirds of global salt
consumption in food and food processing because of the size of
its population (4.23bn in 2015) and relatively high per capita
consumption (estimated at 12g/day). Within the region, the main
markets are in China and India.
In industrialised regions such as North America and Europe,
some three-quarters of salt intake is from processed and
prepared foods, with the remainder coming from table salt.
Demand growth
World demand for salt is forecast to rise by an average of 2%
per year to almost 400m tonnes in 2025. Much of the increase
will be in Asia (especially China and India), where it is
expected to reach around 200m tpa.
In North America, demand is forecast to reach 95m tpa and in
Europe some 80m tpa.
Demand for salt in chlor-alkali is expected to grow by an
average of nearly 3% per year from under 125m tpa to almost
160m tpa by 2025. Most of this will be in Asia, especially
China, where demand is forecast to rise by over 25m tpa.
Indian demand is also set to rise as chlor-alkali capacity
grows to supply rising domestic demand.
Outside Asia, regional supplies of salt are expected to be
sufficient to meet the rise in demand. North American
consumption is slated to increase by over 3m tpa, partly
because of an increase in PVC production for export markets.
Demand in both Europe and the Middle East is expected to grow
by over 1m tpa.
Demand for synthetic soda ash is forecast to reach 65m tpa in
2025, most of which will be in Asia, led by China and, to a
lesser degree, India.
Elsewhere, salt consumption in synthetic soda ash is
forecast to remain largely flat and may decline slightly in
some areas. An exception may be the Middle East where a number
of potential synthetic soda ash projects and capacity
expansions are located.
Global demand for de-icing salt will continue to continue to
fluctuate between years, following weather patterns.
Overall, global demand is forecast to be around 35-50m tpa
in 2025. The effects of climate change on winter weather
patterns are yet to be seen, but there are indications that the
average severity of winter weather may be lessening. Some
winters, however, may be much more severe than average,
requiring higher amounts of salt. The expansion of road
networks in northern latitudes will also increase use of salt
in de-icing.
The world population is predicted to rise above 8bn by 2025,
based on anticipated average expansion of around 1% per year.
If per capita salt use remains similar to current levels, then
food and food processing will account for around 33m tpa of
consumption.
However the use of salt in food may fall as concern grows
about its potential adverse health effects. World Health
Organization (WHO) member states have agreed on a voluntary
reduction of 30% in mean population intake of salt, with the
aim of achieving individual consumption of less than 5g per day
by 2025. If global per capita use were to fall to WHO
guidelines, then forecast salt demand would be less than half
its current total.
Salt production
Salt is produced in over a hundred countries, but the
highest volumes are produced in just a handful. In 2015,
production in seven countries, each with output of more than
10m tonnes, collectively accounted for nearly 190m tonnes or
around two-thirds of total supply (see Figure
3).
| Figure 3: Production of salt by leading
countries, 2006-2015 (m tonnes) |
|
| Source:
Roskill |
In general, salt supplies are sufficient in most locations
to meet current and future levels of demand.
The high bulk/low value nature of salt means most is used
close to the point of production, but over 65m tpa is traded
internationally. Trade has increased in recent years, assisted
by historically low dry bulk shipping costs. The main long
distance exports are from low cost large-scale solar salt
operations in Mexico and Australia to consumers in East
Asia.
Large amounts of rock salt are also shipped from Chile,
mostly to the North American de-icing market.
There is considerable trade within Western Europe where
consumers can be closer to suppliers across national borders
than within their own countries. The evolving pattern of
international trade in salt is shown in Figure 4 and
Figure 5, with the latter illustrating the significant
growth in salt volumes from Indian producers to China.
Chinese chemical companies, especially in coastal areas, are
importing increasing amounts of high quality solar salt,
particularly from India. Indian exports to China have risen by
over 40% over the last decade. A major reason for this is a
shortage of high grade salt sources in China, in part because
of the loss of land to construction that was previously used to
make solar salt.
The Chinese edible salt industry has historically been
subject to state control, but this changed at the start of
2017. China’s government now allows private
companies to enter the edible salt market and existing
producers to sell directly to consumers.
Prior to this, the China National Salt Industry Corporation
(CNSIC or China Salt) decided production limits and prices.
CNSIC issued permits to around a hundred companies to produce
salt and the state still retains supervision over retail
pricing.
The intentions of the reforms are to introduce competition
within the domestic salt industry, improve productivity and
reduce prices. This is also likely to lead to supply
consolidation.
Figure 4: Major global trade flows of
salt,
2006 (m tonnes) |
|
|
Colour of the trade flow corresponds to
the
exporting country/region
Source: Roskill and Global Trade
Atlas
|
Figure 5: Major global trade flows of
salt,
2015 (m tonnes) |
|
|
Colour of the trade flow corresponds to
the
exporting country/region
Source: Roskill and Global Trade
Atlas
|
New capacity
There are a number of salt projects around the world at
various stages of planning and construction that could
potentially add over 20m tpa to global capacity.
Indian producers, particularly in Gujarat, are increasing
capacity to meet rising Chinese demand. Indian company
Archean Group, for example, plans to add 3m tpa to its supply
capability by 2017.
In Australia, Germany-based K+S Group, the
world’s largest salt producer, plans to develop a
3.5m tpa capacity solar salt operation at Ashburton, Victoria,
to supply the Asian market.
In Europe, Netherlands-headquartered AkzoNobel and
Israeli-Spanish group ICL Iberia are opening a 1.5m tpa pure
dried vacuum (PDV) plant in Spain this year and are considering
doubling this capacity.
UK-listed Sirius Minerals Plc is developing a potash mine in
the UK, which may include 2m tpa of rock salt capacity to
supply the de-icing market.
US-listed Compass Minerals Inc. is continuing to expand its
Goderich rock salt mine in Ontario, Canada to supply the
regional de-icing market.
In Mexico, Exportadora de Sal SA (ESSA) has indicated it may
add 2m tpa to its capacity.
Salt prices
Salt prices vary from less than $10/tonne to nearly
$200/tonne, depending on the method of extraction, country of
origin, process used, grade and application.
Salt-in-brine products usually have the lowest price because
mining and processing costs are minimal. Vacuum evaporated salt
is generally the most expensive, reflecting the energy costs
incurred in processing and the high purity of the
product.
In general, salt sold in bulk has a lower value than
material that has been packaged, palletised or pressed into
blocks.
De-icing salt tends to be the least expensive of solid salt
grades. Food-grade salt commands higher prices than
chemical-grade material, owing to the extra processing and
packaging costs for food products.
Prices for pharmaceutical grade salt are more than seven
times those of chemical grade material because of the high
energy requirements of specialised vacuum processing technology
used to produce it.
In Asia, prices of high-grade solar salt are expected to
rise at above the rate of inflation because of the continuing
shortage of this type of salt in China, although increasing
competition between suppliers in India, Australia and China may
slow the rate at which prices rise.
The deregulation of the edible salt market in China may also
act to slow price appreciation.
In North America and Europe, prices will probably rise more
slowly in line with lower rates of demand growth. The
introduction of new suppliers in both regions should also
undermine price growth as competition increases, especially
in the chemical and de-icing markets.
*David has been analysing metal and industrial mineral
markets for over two decades since joining Roskill in 1994. He
has written many of the company’s multi-client
reports but in more recent years has specialised in those
dealing with industrial minerals. In particular, he has
concentrated on those minerals used in the paper (calcium
carbonate and kaolin), refractory (magnesia and zircon),
chemical (salt, iodine and soda ash) and glass (boron)
industries. David has also contributed to a wide range of
consultancy projects, including due diligence reports on salt,
magnesia and talc, and market studies on various aspects of the
boron, talc and calcium carbonate markets.