LONDON, November 17, 2014 /PRNewswire/ --

Over the last few years the soda ash industry has been relatively stable as global consumption continued to recover from the effects of the global economic downturn of 2008/09.  In 2014, FMC announced it planned to sell its US operations by mid-2015 as part of its purchase of Cheminova, a multinational crop protection company, from Auriga Industries. This is the largest shake-up in ownership of soda ash capacity in recent years, outstripping the purchase of Brunner Mond by Tata and Searles Lake by Nirma in the late 2000s.

A globally significant business 

FMC's soda ash operations are part of the company's Alkali Chemicals business and are the fourth largest in the world. FMC produces soda ash from two operations based on trona located in the Green River area of Wyoming in the USA.  These are operated through FMC Wyoming in which Sumitomo and Nippon Sheet Glass, both of Japan, used to own a combined 20% share.  In 2013, Nippon Sheet Glass sold its 6.25% stake back to FMC for US$80M.  Sumitomo continues to hold a 6.25% share in FMC Wyoming and there have been no indications from the company it intends to either sell or expand this.

In global terms, FMC Wyoming controls 22% of natural soda ash capacity and over 5% of the global total.  Capacity is divided between the Westvaco and Granger operations.  All 3.2Mtpy of capacity at Westvaco is active as is 453,000tpy at Granger where a further 0.7Mt is mothballed.  In addition to soda ash, the Westvaco operation is also a major producer of other sodium chemicals including sodium bicarbonate.

In July 2011, FMC restarted around 0.45Mtpy of capacity at Granger.  This was followed in 2012 by an announcement that the company planned to increase capacity at the plant by over 0.6Mtpy to almost 1.1Mtpy by 2014.  The new capacity will use the existing solution mining technology in production at the Westvaco plant.  The mothballed capacity will remain closed.  This additional capacity increases the overall total to some 4.3Mtpy or a quarter of the global total based on natural soda ash.

In 2014, FMC expects to produce a record amount of soda ash and is reportedly optimistic that soda ash prices will rise.  In 2013, the Alkali business had revenues of US$747M or a 2% increase compared with 2012.  This followed an increase in sales of 6%, which was partially offset by a 4% decline in prices.

US producers benefiting from low costs 

Capacity based on natural sodium carbonate, usually the mineral trona, has the lowest production costs of all soda ash sources at under an estimated US$100/t in the USA.  The cost of producing soda ash by synthetic means, mostly by the Solvay or Hou processes, is much higher depending on location but is estimated at US$200-225/t.  Synthetic operations do benefit from lower transport costs as they are located closer to consumers but producers of natural soda ash have a clear production cost advantage.

US producers are the leading exporters of soda ash, shipping over 6.4Mt in 2013 compared to 3.9Mt in 2000 or around half the global total.  One reason for this growth has been that US producers have become increasingly competitive in foreign markets in recent years, aided by a reduction in the cost of domestic energy.  As a result, exports have become increasingly important and by 2013 almost 57% was shipped to foreign consumers.  South America is now the most important foreign market, accounting for almost 28% of the total in 2013 compared to 23% in 2000.  

Global demand for soda ash is forecast to increase by nearly 3.6%py to 2018.  Over the last decade, most growth has been in Asia, a very high proportion of which was in China.  The Chinese soda ash industry is struggling to cope with overcapacity and rising energy costs, which have sharply reduced its competitiveness in both domestic and export markets.  As a result, US producers are well placed to supply the anticipated rise in Asian demand for soda ash.  South American demand for US soda ash has also grown markedly and is highly likely to continue to do so.

A mixed basket of potential suitors 

The purchaser of FMC's soda ash operations will become one of the leading players in the global soda ash market.  Potential purchasers probably include a variety of companies, including current soda ash producers, those with similar mineral or chemical businesses, and private equity.

Solvay of Belgium, the largest single soda ash producer, has operations at Green River as well as a number of higher cost synthetic operations around the world.  The company has closed a number of these in Europe and could seek to use FMC's capacity to supply this market instead.  A proposed purchase by Solvay would almost certainly have to be passed by regulatory authorities in the USA and EU.  Tata and OCI, the other Green River producers could seek to buy FMC's assets to reduce overall costs by rationalisation of their operations.  Companies operating in related businesses might have mineral mining or bulk chemical background.  Private equity companies have a history of involvement in the USA soda ash industry.  Currently, Natural Resource Partners owns 49% of OCI Resources and could look to increase its holdings in the soda ash industry.

Roskill's consulting business assists companies in determining the competitive environment and evaluating market risks, building on over 40 years' experience in mineral and metal market research.

Roskill's new Soda Ash: Market Outlook to 2018 report contains full estimates for 2013, profiles on major producers and projects, an assessment of key market trends and an outlook for supply, demand and prices to 2018. 

This latest edition is available at £5200 / US$8300 / €6200 from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND. Tel: +44-20-8417-0087, Email:info@roskill.co.uk  Web:http://www.roskill.co.uk/soda-ash.

Note to editors 

Roskill Information Services Ltd. of London, UK is a leading provider of multi-client and bespoke market research services to the minerals and metals industry.

The new soda ash report provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.

For further information on this report, please contact Alison Saxby, asaxby@roskill.co.uk or +44-20-8417-0087.

SOURCE Roskill Information Services