Chemical and Fertilizer Mineral Mining, NEC

SIC 1479

Companies in this industry

Industry report:

This category covers establishments primarily engaged in mining, milling, or otherwise preparing chemical or fertilizer mineral raw materials, not elsewhere classified. Establishments primarily engaged in milling, grinding, or otherwise preparing barite not in conjunction with mining or quarry operations are classified in SIC 3295: Minerals and Earths, Ground or Otherwise Treated. Establishments primarily engaged in producing salt by evaporation of sea water or brine are classified in SIC 2899: Chemicals and Chemical Preparations, Not Elsewhere Classified.

Industry Snapshot

Salt represents nearly half of all industry chemical and fertilizer mineral industry shipments. Consequently, the performance of the salt industry tends to reflect overall industry conditions. Other major contributors to this category include sulfur and barite. Salt production held relatively steady between 45 million and 47 million metric tons between 2005 and 2009. Prices rose through the latter part of the decade. Sulfur production increased from 8.69 million metric tons in 2008 to 9 million metric tons in 2009. A decline in domestic demand for sulfur for agricultural use was offset by high export prices. Finally, barite mining was strong during 2008 on high oil and gas prices, but mining activity dropped dramatically during 2009 as the global economy push pressure on the industry. Production fell from 648,000 metric tons in 2008 to 380,000 metric tons in 2009.

Organization and Structure

The major products mined by the chemical and fertilizer minerals industry included salt, sulfur, barite, fluorspar, lithium, and strontium. Salt represents approximately 50 percent of the value of all industry shipments and is primarily produced in Louisiana, Texas, and New York. The second largest segment of the industry is sulfur, which comprises roughly one-third of the value of all industry products. The third largest product in the industry is barite, although it represents less than 5 percent of the value of all industry shipments.

Background and Development

The United States was the world's largest producer of salt in the early 2000s, followed by China, India, Germany, and Canada (the United States would be passed up by China in the late 2000s). Twenty-nine U.S. companies operated 69 salt-producing plants in 15 states in 2003, producing salt in four basic forms: salt in brine (51 percent of all salt sold or used), rock salt (30 percent), vacuum pan salt (11 percent), and solar salt (8 percent).

U.S. salt production between 2000 and 2003 declined from 45.6 million metric tons to 41.2 million metric tons, while consumption declined from 51.6 million metric tons to 50.1 million metric tons over the same period. Because production was declining faster than consumption, the United States increased its reliance on imports to 23 percent of domestic consumption in 2003, compared to 16 percent of consumption in 2000. At the same time, exports declined from 1.12 million metric tons in 2001 to 500,000 metric tons in 2003.

There were roughly 14,000 end uses for salts, with the largest being chemicals (45 percent); road de-icing/ice control salt (31 percent); salt sold to distributors (8 percent); industrial uses (8 percent); agricultural salt (6 percent); food, including table salt (4 percent); primary water treatment applications (2 percent); and exports/other uses (less than 1 percent). Along with limestone, coal, and sulfur, salt was one of the four most important minerals used by the chemicals industry. As early as 1939, salt was being used in the production of 74 industrial chemicals in the form of sodium and chlorine. Historically, the largest U.S. salt mining or producing firms were operated by chemical companies that processed the extracted salt into commercial products. Salt was used by the chemical industries as a feedstock in the manufacture of chlorine and caustic soda, which was used to make everything from soap, dyes, and dairy products to glass, pulp, and paper. Other uses included water conditioning and treatment processes, textiles and rayon manufacturing, metallurgical applications, leather treatment, agriculture, refrigeration, meat packing, and fish curing.

In 2003, 50.1 million metric tons of domestic and imported salt were used in the United States. In 1970 the United States reported 50 companies producing salt at 95 plants. However, by 2003, the industry segment had been reduced to 29 companies with 69 plants because of inexpensive salt imports, intensified market competition, surplus production capacity, and high energy and labor costs. In the 1990s, Continental Salt, Eastern Cargill Inc., and Petroquaimica de Venezuela, S.A., announced a joint venture to produce solar salt, and Akzo Nobel Salt Inc. decided not to replace its collapsed and flooded rock salt mine in Retsof, New York, which had been the largest underground room-and-pillar salt mine in the Northern Hemisphere, with a new mine. Instead, Akzo decided to sell virtually all its North American and Caribbean salt operations, valued at $450 million, to agricultural giant Cargill Inc., strengthening Cargill in its struggle with Morton Salt for industry dominance. With sales of $708 million, Morton Salt was the retail salt industry leader in 2003.

U.S. salt producers accounted for 19.6 percent of the world's total production in 2003. The six industry firms accounting for the majority of exported salts were Akzo Nobel Salt Inc., Cargill Salt Co. and its affiliate Leslie Salt Co., North American Salt Co., Morton Salt Co., Western Salt Co., and United Salt Co.

In 2007, 29 U.S. companies produced 43.7 million metric tons of salt for use in brine, rock salt, vacuum pan, and solar salt with a combined estimated value of $1.3 billion. Roughly 64 salt-producing plants operated in 2007 in 15 states, with those in California, Florida, Illinois, and Nevada accounting for 25 percent of the national output. Of the total industry tonnage, 37 percent was used for road de-icing in 2007 compared to 31 percent in the early 2000s. Compass Minerals, a major U.S. salt producer, increased production 1 million tons at its Goderich, Ontario, Canada, mines to meet increased demand for de-icing salt in the Great Lakes region.

China had become the leading industry producer in 2006, with salt production reaching 54 million metric tons, compared to 44.3 million metric tons in the United States. Other major international producers were Germany, Canada, India, Australia, Mexico, and the United Kingdom. Worldwide salt production totaled 251 million metric tons in 2006.

In early 2000s, the United States remained the world's largest producer and consumer of sulfur, one of the four most widely used industrial minerals in the chemical industry. Unlike most other major mineral commodities, sulfur is primarily used as the chemical reagent sulfuric acid, rather than as part of a finished product. Sulfuric acid was the most widely produced chemical in the United States. In 2003, 90 percent of all sulfur output was consumed in the form of sulfuric acid (see SIC 2819: Industrial Inorganic Chemical Manufacturing) to make everything from insecticides, soaps, leather, and textiles to artificial fertilizers, paints, dyes, and paper. Roughly 70 percent of all sulfur consumed in the United States in 2003 was used in agricultural chemicals, primarily in fertilizers, but sulfur was also used in the manufacture of a myriad of industrial products.
The world sulfur industry was divided into two categories: producers who extracted sulfur or pyrites as their primary mining objective, and those who extracted it solely as a by-product of the mining of other minerals. In the early 2000s this indirect or "involuntary" production of sulfur accounted for almost three-quarters of the world's sulfur production. In 2003, 8.8 million metric tons of elemental or unrefined sulfur was produced by more than 160 operations in 32 states and U.S. territories. Three-quarters of the world's output of elemental sulfur was recovered from natural gas processing, petroleum refining, and coking plants. Thirty-nine U.S. companies in 26 states and U.S. territories produced recovered sulfur in 2002 led by ExxonMobil Corp., BP plc, ConocoPhillips Co., ChevronTexaco Corp., Shell Oil Co., Valery Energy Corp., and CITGO Petroleum Corp.

Elemental sulfur was produced using the Frasch hot-water method, in which native sulfur found in salt domes and sediment was melted underground and brought to the surface with compressed air. In 2000, however, Freeport-McMoRan Sulphur Inc. had shut down the last operational Frasch mine in the United States.

Global sulfur production remained unchanged in 2005 and 2006, while sulfur consumption climbed slightly in 2006 as fertilizer production consumed an estimated 50 percent of output. Worldwide sulfur consumption of fertilizer was projected to climb 2.7 percent annually through 2015, whereas industrial consumption will increase 2.3 percent annually during the same period. In 2007, 8.2 million metric tons of elemental sulfur was produced by 113 operations in 29 U.S. states and territories with a value of approximately $400 million. Louisiana and Texas were responsible for 45 percent of U.S. production. Increased demand from China and India increased the price of sulfur during 2007. However, the most significant event of 2007 occurred when Canada surpassed the United States as the world leader in sulfur production.

Barite production grew 14 percent in 2003 to 480,000 metric tons valued at $14 million, compared to 540,000 tons valued at $30 million in 1996. Barite mines operated primarily in Nevada and Georgia. Almost 95 percent of the barite sold in the United States in the early 2000s was used as a weighing agent in oil- and gas-well-drilling fluids to maintain pressure and prevent blowouts. It was also used as a weighing additive in cement, rubber, and urethane foam and as a raw material in barium chemicals, as well as for metal protection and gloss in automobile paint primer and leaded glass. Barite has been used in automobile brake and clutch pads; concrete vessels for holding radioactive materials; cathode-ray tube faceplates and funnelglass; fillers in linoleum, paper, and rubber; in the manufacture of white pigment, inks, oil cloth, and leather; and in the production of glaze, enamels, detonators, and signal flares.

In the late 1990s and early 2000s, the United States began to rely increasingly on barium imports. In 2003, barium imports were responsible for 81 percent of domestic consumption, an increase from 66 percent in 1999. U.S. barium producers found it difficult to compete with the high-grade, low cost imports of foreign rivals. Nevertheless, U.S. production continued to grow as the onshore drill rig count climbed from 790 in July 1996 to 965 in August of 2002, fueling a need for fresh barium. However, most exploratory and development oil drilling occurred outside the United States in the early 2000s, and because it was not cost-effective to ship a low-unit-value commodity like barium overseas, the barium mining industry's future growth depended on the discovery of new gas reserves in the United States.

Barite production fell 8 percent to 540,000 tons valued at $23 million in 2007 from 589,000 tons in 2006. Barite exports fell to 71,500 tons, or 23 percent, in 2006, while imported ground barite decreased to 815 tons in 2006 from 84,000 tons in 2005. The value of domestic primary barite climbed to $40.00 per ton in 2006, growth of 11 percent over $35.90 per ton in 2005. A growing interest in natural gas exploration in Colorado, Utah, and Wyoming was in turn increasing demand for drilling mud, which resulted in increased demand for barite.

Other Minerals.
Other minerals mined by industry firms in the 2000s included pyrites, fluorspar, lithium carbonate, strontium, wollastonite, natural wollastonite, and natural iron oxide pigments. Major end uses for fluorspar included lead, silver, copper and gold smelting, aluminum manufacturing, high-octane gasoline production, enamel manufacturing, refrigerant, plastics, and insecticide production, the manufacture of opaque glass and colored cathedral glass, and steel production (a single ton of steel requires approximately seven pounds of fluorspar). Lithium compounds have historically been used in roughly 20 industrial applications, including synthetic vitamins, special-purpose alloys, aluminum lithium composite alloys for commercial and military aircraft, and nuclear energy applications. Spodumene, lepidolite, and amblygonite were mined primarily for their lithium content. Almost 70 percent of strontium consumed in the United States was for the manufacture of X-ray-blocking faceplate glass for television picture tubes. Celestite and strontiate were strontium-based minerals also mined by this segment of the industry along with comparatively small quantities of arsenic, brimstone, alunite, guano, marcasite, mineral pigment, ocher, pyrrhotite, and umber.

Other minerals mined and included in this industry classification are mineral pigment mining, which accounted for 12.2 percent of market share with $7 million in sales and 72 employees, and fluorspar, which generated $1.5 million in sales and employed 20 miners. Arsenic mineral mining had a value of $3.4 million, with 5 employees, while alunite mining, lepidolite mining, and spodumene mining each operated one mine for a combined value of $1.1 million in sales and a total of 19 employees.

Current Conditions

In the late 2000s, the United States and China continued to dominate global salt production, accounting for roughly 40 percent of the world's salt supply. China led with 60 million metric tons in 2009, followed by the United States with 46 million metric tons. The next largest producers were Germany and India with 16.5 million and 15 million metric tons, respectively. The value of the salt industry has grown steadily during the 1990s and 2000s. According to the Salt Institute, the industry was valued at $840 million and $1.15 billion in 1989 and 1999, respectively. In 2009, the industry's revenues totaled $1.95 billion.

Highway salt is a major contributor to this increase in revenues, although this segment of the industry is highly dependent on annual weather conditions. Nonetheless, overall, the segment's value has generally grown in value. In 1999, highway salt totaled 15.7 million metric tons for a value of $328.4 million; in 2009, highway salt totaled 16.6 million metric tons for a value of $714.1 million.

Salt for human consumption totaled 1.48 million metric tons in 2009, for a value of $321.1 million. Water conditioning salt totaled 3.2 million metric tons in 2009 and was valued at $439.8 million. Animal nutrition salt totaled 1.71 million metric tons, for a value of $141.4 million. Finally, the last major use of salt, chemical use of salt totaled 1.93 million metric tons in 2009 and was valued at $79 million.

The United States remained the top producer of sulfur in 2009, with 9.8 million metric tons, followed by Canada (9.3 million metric tons) and Russia (7.2 million metric tons). Elemental sulfur and its byproduct, sulfuric acid, were produced in 29 states plus the Virgin Islands in 2009. The industry was valued at approximately $100 million. Elemental sulfur production totaled 9 million metric tons; about 45 percent of production took place in Texas and Louisiana. Domestic production satisfied 74 percent of domestic consumption needs. The majority of imported elemental sulfur and sulfuric acid came from Canada.

Sulfur and sulfuric acid experienced extreme price hikes during 2008. The price per ton of elemental sulfur skyrocketed from an average of $36.85 per ton in 2007 to $262.32 per ton in 2008. In fact, in August prices hit $600 per ton before declining to $150 per ton in November. However, demand and subsequently price plummeted early in 2009 as the global economy entered a recession. In January 2009, sulfur was practically valueless, being quoted at $0 per ton. Average price for elemental sulfur in 2009 was just $10 per ton. Price recovery is expected as the economy continued to improve throughout 2010; however, the U.S. Geological Survey, anticipated that prices would recover to pre-2008 levels and not return to the abnormal highs.

The United States continued to be heavily dependent on imports for its consumption needs of barite, producing 380,000 metric tons in 2009 and importing 1.6 million metric tons. Domestic production in 2009, which was valued at $20 million, was down by 41 percent from 2008, when production reached 648,000 metric tons. Most production in 2009 came from four mines in Nevada and one mine in Georgia. The decline in production and consumption was attributed to the decline in the oil and gas industry, as 95 percent of barite is used as a weighting agent in oil and gas well drilling fluids. China continued to dominate global production of barite, mining 3 million metric tons in 2009, followed distantly by India with 800,000 tons. China also had the largest stockpile of barite in reserves, holding 62 million tons in reserve, followed by India's 34 million tons and the United States's 15 million tons.

Industry Leaders

Morton International, Inc. of Chicago, Illinois, was the leading producer of consumer salt. Morton was owned by Rohm and Haas Company, along with Canadian counterpart, Windsor Salt, giving the diversified company salt as one of its six markets. However, the company was sold in 2009 to German company K&S for $1.675 billion. Rohm and Haas posted revenues of $46.6 billion in 2009. Highly diversified agricultural giant Cargill, Inc., in Wayzata, Minnesota, distributed salt under the brand Diamond Crystal. United Salt Corporation, headquartered in Houston, Texas, was formed in 1928 and by 2007 reported revenues of an estimated $16.1 million with 217 employees.

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