(Wyoming Business Report, September 13) – Wyoming’s congressional delegation joined together last week in calling on the Obama Administration to use upcoming trade talks with China to address the soda ash “overcapacity issue,” which the lawmakers say has hurt the state’s ability to export its own soda ash production.
Wyoming is by far the top source and exporter of soda ash in the United States — producing an estimated 90 percent of the nation’s annual output— and it plays a key part of the state’s economy. And especially so in Sweetwater County — known as the “Soda Ash Capital of the World — where the Green River Formation holds the world’s single-largest deposit of trona, natural soda ash’s source mineral.
Wyoming’s all-Republican delegation — U.S. Senators Mike Enzi and John Barrasso and U.S. Representative Cynthia Lummis —sent a letter to the U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman, urging them to address the soda ash issue at the 27th annual U.S.-China Joint Commission on Commerce and Trade meetings later this year.
“U.S. soda ash is the most competitive and environmentally-friendly in the world due to a unique natural deposit of the soda ash raw material trona located in Green River, Wyoming, from which the U.S. could supply world demand” for thousands of years, the delegation wrote. “Roughly 55 percent of U.S. soda ash is exported, making soda ash America’s largest inorganic chemical export.”
The lawmakers said that years of rapid production capacity increases have transformed China from a “net importer of soda ash to the world’s largest soda ash producer.” As China’s economic growth has slowed in recent years, China has targeted export markets for its excess capacity of soda ash, which in turn harms U.S. soda ash producers. As the delegation pointed out in its letter, not only is this an important issue for the state, but even China’s own State Council has recognized that soda ash overcapacity in the country must be resolved.
According to the delegation’s letter, “China’s soda ash overcapacity is the culmination of nearly 30 years of industrial policies aimed at spurring soda ash production even in the face of diminished demand.”
According to the Industrial Minerals Association–North America, soda ash — also known as sodium carbonate (Na2CO3) or common baking soda — is an alkali chemical used primarily in glass manufacturing, including the production of glass containers, fiberglass insulation, commercial building, and automotive industries. Soda ash also is used in baking; the manufacture of some detergents and paper products; and to purify air and soften water; and, as environmental concerns grow, demand for it is increasing for use in the removal of sulfur dioxide and hydrochloric acid from smokestack emissions.
The growth of China’s industry — which uses a chemical process to produce synthetic soda ash, as opposed to Wyoming producers, who refine soda ash from trona — was spurred by the country’s building boom over the last decade, which drove demand for the flat window glass used in the construction of everything from common houses to Shanghai skyscrapers.
An economic staple
Federal Reserve Board uses soda ash as a national economic indicator and, according to the Wyoming Mining Association, the mineral is Wyoming’s top export product, being shipped to markets around the globe. In 2015 alone, Wyoming mines — all of which are underground mines — produced over 17 million tons of trona and employed 2,483 people.
The U.S. Geological Survey in 1997 estimated the state’s total reserve of trona to be 127 billion tons, with 40 billion tons recoverable. The Wyoming Geological Survey estimates Wyoming mines have produced over 633.2 million tons of trona since 1949 and that, at the current rate of production, the state’s recoverable trona reserves will last 2,350 years.
The price of soda ash has more than doubled over the last 10 years, reaching $142 per short ton earlier this year. The total value of domestic natural soda ash produced in 2015 was estimated to be about $1.7 billion, with production of 11.7 million tons for the year.
Center of the industry
The U.S. soda ash industry comprises four companies in Wyoming (operating five plants) and one company in California with one plant.
The American Natural Soda Ash Corporation (ANSAC) operates as the international sales, marketing and distribution arm for the three leading producers: Tronox Alkali Wyoming Corporation, Tata Chemicals North America (TCNA) and Ciner Resources Corporation. Together, these companies export approximately 4 million metric tons of natural soda ash annually, making ANSAC the largest exporter of natural soda ash in the world. The companies’ mines and processing plants operate 24 hours per day, year-round, contributing over $300 million annually to the local economy.
Connecticut-based Tronoxentered the Wyoming scene in a big way in 2015, purchasingFMC Corporation’s Green River assets for $1.64 billion.
Another major player in the market, Solvay Chemicals, has its U.S. soda ash headquarters in Green River, as well.
Many experts predict demand for soda ash from the developing world will show the most promise for growth heading into the future, while in the U.S. and Western Europe demand is flat to declining. According to TCNA, non-China global demand is going to outstrip supply until 2018. TCNA currently sells about 45 percent of its soda ash in the U.S.
According to a report published recently by Grand View Research — a San Francisco-based market research and consulting company — global soda ash market size was $5.94 billion in 2015 (55.45 million tons) and it is expected to reach $25.37 billion (71.93 million tons) by 2024. The report said the growth of glass industry, particularly in the Asia-Pacific and the Middle Eastern markets, is also expected to play a crucial role in the developing the global soda ash market. Soda ash is an energy intensive industry — in Wyoming, most of the operations are powered by coal from nearby mines — and fluctuating energy prices are expected to affect market growth.
The Asia-Pacific market was the leading regional market in 2015, accounting for 54.2 percent of global demand. Increasing industrialization in the emerging economies of China, India, Thailand, and Indonesia is expected to drive the regional market in the future, the report said. As the Wyoming delegation pointed out, the report found that China — due to established, as well as upcoming manufacturing facilities — is likely headed toward overproduction. However, the report found that in terms of exports, the overall Asia-Pacific soda ash industry is anticipated to face tough competition from North America, due to the cost advantage enjoyed by U.S natural soda ash manufacturers.