Tata Chemicals North America has several advantages. It has access to the world's largest reserves of trona and the immense network of the American railroads. Mark Hannant and Franka Godina talk to the men and women in Wyoming and New Jersey who complete the equation.
When employees at Tata Chemicals North America were consulted in advance of the rebranding of their business in April 2011, they were philosophical. It seemed clear that the Tata group was committed for the long term. To the miners and process workers in the mid-West, and their colleagues at the corporate office on the east coast, that was much better than the short-termism they'd seen from earlier owners. For years the business had been controlled by hedge funds and private equity players, whose goal was to sell the 'asset'. As one miner put it: "It seems Tata's not here just to make money. They're here to make soda ash to make money and that's the difference." Being back in the fold of a large industrial house that understood the process and took a long-term view was deemed a good thing.
Vice president & general manager of Tata Chemicals North America, Chris Douville has experienced several owners in his 22 years with the company. He explains the importance of that long-term perspective: "It's a key part of making a sustainable business. It means we take decisions in a different way."
From his office in New Jersey, a few miles from the financial centre of New York, he gives a broad overview of a business that each year extracts almost 5 million tonnes of trona, produces 2.5 million tonnes of soda ash and in doing so returns significant profits to the Tata Chemicals group.
"We have several advantages," he says. "We have an abundant natural resource. And the cost of making soda ash naturally means we can compete as a low-cost producer, globally, against local synthetic manufacturers. Our soda ash is the highest quality in the world. It's very low in chlorides and that's what glassmakers want.
"Our partnership with the railroads is fundamental. We have an extremely efficient well-oiled supply chain. It allows us to transport 50 per cent of the product we produce, huge distances to the ports of Portland, Oregon and Port Arthur, Texas, and retains our lowest cost position. At the same time, we can supply our US-based customers. Our excellent relationships with customers are a vital ingredient to our success."
The customer relationships are so interwoven that TCNA's biggest customer Owens-Illinois (O-I), owns 25 per cent of the Green River facility. Tata Chemicals supplies O-I, one of the world's largest packaging producers, in 10 countries. Church & Dwight, another important customer and neighbour in Green River, Wyoming, is also a joint venture partner along with FMC in the Natronx business launched earlier in 2012. Natronx is developing dry sorbent injection solutions that help enterprises in generating electricity from coal to reduce their emissions. As one of three members of export co-operative American Natural Soda Ash Corporation (ANSAC), Tata Chemicals has a global reach, and through this channel sells its products in more than 30 countries.
"The other part of the puzzle is our people," says Chris. We have people who've worked with us in Green River for 40 years. We have generations where sons work alongside their fathers and even grandfathers. The business is as important to them as they are to us, and we have an important legacy to maintain in the community.
Tata ownership, since 2008, has given the business a new perspective, he says. "It means we've been able to make long-term decisions and that's what lets you build a sustainable business. It has improved our risk management focus. We have to make investments in new technology to meet emissions regulations. We have exciting projects to reduce water consumption and recycle our waste. Those are things that Tata has a natural affinity with. They're not priorities for hedge fund owners who look quarter-to-quarter."
But the benefits cut both ways. Buying what had been General Chemical, formerly part of Allied Signal, now Honeywell, pushed Tata Chemicals from the world's fifth- to the second-largest producer of soda ash. Also, contributing profits has helped Tata Chemicals North America balance a group portfolio that now has access to the world's two largest trona reserves.
"If you want to be a global producer and meet the growing demand in emerging markets, you need to have an asset within the US, producing natural soda ash that gives you scale and a sustainable cost position. That's what we've brought to the table," says Chris.
De Lyle Bloomquist, president, global Chemicals business, explains the significance of the US business to the group. "While our other soda ash operations serve regional markets, the business here in north America gives the Tata Chemicals portfolio global reach. That allows us to serve multinational clients in a way local businesses can't."
He also stresses on the importance of natural soda ash production. "With around 60 per cent of the group's product now made from trona, we have a much more benign environmental impact than many of our competitors," he says.
A treasure trove of ancient trona
Wyoming is remote. While the scenery is breathtaking, the climate is inhospitable. It's not easy to get to, even from within the United States; and once you do get there, there's not a great deal to do except marvel at the vastness of the high plain desert and the beauty of the mountains.
Hidden beneath the ground are major deposits of natural resources, oil and gas, coal seams and minerals. South-western Wyoming is the site of the world's largest deposit of trona, or sodium sesqicarbonate to give it its chemical name. The trona has been there for around 35 million years, formed as a major body of water shrank, leaving saline-rich sediment. And there's a lot of trona. Estimates suggest more than 100 billion tonnes of extractable trona. That's enough to meet global demand for a few hundred years.