It’s no secret German fertilizer producer K+S AG is seeking a buyer for its Morton Salt business in North and South America. In fact, some insiders speculate a buyer is currently conducting its due diligence and that a deal will be announced by the end of this year, or early in 2021.
According to those who follow the salt industry, K+S is looking to reduce the debt it incurred from financing its Canadian potash mine. Prices have dropped in that market and stockpiles are at record highs.
It’s unknown at this time whether an existing salt company is the contender looking to consolidate market share, or if it’s a private equity firm looking to diversify its investments and holdings. Among the major players serving the North American commercial snow and ice industry (and I apologize in advance if I missed anyone), you’ve got (in no particular order):
• Cargill Salt (mines in Cleveland, Lansing, NY, and Louisiana)
• American Rock Salt (NY mine, largest in US)
• K+S owns Morton Salt (Morton Salt Mine in Ohio).
• Kissner Salt (Kissner Group Holdings) was bought by Stone Canyon Industry Holdings this past April for $2 billion. In addition to Kissner, SCIH’s Salt Division includes US Salt, Detroit Salt, NSC Minerals, Central Salt and Lyons Salt. This move made them one of North America’s largest salt producers.
• Compass Minerals (Cote Blanche, La., mine)
Many snow and ice professionals wonder if one of these major players takes over Morton would the sheer size of the consolidated market create a monopoly in some of the major North American snow markets? According to the federal antitrust laws, a company has a monopoly when their market share for a product or service exceeds 75%.
We’ll have to wait to see who the new owner is, what their plans are for Morton, and whether the move turns heads over at the SEC or with snow state attorneys general.
One salt industry insider encouraged me to peruse the K+S 2019 annual report for any additional details on the scope of Morton’s share of the North American salt market. While concrete (and understandable) market share data eluded me in the 250-plus page financial report, I did come across something interesting about half way through where K+S identified and speculated on specific threats that could impact its business operations and profitability in the coming years.
In the section titled “Risks and Opportunities 2020-2022,” the report identifies “More stringent requirements regarding the outdoor storage of deicing salt in North America” as having a 10%-50% possibility of occurring with a "significant" loss. The report defines a “significant financial impact” – as a loss potential greater than $235 million (US).
Here’s how K+S defines this potential problem:
In the past, there have been no special environmental protection requirements regarding the outdoor storage of de-icing salt in North America. However, more and more individual states and local authorities are now moving towards defining mandatory standards in this regard. As a result of stricter local requirements, comprehensive measures may be required, including indoor storage.
In conjunction with environment experts, we continue to work on environmental audits to determine whether owned and leased warehouse locations comply with the new local requirements. [Page 127]
Now, consider the attention winter salt use and the salination of freshwater lakes and streams has received over the last two years, and it’s fair to speculate stricter storage measures could become a real issue for our industry. While environmental enforcement tends to trickle down from suppliers (who have the largest targets painted on their backs), to municipalities, and finally on to the professional snow contractor, this could become an expensive and potentially litigious issue for the commercial segment of the industry.
Are you beginning to experience greater scrutiny among local and state municipalities about how your winter rock salt is being stored? And if there is a crackdown and a push for indoor storage, what sort of financial impact would this have on your snow ops?
Mike Zawacki is editor of Snow Magazine. You can reach him at email@example.com.