Solvay America Acquires American Soda

15 September 2003 00:00  [Source: ICB Americas]

Solvay America Inc. has acquired the soda ash concern American Soda LLP, a unit of the natural gas pipelines group Williams Company. The deal, which closed on September 10, was for a sum "less than $50 million," according to a Solvay spokesperson. Negotiations between American Soda and Solvay have been ongoing since last spring.

Williams has been trying to sell Ameri-can Soda since early last year as part of a plan to raise cash and as a part of its strategy to sell noncore assets.

The acquisition involves a soda ash mining and processing operation in Para-chute, Colo. Williams says the facility was designed to produce roughly 800,000 tons to 1 million tons per year of soda ash. However, the plant encountered production problems since it began operations in November 2002, and sources say it has been operating at roughly 50 to 60 percent.

Solvay says the acquisition provides it with a unique opportunity to expand its resources of sodium minerals to include western Colorado nahcolite, a naturally occurring form of sodium bicarbonate. In addition, Solvay says the deal will expand its customer base to a "wide range of end uses," including glass, detergents, chemicals and animal nutrition for soda ash and sodium bicarbonate.

"We will optimize the operations of our two soda ash companies to bring greater efficiencies, overall reduced energy and other fixed costs and better customer response capabilities," says Dick Hogan, senior vice president of Solvay Chemicals Inc.

The soda ash market has been struggling with low margins and oversupply. In light of these conditions, analysts have speculated that Solvay might decide to close the Parachute facility. Solvay says it will "take a hard look at the viability of the operations over the next few months and then make our decisions," a spokesperson says.

Soda ash operating rates have been roughly 91 to 92 percent although analysts say the market is balanced when rates are at 95 percent. This month, Solvay and FMC Corp. have nominated a $7 per short ton price increase. An increase for the same amount was attempted in the fourth quarter 2002, but was met with limited success.

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