Compass Minerals International Inc's Business Segments

Compass Minerals is a leading provider of essential minerals that solve nature’s challenges, including salt for winter roadway safety and other consumer, industrial and agricultural uses; specialty plant nutrition minerals that improve the quality and yield of crops; and specialty chemicals for water treatment and other industrial processes.

The largest rock salt mine in the world in Goderich, Ontario, Canada;

The largest dedicated rock salt mine in the U.K. in Winsford, Cheshire;

A solar evaporation facility located in Ogden, Utah, which is both the largest sulfate of potash specialty fertilizer (“SOP”) production site and the largest solar salt production site in the Western Hemisphere; and

Several facilities producing essential agricultural nutrients and specialty chemicals in Brazil.
Our salt business provides highway deicing salt to customers in North America and the U.K. as well as consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation and other salt-based products for consumer, agricultural and industrial applications in North America. In the U.K., we operate a records management business utilizing excavated areas of our Winsford salt mine with one other location in London, England.
Our plant nutrition business produces and markets specialty plant nutrition products to distributors and retailers of crop inputs, as well as growers worldwide. Our principal plant nutrition product in North America is SOP which we market under the trade name Protassium+. We also sell various premium micronutrient products under our Wolf Trax brand.

We sell our salt and plant nutrition products primarily in the United States, Canada, Brazil and the United Kingdom. See Note 15 to our Consolidated Financial Statements for financial information relating to our operations by geographic areas.
We significantly expanded our plant nutrition business with the acquisition of Produquímica Indústria e Comércio S.A. (“Produquímica”), which now constitutes our Plant Nutrition South America segment. This segment operates two primary businesses in Brazil - agricultural productivity, which manufactures and distributes a broad offering of specialty plant nutrition solution-based products, and chemical solutions, which manufactures and markets specialty chemicals, primarily for the water treatment industry and for use in other industrial processes. See Note 3 to our Consolidated Financial Statements for further discussion of this acquisition.

SALT SEGMENT

Salt is indispensable and enormously versatile with thousands of reported uses. In addition, there are no known cost-effective alternatives for most high-volume uses. We are among the lowest-cost salt producers in our markets due to our high-grade quality salt deposits, which are among the most extensive in the world, and we leverage this advantage through the use of effective mining techniques and efficient production processes. Further, many of our salt assets are in locations that are logistically favorable to our core markets. Our strategy for this business is to focus on driving profitability from every ton we produce through both cost efficiency and commercial execution.
Through our Salt segment, we produce and market sodium chloride and magnesium chloride in North America and sodium chloride in the U.K. Our Salt products include rock salt, mechanically evaporated salt, solar evaporated salt, brine magnesium chloride and flake magnesium chloride. While we also purchase potassium chloride (“KCl”) and calcium chloride to sell as finished products or to blend with salt (sodium chloride) to produce specialty products, sodium chloride represents the vast majority of the products we produce and sell.

We sell our Salt products through our highway deicing product line (which includes brine magnesium chloride as well as rock salt treated with this mineral) and our consumer and industrial product line (which includes salt as well as products containing magnesium chloride and calcium chloride in both pure form and blended with salt).
Highway deicing, including salt sold to chemical customers, constituted 43% of our gross sales in 2016. Our principal customers are states, provinces, counties, municipalities and road maintenance contractors that purchase bulk deicing salt, both treated and untreated, for ice control on public roadways. Highway deicing salt in North America is sold primarily through an annual tendered bid contract process with governmental entities, as well as through longer-term contracts, with price, product quality and delivery capabilities as the primary competitive market factors. Some sales also occur through negotiated sales contracts with third-party customers, particularly in the U.K. Since transportation costs are a relatively large portion of the cost to deliver products to customers, the locations of the salt sources and distribution networks also play a significant role in the ability of suppliers to cost-effectively serve customers. We have an extensive network of approximately 90 depots for storage and distribution of highway deicing salt in North America. The majority of these depots are located on the Great Lakes and the Mississippi River and Ohio River systems (and their major tributaries). Deicing salt product from our Ogden, Utah, facility supplies customers in the Western and upper Midwest regions of the U.S. Treated rock salt, which is typically rock salt treated with brine magnesium chloride and organic materials that enhance the salt’s performance, is sold throughout our markets.

We believe our production capability at our Winsford, Cheshire, U.K. mine and favorable logistics position enhance our ability to meet the U.K.’s winter demands. Due to our strong position, we are viewed as a key supplier by the U.K.’s Highways Agency.

Winter weather variability is the most significant factor affecting Salt sales for deicing applications, because mild winters reduce the need for salt used in ice and snow control. On average, over the last three years, approximately two-thirds of our deicing product sales occurred during the North American and European winter months of November through March each year. The vast majority of our North American deicing sales are made in Canada and the Midwestern U.S. where inclement weather during the winter months causes dangerous road conditions. In keeping with industry practice, we stockpile salt to meet estimated requirements for the next winter season.

Our principal chemical customers are producers of intermediate chemical products used in the production of vinyls and other chemicals, pulp and paper, as well as water treatment and a variety of other industrial uses. We typically have multi-year supply agreements with our chemical customers. Price, service, product quality and security of supply are the major competitive market factors.

We are the third largest producer of consumer and industrial salt products in North America. This product line includes commercial and consumer applications, such as water conditioning, consumer and professional ice control, food processing, agricultural applications, table salt and a variety of industrial applications. We believe that we are among the largest private-label producers of water conditioning and table salt products in Canada. Our Sifto brand encompasses a full line of salt products, which are well recognized in Canada.

Our consumer and industrial sales are driven by broad product lines, strong customer relationships and products using both private-label and Company brands. Our consumer and industrial product line is distributed through many channels including retail, agricultural, industrial, janitorial and sanitation, and resellers. The consumer and industrial product line is channeled from our plants and third-party warehouses to our customers using a combination of direct sales personnel, contract personnel and a network of brokers or manufacturers’ representatives.

PLANT NUTRITION

Fertilizers are critical for efficient crop production using the limited arable land resources available around the world. The nutrients needed to ensure plant health can be divided into three categories:

macro nutrients - the traditional NPK fertilizers (nitrogen (N), phosphorus (P) and potassium (K)),

secondary nutrients - calcium, magnesium and sulfur, and

micronutrients - trace elements of iron, manganese, copper, boron, zinc, molybdenum, chlorine and nickel.
In addition, a wide range of nutritional and functional enhancers, biostimulants and adjuvants are critical for a plant’s metabolic processes and overall stress and disease resistance. The application and necessity of essential nutritional supplements is based on Liebig’s Law of the Minimum, which is the principle that only by increasing the amount of the scarcest nutrient can the growth of a plant or crop be enhanced, despite the plentiful presence of other nutrients.
Our plant nutrition business focuses on higher value plant nutrients including SOP, specialty formulations of macro fertilizers and a wide range of high-value specialty products incorporating secondary nutrients, micronutrients and nutritional and functional enhancers. Our products contribute to improved overall plant-metabolism, nutrient uptake and fixing, stress resistance, plant defense mechanisms, energy conversion, cell division, root enhancement and leaf, flower and fruit formation, among other benefits. The yield-enhancing properties of these supplements have been shown to provide significant farm productivity gains.

Historically, our plant nutrition business primarily consisted of the production and sale of SOP, a specialty form of potassium which also provides plant-ready sulfur. There are two major forms of potassium-based fertilizer, SOP and muriate of potash (“MOP”). Many high-value or chloride-sensitive crops experience improved yields and quality when SOP rather than MOP is used. SOP is also a more cost-effective alternative to other forms of specialty potash. We are the leading SOP producer and marketer in North America and also market SOP products internationally depending on market conditions. In 2014, we branded our SOP products under the name Protassium+. Our plant in Ogden, Utah, is the largest in North America and one of only four large-scale solar brine evaporation operations for SOP in the world. Our SOP plant in Wynyard, Saskatchewan, is Canada’s only SOP producer.

Our SOP is sold in various grades under our Protassium+ brand. Our agricultural product line consists of different grades sized for use in broadcast spreaders, direct application and liquid fertilizer solutions. Our turf product line consists of grades sized for use by the turf and ornamental markets and for blends used on golf greens. We also provide an organic product line with grades sized for a wide range of applications.
Our Wolf Trax micronutrient products are essential to a wide range of crops, including commodity row crops, as different plants and soil conditions require different micronutrients. Both Protassium+ and Wolf Trax product lines are generally sold to crop input distributors and dealers who then sell our product to farmers and growers. Our commercial efforts focus on educating and selling the agronomic benefits of SOP as a source of potassium nutrients and various micronutrients to plant health.

The agriculture productivity products may be applied for different stages of a plant’s life cycle, different soil and other growing conditions, different crop types and using different delivery mechanisms. We also provide value-added services to our customers, such as soil analysis programs, technical trainings and conferences, crop field test and research, pre- and post-sales support and specialized technical support, which allow us to tailor our Plant Nutrition South America products and sales to a wide variety of customers, diverse types of crops and multiple regions. Through our chemical solutions business, we manufacture, market and supply water treatment and chemicals for industrial processes. Our water treatment products have many different uses including algae control, alkalinity control, disinfection control, odor and corrosion control, water filtration and water clarification.