Description of Compass Minerals International Inc's Business Segments
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.
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