Amid all the interest in cryptocurrencies, copper, renewable energy and other markets, salt is starting to make some noise in North America with private equity groups in particular jumping into the fray.
Salt is truly a magical substance, and demand for it continues to steadily increase.
Historically, salt’s value came from its ability to preserve food, and some nations actually went to war over this commodity which has been the engine of empires and revolutions.
Today, salt remains key to our food industry and overall human health but it’s also now used in an immeasurable number of products and processes, even extending to the alternative energy market where sodium chloride-run batteries are in active development as a potential substitute for lithium.
Interestingly, in the United States and Canada, security of supply is becoming an issue with respect to salt as North America increasingly depends on imports from Chile and North Africa to fill the demand for de-icing products used on roads, highways, parking lots and sidewalks. Approximately 25 million tonnes of salt is scattered on U.S. roads annually, about 150 pounds for every American, and no economic alternative has ever been found. Shipping of salt from overseas also contributes to global carbon emissions, but there’s a Canadian company that offers at least a partial solution to this problem.
Red Moon Resources (TSXV: RMK) owns what industry experts consider to be the most attractive undeveloped salt resource tailor-made for the large road salt de-icing markets in Eastern Canada and the Northeast USA, an estimated 100-year supply of high-grade salt (>95% NaCl) strategically located next to a deep water port on the western coast of Newfoundland. Shipping distance from there to Boston, for example, is very limited (3-4 days) vs. the few weeks it takes to ship product from places such as Chile, Egypt and Morocco to the U.S. East Coast.
The grade and shallowness of the Great Atlantic salt deposit, combined with adjacent important infrastructure, caught the attention of Mr. Rowland Howe who was instrumental in growing Compass Minerals’ (NYSE: CMP) Goderich mine in southern Ontario into the largest underground salt mine in the world. Mr. Howe, who managed Goderich from 1995 to 2011, is highly respected in North American salt circles and was recently appointed President of Red Moon with a mandate to push Great Atlantic through the Feasibility Stage into potential production.
Efficient salt mines are not only safe for the environment, but they’re also known to operate for many decades through all business cycles, providing a very long-term source of jobs, investment and wealth creation.
Recent developments in the North American salt market underscore how salt has become a big business. Private equity has completed $5.2 billion (U.S.) in strategic salt acquisitions over the past year, including a buyout (subject to antitrust approval) of Germany’s K+S Americas operating unit, while Compass just reported a banner first quarter for salt sales (road de-icing products plus sales to the chemical industry).