Extension of soda ash royalty reduction critical to U.S. exports

December 10, 2010

Lummis Bill Provides Stability and Helps Support U.S. Industry Facing Increasing Trade Barriers

Legislation introduced December 2nd by Rep. Cynthia Lummis (R-WY) will continue to help ensure the health of the U.S. soda ash industry in the face of mounting competition from China and market access barriers in other parts of the world. HR 6490 will extend for an additional five years the reduced royalty rate of 2% on the output of sodium compounds on federal land, including soda ash.

The U.S. soda ash industry relies on this reduced rate to stay competitive in an export market increasingly distorted by foreign industrial policies. Foremost among these barriers is the Chinese practice of manipulating the rebate rate on its 17% VAT (currently 9%) for its exporters, to the detriment of U.S. exporters. "In the face of fierce and unfair foreign competition, the reduced royalty rate provides crucial support to the U.S. soda ash industry, which is heavily reliant on export markets," said John Andrews, president of ANSAC (American Natural Soda Ash Corporation). "A five-year extension would provide soda ash producers certainty and confidence to expand production, supporting thousands of jobs and $1 billion per year in exports."

The U.S. industry produces roughly one quarter of total global output, and directly and indirectly accounts for nearly 20,000 jobs in the United States. In 2010, for the first time over 50% of total U.S. soda ash production will be exported, demonstrating the increasing dependence of the U.S. industry on export markets.

ANSAC, headquartered in Westport, Connecticut, is the international marketing arm for four U.S. soda ash manufacturers: FMC Corporation, General Chemical, Solvay Chemicals and OCI Chemicals Corporation. Soda ash (disodum carbonate) is a basic chemical raw material required to manufacture commodities such as glass, detergents and other chemical products.