Salt: Inside the big business of battling winter’s icy bite | Financial Post
Patrick Laracy was confident that winter was still several weeks away, despite overnight temperatures at his home in St. John’s, Nfld., dipping into minus territory in early November. He figured it would be closer to Christmas, quite possibly the New Year, before it snowed.
This is likely contrary to outsiders’ perceptions of a province buried in mountainous drifts from October to May, which he said are to be blamed on the CBC and the Canadian appetite for stories of wild winter storms. But the story in St. John’s wasn’t wild in the least, at least not yet.
“The weather here is fantastic,” Laracy said. “Most Christmases in St. John’s are green.”
That’s not to say the 64-year-old career geologist, mining industry entrepreneur and occasional lawyer does not love a good walloping winter. Snow, ice, periods of freezing followed by sudden thaws, more freezing, more snow and slippery roads, as well as the legions of snowplows, especially salting trucks, combating winter’s treacherous bite are at the core of the international road salt business he hopes to build in St. George’s.
St. George’s is a small town of 1,200 that used to be a small town of 2,200. It has been getting smaller by the year as the population ages and the young people leave and don’t come back. There is a gas station and a couple of stores, but not much else to speak of in terms of job opportunities.
But it is what is below ground that has folks buzzing about the future lately — and not in funereal terms. The town, with its deepwater port, sits atop a vast, homogenous, high-grade, billion-tonne salt deposit. Laracy discovered it when he was drilling for oil and gas in the area several years ago, and he hopes he can become a Canadian player in a US$4-billion industry dominated by companies in the United States.
At the time of the discovery, he wasn’t thinking about salt beyond adding a pinch here and there to his meals. But the company he founded, Atlas Salt Inc., has plans to dig out the “great Atlantic salt deposit” and has already navigated several environmental regulatory hoops on the road to what Laracy hopes will be a new, state-of-the-art, $480-million road salt mine.
If built, it would be the first new salt mine in North America in almost 30 years. The company’s target market isn’t salt shakers, but major cities in Atlantic Canada, Quebec and the eastern seaboard of the United States, such as Boston, which imports the bulk of road salt sprayed upon its streets from Chile by way of the Panama Canal.
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“We are not looking at table salt; the big market is road deicing salt,” Laracy said. “The reason we believe it is all doable is the fact that there is a domestic shortfall for road deicing salt in North America, and that the annual deficit, depending on the severity of the winter, can be between seven and 11 million tonnes a year. That deficit is being supplied by international sources, such as Chile, Mexico, Egypt and North Africa. What that means is we have a competitive advantage that never goes away: location.”
No matter where one hangs their hat, road salt as a commodity doesn’t generate the same degree of market hype as, say, a new gold strike, lithium find or massive reservoir of oil just waiting to be tapped. Indeed, Joel Jackson, a managing director of equity research at BMO Capital Markets who has been covering the industry for 15 years, described salt as a remarkably “boring business,” albeit with some fascinating aspects.
For example, Saskatchewan is famous for its potash mines, but it also has unlimited salt reserves. Every tonne of potash that gets pulled from the earth produces several tonnes of salt tailings. That salt, Jackson said, sits on the Prairies gathering proverbial dust, providing the Toronto-based analyst with a good example of a truism of the North American road salt industry: In order to make a buck as a road salt producer, your mine needs to be close to the market.
“When you are talking about road salt, this is not a high-value product because it is a regional market, and this is important because freight costs matter,” Jackson said. “What that means is to be profitable, you can only really ship the salt so far without taking a loss.”
Of the three big North American players, only Kansas-based Compass Minerals Inc. (CMP) is a publicly traded company. CMP operates the world’s largest underground salt mine, which is located beneath Lake Huron, next to Goderich, Ont., and it is as deep as the CN Tower is tall.
The mine produces about six million tonnes of salt per year, and the company ships it to communities around the Great Lakes region, including Toronto, and up into the St. Lawrence Seaway. CMP sold about US$900-million worth of road salt in 2023 at an average price of US$68 a ton, but none of its sales were bound for the American East Coast. Its rivals for road salt market share are a couple of American private-equity players: Cargill Inc. in Minnesota and Morton Salt Inc. in Chicago.
Another truism of the road salt industry, Jackson said, is that no matter how boring it is, it is still a “good” business, hence the interest private equity shows in it.
Winters may vary in severity, but bulk road salt buyers — that is, cities, states, counties and provinces — are a constant, so there is always someone shopping for road salt. Even after a mild winter, government customers begin tendering contracts for the next one because you never know when the snow is going to fall, as it did in British Columbia on the first weekend in November.
An old salty tale
A lone salt truck makes its way south on Highway 400 near Toronto. Photo by Postmedia
Salting road surfaces dates back to the 1940s, when an explosion of road networks, suburbs and vehicles slipping every which way on wintery days became a problem in need of a remedy. It turned out that sodium chloride was, and remains, the ideal fix.
Nature loves disorder, Yolanda Hedberg, a chemistry professor at Western University in London, Ont., said, and sprinkling salt onto a snow-dusted and rapidly icing street stirs up molecular chaos, lowering the freezing point of water, thus “deicing” the road. Road salt can work its magic to about minus 21 C. Any colder and you best call in the sand trucks, not to melt the ice, but to provide some traction for tires.
Hedberg is originally from southern Germany, but she moved to Stockholm to study and became involved in her neighbourhood “technical” committee, which was tasked with looking at the best means of keeping roads clear during winter.
The Swedish approach was to use “sweeper” trucks to vigorously dust away as much snow as possible before dousing the roads with a low-concentration salt-brine solution. The goal: use the minimum amount of salt to keep drivers safe.
As a result, Hedberg was aghast when she moved to southwestern Ontario four years ago.
“They use tons of road salt in North America,” she said. “You basically walk on a layer of salt; for a European, this seemed crazy.”
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A worker grooms a pile of road salt in Chicago. North American cities use much more salt on their roads than European cities. Photo by Scott Olson/Getty Images
It was also inspirational. The chemist is conducting a multi-year road salt study in London that looks at sodium chloride and alternative road salts such as sodium acetate, as well as some sugar-added, pet-friendly salts, to determine which is most effective at melting snow and increasing vehicle traction, but least noxious to soil and the metals on bikes, cars and infrastructure, such as bridges.
What has been most surprising to learn so far, Hedberg said, is that the alternatives to sodium chloride are just as bad as sodium chloride — good old road salt. For example, sodium acetate has proved even more destructive than salt at seeping through concrete and corroding the steel that forms the skeleton of bridges.
“Salt is doing terrible damage to our infrastructure,” she said. “And if you look at other alternatives, such as sand, it induces a lot of wear because it basically pulverizes the asphalt due to friction.”
In short, salt is here to stay, and her recommendation to cities that rely upon it is to try to “use less.”
Reducing road salt consumption has been one of the things on Vincent Sferrazza’s mind lately. The City of Toronto’s director of transportation and operations is the guy in charge of keeping the city’s roads clear from November to April. He spends every day, even in the thick of summer, thinking about the next winter, an obsession he describes as a “healthy” anxiety.
“We never stop planning for winter,” he said.
Toronto gets between 130 centimetres and 140 centimetres of snow in a typical winter and sprinkles about 125,000 tonnes of salt, worth about $20 million to $25 million, on its road networks to deal with it. (Toronto’s salt, no surprise, is supplied by the industry’s three main players.)
Salt truck sprayers are programmed to dispense a set amount of salt per kilometre per road type, meaning your quiet side street is not getting salted to the same extent as a major expressway, which gobbles up 180 kilograms of road salt per kilometre per lane.
One of Sferrazza’s pilot projects this winter is to equip a handful of salting trucks with artificial intelligence sensors that will allow the salter to react to road conditions in real time by measuring the warmth of the road surface, the presence of ice, the degree of friction between tires and asphalt, the relative humidity and the air temperature. Crunch all that information and it could be that a road needs less salt in a given moment than the established settings, and vice versa.
“This could be a real game changer when it comes to the appropriate application of salt,” he said.
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A snow plow and salter in Windsor, Ont. in January. Winter’s increasing unpredictability will likely increase the use of road salt. Photo by Postmedia
Why use 180 kilograms when 120 will do? It is a key point given winter’s increasing unpredictability, and the preponderance of mid-January thaws in places such as Ottawa that didn’t used to thaw out until spring. A thaw followed by a renewed blast of winter weather sends the salt trucks back onto the streets, and the more the cycle repeats, the more salt gets dispensed.
Hedberg is not an analyst, economist or weather forecaster, but her prediction is that as winters become more erratic, road salt use is going to “increase,” no matter anyone’s best intentions to cut back.
Work, bread, water and salt for all
Greater demand for road salt might not be great for bridges, but it registers as good news to Conrad White. He is the Mayor of St. George’s, Nfld., and his life story could be a stand-in for thousands of others like him in the region.
His story goes like this: Once upon a time, he was young and his high school was brimming with 800 students. Upon graduation, he had a choice to stay at home, scuff around for work, and hopefully get enough hours to claim unemployment insurance when the work dried up, or move to Ontario or Alberta to find a full-time job.
Right now, there is nothing here to keep the kids home. The salt mine would have a huge economic impact
Conrad White, mayor of St. George’s, Nfld.
That’s how White wound up working at a glass factory in Ontario for 30 years and then for a union before he moved home to retire. Ontario provided him with a living, but there was not much in the way of community life in the Toronto suburbs. He knew his immediate neighbours, but that is about it.
Back home, he knows everybody, and it is that sense of community he wants to keep in place for coming generations, and the only way to do that is to give them an opportunity to stay home and work, something Atlas Salt’s mine could help achieve.
“Right now, there is nothing here to keep the kids home,” he said. “The salt mine would have a huge economic impact.”
Being a Newfoundlander, the mayor is accustomed to hearing rural revival stories that don’t pan out. But the mine’s proponents are actively building a road to the site, he said, and the community is almost unanimously in favour of the project.
“We’ll just have to wait to see how she goes,” he said.
Patrick Laracy has been waiting for his moment for decades, having been in “the game” for 41 years. Exploration geologists tend to view themselves as “treasure hunters,” and every treasure hunter hopes that they will discover something that grows up to be a working mine, which is something that almost never happens.
The mine in his imagination was originally going to be copper, or gold, or perhaps a major oil strike, but then along came a billion-tonne salt deposit. As sure as winter, its arrival got him thinking of a new career horizon, one stretched out along an icy road in need of salt.
“It is not like we are chasing a vein of gold that is a foot wide and disappears,” Laracy said. “We know the salt is there, and we know we have got a lot of it — a billion tonnes — it is high grade, and there is a market for it on the East Coast.”