|Royalty Reduction Act of 2006 Position|
The Industrial Minerals Association – North America (IMA-NA) supports the extension of the Soda Ash Royalty Reduction Act of 2006 for an additional five years. The legislation was implemented on October 12, 2006, and it was allowed to expire on October 11, 2011. IMA-NA urges Congress to extend this law to allow for the soda ash industry in the U.S. to remain competitive, especially during the current economic climate. Soda ash is an essential mineral in a variety of products. It has a number of diverse uses that touch our lives every day. Glass manufacturing is the largest application for soda ash whether it is in the production of containers, fiberglass insulation, or flat glass for the housing, commercial building, and automotive industries. Soda ash also is used to clean the air and soften water. As environmental concerns grow, the need increases for soda ash used in the removal of sulfur dioxide and hydrochloric acid from stack gases. Chemical producers use soda ash as an intermediate to manufacture products that sweeten soft drinks (corn sweeteners), relieve physical discomfort (sodium bicarbonate) and improve foods and toiletries (phosphates). Household detergents and paper products are a few other common examples of readily identifiable products using soda ash.
Over 54% of U.S. soda ash production is exported. Its production and use support thousands of jobs, and it is the second largest export from the Port of Portland, OR.
Soda ash extraction and processing in the U.S. is environmentally responsible due to its natural occurrence. China’s soda ash production is accomplished through a synthetic process which creates calcium chloride as a byproduct. Calcium chloride contributes to environmentally harmful toxic sludge emissions. The Chinese method for soda ash production is energy intensive, and generates five times more waste than naturally-sourced soda ash. Significantly, the Chinese method produces twice the amount of greenhouse gas emissions.
Since the enactment of the Act, the industry has been able to use the savings generated to increase jobs, capital expenditures, output and allowed US soda ash exports to remain competitive with Chinese competitors. However, in recent years, Chinese initiatives including the value added tax (VAT) rebate and local government financing coupled with the overproduction of soda ash in China has left no margin for error for the U.S. industry if they are to remain competitive into the future.
The reduction of the soda ash royalty in 2006 allowed the soda ash industry to stem subsidization and false growth of the Chinese synthetic soda ash industry by increasing capital expenditures some 85% that resulted in a 33% greater collection of revenue by the Treasury despite the reduced rate. In the current economic downturn, China has continued to subsidize its soda ash industry and artificially promote exports, which intensifies the need for Congress to extend the Soda Ash Royalty Reduction Act for an additional five years.
IMA-NA is a trade association created to advance the interests of North American companies that extract or process industrial minerals, such as soda ash, used throughout the manufacturing and agricultural industries. IMA-NA stands ready to participate constructively in this important discussion.