Leading detergent maker Nirma has entered into an agreement to acquire the US-based natural soda ash producer Searles Valley Minerals Operations (SVM) from an affiliate of Sun Capital Partners, Inc. The company has not disclosed the value of the transaction.
The HSBC Securities and Capital Markets (India) has advised the company on the transaction. SVM is a manufacturer of inorganic chemicals, which produce soda ash using the solution mining method. Solution mining offers major advantages in the reduction of labor costs compared to conventional underground mining, the company said in a notice to the stock exchanges.
SVM has three manufacturing facilities located at Argus, Trona and Westend, California and has a combined production capacity for all products of over 1.9 million tonne. The company has an installed capacity of 6,50,000 tonne of soda ash, which is mainly used to make detergents.
Almost 45 per cent of Nirma's soda ash production is used captively. It also produces salt for captive consumption. Nirma had taken over Saurashtra Chemicals last year to augment its soda ash capacity.
Industry sources said that the increase in demand for soda ash fuelled by rising economic growth could be the main reason for Nirma's overseas acquistion. The demand for soda ash is likely to grow at a compounded annual growth rate of 5 per cent in the coming years, according to industry experts.
There are only five producers of soda ash in India -- Tata Chemicals, GHCL, Nirma (includes acquired capacity of erstwhile Saurashtra Chemicals), DCW and Tuticorin Alkalis Chemicals & Fertilisers.
As on March 31, 2006, India's soda ash manufacturing capacity was 2.70 million metric tonne. China, the US and Europe are the other major producers of soda ash in the world.