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Star-Tribune Editorial Board

Post Time:Aug 05,2009Classify:Industry NewsView:292

Wyoming's soda ash industry in the Green River Basin is fighting two major problems at once: the economic recession and Chinese soda ash exporters. It's difficult to judge the full impact of both, but the latter shows some promise of being helped by congressional action.

Last week one of the four producers in the basin, OCI Wyoming, announced it was laying off about 8 percent of its work force in the coming weeks. The company will lose 38 of its 430 employees, which is another blow to the local economy that depends on the good-paying jobs from trona mining and soda ash production. The OCI facility, located about 20 miles west of Green River, is Sweetwater County's sixth-largest employer.

Trona mining has been a staple of southwest Wyoming since the 1940s. Trona ore is mined from beds that lie from 600 to 2,000 feet underground, then refined into soda ash on the surface. Soda ash is used to make a variety of industrial products, including glass, soap and detergent manufacturing.

We hope this move is the last layoff the area will see. Wyoming's four soda ash companies employ about 2,400 people, and we sympathize with those who have lost their jobs.

But the layoffs were not entirely unexpected. The U.S. Geological Survey reported a 24 percent drop in U.S. soda ash production between the last three months of 2008 and the first quarter of this year. The decrease is blamed largely on weak demand for glass in the auto and construction sectors.

China, which took over from the U.S. as the top producer of soda ash in the world in 2003, makes synthetic soda ash. It is also battling the recession, but it's had help from a government export incentive that has given it an unfair advantage in the global marketplace over its Wyoming competitors. The Chinese government introduced a 9 percent rebate on its 17 percent value-added tax on soda ash exports.

Chinese soda ash exports grew 40 percent in the first three months of 2009 versus the same period last year. "During this period of plummeting demand ... you have the Chinese essentially trying to export their way out of a recession and keep jobs in China by increasing exports," explained John McDermid of IBC Inc., a consultant for soda ash distributor American Natural Soda Ash Corp.

Fortunately, Wyoming's congressional delegation has been keeping a close watch on what's happening. "Hands down, Wyoming's soda ash is a better product than synthetic Chinese soda ash," said Sen. Mike Enzi. "But value-added taxes and rebates offered by the Chinese government discount their soda ash enough that it distorts global prices and woos buyers. We shouldn't let China leave Wyoming soda ash in the dust."

The delegation has asked U.S. Trade Representative Ron Kirk to eliminate tax hurdles and "allow the best product to win without price distortions," Enzi said.

"Wyoming soda ash producers can successfully compete throughout global markets when the playing field is level," added Sen. John Barrasso.

Leveling that playing field will take some work, but the success of the trade effort is critical to the future of Wyoming's soda ash industry. We're glad to see Enzi, Barrasso and Rep. Cynthia Lummis on top of the issue and battling for a critical sector of the state's economy. For the sake of those 2,400 Wyoming workers, we wish them success.

Source: www.trib.comAuthor: shangyi

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