Silica producers: screen of leading companies?

The chemical element silicon makes up 28% of the Earth’s crust, second only to oxygen. It is found naturally in the form of silica sand. In turn, highly pure silica sand, with well over 95% SiO2 content and less than 0.6% iron oxide, is an important resource used in making glass, metal foundries, “proppant” for hydraulic fracturing in the oil and gas industry and making high-grade silicon (for chips and PV silicon). The market is 350MTpa. This data-file is a screen of the world’s largest silica sand companies.

Silica mining and processing has been a challenging business in the recent past. Many companies have been loss-making. Otherwise, ROCE’s have been low, at 6-7% for the industry’s largest producer, and there have also been some high-profile bankruptcies and re-structurings. On the other hand it is challenging businesses that can enjoy the greatest changes of fortune.

Does the outlook get more interesting in the energy transition? Our solar outlook requires an additional 20-30MTpa of specialty glasses (bill of materials here), which comprise 50% of the mass of a solar panel. Our wind outlook requires another 1-2MTpa of glass fibers, which comprise 50% of a wind turbine blade (bill of materials here). In the interim, the world is short of conventional energy, under-investing in long-cycle oil projects, and thus likely to re-accelerate short-cycle shale, particularly important for the US sand market (a typical shale well uses 15-25kT of sand).

Leading silica sand producing companies are profiled in this data-file. They range from Junior miners developing new silica resources to a division of Mitsubishi, that produces almost 3MTpa from one of the highest silica mines in the world at Cape Flattery, Australia, with 99.9% purity and 0.01% Fe2O3. In our view, one of the most interesting businesses is listed in the US, with around $1bn market cap at the time of writing, plus a large and well diversified footprint.

The data-file is a screen of the largest silica sand companies, covering over 100MTpa of silica sand production, across 16 companies in 11 countries. There are both public companies and private companies. For each silica sand producer, we have estimated its size, employee count, revenues, exposures to silica sand, and tabulated some notes. Energy intensity of silica sand production is usually around 80kWh/ton and CO2 intensity is around 20kg/ton, which cascades through to products made using sand as an input material.

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