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Prosperity is spreading - one grain at a time
Everyone is familiar with metallic mining, but the concept of non-metallic mining is relatively new. Nonetheless, it blew into western Wisconsin like a hurricane during 2011 and 2012, creating direct jobs and business plus substantial spin-off employment and trade.
“The sand mining industry affects companies in about a 45-mile radius,” said Rick Budinger, president of the Wisconsin Industrial Sand Association (WISA), a new group that promotes stewardship within the trade. The latest developments are located between Rice Lake and Chippewa Falls, an area rich with sand having the ideal size, shape and hardness for the hydraulic fracking process, which is used to release petroleum deposits.
Because the industry is so new to the region, hard data is not yet available. But in a Nov. 13 presentation to the Barron County Board, sand mining executives revealed data that provides a glimpse at the growing industry. BusinessNorth contacted several other business owners to supplement that information.
Direct employment already is in the hundreds, mining company officials said. For instance, Great Northern Sand employs 47 and has contracts with another 38 in the Town of Dovre. Superior Silica Sand has hired 92 at its New Auburn facility and will add 120 at a plant now under construction near the city of Barron. The staff at Midwest Frac, which mines in the Town of Arland, is about 40.
For every 20 jobs directly employed by the industry, another six benefit through indirect employment, Budinger said, “and they spend their income on mortgages, gas, food and other products.” There’s also considerable business-to-business trade. For example, Midwest Frac pays $22,000 a month to Barron Electric and buys about 180,000 gallons of gas each year to power its trucks.
“The benefits are staggering,” said Dave Fellon, president of Progressive Rail, based in Lakeville, Minn. His company operates a north-south line from Rice Lake to Chippewa Falls and an east-west line from Almena to Cameron. In total, it owns 165 miles of track that connect to the nation’s Class 1 railroads. Before frac sand was mined, he said Progressive’s Wisconsin corridors were “very sparsely traveled.” Now, the company is laying new track so trains can pass each other.
“We’ve gone from a little company to having upwards of 100 employees. These aren’t part time jobs – they’re full time good-paying jobs,” he said.
In a rare move within today’s rail industry, Canadian National decided to invest $35 million into a line that hasn’t been used for decades. CN restored nearly 40 miles of track between Ladysmith and Barron – a corridor that should be fully in service by mid-December. It became a worthwhile venture for CN because the railroad secured a 10-year sand transportation contract with Superior Silica Sand, said Jim Walker, operations director for the mining and processing firm.
CN’s Barron subdivision will connect with its North American rail network at Ladysmith.
“The CN opens a totally new territory for us, primarily in Canada. Canada is going to be the next big fracking market,” Walker told the Barron County Board.
In August, Jean-Jacques Ruest, CN executive vice-president and chief marketing officer, said frac sand represents an excellent opportunity for the carrier. “CN’s frac sand market has grown nearly 70 percent, reaching 35,000 carloads and $100 million in revenue in 2011,” he said in announcing the investment. The goal is for frac sand to become a $300 million business within three to five years, Ruest said.
The revamped corridor also creates new opportunities for Barron County and the surrounding area, CN Director of Government Affairs Kevin Soucie told the Barron County Board.
“It connects Barron County with our network, which spans North America … and opens Barron County to global markets,” he said. “Earlier this year, we opened the Chippewa Falls inter-modal terminal, which connects this area to Asia. It’s not just for imports. We’re exporting Wisconsin grain out of that facility to Asia. There are all kinds of opportunities, and we really want to work with you do develop them.”
Trucking firms and their suppliers also are ramping up operations, Fred Meyer of Meyer International Trucks in Rice Lake said in an interview.
“There has been nothing in 38 years of business that has affected our company more than this,” he said, referencing the growing demand for truck parts and mechanical service.
Each new processing plant needs about 14 dump trucks to haul sand from fields to processing plants, Meyer said. Anybody who does work related to transportation is seeing more business,” he said.
In fact, the impact extends beyond sand mining, processing and transportation, according to Matt Torgerson, president of Midwest Frac, a locally owned mining company. “If you look at the economic benefits of Barron County, people are shaking their heads about what the sand business has done for them – firms such as Rod’s Painting and Sand Blasting, Meyers Electric – you could go on and on. If you look at their sales year-to-date, this year compared to last year, it’s just amazing.”
It’s estimated the sand mining process could last for decades and, in conjunction with petroleum firms, return the country to energy independence.
“If this continues, the United States will surpass Saudi Arabia in oil production within eight years,” Kurt Bauer, president and chief executive of Wisconsin Manufacturers and Commerce, said last month at a lecture in Superior.
Superior Silica Sand is spending $4.7 million to upgrade County Highway P next year and is paying a per-ton fee for road maintenance. Money going into that pool is expected to total $2.2 million. The company also is paying the Town of Clinton 10 cents per ton and Town of Arland 20 cents a ton on expected production of 1 million to 1.2 million tons.
Potential threats to the sand industry, however, exist in Washington, D.C. and in some statehouses. The Environmental Protection Agency dislikes fossil fuels, Bauer said, which include gasoline and natural gas. If those industries are threatened, the impact also could affect sand mining. In addition, the fracking process is under fire by environmental groups. Business execs, however, are optimistic.
“This will benefit this area for a long, long time,” Soucie said. “We look forward to working with the county to market this and bring more jobs to this area.Previous BusinessNorth Exclusives Articles:
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