Arkansas' Bromine Industry Sees Rebound

It doesn't hold the historical boomtown allure of the oil industry and it lacks the get-rich-quick giddiness of the early days of the Fayetteville Shale Play, but bromine production continues to provide good jobs in south Arkansas as it has since 1957.

The industry, which suffered along with thousands of others during the recession, has seen a resurgence since the production trough of 2009, though the number of jobs it provided has slipped since 2003. In an article on the industry that year, Arkansas Business reported that the sector employed about 1,500, while the Arkansas Democrat-Gazette put that figure at about 1,300.

Now the two chemical company giants operating in Union and Columbia counties - Great Lakes Solutions, a division of Chemtura Corp. of Philadelphia, and Albemarle Corp. of Baton Rouge - say they employ about 1,000 workers; the U.S. Geological Survey says that figure is about 950. With hourly wages estimated at about $24, the companies have a combined annual payroll of about $50 million.

Bromine is extracted from the brine, or saltwater, found in the Smackover Formation in south-central Arkansas, the same formation where oil was discovered in 1921. Originally considered a nuisance accompanying oil drilling, brine came to be recognized as a valuable mineral resource when state chemists found that it contained high levels of bromine. Bromine production began in the area in 1957 and has continued to this day.

Bromine is used in a wide variety of products, though its greatest use is as a flame retardant. It's also employed in pesticides, water-treating chemicals, drilling fluids for the oil and gas industry and pharmaceuticals.

The Geological Survey calls bromine "the leading mineral commodity, in terms of value, produced in Arkansas." Great Lakes and Albemarle are responsible for about a third of world production of the mineral, the survey says. Israel - specifically the Dead Sea - and China are the other major sources of bromine.

In 2006, the latest year for which the government provides data, the United States - effectively, Arkansas - produced 243,000 metric tons out of a world production total of 671,000 metric tons that year.

The value of bromine production can be hard to determine because only Great Lakes and Albemarle are involved in U.S. production and they consider that information proprietary. But there are clues to be had.

Seeking Alpha, a website providing stock market analysis and research, in August quoted the CEO of a Chinese chemical company as saying that he expected bromine prices to stay steady during the next year or so at about $3,486 per metric ton. That price applied to Arkansas' 2006 output would total $847.1 million.

And the Arkansas Department of Finance & Administration's data indicates that the severance tax paid on brine the fiscal year that ended June 30 of this year ($605,274) was almost 5 percent higher than in fiscal 2006 ($578,581). Since the severance tax is applied to volume rather than value, the DF&A data suggests that the value of Arkansas' brine is creeping up toward $900 million a year.

Chemtura, Great Lakes' parent company, employs 4,300 people and has manufacturing facilities in 14 countries worldwide. It reported $3 billion in sales in 2011 and earnings of $119 million. Albemarle, with 4,100 employees worldwide, had earnings in 2011 of $436.3 million on sales of $2.9 billion.

Great Lakes has three manufacturing sites in Arkansas, all in Union County. Albemarle has two plants in the Magnolia area.

The improvement in bromine demand was made concrete in a recent filing with the Arkansas Oil & Gas Commission, which regulates the brine-bromine industry in the state. Great Lakes had decided in 2010 to shut down one of its units in El Dorado as a money-saving measure. The recent filing notes a "sharp increase" in bromine demand and seeks to prevent the shutdown of the unit, which was originally scheduled for the end of this year.

Asked about the recession's effect on Great Lakes, Marshall Moore, director of technology and advocacy for the company, said, "The products that we supply go into a number of different consumer markets - electronics, automotive, home construction and that sort of thing. So we were pretty significantly affected by the economic downturn at the end of 2008. ... But it started to come back [at the end of  2009] and then had a very strong recovery in 2010 and since that time [we've] been running pretty strong."

Moore noted that the bromine Great Lakes produces is available from a "very finite number of sources around the world," including China, whose bromine comes from the sea. China has seen a depletion of its supply and has actually become a net importer of bromine, a development that has been "a positive business situation for us," Moore said.

‘A Vital Part'

Henry Florsheim, president and CEO of the El Dorado Chamber of Commerce, said Great Lakes is among the top five employers in Union County.

"Union County and, frankly, all of south Arkansas have forever been driven by natural resources, and people typically think of timber and of oil and natural gas," he said. "But we're sitting on the second-largest bromine deposit in the world behind the Dead Sea. Great Lakes and Albemarle are here because of those natural resources, and a lot of companies here service their vendors and suppliers. They are a vital part of our economy."

"The wages are definitely higher than the average," Florsheim said. "And another thing people don't know about the bromine industry ... is that they operate much like oil and gas [companies] in that they lease property to drill for bromine on. So they are not only hiring people and spending money with companies here, but they also lease properties from local landowners who earn royalties just as they do if an oil rig goes up on their property."

Risk and Controversy

The two chemical companies provide comparatively high-paying jobs, but the extraction of bromine carries some risk as well as controversy. As a liquid, it is highly corrosive, and as a gas, it's dangerous to inhale.

In June, the federal Occupational Safety & Health Administration proposed fining Great Lakes Chemical Corp. (Great Lakes and Crompton Corp. merged in 2005 to form Chemtura) $122,000 for 18 safety violations at a plant in El Dorado.
According to OSHA, the government group began an inspection at the plant last December.

The inspection found that the plant did not meet criteria for several pressure-related safeguards.

"By failing to ensure that safeguards are in place, Great Lakes Chemical puts its workers at risk of exposure to bromine, a highly hazardous chemical that can cause severe burns to the eyes, nose, throat and respiratory system," OSHA's Little Rock director, Carlos Reynolds, said in a news release.

Great Lakes responded with its own statement: "Although the results of OSHA's review show that Great Lakes Chemical's Central Plant had no willful citations, there were recommendations that the company will seek to improve immediately." It added, "The health and safety of our employees, neighbors and community as a whole is of paramount importance to Great Lakes Chemical, and we continuously strive to improve our safety systems."

‘A Big Boon'

Mike Howard with the Arkansas Geological Survey notes that the bromine supply created during the Jurassic era in south Arkansas is finite, but, he said, production "could go on another 200 years. There's that much of that material."

And that would probably suit Henry Florsheim just fine. Arkansas' bromine producers "are a big boon to what happens here."