GREEN RIVER - Reeling from the loss of hundreds of jobs over the last decade, severe trade barriers and stiff competition from China, southwest Wyoming's soda ash industry got a huge shot in the arm Friday after the U.S. Senate approved a trona royalty rate reduction.

The bill will lower the federal royalty Wyoming trona companies pay from 6 percent to 2 percent for the next five years.

Industry experts estimate the 4 percent royalty reduction will save the industry about $5 million annually. Industry officials said the reduction will allow companies to invest in new equipment that could lead to production increases and job stability.

The four Green River companies operating in southwest Wyoming comprise the bulk of the U.S. soda ash industry, valued at $905 million in 2005.

Green River producers were ecstatic Friday and welcomed the news.

"This is fantastic … (It's) made my day," said Tim Morrison, site manager for OCI Chemical Inc. "This will help us to continue to invest (in the industry), and that's great. We really appreciate the help of the delegation and their work on this."

Sen. Craig Thomas, R-Wyo., sponsor of the Senate bill, said the federal royalty rate reduction will go a long way toward helping Wyoming's soda ash industry to be more competitive in the global market.

"This legislation fortifies the Wyoming soda ash industry's position against global competitors in Asia," Thomas said Friday. "Maintaining a strong soda ash industry is critical to the economy in southwest Wyoming."

Sen. Mike Enzi, R-Wyo., and Rep. Barbara Cubin, R-Wyo., both lauded the bill in statements issued Friday. Enzi called the bill's passage a "tremendous victory" and an "equalizer" that will ensure fair trade exists in the global soda ash market.

The royalty reduction will mean lost revenues for both the state and federal governments. Wyoming receives 50 percent of the royalties collected on soda ash production.

Federal mineral royalties go primarily for education and highways. The four Green River companies paid about $100 million in 2005 in federal, state and local taxes and fees, according to industry figures.

Lengthy effort

The bill's passage came after years of effort by Wyoming's congressional delegates to help Green River soda ash producers, who have long been at a disadvantage in the world's markets because of high labor and energy costs, strict environmental laws and high transportation costs.

The same trona royalty rate measure sponsored by Cubin passed the House both as an attachment and as a stand-alone bill in recent years, but both times it failed in the Senate.

Wyoming's four producers have shed about 700 jobs since 1997 as Asian producers including China have cranked up production and competition through government subsidies and lax environmental rules.

China, for example, has state-owned, synthetic soda ash plants with little or no environmental regulations, less-efficient manufacturing facilities located near major seaports, and low wages, which give them a leg up in world markets.

Wyoming's natural soda ash producers, on the other hand, face high labor costs, strict environmental laws and the high costs of transporting the product about a 1,000 miles to the West Coast for overseas shipping.

The U.S had been the world's leader in soda ash production for nearly 100 years until China surpassed the U.S. production in 2003.

The overall value of U.S soda ash has steadily declined from $77 per ton in 1997 to $60 per ton in 2005, according to industry figures.

Wyoming producers annually mine about 16 million tons of trona, which is refined into soda ash. In 2005, the industry produced about 11.1 million tons of soda ash.

Soda ash is used in the production of glass, baking soda and laundry detergent. There are about 2,300 soda ash workers in the industry in Wyoming, and the four Green River producers account for about 33 percent of the global market.

Future investments

In 1996, the Bureau of Land Management hiked the royalty payments to its current rate of 6 percent for renewed leases and 8 percent for new leases. The rate hike was imposed at a time when soda ash exports were rising to record levels.

Morrison said the reduction in federal taxes will allow Sweetwater County producers to obtain the necessary capital to continue to reinvest in operations.

"What this really does is help us with committing to future investments," Morrison said in a phone interview from the OCI facility, located about 20 miles west of Green River.

"The lifeblood of this type of business is just to continue to invest and get more efficient, and this gives us the ability to do that," he said. "Banks see that the government is trying to help us remain competitive, and that's really what's important to us."

Morrison said new equipment comprises the bulk of most new investments, which keeps the industry competitive.

"What you worry about if you're not ultra-competitive, you'll end up losing ground against overseas competitors," he said. "And that's really what this (rate reduction) is trying to do … give us an equal playing field with the Chinese, primarily."

In recent years, Wyoming's delegation has also worked to ease severe international trade barriers perceived as unfair to Wyoming producers.

At the behest of the delegation, U.S negotiators struck a deal with Australia in 2004 that resulted in the elimination of a 5 percent import tariff on American soda ash exports. The delegation has also pushed to reopen closed markets in India and to induce the Brazilian government to lower its import tariffs.

The rate reduction will last for five years. The bill says that after four years, the Interior Department will report to Congress on the effects of the royalty reduction.

The study will look at the number of jobs that have been created or maintained during the reduction period, the amount of soda ash produced on federal lands and the total amounts of royalties paid.

Southwest Wyoming bureau reporter Jeff Gearino can be reached at 307-875-5359 or at gearino@tribcsp.com.