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Florida Trend Magazine http://www.floridatrend.com/article.asp?page=1&aID=47392 Rock and a Hard
Place All concrete looks alike once it becomes a sidewalk. But there are as many combinations of ingredients for concrete as recipes for cake. The Florida Department of Transportation, for example, chooses from among 1,645 different concrete mixes when it specifies how a road, bridge or sidewalk should be built. Just as cake depends on flour, the vast majority of those mixes involve an essential ingredient: Limestone. In Florida, almost half of the high-quality limestone used in building materials, including concrete, comes from pits in northwestern Miami-Dade County. Since the 1950s, building materials firms like Florida Rock Industries, Rinker Materials of Florida, Tarmac America and APAC-Florida have mined limestone there. Over time, as water flowed into the enormous holes left by the draglines and the excavators, the mining created thousands of bodies of water. That’s how the 57,500-acre region got its name: The Lake Belt. Along with limestone, the rock companies mine sand, limerock and other types of so-called “aggregates” that are key ingredients in building supplies. Florida’s supply of limestone, along with its insatiable demand for the materials needed to build homes, roads and waterworks, have made the state one of the most important in the nation to the industry. Thomas A. Herbert of Lampl Herbert Consultants in Tallahassee estimates the state consumes 143 million tons of aggregates each year. About 120 million of those are scooped out of Florida mines — 55 million from mines in the Lake Belt. In July, however, a crack opened up in the industry’s foundation. Ruling in a lawsuit filed by the Sierra Club and other environmental groups, U.S. District Court Judge William Hoeveler shut down most rock mining in the Lake Belt. He wrote that the enormous quarries, so close to Miami-Dade’s primary public water supply, raise “grave concern” about chemical and bacterial contamination of a wellfield that supplies more than 1 million people. Hoeveler’s ruling nullified permits granted by the U.S. Army Corps of Engineers and handed the decision of whether to restore them back to the Corps. He left no doubt about his low opinion of the agency’s stewardship: “In three decades of federal judicial service, this court has never seen a federal agency respond so indifferently to clear evidence of significant environmental risks related to the agency’s proposed action.” Florida’s leading materials companies are appealing Hoeveler’s ruling. But their most pressing concern at this point is coming up with sources of limestone. “That’s what we’re trying to figure out now,” Florida Rock CEO and President John Baker told reporters and investment managers in a conference call following the ruling. “We just don’t know.” The state has plenty of potential limestone mines, but urbanization and local land-use regulations preclude developing most of them; it’s neither quick nor easy to permit a rock mine in Florida, especially a large one. Herbert, author of a recent DOT study on the industry, says the Lake Belt contains the hardest and most durable geologic formation in the state. Florida has six “mega-mines,” he says, those among the top 10 in production in the United States. And five of those are in the Lake Belt. The sixth mega-mine is in Lee County, but it lacks rail access and serves only southwest Florida. Although limestone mines operate in 22 of Florida’s 67 counties, Herbert says, only six clusters have significant reserves: Miami-Dade/Broward; Palm Beach; Collier/Lee; Lake/Polk; Hernando/Sumter/Citrus; and Taylor/Dixie. But those mines, too, face water-quality and other environmental and public health questions as development rolls closer. Palm Beach County, for example, has been debating the future of mining in the Everglades Agricultural Area. The uncertainty over Lake Belt mining is playing out against a backdrop of other forces rocking the industry. For one, a downturn in the residential housing market has sharply reduced demand for cement and other materials here. Florida’s demand has fallen more than 12%, says Ed Sullivan, chief economist at the Skokie-Ill.-based Portland Cement Association, compared to a 4.4% decline nationally. Sullivan expects at least another year of slack demand. The Lake Belt provides so much of Florida’s materials supply that scarcity could be an issue despite lower demand from residential construction. The DOT, for example, remains on a buying binge of materials. In addition, a global trend has seen Florida’s rock companies targeted for mergers and acquisitions by national and international competitors that need a beachhead in America’s Sun Belt. For example, Anderson Columbia sold half of its Suwannee American cement plant near the Ichetucknee River and its Jacksonville Trinity Materials operations to Brazil-based Votorantim Cimentos, one of the largest cement companies in the world. Jacksonville-based Florida Rock Industries is being acquired by Birmingham-based Vulcan Materials Co., the largest producer of construction aggregates in the United States. Supply side With future domestic supply uncertain, the multinationals, including Votorantim, Athens, Greece-based Titan America and Cemento Andino in the Dominican Republic, are moving in to fill the gap. The three companies have signed long-term lease contracts with the Tampa Port Authority to ship aggregates into Florida, with each investing at least $10 million to ramp up operations at the port. Rinker Materials (the Australian company is being acquired by Mexico-based Cemex) is negotiating an even larger deal with the port, where it will build on 36 acres. Other companies have been working to increase production at facilities in Florida outside the Lake Belt. Rinker plans to increase production by 900,000 tons at the Brooksville facility it acquired from Florida Crushed Stone for $350 million six years ago. Florida Rock, meanwhile, is doubling capacity at its mine in Newberry. And American Cement soon will come online with a 1.2-million-ton operation in Sumter County. In the short term, the issue posed by closing the Lake Belt to mining will be cost. Ananth Prasad, chief engineer at the DOT, says the ruling “cuts out 30% to 40% of just our statewide supply” of limestone. He predicts the strain on supply could result in not only higher road-building costs to taxpayers but some projects being delayed. The cost of new homes is likely to rise as well. Sullivan is among many economists who believe Florida’s housing industry — and with it, the building-materials industry — will turn upward again sometime in 2009. “When that happens, you’re still going to need a foundation for your house, and you’re going to get it,” he says. “But I can’t tell you how much it’s going to cost.” Over the long haul, the very survival of resource industries such as mining is at stake in Florida. The state will face more Lake Belt-type issues, Herbert says, as population growth and development “are overrunning the lands where limestone and sand deposits are found.” “Anywhere water and rock merge,” he says, “you’ll see these issues morphing.”
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