Determining Value-Added Opportunities in Industrial Minerals

Value added is a loosely used qualifier in the industrial minerals industry. What exactly does it mean? What does it take to make a value-added product? More importantly, how does a company maintain the value added to its products? Most people agree that value-added means the value of a mineral minus the cost to produce it. This is misleading, though, because producing value-added products does not necessarily guarantee the profitability of the products. In some cases, firms that make value-added products are not very profitable. It is important not only to understand how to make a value-added product but also how competitive forces in the market can erode the value added. Therefore, when looking at value-added opportunities, producers must understand how to obtain the value added and how to maintain that value. Four major factors limit a company's ability to add value to its products. This paper examines these factors. It uses the ground calcium carbonate and mica industries as examples.