Pit & Quarry, December 2011

SPECIAL REPORT 2012 State of the Industry The economy is still moving at a snails pace but prospects for a new highway bill and the rise of specialty products like frac sand have some producers optimistic W hile many aggregate producers are still reeling from the down economy and general lack of construction there are some positive signs for the industry For one a reauthorization of the highway bill may finally be on the horizon Were about to begin another year under a short term extension but word from Washington is that a new bill with bipartisan support may be in the works The current extension ends March 31 2012 but the Senate Environment Public Works Committee unanimously passed Moving Ahead for Progress in the 21st Century MAP 21 a bipartisan two year bill The committee vote offers much reason for hope that a new highway bill will make it through the House and Senate However 2012 is a presidential election year so anything is possible Although it only affects producers in limited areas of the country the issue of frac sand is a hot topic in the industry The product is used in the fracking process by the oil and natural gas companies The rise of natural gas production in the United States has driven up the price of frac sand and some producers are reaping the benefits Given the controversy surrounding the fracking process the long term prospects of the practice are unknown The coming year brings two trade shows of interest to the industry AGG1 in March and MINExpo in September The AGG1 Aggregates Forum Expo takes place March 13 15 2012 in Charlotte N C In the fall Las Vegas will be the site for MINExpo International September 24 26 Construction forecast McGraw Hill Constructions 2012 Dodge Construction Outlook predicts that overall U S construction starts for next year will remain essentially flat The level of construction starts in 2012 is expected to be 412 billion following the 4 percent decline to 410 billion predicted for 2011 The construction industry has struggled to see recovery take hold over the past couple of years After plunging 24 percent in 2009 new construction starts leveled off in 2010 and have hovered within a set range during 2011 said Robert Murray vice president of Economic Affairs for Mc Graw Hill Construction The backdrop for the construction industry is the fragile U S economy which continues to see slow employment growth diminished funding from federal and state governments and pervasive uncertainty In 2012 the top line numbers are not expected to show much change but there will be variation within the major construction sectors with some gains predicted for housing and commercial building assuming the U S economy avoids recession The 2012 Dodge Construction Outlook details BY DARREN CONSTANTINO AND BRIAN R ICHESSON Aggregate production Estimates courtesy of Jason Christopher Willett USGS Crushed stone down 2 Q3 2010 vs 2011 and down 3 nine months of 2010 vs 2011 Construction sand and gravel up 4 Q3 2010 vs 2011 and almost no change nine months of 2010 vs 2011 10 PIT QUARRY December 2011 www pitandquarry com