Pit & Quarry, October 2018

REPORT GOOD GROWTH EXPECTED FOR CANADIAN SILICA Pioneer U S Silica enter sand purchase agreement C anadian industrial silica sand demand is projected to rise 67 percent each year to 981 million metric tons in 2022 according to a report from The Freedonia Group Based on the report titled Global Industrial Silica Demand growth will be driven by oil and gas suppliers need for frac sand This and other trends are presented in the report The Freedonia Group projects hydraulic fracturing to account for 82 percent of Canadas industrial silica sand demand in 2022 In addition to an increase in active rigs demand will be supported by the rapid adoption of new oil and gas exploration technology and its associated engine oil standards Since well drilling often occurs in environmentally sensitive areas any lubricants that offer a reduced environmental impact in these areas will also benefit the firm reports The Freedonia Group projects hydraulic fracturing to account for 82 percent of Canadas industrial silica sand demand in 2022 The foundry and building products segments will also support industrial silica sand demand Fabricated metals manufacturing will boost foundry demand while Canadas intensive use of asphalt roofing will aid building products demand P Q AGGREGATE INDUSTRY INDEX NOV DEC JAN 16 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN 17 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN 18 October 374 FEB MAR APR MAY JUN JUL AUG SEPT OCT 400 350 300 250 Source Pit Quarry Above The P Q Aggregate Industry Index which achieved a 2018 high in August drops sharply this month to 374 12 MONTH CHART PRICE 52 WEEK RANGE MARKET CAP IN BILLIONS STOCKS LOW HIGH As of Sept 18 2018 Source Yahoo Finance Cemex CX 719 572 945 1088 CRH Oldcastle CRH 3239 3138 3932 2668 Eagle Materials EXP 8699 8584 12249 416 Granite Construction GVA 4511 4076 6858 206 Heidelberg Cement HEI 6592 6472 9616 1308 LafargeHolcim LHN 3949 3931 5184 2332 Martin Marietta MLM 19561 18834 24133 1233 MDU Resources MDU 2715 2429 2962 532 Summit Materials SUM 1916 1847 3406 221 U S Concrete USCR 5203 4400 8635 087 U S Lime Minerals USLM 7700 7056 10140 043 Vulcan Materials VMC 11279 10610 14120 1492 P ioneer Natural Resources entered into a long term sand supply agreement with U S Silica purchasing an interest in U S Silicas sand reserves at its Lamesa Texas mine in West Texas The agreement secures a long term supply of sand from the mine for Pioneer with U S Silica processing and supplying sand for 15 years We are pleased to announce our agreement with U S Silica that provides Pioneer with lowcost West Texas sand for the foreseeable future says Timothy Dove president and CEO of Pioneer Natural Resources Strategically located in close proximity to our Midland Basin acreage delivered sand from the Lamesa mine will cost approximately half that of our current delivered sand reducing well costs into 2019 and beyond The long term nature of this agreement will benefit both companies According to Pioneer the Lamesa mine is expected to produce approximately 6 million annual tons of predominantly fine grade 100 mesh and 40 70 mesh sand with initial production expected in the fourth quarter of 2018 Pioneer expects to receive its initial sand volumes during the first quarter of 2019 with the supply increasing from about 14 million tons in 2019 to 2 million tpy in 2020 and beyond pitandquarry com October 2018 PIT QUARRY 29