Sumitomo has completed the acquisition of Saconix LLC. from a U.S. private equity fund to make Saconix a wholly-owned subsidiary of the Sumitomo Corporation Group. Saconix is engaged in the distribution and transportation service of sulfuric acid in the US West and Gulf.
Sulfuric acid is one of the world’s most used chemicals in a variety of industries including agriculture, manufacturing, mining, and textiles, making it an indispensable commodity for many of the goods and services we rely on in daily life. Its use in the mining of copper, lithium, rare-earth, etc. is expected to drive its demand in line with the global shift toward decarbonization. As food demand rises to meet the needs of a growing worldwide population, its use in agriculture and fertilizer production is likewise anticipated to expand. Sulfuric acid is thus steadily growing in importance as a commodity.
The Sumitomo Corporation Group’s sulfuric acid business has its origins in the export of sulfuric acid, out of Japan, produced in the smelting process of non-ferrous metals. In 1994, the Group acquired 100% ownership of Interacid Trading S.A., which is the world’s largest seaborne trader by volume of sulfuric acid. Since then, the Group has been broadly engaged in the provision of services, including seaborne trading, local distribution and storage of sulfuric acid in the United States, Chile and other countries. The strategically located sulfuric acid storage tanks, owned by the Group, and the highly trained safety operations enable the Sumitomo Corporation Group supply customers with the required quantities at any time demanded. By leasing space in its storage tanks, it can also hold the difficult-to-store chemical on customers’ behalf. In this way, the Sumitomo Corporation Group provides added value beyond its trading.
Saconix has tangible distribution facilities, including storage tanks and transloading facilities at several sites in US West and Gulf, and provides with local distribution and logistics services. The company thus has a business model with a very high affinity for that of the Sumitomo Corporation Group’s sulfuric acid business.
By making Saconix its wholly owned subsidiary, the Sumitomo Corporation Group will acquire new logistics bases in the western part of the U.S. and the Gulf Coast region, boost its worldwide sulfuric acid storage capacity to 19 tanks, or about 330,000 tons (including lease assets), and increase its trading volume to about 3.5 million tons of sulfuric acid per year, or around 20% of all seaborne trading volumes. This transaction will thus consolidate the Sumitomo Corporation Group’s position as a leader in the sulfuric acid industry.
The company will continue to pursue synergies between the sulfuric acid trading business and the tank terminal business to promote a stable supply of sulfuric acid, a chemical that contributes to decarbonization and sustainable food production.