May 2003

Multiple Markets Optimize Reserves

An aggregates producer and industrial minerals manufacturer partner to open quarry and new markets.

Luck Stone’s Pittsboro, N.C., plant is the company’s first operation in North Carolina. Its aggregate sales are anchored by a large, on-site customer — 3M’s roofing granule plant.

To some extent, it was fortuitous timing that brought together an aggregates producer and an industrial minerals manufacturer in a unique partnership. At the same time that Luck Stone was exploring opportunities in the roofing granules business, 3M was trying to identify aggregate companies interested in starting an operation in North Carolina. 3M had purchased land near Pittsboro, N.C., about 30 miles west of Raleigh, and applied for a mining permit, but the quarry reserves contained a lot of rock beyond what was needed for roofing granules.
The company realized that to open the quarry themselves would be a huge undertaking and would significantly cut into profit margins, so it began looking for a partner to maximize the reserve material. It made good business sense to partner with an established construction aggregates company.
3M’s Industrial Mineral Products Division manufactures materials for a variety of surfaces, including asphalt shingles and other roofing products. It is a leading supplier of roofing granules to shingle manufacturers in North America. However, the company had not built a new roofing materials manufacturing facility in more than 40 years. The roofing granule market had expanded significantly in the southeastern United States, yet the closest 3M manufacturing facilities for roofing granules were in Belle Meade, N.J., and Little Rock, Ark.
“Locating a new manufacturing facility in the southeast would make us much more competitive in the roofing granule industry because it would move us closer to our customers,” says James Zieglmeier, manufacturing services manager for the Pittsboro plant. “Trucking costs and transportation issues to haul products across several states was an expensive part of our business. We needed to go where our customers were.”
In the past, 3M operated its own quarries to supply stone to its manufacturing facilities. Therefore, 3M began purchasing land at the Pittsboro site in 1979 and applied for a mining permit in 1996. It was slated to become the first greenfield site the company had developed in more than 25 years.
The new Pittsboro site, however, offered several challenges — and opportunities. While all the material on the site was meta-volcanic, three distinct rock types existed: andesite, basalt, and tuffs. 3M only wanted the andesite for the roofing granule product and did not want to be in the business of crushing the other types of rock and selling it out of the gate. At the same time, the company recognized that it could run its operations more efficiently if it did not have to quarry the rock it needed to manufacture the roofing granules.
“If 3M had elected to open the quarry ourselves, we probably never would have built this manufacturing facility,” says John Lowrey, plant manager for 3M’s new Pittsboro operation. “We needed someone excited about selling aggregate in a new market.”
For Richmond, Va.-based Luck Stone, the process started in 1996, when Hardy Josephson, director of sales development, and Peter Schreiber, Solutions Group coordinator, began working with Owens Corning on a roofing granule product. As the largest producer of roofing shingles in the country, Owens Corning bought its granules from a variety of sources and was interested in the aggregate produced out of a particular Luck Stone quarry.
3M heard of Luck’s interest in roofing granules and contacted the company in 1998 to see if it would be interested in forming a partnership at its Pittsboro site.
“The opportunity to enter the North Carolina market was very attractive to us because it fit with our strategic goals to expand our business geographically and to provide innovative customer solutions,” says Bob Grauer,vice president of Luck Stone’s Solutions Group. “Through discussions about customer needs, market conditions, and reserve potential, Luck Stone and 3M created an operating plan customized to a shared strategy.”
According to 3M’s Lowrey, the roofing granule manufacturer elected to go with Luck Stone because of its expertise in site development, mining, processing, marketing, and distribution. “We visited several of Luck Stone’s quarries and were impressed with its operations,” he says. “We knew this company could provide us with the expertise and quality of product that we needed in order to make our facility successful.”
In the fall of 1999, Luck Stone and 3M began negotiations to jointly develop a stone quarry and roofing granule manufacturing facility at a 2,000-acre site off US 15-501 south of Pittsboro, N.C. In November 2000, the companies officially signed the Pittsboro Operating Agreement — the longest term contract ever awarded by 3M and the first time in 3M’s history that it looked to an outside company to run the quarry operations on its site.
“The arrangement utilizes the expertise of both companies and maximizes the natural resources at the site,” says Greg Linnerooth, general manager of 3M’s Industrial Mineral Products Division. “We use just the mineral quarried for granules, and Luck is able to use the remaining rock for its multiple markets.”
“Being able to kick off a greenfield operation with a large-volume, on-site customer is great,” says Grauer. “This represents the highest volume start-up we’ve ever had.”

Luck Stone dedicated a secondary crushing/ screening circuit to produce material for 3M’s roofing granule manufacturing facility (background). The circuit supplies stone directly to 3M’s feedstock pile.

Two plants in one
From the start, it was planned to co-join the two plants. The co-joined plant design is efficient and makes it difficult to see where Luck’s facility ends and 3M’s begins. Luck Stone built a secondary crushing and screening facility fully dedicated to 3M’s product that supplies stone directly to 3M’s feedstock pile. This stone is then conveyed to the 3M plant where it is processed into roofing granules of 15 colors.
The companies work closely together to ensure that the quality of stone sent to the secondary crusher meets the grade specifications for 3M’s product. The process has evolved into one of joint cooperation between Luck Stone’s production foreman and 3M’s crushing and screening process engineer.
Luck Stone analyzes core samples from potential blasting areas and sends drill cuttings to 3M’s crushing and screening process engineer. If 3M deems the rock quality suitable for its product, Luck Stone proceeds with the shot as planned. Following the shot, 3M sends its engineer to the blasting site to determine if the rock is the right color and grade for roofing granules.
“We are in daily communication with Luck Stone,” says 3M’s Lowrey. “We also have weekly production meetings to discuss process efficiencies and technical glitches. We are very open with each other and work very well together.” The companies constantly communicate about quality control, product grade, and operating systems.

Shared stewardship
Environmental stewardship is another important area of cooperation between Luck Stone and 3M. The quarry and manufacturing areas will cover 400 acres. Manufacturing areas and 1,600 acres of undeveloped green space will be actively managed under the two companies’ compatible policies of environmental responsibility.
Plans include maintaining natural habitat areas for wildlife, planting trees, and controlling storm water. The state-of-the-art storm water containment system was constructed jointly by 3M and Luck Stone. In addition, a key environmental initiative at the 3M facility is to use semi-treated waste water, or “gray” water, from the city of Pittsboro in the manufacturing process. Using gray water instead of portable water at the plant helps the city reserve the capacity of the existing municipal water and wastewater systems. It also protects the local groundwater. “We recycle all of our water,” Lowrey says. “We have no wastewater discharge from our facility.”
The quarry and manufacturing facility also work jointly in training local emergency rescue and fire personnel. “We are working together with the county on our disaster recovery plans and procedures,” Lowrey says.

Shared benefits
Partnering with an aggregate company to run the quarry provides 3M with a consistent, quality product without the added responsibility and cost of operating an aggregate facility. “If we have to operate a quarry ourselves, it cuts into our profits,” Lowrey says. “It is financially sounder to have Luck Stone provide us with exactly the product we need for our roofing granules, while at the same time utilizing the remaining reserve.”
Luck Stone benefits in that the Pittsboro site affords the company an easier entry into the North Carolina market. It gives Luck Stone access to a high quality reserve of stone located in a growing area with great transportation alternatives. In addition, Luck Stone did not have to focus on mining permits or zoning applications, since 3M had already received the necessary documents to begin the quarry operation.
Having one of the company’s largest customers on site also is a huge benefit for Luck Stone. “The business from 3M anchors our operation,” says Steve Demeyer, Luck Stone’s Pittsboro plant manager. “It gives us greater flexibility to develop new markets.”

Luck Stone coordinates closely with 3M’s quality control lab to ensure that the rock meets specifications for color and grade.

Linda S. Tissiere is public relations manager for Luck Stone. The company’s partnership with 3M at the Pittsboro plant received a silver award in the National Stone, Sand and Gravel Association’s 2002 Capstone competition recognizing innovative marketing and market development.