Minerals Technologies Inc. History

Address:

The Chrysler Building
405 Lexington Avenue
New York, New York 10174-1901
U.S.A.

Telephone: (212) 878-1800
Fax: (212) 878-1801

Public Company
Incorporated: 1992
Employees: 2,305
Sales: $684.4 million (2001)
Stock Exchanges: New York
Ticker Symbol: MTX
NAIC: 212325 Refractory Minerals Mining and/or Beneficiating; 325188 All Other Basic Inorganic Chemical Manufacturing

Company Perspectives:

MTI is a global resource- and technology-based growth company. We develop, produce, and market the highest quality performance-enhancing minerals, mineral-based, and synthetic mineral products. We make money by helping our customers make money.

Key Dates:

1968:: Pharmaceutical giant Pfizer Inc. forms and incorporates a special minerals division.
1982:: The satellite precipitated calcium carbonate (PCC) program is initiated.
1986:: The first satellite PCC plant is opened.
1992:: Minerals Technologies, Inc. (MTI) is spun off from Pfizer through an initial public offering of its stock.
1993:: The company announces a joint venture with Partek Corporation of Finland to produce PCC in the Nordic countries and in Eastern Europe.
1997:: MTI makes its first major stride toward penetration of the groundwood paper market in a breakthrough deal with Myllykoski Paper Oy of Finland.

Company History:

Minerals Technologies Inc. is a leading force in the international papermaking industry, responsible in large part for transforming the process by which paper was produced in North America and creating a market niche, which it quickly dominated. The company is known for designing and implementing an innovative system to produce precipitated calcium carbonate (PCC), a filler and pigment used in the production of paper, as well as for manufacturing mineral-based monolithic refractory products, which are used primarily by the steel industry to resist the effects of high temperatures.

1968: Originating As a Division of Pfizer, Inc.

The company traces its history to 1968, when pharmaceutical giant Pfizer Inc. formed and incorporated its special minerals division, which comprised an amalgamation of companies involved in the excavation of minerals--particularly limestone--that Pfizer had acquired earlier in its history. While some of the acquisitions dated back to the 1940s, a majority arrived during the 1960s, when the company began purchasing in earnest the properties that would eventually form its specialty minerals division. With these minerals excavation companies and minerals reserves, Pfizer produced various minerals--limestone, lime, talc, and calcium--for the building materials, steel, paints and coatings, and chemical industries, as well as other manufacturing industries, which together, composed one of three product lines that would fuel the division's growth throughout its existence under Pfizer's corporate umbrella.

The division's second product line was established seven months after its incorporation through the acquisition in September 1968 of New York City-based Quigley Company, Inc., a manufacturer of mineral-based refractory products used to resist the effects of high temperatures in manufacturing processes utilized by the steel, cement, and glass industries. With the addition of Quigley, Pfizer's specialty minerals division now offered two product lines--both sold chiefly to the steel industry--that provided a foundation for the division's growth and supported its existence for roughly the next two decades. Although refractory products and mineral mining and processing were integral contributors to Pfizer's mineral-related operations, the specialty minerals division's third product line, precipitated calcium carbonate (PCC), was the key to its success, vaulting first Pfizer then its spinoff, Minerals Technologies Inc., into a dominant position in the papermaking industry.

Developing the PCC Satellite Plant Concept in the 1980s

Produced from a mixture of lime, carbon dioxide, and water, PCC was used primarily as a filler in alkaline process, wood-free paper and, to a lesser extent, as a specialty pigment to make coated and uncoated paper. Its use as an alternative to more expensive wood pulp and to other fillers, such as kaolin clay and titanium dioxide, had been known for years. Historically, however, North American manufacturers of wood-free paper utilized acid technologies, rather than alkaline technologies, significantly limiting the demand for PCC. Although manufacturing costs associated with producing PCC were low, both drying and transporting the product were expensive processes, adding more than $100 per ton of filler and giving Canadian and American wood-free paper producers little incentive to convert to an alkaline-based process.

Pfizer's specialty minerals division would provide these manufacturers with the incentive to switch to an alkaline process, but not until roughly 20 years after its incorporation and not until a lengthy research and development program produced a solution to the prohibitive cost of PCC. As Pfizer's researchers perceived it, the problem with PCC was not how it was produced as much as where it was produced, so the specialty minerals division began developing a plan to manufacture PCC in proximity to the pulp and paper mills that would use the product. The concept, under development by 1982 at the company's research center in Easton, Pennsylvania, and its lime and limestone plant in Adams, Massachusetts, changed the way a majority of the paper was produced in North America and positioned Pfizer's specialty minerals division as a burgeoning force in the paper industry.

By producing PCC in plants adjacent to pulp and paper mills, the specialty minerals division eliminated both the need to dry PCC and the costs incurred from shipping it, yielding a delivered product that was substantially cheaper than purchasing PCC from an independent, "merchant" plant. Adjacent, or satellite plants, as designed by Pfizer's specialty minerals division, used carbon dioxide produced by the host paper mill, combined it with dissolved lime, then delivered the product in slurry form, saving the mill more than 50 percent in its PCC costs and creating a new niche in the paper filler market. Although innovative, the satellite PCC plant concept was suitable only for producers of alkaline-based paper, not for the vast majority of manufacturers who produced paper under acid conditions, but, while the satellite program was being refined during the early and mid-1980s, the price of fillers used in acid technologies, particularly the price of titanium dioxide, began to climb. Coupled with the innovative and relatively inexpensive satellite PCC plant concept developed by Pfizer's specialty minerals division, the rising cost of wood pulp, titanium dioxide, and other fillers provided sufficient incentive for papermakers employing acid technologies to seriously consider adopting the division's PCC system. The decision these producers made quickly transformed their industry, and along with it, the future of Pfizer's specialty minerals division.

The first satellite PCC plant, the first of many to follow, was dedicated in 1986, four years after the development program was initiated, marking the beginning of a new era for the specialty minerals division, then in its 18th year of operation. Before the first plant was completed, a $10 million facility constructed near Consolidated Papers, Inc.'s paper mill at Wisconsin Rapids, Wisconsin, plans were announced for another, this time in Ticonderoga, New York, adjoining International Paper Company's pulp and paper mill. Both of these facilities were owned and operated by Pfizer's specialty minerals division, an arrangement that was typical of the onsite facilities to follow, and each produced approximately 30,000 tons of PCC a year, affording paper mill operators substantial savings. Over the course of the next two years, from the end of 1986 to the end of 1988, three additional plants were constructed, then another 12 during the next two years, giving Pfizer 17 satellite PCC plants by the conclusion of 1990. By the end of the following year, the specialty minerals division's last full year as a subsidiary of Pfizer, the number of onsite PCC plants had swelled to 21, while conversely, Pfizer had begun to do the opposite, shedding itself of assets deemed inconsistent with its future plans.

Eight additional satellite PCC plants were put into operation in 1992, the greatest increase in one year since the specialty minerals division's onsite project had begun six years earlier. Against the backdrop of this prodigious expansion--which brought the total number of facilities in operation to 29 and cast Pfizer as the central agent of change in the papermaking industry--larger, more defining issues were being discussed that led to the creation of a new company and ended Pfizer's long history of involvement in the specialty minerals business.

Like other U.S. healthcare companies, Pfizer Inc. spent the early 1990s reexamining its future role in an industry that appeared destined for dramatic, sweeping change. As the 1992 U.S. presidential election neared and the debate concerning national healthcare reform intensified, many healthcare executives maneuvered to anticipate the effects of widespread federal legislation, pinning the future success of their companies on decisions made in uncertain times. Among the larger, more diversified healthcare companies, a pattern emerged, as several multinational concerns began to shed assets unrelated to the healthcare market. One of these large, diversified healthcare companies was Pfizer Inc., a $7 billion corporation with wide-ranging interests in pharmaceuticals, hospital products, consumer healthcare products, chemicals, and minerals, among others.

During the early 1990s, Pfizer began divesting properties deemed inconsistent with the company's plans for its future, which, as Pfizer's Chairman William C. Steere, Jr., related to the New York Times, consisted of pursuing a "strategy of focusing on [Pfizer's] strengths as a research-based, diversified health care company." Toward this objective, Pfizer sold its citric-acid business in 1990, touching off a series of strategic divestitures over the course of the next two years that represented a loss of more than $1 billion in total sales and led to the divestiture of the company's specialty minerals division, a $359 million contributor to the company's 1991 annual sales.

1992: Becoming an Independent Company

In August 1992, Pfizer announced plans to sell the bulk of the company's interest in specialty minerals through the public offering of stock in a newly created company, Minerals Technologies Inc. (MTI). Approximately 60 percent of Pfizer's interest in its specialty minerals division was sold by the end of October, and the remaining 40 percent was sold six months later, in April 1993, completing the full divestiture of Pfizer's specialty minerals division and beginning Minerals Technologies' first year of business as a manufacturer and marketer of PCC, refractory products, and other minerals.

Concurrent with Pfizer's initial announcement to spin off its specialty minerals division in August 1992 was the selection of MTI's chair and chief executive officer, Jean-Paul Vallés, who had joined Pfizer in 1967, one year before the specialty minerals division was incorporated. In the three years leading up to Pfizer's divestiture of its specialty minerals division, Vallés had been responsible for several of Pfizer's businesses, including the specialty minerals division that now represented Minerals Technologies. Vallés left his position as vice-chairman of Pfizer and assumed stewardship of Minerals Technologies' three business lines, the most promising of which continued to be its design and operation of satellite PCC plants.

Although Minerals Technologies' two other product lines figured less prominently in the company's future than its involvement in onsite PCC production, they nevertheless were essential contributors to the company's annual sales volume, providing diversity and stability to predicate the company's further expansion in its PCC business. Minerals Technologies' refractory product business, which generated $147.6 million in sales in 1993 compared to the $171.1 million derived from PCC sales, was operated through the company's subsidiary, Minteq International Inc. Minteq sold refractory products in North America, Europe, and Asia, giving the company the geographic breadth to help mitigate the product line's dependence on the historically capricious steel market. This involvement overseas was particularly important in Minerals Technologies' first year of existence, when sluggish steel markets in the United States and Japan were offset by Minteq's production facilities in South Korea, where steel production was robust, and in China, which, for the first time, produced more steel than the United States.

In addition to its presence in strong steel-producing regions, Minerals Technologies also owned minerals reserves in the eastern, midwestern, and western areas of the United States. From these reserves, estimated to last between 40 and 70 years, the company mined and processed limestone and talc as well as manufactured mineral-based and technology-based products which, combined, constituted Minerals Technologies' other mineral products line, a contributor of $109.6 million to the company's sales volume in 1993.

Strategic Expansion in the 1990s

While refractory products and other mineral products together generated more than 50 percent of Minerals Technologies' total sales in 1993, the company's greatest expectations were invested in the expansion of its satellite PCC concept, the essence of the company's future. By the end of 1993, Minerals Technologies was operating 34 onsite PCC plants, which accounted for more than 90 percent of all satellite PCC production. Expansion had extended the company's presence into Europe, where Minerals Technologies operated an onsite plant in Saillat Sur Vienne, France, and three more plants in Finland. In Europe, where for years paper producers had manufactured their product under alkaline conditions, the company's focus was not on converting from acid to alkaline papermaking as it was in North America, but on convincing European manufacturers to use PCC, rather than ground chalk or ground calcium carbonate. Toward this objective, Minerals Technologies announced a joint venture in August 1993 with Partek Corporation, an international industrial group based in Finland and Scandinavia's largest producer of lime, to produce PCC in the Nordic countries and in Eastern Europe.

With this European expansion bolstering the company's position in the global paper industry, Minerals Technologies entered 1994 looking to translate its success in the wood-free segment of the paper industry into success in the wood-containing segment. By this time, the company's development of satellite PCC plants had dramatically altered the wood-free segment of the paper industry, converting an industry that predominantly had utilized acid-based technology to an industry in which 80 percent of the paper produced was made with alkaline technology. Efforts to effect a commensurate transformation of the wood-containing industry had been stalled by the tendency of wood-containing paper to darken in an alkaline environment. However, in 1993 Minerals Technologies successfully commercialized an acid-tolerant PCC, opening up a vast new market for the company's expertise in PCC production. As Minerals Technologies entered its first full year as a separate, independent company, expectations ran high, with plans to further solidify its position in the wood-free paper industry and to begin its involvement in the wood-containing paper industry, both of which promised to sustain the company's growth throughout the 1990s.

Indeed, MTI grew at an impressive rate throughout the remainder of the 1990s, maintaining its focus on the international expansion of its satellite PCC concept. Having found the Japanese market, then the second largest paper market in the world, particularly difficult to penetrate, in 1997 MTI launched a joint venture with Japanese companies Fimatec Ltd. and Mitsubishi to manufacture and market PCC in that country. By the terms of the agreement, MTI would provide its technical expertise in building and running PCC plants, while the Japanese corporations would focus on marketing the idea. By 1998, MTI had established 55 plants worldwide, including locations in Brazil, Israel, southeast Asia, South Africa, and China.

Alongside expansion in the PCC market for paper products, MTI also pursued opportunities for increased production of specialized PCC, including Ultrafine, Super-pflex, and U.S. Pharmacopeia grades, commonly used in plastics, sealants, and food industries. To this end, in 1993 the company invested $18 million in its Adams, Massachusetts, facility, giving it the capacity to produce calcium crystals of various grades. In 1998, the company acquired a facility with similar capabilities in Lifford, England. The following year, MTI established a third site for the production of specialty grade PCC, investing $20 million to construct a manufacturing facility in Brookhaven, Mississippi. These new operations were seen as critical for continued growth across the diverse range of markets for specialty PCC.

Through continued emphasis on research and development, MTI was able to introduce a new product, CalEssence, to the specialized PCC market in 1997. Responding to a flurry of publicity, particularly in California, over the lead content in some calcium supplements and calcium-based antacids, MTI had developed CalEssence PCC, a grade of calcium carbonate containing only trace levels of lead. By using CalEssence PCC, manufacturers could meet the heightened restrictions for lead content. The introduction of CalEssence was a reflection of MTI's belief that its ability to provide value-added products to its customers was a critical component of the company's long-term success.

During the mid- to late 1990s, MTI also enjoyed increased demand for its patented Acid-Tolerant PCC technology. A breakthrough deal in the wood-containing paper industry was reached in 1997 when MTI and Myllykoski Paper Oy of Finland agreed to implement this technology in its production of supercalendered groundwood papers, the high-shine quality of paper used for magazines and catalogues. With the agreement, Myllykoski established itself as the world's first manufacturer of PCC-based supercalendered paper, and Minerals Technologies made its first major stride toward penetration of the groundwood paper market, which accounted for approximately half of the overall paper market worldwide.

Responding to Weakened Economic Conditions in the Early 21st Century

The first years of the 21st century brought weakened conditions to the paper, steel, and construction industries--the main sectors MTI served--particularly in North America. Fortunately, one of the critical benefits of the satellite PCC business to MTI was that these operations were typically established with ten-year contracts, effectively insulating MTI from the ups and downs of the normal business cycle.

Still, MTI took further steps to shore up its financial performance. In June 2001, the company announced that it would cut 120 full-time employees--about 5 percent of its total workforce--from its worldwide operations. Making its first significant staff reduction since the company's formation in 1992 was a difficult decision, but MTI officials maintained that it was necessary to reduce operations costs and improve efficiency.

MTI saw another opportunity to improve its overall financial strength by bolstering the sales and profitability of its Minteq subsidiary, mainly through the 2000-2001 acquisitions of Ferrotron Elektronik GmbH, the refractory business of Martin Marietta Magnesia Specialties, and Rijnstall, NV. These acquisitions enabled MTI to keep pace with the changing nature of the refractory business, especially the increasing demand for new, high-tech products and services.

With the company's demonstrated agility and the seemingly unlimited growth potential of PCC markets, Minerals Technologies appeared well positioned to continue the consistent growth it had achieved in the 1990s.

Principal Subsidiaries: Specialty Minerals Inc.; MINTEQ International, Inc.

Principal Competitors: Engelhard Corporation; J.M. Huber Corporation; Martin Marietta Materials, Inc.

Minerals Technologies Inc. History

Company Perspectives:

Key Dates:

Company History:

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