Critical Commodities Conference 2014

Critical Commodities Conference 2014

By Richard Eberhardt

Wake Up, America! was the message the final speaker had for more than 360 attendees of the 2014 Critical Commodities Conference held at the Riverside Hilton in New Orleans on April 16 and 17.

Dan Dimicco, now Chairman of the Board Emeritus with Nucor Steel following his retirement three months ago, gave an impassioned speech suggesting ways to correct the errors of Washington to bring America back as an economic powerhouse and create hundreds of thousands of jobs in the process.

During Dimicco’s tenure with Nucor dating back to September, 2000, Nucor Steel completed over 50 acquisitions valued at $6.5 billion and total shareholder return growth was 720 percent, an astounding 28 times greater than the S&P 500’s total return.

At the 2011 Critical Commodities Conference in New Orleans, Dimiccowas the featured speaker and created a buzz of excitement then because his company had just announced it would build a multi-billion dollar steelplant on the Mississippi River between Baton Rouge and New Orleans.

While Dimicco did discuss Nucor Steel, his presentation focused on re-developing the nation’s economic strength through manufacturing and the jobs it creates. His mantra wasinnovation, build it, manufacture it and service the products domestically.

Natural gas, providing low cost and abundant energy, was the game changer and plentiful supplies were justbecoming available throughhydraulic fracturing of shale deposits, called fracking.

Now, three years later, thousands of wells are producing from huge deposits known as Bakken in the Dakotas, Marcellus in Pennsylvania and New York, Eagle Ford in South Texas and Haynesville in Northwest Louisiana, among others.

“Natural gas here has a bright future if we don’t screw up the very cost effectiveness it brings,” he said. He showed a slide of a number of multi-million and multi-billion dollar plants announced that would be built in the southern United States based on low cost gas.

Dimicco was again the featured speaker, closing out the 2014 Critical Commodities Conference, with a luncheon presentation in which he again touted jobs creation through manufacturing, but cautioned that exporting the gas could cripple the economic advantage the United States holds by providing the low cost energy to nations around the world, including emerging economies where labor rates are significantly lower than domestically.

“Our policy should be to use natural gas domestically to manufacture products and export manufactured goods, and not export low cost natural gas,” Dimicco said, adding that creating the manufacturing jobs creates ten times the economic value as exporting natural gas.

Manufacturing jobs would increase by 180,000 by using the low cost energy domestically versus exporting gas which would create only 22,000 jobs.

“Let’s not export our advantage,” he said.

Limiting the export of natural gas could be a hard sell to producing companies, though. Currently natural gas sells for just over $4 per mmbtu. With multinational companies taking advantage of the low cost, clean energy and relocating plants to the United States, the price could rise some.

Long term contracts are currently being negotiated through 2020 with natural gas prices under $5 per mmbtu, he said.

But short term profits for the gas producers could dictate exporting LNG to manufacturing giants like India where the price is currently above $17 per mmbtu or China where it is $19.40 per mmbtu. Exporting the gas would allow those emerging nations to take advantage of their significantly lower labor rates and challenge the economic edge currently driving manufacturing plants to relocate to the US.

In addition to limiting the export of natural gas, Dimicco said it is important to make trading partners—he called them trading competitors—accountable and honor the trade agreements signed with the United States, in effect opening their markets to US goods.

Dimicco said neither the Democratic or Republican parties have demonstrated the courage to hold trading competitor nations to their agreements.

He also challenged that Congress is not working together topromote business, from the high taxes and anti-business regulations promoted by liberals to theinfrastructure stifling limitations of the Tea Party.

“Let’s invest our way out of national debt,” Dimicco said passionately. “We have let Congress steal our economy from us. Wake up America!”

The Critical Commodities Conference began six years ago with discussions on agribusiness and steel. Railroads were later added. This year breakout sessions now include energy and it brought an additional 25 percent to the 400 conference registrations, said conference organizer James Baldwin Jr., who is manager of Southern Sails of Louisiana LLC, a consulting group.

Individual presentations were made by Wolfgang Freeze, President of Hapag-Lloyd; Dr. Helge Hove Haldorsen, Vice President Strategy Statoil Development & Production North America; and Keith Prather, Managing Director, Armada Corporate Intelligence. Dell Demps, General Manager of the New Orleans Pelicans was the Wednesday luncheon speaker.

Breakout sessions were held two at a time with presentations on making and getting iron and steel to the market; feeding the world with agribusiness; natural gas, a game changer in transportation; latest trends in transloading and warehousing; expansions and new-builds in the chemical industry; and going green in transportation.

Second day breakout sessions included a discussion of the iron and steel pipe market, railroad transportation, doing business in Mexico; and exporting energy including natural gas.