Motivations for the transaction

In a recent blog, I reported the sale of Mitsubishi’s 49% share in the Mexican salt producer ESSA. The Mexican government had claimed the initiative for this transaction as a milestone in the social and sustainable economic development of the country. On the side of Mitsubishi, a reasons for the sale appeared to be the continuing decline of Japanese chlor-alkali production. As a consequence, the strategic importance of captive salt supplies decreases. The divestment probably also had to do with announced capacity additions of Australian salt plants, and anticipated abundant supply in the coming years. It is also reported that ESSA and Mitsubishi had continuing conflicts about the fair sales price.

Development of Japanese demand and imports

Recent Japanese industry statistics show a continuing decline of chlor-alkali output. So far, Japanese trade statistics show continuing imports from Mexico at previous levels.

Recent development of ESSA’s production and sales

The Mexican newspaper “La Razon de Mexico”, reported recently that salt production in the first quarter of 2024, was down to 1.23 million tonnes, and 30% below planning. First quarter sales of 1.43 million tonnes were 44% below budget. If the trend was to continue, the annual sales volume could be as low as 4.1 million tonnes. This would be less than half of the 9 million tonnes of past years.

Perspectives for ESSA

The recent decline is indicative that investment in equipment, and major efforts to regain market share are required to achieve these goals. The newspaper article expresses doubts that the government has worked out the planning for a healthy future of ESSA.


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