Ciner Resources LP (CINR), is a fixed-distribution Master Limited Partnership that IPOed in 2013. It is one of the largest and lowest cost producers of natural soda ask in the world. Soda Ash is a raw material used in the production of glass, chemicals, and detergents. The company produces 2.75 million short tons, has 60+ years of mining reserves and generated $119m in 2017 adjusted EBITDA on $497m in sales.
The company’s mine is in Wyoming. Wyoming has most of the world’s natural trona which is the lowest cost material for soda ash production. This process is a lot cheaper than producing soda synthetically. Soda ash from trona costs $70-80 per ton vs $130-180 per ton for synthetic. 1.5 tons of trona are needed to produce 1 ton of soda ash. This cost advantage is unique to the companies operating in Wyoming (including Tata, Solvay and Genesis). CINR, Tata and Genesis have a co-op called ANSAC to sell soda internationally.
CINR is the MLP that owns 51% of the operating company that owns the mine. 49% of the operating company is owned by NRP. CINR manages the operating company. Ciner Turkey owns 75% of CINR. The company trades at around 7x EV/EBITDA, 8x P/E and 8% dividend yield. The dividend yield appears to be sustainable.
The biggest risks are soda ash prices, and production issues (they have had some unexpected repairs). Prices have been stable over the last 2 years. Unlike many other MLPs and REITs, CINR does not have much leverage with total debt to EBITDA at 1.2x. CINR definitely looks interesting despite being a commodity business. The low liquidity of the stock, however, is a negative, making this mostly a candidate for personal accounts. To offset this, I am putting this on my watchlist and waiting for a pullback as the stock has traded 10% lower several times over the past year.
