Trade Trajectory: A deeper look at Utah's 2016 export numbers.

• Author: Miller, Derek B.
• Position: Worldview

From celebrating World Trade Center Utah's (WTC Utah's) 10year anniversary to exploring the possibility of getting an inland port to completing countless trade missions, Utah saw a lot of international business activity in 2016.

While many companies took the leap into exporting last year, recent numbers obtained from the U.S. Census Bureau show total Utah exports declined from $13.3 billion in 2015 to $12.1 billion in 2016. I would like to use this month's article to provide context for these numbers.

Metals matter

Metals made up more than 40 percent of Utah's total export value in 2016. The metals export category includes coal, petroleum, metal ores, nonmetallic minerals, aluminum, iron and steel. Because metals make up a large proportion of Utah's exports, their highs and lows greatly influence year-end numbers.

In 2016, metal exports decreased by 16.2 percent. This can be attributed to a number of factors including a decrease in commodity prices. Iron ore, steel and coal experienced decade lows in prices during the year. Uncertainty with the 2016 U.S. presidential election and a reduction in foreign customers' confidence may have also played a role.

One of Utah's largest producers of metals and minerals is Rio Tinto Kennecott. Since Rio Tinto is a member of the WTC Utah board, I spoke with board member Geoff Green to learn how the company has been affected by lower metal prices. Green said Rio Tinto Kennecott has experienced a reduction in exports due to decreased production and lower prices.

Green noted that despite unpredictability in market factors, the outlook for the mine is positive, saying, "the medium- and long-term outlook for our products is very strong. We continue to work on extending the life of the mine to 2030, with potential optionality even going out beyond that. We are investing in accessing ore in the south wall of the mine right now, and that is going to take us out for more than another decade."

To cope with the cyclical nature of the mining business, Rio Tinto Kennecott is thinking outside of the box. The company is utilizing resources to generate business from other mines. For example, Rio Tinto Kennecott has started processing third-party copper concentrates to improve utilization of its smelter and is investing in and utilizing new technologies to make its business safer and more efficient.

While metals exports are an important part of Utah's economy, they are unpredictable. Gov. Gary Herbert recognized this...