Grimes Rock – The Superior Alternative

Absolutely Essential For Economic Recovery The Most Economical Alternative The Most Environmentally Sound Alternative

Distance Matters!

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Aggregate Shortages Under SMARA, The California Geological Survey provides a regional map and accompanying text that provides an analysis of a region’s total permitted aggregate reserves and compares that to the region’s 50 year demand for aggregates. The excerpt from the statewide map below depicts the relevant area that could impact Ventura County aggregate supplies. The first number next to the circle is the permitted reserves and the second is the 50 year demand. This map, while useful, is inadequate in portraying the actual supply and demand conditions in the aggregate industry

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An Industry Insider’s View on Aggregate Shortages

The rate of depletion of resources is far greater than the permitting of new resources

California faced severe shortages and spiking prices during the last construction boom

The shortages required expensive aggregate to be imported from British Columbia and Mexico

The Port of LA Berth 400 project had to import expensive aggregate from BC

BC aggregate to the POLA was also reloaded and shipped to other infrastructure LA projects

There have been significant closures and downsizings of aggregate facilities since the last construction boom

Only the “Great- Recession” has saved California from even more severe aggregate shortages

2005 Construction Aggregate Production: 255.3 Million Tons TOTAL

2005 California Population:

36,100,000 People

Annual per Capita

Consumption: 7.1 Tons

2012 Construction Aggregate Production: 118.7 Million Tons TOTAL 2012 California Population:

37,679,000 People

Annual per Capita

Consumption: 3.1 Tons

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An Industry Insider’s Estimate of Aggregate Production Closures in Metro Markets Industry Consolidation and Declining Production Capacity

"Greater LA Metro" Changes in Aggregate Production Last 40 years

Los Angeles County Peak Ventura County Peak

Closed Operations Production Closed Operations Production

Blue Diamond Sierra 750,000 Asbury Rock Products Santa Paula 500,000

Blue Diamond Sun Valley 1,500,000 CalMat Saticoy 2,000,000

Blue Diamond/Curtis Castaic Creek 750,000 Livingston Graham Santa Paula 800,000

California Materials Sun Valley 1,500,000 S. P Milling Ventura River 500,000

Chandlers Palos Verdes Sand And Gravel 1,200,000 S. P. Milling Runkle Canyon 700,000

Curtis Sand & Gravel 1,000,000 SP Milling El Rio 2,000,000

Curtis Sand & Gravel 350,000 6,500,000

Livingston Graham Duarte 1,000,000

Livingston Graham Sun Valley 1,500,000 LA Orange Border Peak

Manning Brothers 600,000 Closed Operations Production

Osborn Co Eaton Wash 350,000 Fosters Temescal Canyon 300,000

Owl Rock Azusa/Irwindale 2,200,000 Owl Rock Prado 1,000,000

Sully Miller Kincaid 1,000,000 Conrock Clairemont 1,200,000

VMC Sun Valley 2,500,000 Conrock Upland 1,200,000

16,200,000 Sully Miller Upland 1,200,000

4,900,000

Orange County Peak

Closed Operations Production Operations Peak

C.L. Pharris Santa Ana River 1,000,000 Pending Shutdown or Severe Reduction Production

Conrock Atwood 750,000 VMC Reliance LA County 4,000,000

Conrock Orange 2,200,000 Cemex Azusa LA County 3,000,000

Conrock San Juan Creek 1,200,000 Colas Irwindale LA County 4,800,000

El Toro Materials 1,200,000 VMC Mission Valley San Diego County 3,000,000

Livingston Graham Trabuco Creek 1,000,000 14,800,000

R.J. Noble Santa Ana River 1,200,000

Robertson's Gypsum Canyon 2,700,000 New Mines & Permit Expansion Peak

Sully Huntington Beach 250,000 Producer Production

Sully Miller Irvine Lake 1,500,000 Increased Depth Irwindale (existing operators) 5,000,000

Sully Miller Jeffrey Rd 1,200,000 Big Rock Creek, VMC LA County 1,500,000

Sully Miller RC-1 550,000 VMC Fish Canyon/Reliance LA County 5,000,000

Sully Miller Round Canyon 900,000 Norcal San Bernardino, Robertson's 5,000,000

Sully Miller Orange 1,200,000 Corona Riverside, VMC, Werner, All American 10,000,000

Transit Mixed Blackstar Canyon 800,000 Ventura County, Best, Grimes, Cemex 3,200,000

17,650,000 29,700,000 4

Closure of “Metro” Aggregate Production Increases Haul Distance and Aggregate Costs

Unfortunately, the trend has been towards longer haul distances since the 1970’s • All Southern California Coastal counties are now net importers from Inland counties or foreign sources

• Most aggregates are transported by truck. The longer the haul distance, the greater the carbon footprint of a

construction project.

• The cost of aggregates increases 15 cents per mile. In some areas, transporting aggregates even 20 miles may double costs. Delivered aggregate prices to consumers have increased faster than the rate inflation for the past 25 years.

• Longer distances have negative impacts: increased greenhouse gases, increased tail pipe emissions, increased fuel consumption, added traffic congestion, and increased road maintenance.

• During the last boom cycle delivered aggregate prices rose from Jan-2004 to Jan-2006 by nearly 40% and more than $4.00 per ton. This extrapolated to a $28 increase for every person in the State of California.

• Aggregate deposits in the Inland Empire counties are more difficult to permit because of encroaching urban development

• The Inland Empire counties will increasingly consume more of their nearby aggregates, therefore, haul distances will become even longer. Aggregate is now often trucked 60 one way miles from the Inland Empire to Orange and Los Angeles counties

• Two sites in Los Angeles County receive aggregate by rail from long distances requiring double handling, but rail is not a good solution because of Southern California rail congestion.

• A Canadian aggregate source is trying to permit a sea terminal for aggregate delivery, but this is contrary to the “Green Ports” and “Green Truck” initiatives.

• The best policy, both economically and environmentally, is to extend existing metro aggregate supplies as long as possible.

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Alternative Sources for the Extra Rock Produced by the Expansion of Grimes Rock

Note: It could be argued that extra sand could be produced at Cemex’s Moorpark operation, but the Grimes deposit contains more rock and its sand is much cleaner than the sand in Cemex’s deposit. The Extra Rock that Grimes produces will reduce rock imports that now come from Littlerock. 6

Alternative Sources of Coarse Aggregate for National Ready Mix in Moorpark

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Conclusions

• Local aggregate sources are declining

• The drawdown of a region’s reserves may not match that region’s demand due to increasing industry consolidation and a drop in the region’s production capacity

• Imbalance between a region’s demand and production capacity increases haul costs and creates spot shortages and spiking prices.

• Delivered aggregate prices have been increasing faster than the rate of inflation for more than 20 years due to declining local supplies and longer hauls

• Aggregate prices increased on April 1st 2013 even with the market at only 46% of peak demand indicating that supply is already tightening.

• Extending local sources is the best option

• Grimes Rock is the most efficient rock plant now in operation in Ventura County in terms of rock production, waste minimization, and water use.

• Grime’s should be allowed to expand because all of the rock that it produces will be a direct reduction in rock imports from more distant sources in other counties

• A reduction in imported rock is both economically and environmentally beneficial to the majority of Ventura County citizens.

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