A) Low Cost of Perlite
The first reason is the price. We will provide large volumes of perlite at a cost lower than any historical perlite price.
Currently, commercial Perlite distributors sell Perlite by the bag. At Home Depot, an 8-quart bag of Perlite (Miracle-Gro) costs $4.786 or about $.75 per lb ($1500 per ton). The wholesale price of agricultural perlite is approximately $400 per ton. Our pricing to farmers will be much more reasonably priced at $130 per ton.
How is it possible to lower the cost of perlite to $130 per ton? Perlite mining is not unlike mining iron ore. Both are excavated, crushed, sized, and heated. Iron ore mining is a very similar model. The difference is that the current U.S. total production of perlite is only about half a million tons. The total worldwide production of perlite is a little over 3 million tons. Whereas, the total U.S. iron ore production is 40 million tons and the total worldwide production of iron ore is over 3 billion tons. So, with large-scale mining, iron ore mining reflects savings from large-scale processing. Iron ore can be excavated, crushed, sized, and heat-processed then sold for $70 a ton, still leaving a profit for the mining company.
Iron ore processing equipment (from excavators to furnaces) is almost identical to perlite processing. We eventually expect to produce and deliver 10 million tons of perlite per year to the Central Valley farmers (remember, the current U.S. production of perlite is ½ million tons per year, so we anticipate increasing that by 20 times). The economy of scale improves efficiency and so it will be possible for us to produce horticultural perlite for the market at $70 per ton and when we sell for $130 per ton, there is sufficient room for profit and other unanticipated costs.