Vulcan Materials sells gravel quarries in antitrust settlement

Eleven gravel quarries near Knoxville have a new owner due to a federal antitrust lawsuit.

Vulcan Materials Co. sold those sites and six others to Blue Water Industries LLC, a subsidiary of Florida-based Blue Water Industries Holdings LLC.

On May 25, 2017, Vulcan agreed to buy rival quarry firm Aggregates USA from California hedge fund SPO Partners for $900 million. The U.S. Department of Justice filed a civil antitrust suit to block the sale.

Alabama-based Aggregates USA quarries and sells rock in Florida, Georgia, Tennessee and Virginia. In 2016, the company reported sales of $124 million.

Vulcan, also headquartered in Alabama, quarries and sells rock in 20 states and Mexico. In 2016, Vulcan reported net sales of $3.5 billion, making it one of the country’s largest aggregate suppliers.

“Vulcan and Aggregates USA are the primary suppliers of coarse aggregate for projects in parts of east Tennessee and southwest Virginia, together supplying nearly all of the coarse aggregate purchased directly by the Tennessee and Virginia Departments of Transportation or purchased by contractors for use in Tennessee and Virginia DOT projects,” the lawsuit said.

Aggregate, or various sizes of gravel, is used in road paving and construction; some forms of concrete can be up to 95 percent aggregate.

Coarse aggregate isn’t very expensive — usual prices are $5 to $20 per ton. But much of that price is based on how far the rock has to travel, so nearby quarries are essential in keeping costs down.

Vulcan and Aggregates USA owned the only quarries serving road-builders in the Knoxville, Tri-Cities and Abingdon areas, meaning the enlarged Vulcan would have a monopoly on local projects needing gravel, according to a settlement agreement. Thus the DOJ required Aggregates USA’s quarries to be sold in order to maintain bidding competition on future construction work.

In the Dec. 22 settlement, the Justice Department ordered Vulcan to sell 17 quarries and connected operations around Knoxville, the Tri-Cities, and Abingdon. That included 13 active and four inactive quarries previously owned by Aggregates USA.

“Without relying on a regulatory behavioral decree, these divestitures will ensure that customers, and ultimately taxpayers, in Tennessee and Virginia continue to benefit from robust competition and competitive prices,” Assistant Attorney General Makan Delrahim of the Antitrust Division said in a news release. “The acquisition, as originally proposed, would have eliminated one of the two suppliers of coarse aggregate in parts of east Tennessee and southwest Virginia.”

Vulcan and Aggregates USA were given 45 days to sell the quarries. The now-merged firm is barred from reacquiring any of them for at least five years. The sale was completed Dec. 29, according to Aggregates USA’s website.

Neither Vulcan nor Blue Water immediately responded to requests for comment.

The Knoxville-area quarries are:

• 1949 E. Raccoon Valley Road, Heiskell
• 345 E. Broadway Blvd., Jefferson City
• 461 Rocktown Road, Jefferson City
• 2303 Gov. John Sevier Highway, Knoxville
• 224 Heiskell Ave., Knoxville
• 2107 Big Hill Road, Lenoir City
• 9600 Mascot Road, Mascot
• 1001 Park St., New Market
• 1550 Quarry Road, New Market
• 605 Cherokee Explosives Road, Rutledge
• 1977 W. Andrew Johnson Highway, Strawberry Plains

The Tri-Cities quarries are:

• 736 Centenary Road, Blountville
• 210 Judge Ben Allen Road, Elizabethton
• 164 Asphalt Plant Road, Jonesborough
• 4175 Marbleton Road, Unicoi
• 350 W. Fourth Ave., Watauga

One quarry near Abingdon, at 21339 and 21490 Gravel Lake Road, rounds out the list.

In 2013, East Knoxville residents complained three decades of blasting at a nearby Vulcan Materials quarry cracked their house and business walls. The company said the explosions were well within legal standards for quarry operations, and blamed the cracks on unrelated factors such as soft foundations and poor concrete.

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