Executive Summary

In the late 2010's, a leading entity in the industrial and fertilizer industry (S&P 500 Firm) that specializes in the innovative production of sustainable, high-quality fertilizer products reached out to us for guidance on starting to distribute their fertilizer products. The organization, which we will call Alchemia, was leveraging advanced technology to convert bauxite residue, a byproduct of one of their refining processes, into a valuable resource for the agricultural sector. Their pioneering approach was the beginning of an eco-friendly solution to waste management but also contributes to global food security by producing essential nutrients that enhance soil health and crop yield

Through our engagement we used our design and discovery process broken down into the following steps:

1. Discovery
2. Operational & Manufacturing Architecture
3. Marketing Research
4. Distribution
5. Client Feedback
6. Delivery & Results

Through our approach, the company learned what were the demands for their new product on a global scale, what were their manufacturing & operational constraints, and which global markets were going to be the easiest for distribution. 

Shortly after our engagement, the company implemented their manufacturing operations in one of their Latin American factories so that they could distribute their product to Mexico, the United States, and other regional markets. Additionally, with a better understanding of the regulations around their product, we were able to help with government hurdles and also create localized versions of the product that would meet end user demand. As a result of our engagement, the company was not only able to repurpose a byproduct of their refining process, but was also able to increase their bottom line by 25%.

In the subsequent years, the company has further rolled out their product in Europe and Asia, following the guidance that we helped pioneer through Mir Meridian.

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The Need & Project

In the aluminum refining process, a significant byproduct known as bauxite residue, or red mud, is generated. This substance, traditionally viewed as waste, was transformed into a valuable resource for the fertilizer space through an innovative chemical process first pioneered at one of the world’s largest aluminum refining companies, Alchemia. In the mid 2010’s, chemists at Alchemia were looking for a way to reduce the externalities and waste associated with processing their refined aluminum. Through their experimentation, they realized they could use bauxite residue and extract specific chemicals to be utilized as a key component in the fertilizer manufacturing process.

The problem, however, is that Alchemia was predominantly an aluminum refined and did not have experience in the fertilizer marketing space. Despite having deep connections to the aluminum refining space, the company lacked the supply and distribution chains to become a player in the fertilizer space. Furthermore, the company did not understand the regulatory or global market demands for such a product. Lastly, the company lacked a cohesive go to market blueprint on how to take the new product global. As such, the need to monetize this product is what drove Alchemia to use Mir Meridian’s services to help create a cohesive plan around their innovative product for the fertilizer industry. 

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Discovery

We started an agile design process focused on understanding and setting the playing field for how our engagement with the company would look like. During our engagement, we ran both Discovery and our Marketing Research concurrently to best leverage the information from the Alchemia team. 

​​The initial phase involved identifying the potential of bauxite residue, a byproduct of aluminum production, as a raw material for new products. Once our team understood the research and development of the chemical properties of bauxite residue and understood the manufacturing implications and its applications we were better able to help Alchemia understand what manufacturing ammonium nitrate fertilizers could look like Turning bauxite residue into ammonium nitrate involves a series of chemical processes that extract usable components from the residue, which can then be utilized in the production of ammonium nitrate fertilizer. While the specific process of converting it into ammonium nitrate is complex, Alchemia already possessed all of the resources and engineers necessary to leverage a waste byproduct into a sellable fertilizer with minimal changes to their supply chain.

During our discovery, we also found out that there were many regional and transnational hurdles that would affect an effective distribution approach for Alchemia’s new fertilizer. We found that because ammonium nitrate can be used as an explosive, it is subject to stringent regulations due to its potential for misuse and the hazards associated with its transportation and storage. These regulations vary by country and international bodies, aiming to ensure safety, security, and environmental protection. Some key aspects of these regulations included:

Transportation Regulations

• The various regulations give a framework for the safe transportation of hazardous goods by road, rail, sea, and air, influencing national and international transportation policies.

Storage and Handling Regulations

• Safety Management Systems: Countries may require facilities that store large quantities of ammonium nitrate to implement safety management systems, including risk assessments, safety plans, and emergency response strategies.
• Environmental Protection Measures: Regulations may also address the environmental impacts of ammonium nitrate storage, including measures to prevent contamination of water sources and soil.

Security Measures

• Sale and Purchase Controls: Some countries impose controls on the sale and purchase of ammonium nitrate, requiring buyers to have appropriate licenses and sellers to keep detailed records of transactions.

Usage Restrictions

• Agricultural Use: Regulations may specify allowable concentrations of ammonium nitrate in fertilizers to reduce the risk of misuse.
• Industrial and Mining Use: Special permits and security measures may be required for the use of ammonium nitrate in blasting operations.

International Agreements

• Chemical Weapons Convention (CWC): While primarily focused on chemical weapons, the CWC promotes the peaceful use of chemical substances and could influence regulations on chemicals that can be used to make explosives.
• Global Counter-Terrorism Strategies: International counter-terrorism agreements and strategies can affect how countries regulate and monitor the production, sale, and distribution of substances like ammonium nitrate.

Although there were many different regulations surrounding the use and sale of fertilizer products, Alchemia, as a global producer, was already familiar with many of the shipping restrictions and regulations that the company would need to address to bring the product to market. 

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Marketing

Developing a marketing plan for Alchemia’s new product involved a comprehensive market research study which focused on global supply and demand, local market conditions, competitive landscape, and specific needs of the target audience. 

Our approach was to identify unique selling propositions (USP) that differentiate the product in the market, such as product quality, environmental sustainability, or cost-effectiveness. Additionally, we created pricing strategies that were rooted on production costs, local pricing dynamics, and competitive positioning. Lastly, we used localization efforts to ensure the product and marketing messages were adapted to reflect local languages, cultural nuances, and regulatory requirements. Distribution strategies are crafted to identify effective channels for reaching the target audience, incorporating logistics planning to meet safety and environmental regulations related to ammonium nitrate.

Based on our initial insights, our marketing and promotional tactics were designed to engage potential customers through a mix of digital and traditional marketing methods, including agricultural forums, trade shows, and educational content that provides value-added information to build trust and authority. We worked directly with Alchemia to introduce performance metrics and customer feedback mechanisms designed to measure the success of marketing efforts and understand product reception. This approach, which is a core tenet of Mir Meridian, enabled Alchemia to have continuous refinement of the marketing plan, product offering, and operational strategies. As a result, Alchemia now has a dynamic approach that ensures flexibility and adaptation to changing market conditions and customer needs, aiming for the successful introduction of the new product to the market and achieving sustainable growth.

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Distribution

Thanks to our learnings in the discovery phase, we clearly understood the challenges that companies like Alchemia faced when distributing their products globally. Despite the difficulties and legal and governmental hurdles that Alchemia faced, we found that one of the key methods for us to distribute the chemical would be to produce it regionally to reduce the amount of both shipping and regulatory time that it would take to bring the product to market. 

We helped Alchemia understand and comply with stringent safety, transportation, and environmental regulations, including those set by the IMDG Code for sea transport and the IATA for air freight, among other national laws. Strategic logistics planning is crucial, involving the selection of appropriate transportation modes, ensuring proper packaging and labeling according to international standards, and partnering with experienced logistics providers skilled in handling hazardous materials.

Aside from the transportation and safety regulations, we developed a continuous monitoring for regulatory compliance, coupled with an adaptable supply chain–with in-country manufacturing of aluminum–and robust customer support, ensures the company can effectively distribute ammonium nitrate fertilizer globally, optimizing for efficiency, safety, and environmental responsibility.

Finally, we worked closely with Alchemia’s sales and distribution leadership to incentivize salespeople to responsibly sell ammonium nitrate while also aiming for profit growth.  In conjunction with ethical sales practices, we helped Alchemia develop a multi-faceted approach that intertwines performance-based incentives with strict compliance and responsible selling criteria. This approach involved setting up a compensation structure where bonuses and commissions are contingent not only on achieving sales targets but also on meeting predefined compliance and safety standards. Furthermore, we created a customer segmentation model to encourage the sales team to focus their efforts on clients most likely to use the product responsibly, aligning sales incentives with ethical distribution practices.

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Client Feedback

After a diligent work cadence, the team presented the Alchemia board with our strategy and recommendations for taking their product to market. Most of the feedback that we received from the board included emphasizing how this new approach to creating fertilizers would be much more sustainable and eco-friendly than the comparative manufacturing methods. Additionally, we were asked to consider how to better invest into fertilizer only distribution chains in the future and what costs associated with such investments would mean for the return on investment of the new product developed at Alchemia. Lastly, we were asked to create a system for leveraging market research, customer feedback, and supply chain analytics to make informed decisions.

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Delivery & Results

After incorporating the feedback received from the Alchemia board, we refined our roadmap to not only focus on logistical and regulatory compliance aspects but also on sustainability, innovation, and market-specific needs, thereby enhancing Alchemia’s competitive edge and aligning with broader corporate values and goals.

As a result of our in-market tests and recommendations, Alchemia underwent a split into two independent publicly traded companies in late 2016. Alchemia continued focusing on the bauxite and aluminum sectors, while a new corporate entity took over the value-added components and construction markets. 

Lastly, Alchemia was able to grow profits for the bauxite manufacturing part of the business from 0 to 25% of 2017 revenue in 2018. We were very satisfied with the growth that we helped Alchemia achieve despite the many distribution and legal challenges that we faced in the fertilizer industry. It was truly a pleasure to work with and learn from Alchemia. Many of the strategies that we developed working with such a large enterprise firm had since been distilled into the Mir Meridian approach for working with startups and accelerators.