Commitments

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments

15. Commitments

The Company has an agreement with a supplier to purchase at least 50 percent of the annual kaolin requirements for the Eufaula, Alabama plant at specified contract prices.  In May 2017, the agreement was extended for an additional three years.  For the years ended December 31, 2019 and 2018, the Company purchased from the supplier $1,284 and $1,141, respectively, of kaolin under the agreement.

The Company has a mining agreement with a contractor to purchase 100% percent of the annual kaolin requirements for the Company’s McIntyre and Toomsboro, Georgia plants at specified contract prices, from lands owned or leased by either the Company or the contractor.  The agreement remains in effect until such time as all Company-owned minerals have been depleted.  For the years ended December 31, 2019 and 2018, the Company purchased $1,572 and $2,161, respectively, of kaolin under the agreement.

The Company had an agreement with a supplier to purchase wet sand at specified contract prices.  The two-year agreement required the Company to purchase 720,000 tons over the two-year period.  Any shortfall would be due from the Company at two dollars per ton.  As of December 31, 2019, there was a shortfall of approximately 407,457 tons.  For the year ended December 31, 2019 and 2018, the Company purchased $801 and $4,586, respectively, of wet sand under this agreement.  As a result of the shortfall, the Company has accrued $815 due to the supplier, recorded within other accrued expenses on the Consolidated Balance Sheet at December 31, 2019 and within cost of sales on the Consolidated Statement of Operations for the year ended December 31, 2019.  In addition, the Company has an agreement with a sand processing company to process sand at specified prices.  The two-year agreement also began January 1, 2018 and required the Company to process at least 10,000 tons per month on a rolling three-month average.  Any shortfall would be due from the Company at seven dollars per ton.    The Company provided an upfront capital infusion to the sand processing company to facilitate the processing of wet sand which will be repaid to the Company as an offset to future sand processing charges.  As of December 31, 2019, the total amount due to the Company relating to the unrecovered capital infusion and other receivables was approximately $452. Given the Company does not plan sand processing to continue with this company and given the ongoing arbitration (discussed below), during 2019, the Company wrote off the remaining unrecovered capital infusion and other receivables owed from the sand processing company of $452 within cost of sales.  For the year ended December 31, 2019 and 2018, the Company spent $823 and $2,369, respectively, in net sand processing charges under this agreement.  The sand processing company has alleged the Company did not meet the minimum processing requirements under the agreement and owes a shortfall amount of approximately $2,400.  The sand processing company has filed for arbitration against the Company over this payment.  The Company believes this is a frivolous claim, and plans to defend its position.  As such, the Company has not recorded any contingent liability based on the sand processing company’s allegation.

The Company entered into a lease agreement dated November 1, 2008 (“2008 Agreement”) with the Development Authority of Wilkinson County (the “Wilkinson County Development Authority”).  Pursuant to the 2008 Agreement, the Wilkinson County Development Authority holds the title to the real and personal property of the Company's McIntyre and Toomsboro manufacturing facilities and leases the facilities to the Company for an annual administrative fee of $50 per year. The Company elected the renewal option on November 1, 2017, which extended the lease through November 1, 2021.  At any time prior to the scheduled termination of the lease, the Company has the option to terminate the lease and purchase the property for a nominal fee plus the payment of any rent payable through the balance of the lease term.  Furthermore, the Company has security interests in the titles held by the Development Authority.  The Company has also entered into a Memorandum of Understanding (the “MOU”) with the Development Authority and other local agencies, under which the Company receives tax incentives in exchange for its commitment to invest in the county and increase employment.  The Company is required to achieve certain employment levels in order to retain its tax incentives.  In the event the Company does not meet the agreed-upon employment targets or the MOU is otherwise terminated, the Company would be subjected to additional property taxes annually.  Based on adverse economic conditions beyond the Company’s control that negatively impacted employment levels, a notice dated February 1, 2016 sent by the Company to the Development Authority of Wilkinson County declared a force majeure, which suspended employment levels defined in the original agreement and preserved tax incentives until further notification of the restart of plant operations.  The Development Authority of Wilkinson County has not challenged the Company’s declaring a force majeure.  The properties subject to these lease agreements are included in Property, Plant and Equipment (net book value of approximately $20,680 at December 31, 2019) in the accompanying consolidated financial statements.