Mingling: Good For Cocktail Parties, Not So Good For Security Interests

So, you're a lender who has a perfected security interest in a large pile of limestone aggregate at a cement plant. Another lender has a perfected security interest in a pile of clay at that same plant. The aggregate and clay are crushed, and then ground and blended with other ingredients, before being heated in a kiln to produce a substance called "clinker". The clinker is ground and blended with other ingredients to produce fine cement powder, which is stored onsite in a large silo.¹

All well and good. But your original collateral is technically gone, having been mixed with other ingredients (in which you don't have a security interest) to create the inventory of cement. The question to be asked is, does each lender's security interest in its own collateral continue in the product produced? And if it does, what if one of the lenders isn't paid and there are competing claims to the cement stored as a finished product in the silo? The Personal Property Security Act in