Vermiculite is a natural mineral (magnesium-aluminum-iron silicate) that is heat-treated until it expands and curls, creating a light, fluffy texture.
Vermiculite is sometimes confused with perlite, which is crushed volcanic rock. The two can be visually distinguished, vermiculite having a beige color and spongy texture, but perlite having a white color and hard texture. Also, vermiculite has a neutral pH, while perlite is slightly alkaline. Finally, vermiculite tends to be somewhat more expensive and harder to find than perlite.
Vermiculite is commonly used in a variety of soil mixes, particularly for houseplants and seed-starting. It is also a key ingredient of the soil mix recipe used to fill the boxes in the All New Square Foot Gardening method. In a soil blend, vermiculite both opens up the soil and retains moisture, creating an ideal balance of air and water. Furthermore, vermiculite is valued for this purpose because it is sterile and mold-resistant. Vermiculite also helps retain nutrients.
Vermiculite sometimes finds use in the garden as a soil amendment for transplants. A large hole is dug for the transplant and filled with a mixture of vermiculite and topsoil, getting the plant off to a good start by retaining moisture and providing plenty of room for roots to spread.
Less commonly, vermiculite is sometimes used as mulch. A thick (3-inch) mulch may help keep the soil around garden plants moist, while a thinner (1/4-inch) mulch can be spread across a freshly seeded lawn to promote germination.
Those who practice vermicomposting sometimes add vermiculite to the worm bin. Worms have gizzards and therefore need a source of grit, much like chickens, and smaller pieces of vermiculite are suitable for the purpose.
Vermiculite is also used as an anti-caking agent for dry pesticides and fertilizers.
In the past, vermiculite was used as insulation for houses. While vermiculite insulation was appreciated for its fireproof characteristics as well as its excellent insulating properties, asbestos concerns eventually put an end to its use.
Vermiculite has received a bad rap due to fears over contamination with asbestos. The vermiculite in question was mined in Libby, Montana, but the mine was closed in 1990 because of the asbestos problem. Since that time, only asbestos-free vermiculite has been available on the market. (If you are really concerned, you can even buy vermiculite that is certified to be asbestos-free.) However, some nurseries and garden centers ever since have refused to carry vermiculite, limiting its availability.
A more practical concern these days is the water-retaining tendency of vermiculite. While this property is perfect for water-loving plants such as irises, it is not desirable for other species that prefer a drier soil, such as cacti and succulents.
So while using vermiculite need not be a safety concern, as always make sure it is the right amendment to use for the application you have in mind.