-------
9.1.6 Molybdenum
The United States is the world's leading producer of molybdenum
and, as shown in Table 9-29, is a net exporter of the metal. About
70 percent of domestic consumption goes to the production of molybdenum-
containing steels. Molybdenum in steel improves steel's hardness and
resistance to temper embrittlement, abrasion, and corrosion. The steels
are used in all major segments of industry. As shown in Table 9-30,
molybdenum is also used in lubricants, catalysts, and pigments.
Historically, there has been little incentive to substitute for
molybdenum because the price has been low. As shown in Table 9-31,
however, the price increased substantially during the middle to late
seventies leading to an increased interest in alternatives. A number of
alternative materials are available, but their use may result in impaired
performance or a cost disadvantage. These materials include boron,
chromium, manganese, and nickel, all of which can be used in steel.
Molybdenum-containing steel could occasionally be replaced by plastics
and ceramics. Tungsten, tantalum, and graphite may be substituted in
various other areas. The domestic availability of molybdenum, plus the
fact that it represents only a small percentage of the composition of
many steels, tends to discourage most substitution efforts.
The molybdenum ore processing industry is dominated by the Climax
Division of AMAX, Incorporated, which controls over 80 percent of the
total domestic processing capacity (see Tables 9-31 and 9-33). The
company opened the Henderson Mine in Colorado during 1976 and expects
the mine's output to reach 23,000 Mg (25,000 tons) of metal per year by
1980. Duval Copper and Kennecott Copper, which recover molybdenum from
their copper mining operations, are also large producers of the metal.
They are listed in Table 9-13 with the copper processors.
Approximately 70 percent of molybdenum is recovered from molybdenum
ores, principally low grade deposits of the mineral molybdenite. Ore
grades range from 0.2 to 0.5 percent as Mo$2, representing ore-to-
product ratios of 500 and 200, respectively. The remainder of the
molybdenum supply is obtained as a byproduct from copper, tungsten, or
uranium processing. In some cases the recovery of molybdenum from
copper processing significantly improves the profitability of these
operations.
9-53
-------
The demand for molybdenum is expected to increase at an annual rate
of approximately 5 percent through 1985. The growth in processing
capacity is expected to include construction of one 270 Mg per hour
plant and two 1100 Mg per hour plants by 1985. Ore grades of 0.4 percent
were assumed for these plants.
9-54
-------
Table 9-29: PRODUCTION PROFILE: MOLYBDENUM6
Parameters
Year
1974
Production: mine 1,000
(1,000 tons) as metal
Imports for consumption
centrate 1,000 Mg (1,
as metal
Mg
, con-
000 tons)
Exports, molybdenum concentrate
and oxide 1,000 Mg (1
,000
50.
(56.
0.
(0.
35.
(39.
8
0)
1
1)
7
3)
1975
48.
(53.
1.
(1.
28.
(31.
1
0)
2
3)
4
3)
1976
51.
(56.
0.
(1.
28.
(31.
4
6)
9
0)
3
2)
1977
55.
(61.
0.
(1.
29.
(32.
5
2)
9
0)
8
8)
1978
59.
(66.
1.
(1.
31.
(34.
9
0)
2
3)
4
6)
tons)
Employment:
Mine and mill recovering
molybdenum as the principal
product 2,600
Net import reliance as a
percent of apparent con-
sumption c
2,700 3,700 4,300 4,500
U.S. Bureau of Mines, 1980.
Net import reliance = imports-exports+adjustments for Government and
industry stocks.
£
Net exporter.
9-55
-------
Table 9-30. PRODUCT USES: MOLYBDENUM*
Product uses
Transportation
Machinery
Oil and gas industry
Chemicals
Electrical
Other
1978
(percent)
21
34
15
12
8
10
1979
(percent)
22
32
17
13
8
8
aU.S. Bureau of Mines', 1980.
9-56
-------
Table 9-31. PRICE HISTORY: MOLYBDENUM'
Year
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Oct.b
1979
Actual
$/kg
2.31
2.43
2.60
2.60
2.76
2.76
2.76
3.09
3.09
3.09
3.42
3.42
3.42
3.57
3.57
3.79
3.79
3.79
3.79
3.79
4.45
5.47
6.48
8.11
19.48
prices
$/lb
1.05
1.10
1.18
1.18
1.25
1.25
1.25
1.40
1.40
1.40
1.55
1.55
1.55
1.62
1.62
1.72
1.72
1.72
1.72
1.72
2.02
2.48
2.94
3.68
8.84
Based
1977
$/kg
5.49
5.62
5.86
5.67
5. .91
5.78
5.69
6.31
6.19
6.11
6.66
6.50
6.31
6.39
6.13
6.19
5.89
5.60
5.38
5.07
5.45
6.08
6.86
8.11
""
on constant
dollars
$/lb
2.49
2.55
2.66
2.57
2.68
2.62
2.58
2.86
2.81
2.77
3.02
2.95
2.86
2.90
2.78
2.81
2.67
2.54
2.44
2.30
2.47
2.76
3.11
3.68
""
aAverage annual price per pound of molybdenum contained in
concentrate (95% MoS2) from Kummer (1979).
Average price for October from Engineering and Mining Journal (1979).
9-57
-------
Table 9-32. INDUSTRY CHARACTERISTICS: MOLYBDENUM
Number of leading companies
Number of active operations
Percent of capacity controlled by
leading companies
Value of processing plant output (as
95 percent MoS2 concentrate)
Major processing states
Ratio of ore to product
2
3
Not Available
$133.9 million
Colorado, New Mexico
Range: 200 - 500
9-58
-------
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9.1.7 Silver
Silver, like gold, is valued both as an investment property and as
an industrial metallic mineral. As shown in Table 9-34, the photographic
industry is the major consumer of silver, using 38 percent of the
domestic supply in 1978. Jewelry, arts and crafts, batteries, and
electrical and electronic components are the other major use categories
for silver. The qualities that make silver valuable in industry are its
superior thermal and electrical conductivity; high reflectivity,
malleability and ductility; and corrosion resistance.
As a result of the silver price boom in 1979 (see Table 9-35),
substitutes for silver should become more prevalent. Stainless steel is
used in the manufacture of flatware; aluminum and rhodium can replace
silver in mirrors; and tantalum may be substituted in surgical plates,
pins, and sutures. Many countries are making coins from cupronickel,
cuprozinc, nickel, and aluminum. Substitutes for silver in the photo-
graphic development process are being investigated, but to date, these
efforts have not been successful.
As shown in Table 9-36, the United States imports 45 percent of its
silver while producing 12 percent of the world's supply. There are 12
processing plants whose primary product is silver located in Idaho,
Colorado, and Montana (see Tables 9-37 and 9-38).
Silver ores typically contain from 1 to 25 troy ounces of silver
per ton of ore. A recently developed mine contains 2.5 to 5.0 troy
ounces per ton (Carter, 1978). The recovery of gold and other metals in
the processing of silver ore significantly added to the profitability of
several operations.
Demand for silver in the United States was forecasted in 1978 to
increase at an annual rate of around 3 percent through 1985. A revised
estimate taking into account the unanticipated rise in silver's price is
not yet available. Growth in processing capacity is projected to include
two 45 Mg per hour plants and one 140 Mg per hour plant by 1985. These
plants are assumed to process ore containing 5 troy ounces of silver per
ton of ore.
9-60
-------
Table 9-34. PRODUCT USES: SILVER0
Product uses
1978
(percent)
1979
(percent)
Photography
Electrical and electronic
components
Sterlingware and electroplated
ware
Brazing alloys and solders
Other
38
26
17
7
12
39
25
15
8
13
U.S. Bureau of Mines, 1980.
9-61
-------
Table 9-35. PRICE HISTORY: SILVER'
Year
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
Oct.b
1979
Actual
$/kg
28.94
28.94
28.94
28.94
28.94
28.94
29.58
34.72
40.83
41.47
41.47
41.47
49,83
68.80
57.55
56.91
49.51
54.01
82.31
151.43
142.11
139.86
148.54
171.04
539.67
prices
$/troy oz
0.90
0.90
0.90
0.90
0.90
0.90
0.92
1.08
1.27
1.29
1.29
1.29
1.55
2.14
1.79
1.77
1.54
1.68
2.56
4.71
4.42
4.35
4.62
5.32
16.78
Based
1977
$/kg
67.20
64.94
63.02
62.05
60.44
59.48
60.44
69.45
80.70
80.70
78.77
76.20
89.06
117.67
93.88
88.09
72.98
76.20
109.96
184. 55
157.86
147.57
148. 54
— —
on constant
dollars
$/troy oz
2.09
2.02
1.96
1.93
1.88
1.85
1.88
2.16
2.51
2.51
2.45
2.37
2.77
3.66
2.92
2.74
2.27
2.37
3.42
5.74
4.91
4.59
4.62
~ •"
^Average annual price of silver metal from Drake (1978).
3Average price for October from Engineering and Mining Journal (1979),
9-62
-------
Table 9-36. PRODUCTION PROFILE: SILVER"
Parameter
Year
1974
1975
1976
1977
1978
Production, 1,000 kg (1,000
as metal
Mine
Refinery: New
Secondary (old
scrap)
Ibs)
b
Imports for consumption
1000 kg (1,000 Ibs)
as metal
Exports0, 1000 kg (1,000
Ibs) as metal
Employment: mine and mill
Net import reliance0 as a
percent of apparent con-
sumption
1,086 1,122 1,102
(2,394) (2,474) (2,429)
2,035 2,038 1,749
(4,486) (4,493) (3,856)
1,739 1,594 1,614
(3,834) (3,514) (3,558)
3,035 2,138 2,337
(6,691) (4,713) (5,152)
591 1,048 469
(1,303) (2,310) (1,034)
1,228 1,228
(2,707) (2,707)
1,446 1,696
(3,188) (3,739)
1,540 1,156
(3,395) (2,549)
2,543 2,593
(5,606) (5,717)
720 768
(1,587) (1,693)
1,350 1,250 1,450 1,450 1,500
44
12
45
31
48
aU.S. Bureau of Mines, 1980.
Excludes coinage.
°Net import reliance = imports-exports+adjustments for Government and
industry stock changes.
9-63
-------
Table 9-37. INDUSTRY CHARACTERISTICS: SILVER
Number of leading companies
Number of active operations
Percent of capacity controlled by leading
companies
Value of processing plant output
(as metal)
Major processing states
Ratio of ore to product
11 (1 temporarily
inactive, 1 under
construction)
85
$103.1 million
Idaho, Colorado
Range: 1,150 - 30,000
Typical: 8,400
9-64
-------
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9.1.8 Titanium
Most titanium is consumed as titanium dioxide pigment (see
Table 9-39). The pigment has a high refractive index and is used in
surface coatings, paints, paper coatings, photographic papers, paper
boxes, and plastics to add whiteness and opacity. Titanium metal is
used mainly in aircraft and guided missile assemblies, spacecraft, and
aircraft turbine engines. It is also used by the chemical and
electrochemical processing industry, and in steel and other alloys.
Table 9-40 profiles the production statistics of this industry.
Possible substitutes for titanium pigments include zinc oxide,
talc, clay, silica, and alumina. However, they cost more and do not
perform as well. High strength, low alloy steels, aluminum or other
metals can replace titanium metal in some structural applications, but
they usually do not perform as well and require redesigning of products
and manufacturing methods. Nickel steels are somewhat competitive in
structural applications. When titianium metal is chosen for its resistance
to corrosion, stainless steel, Hastelloy, 90 copper-10 nickel, and
certain nonmetals may be substituted.
The mineral sources of titanium are rutile and ilmenite.
Concentrates of these minerals are made at relatively few operations in
the world. These deposits (rutile and ilmenite) may be either sand or
rock. Both rutile and ilmenite occur together in sand deposits, but
ilmenite is the main constituent of rock deposits. Large deposits of
rutile are found on Australia's east and west coast, and the United
States demand for rutile is met largely by imports. Domestic sand
deposits contain approximately 1.0 to 2.0 percent titanium as titanium
dioxide.
Processing of titanium ores is controlled by the three major
companies shown in Table 9-41. Titanium processors are listed in
Table 9-42. Most United States processing of titanium ores is a part of
an integrated operation. Over 95 percent of the world's natural rutile
production is from Australia.
Table 9-43 includes the price history for titanium, both as rutile
pigment and sponge metal. Both forms were characterized by current
dollar price stability until 1974 when prices began to rise. In constant
dollars, prices were falling through 1974.
9-67
-------
Demand for titanium is expected to increase by about 4.3 percent
per year through 1985. A 270 Mg per hour expansion to an existing plant
and a 540 Mg per hour new plant are projected by 1985. These plants are
assumed to process sand-type ore with a titanium content of 1.5 percent
as titanium dioxide and 0.9 percent zirconium.
9-68
-------
Table 9-39. PRODUCT USES: TITANIUM0
Product uses
1978
(percent)
Paints
Paper
Plastic
Sponge metal
Other uses
50
21
12
2
15
Lynd, 1978 and U.S. Bureau of Mines, 1980.
9-69
-------
Table 9-40. PRODUCTION PROFILE: TITANIUM0
Parameters
Year
1975
1976
1977
1978
1979
Production (Mg as metal)
Imports for consumption, Mg
(ton) as sponge metal
Exports (mainly scrap), Mg
(ton)
Price: sponge, per pound
year end
Stock: Sponge, industry,
year end
Net import reliance0 as a
percent of apparent con-
sumption
3,800 1,613 2,165 1,339 2,177
(4,190) (1,778) (2,387) (1,476) (2,400)
5,647 6,538 4,031 7,065 6,984
(6,226) (7,209) (4,444) (7,789) (7,700)
$2.70 $2.70 $2.98 $3.28 $3.98
5,669 3,617 3,546 2,642 1,300
Titanium Dioxide:
Production
Imports for consumption,
Mg (ton)
Exports, Mg (ton)
Employment
Net import reliance as a
percent of apparent
consumption
603,429 712,940 687,103 720,223 724,000
23,562 62,270 104,373 107,000 105,450
(25[918) (68,497) (114,810) (117,708)(116,000)
14,337 18,912 14,817 34,296 44,444
(15,807) (20,850) (16,336) (37,812) (49,000)
5,800
Net
exporter
4,900
4,900
12
4,200
12
4,800
12
aU.S. Bureau of Mines, 1980. .
Withheld to avoid disclosing company proprietary information.;
cNet import reliance = imports-exports+adjustments for Government and
industry stock. ..
9-70
-------
Table 9-41. INDUSTRY CHARACTERISTICS: TITANIUM
Number of leading companies (titanium
and zirconium)
Number of active operations (titanium
and zirconium)
Percent capacity controlled by leading
companies
Value of processing plant output
(as ilmenite/zircon concentrate)
Major processing states
Ratio of ore to product
5 (2 inactive)
98
$70.5 million
Florida, New Jersey
75 to 100 (as Ti02 in
sand-type ores)
9-71
-------
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9-72
-------
Table 9-43. PRICE HISTORY: TITANIUM'
Based on constant
Year
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
Actual
Ruti 1 e
pigment
$/lb
0.41
0.41
0.44
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.48
0.48
0.45
0.45
0.45
0.50
0.72
0.73
0.78
0.81
0.85
1.02
1.15
price
Sponge
metal
$/lb
4.80
3.90
3.20
2.50
2.05
1.66
1.60
1.60
1.60
1.60
1.32
1.32
1.32
1.32
1.32
1.32
1.32
1.32
1.32
1.42
2.25
2.70
2.70
2.98
3.28
3.98
7.02
1976
Ruti 1 e
pigment
$/lb
0.92
0.90
0.94
0.95
0.93
0.91
0.90
0.89
0.87
0.86
0.85
0.83
0.80
0.78
0.78
0.74
0.66
0.63V
0.60
0.63
0.83
0.77
0.78
0.77
—
--
— —
dollars
Sponge
metal
$/lb
10.76
8.57
' 6.80
5.14
4.16
3.29
3.12
3.09
3.04
2.99
2.43
2.38
2.30
2.24
2.14
2.04
1.94
1.84
1.77 '
1.80
2.60
2.84
2.70
2.82
—
—
——
Year-end price as rutite pigment (Ti content) and sponge metal from
Lynd (1978).
9-73
-------
9.1.9 Tungsten
Tungsten's unique high temperature properties make it suitable for
many industrial uses. As a carbide, its hardness makes it useful as a
cutting edge or facing material in industrial equipment. As an alloy
constituent, tungsten is used in steels that require resistance to wear,
abrasiveness, shock, and corrosion or that need strength at high
temperatures. Mill products made from pure tungsten metal powder are
used in the electrical and electronic industries, furnaces, aircraft,
and in the aerospace industry. Tungsten is also used in various
chemicals and compounds. Product uses are presented in Table 9-44.
The increasing price of tungsten, as shown in Table 9-45, has
resulted in the expanded use of secondary scrap. Tungsten demand in the
United States is linked to major end uses that depend on wear-resisting
materials, and these uses constitute about 72 percent of tungsten
consumption. Alumina may substitute for tungsten in some instances
where an abrasive, wear-resistant material is required. However, in
most cases substitution brings impaired performance. An early break-
through in ceramic technology, in applications involving high
temperatures and oxidation resistance could affect demand for tungsten.
However, this technology has not been commercially developed.
Most tungsten ore has come from the Bishop mine of the Union Carbide
Company, which is the leading company noted on Table 9-46, and the
Climax mine of AMAX, Incorporated (listed in Table 9-33). Five tungsten
ore processing plants are listed in Table 9-47. Because of tungsten's
partial association with molybdenum, about 25 percent of future domestic
production may be determined by the level of molybdenum mining operations.
Although United States tungsten reserves are relatively small, research
on tungsten recovery and utilization continues.! Anticipated improvements
in tungsten processing would allow more effective development of high
volume, low-grade deposits. Domestic tungsten deposits are usually less
than 1 percent tungsten and are typically in the range of 0.4 to
0.5 percent. For the near future the United States will continue to
depend heavily on imports as shown in Table 9-48.
Demand for tungsten is expected to increase by approximately
5 percent per year through 1985. Tungsten ore processing capacity is
9-74
-------
projected to increase as a result of a new 23 Mg per hour plant processing
ore containing 0.5 percent tungsten. These growth projections may be
disrupted if the General Services Administration continues its sales of
large quantities of ferrotungsten from the government's strategic
materials stockpile.
9-75
-------
Table 9-44. PRODUCT USES: TUNGSTElf
Product uses
Metal working and construction
machinery
Transportation
Lamps and Lighting
Electrical
Other
1978
(percent)
75
11
7
4
3
1979
(percent)
77
10
6
4
3
aU.S. Bureau of Mines, 1980.
9-76
-------
Table 9-45. PRICE HISTORY: TUNGSTEN1
Year
Actual prices
$7kg !7Tb
Based on constant
1976 dollars
$7kg
$7lb
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Oct.
1979
8.05
3.44
2.45
2.87
3.09
2.98
3.20
2.95
2.82
3.79
4.63
4.10
4.94
5.22
5.62
6.53
5.64
5.97
10.52
11.55
14.42
21.54
17.97
3.65
1.56
1.11
1.30
1.40
1.35
1.45
1.34
1.28
1.72
2.10
1.86
2.24
2.37
2.55
2.96
2.56
2.71
4.77
5.24
6.54
9.77
8.15
17.13
7.08
4.96
5.69
6.02
5.75
6.06
5.51
5.20
6.83
8.07
6.94
8.00
8.07
8.25
9.10
7.56
7.56
12.13
12.17
14.42
20.39
--
7.77
3.21
2.25
2.58
2.73
2.61
2.75
2.50
2.36
3.10
3.66
3.15
3.63
3.66
3.74
4.13
3.43
3.43
5.50
5.52
6.54
9.25
—
Average annual price per pound of tungsten contained in concentrate
(65% W03).
Average price for October from Engineering and Mining Journal (1979).
9-77
-------
Table 9-46. INDUSTRY CHARACTERISTICS: TUNGSTEN
Number of leading companies
Number of active operations
Percent capacity controlled by
leading companies
Value of concentrate production
(as 65 percent W03 concentrate)
Major processing states
Ratio of ore to product
4 (1 temporarily
inactive)
71
$45 thousand
California, Nevada
Range: 150 - 250
Typical: 200
9-78
-------
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9-79
-------
Table 9-48. PRODUCTION PROFILE: TUNGSTEN0
Parameters
1974
Year
1975 1976
1977
1978
Production; mine shipments,
1,000 Mg (1,000 Tons)
as metal
Imports for consumption; as
concentrate, 1,000 Mg
(1,000 Tons)
Exports; as concentrate,
1,000 Mg (1,000 Tons)
Employment: mine and mill
Net import reliance as a
percent of apparent con-
sumption
3.55 2.49 2.66 2.73 3.14
(3.91) (2.74) (2.93) (3.01) (3.46)
5.03
(5.54)
0.54
(0.60)
540
57
2.98 2.40 3.14 4.15
(3.28) (2.64) (3.46) (4.57)
0.60 0.78
(0.66) (0.86)
525
46
540
53
0.58 0.84
(0.64) (0.93)
945
52
875
56
aU.S. Bureau of Mines, 1980.
bNet import reliance = imports-exports+adjustments for Government and
industry stocks..
9-80
-------
9.1.10 Uranium
In its natural state, uranium contains about 0.7 percent of isotope
U-235, the critical isotope in the generation of nuclear fision processes.
Most uranium is purchased by utilities to fuel nuclear reactors as
indicated in Table 9-49. Depleted uranium (a byproduct of the enrichment
of natural uranium) is used primarily in ordnance, as well as for
containers of spent nuclear reactor residues and other radiation shields
for counterweights and ballast for aircraft and ships, and in research.
The supply of this byproduct greatly exceeds demand.
There are no substitutes for uranium in the production of nuclear
energy, although thorium and plutonium are supplements. Lead, tungsten,
and other metals can replace uranium in nonnuclear applications.
Industry characteristics are presented in Table 9-50. The major
oil companies, such as Kerr-McGee, Exxon, Gulf, and Getty, dominate all
phases of the domestic uranium industry. Union Carbide, United Nuclear,
and Lucky McMines (an independent subsidiary of General Electric) are
other large processors of uranium. Thirty-two uranium processing plants
are listed in Table 9-51.
During the sixties and seventies, many uranium mines and mills
operated with ore that contained approximately 0.2 percent uranium.
Because the richer deposits have been exhausted, the ore grade in new
mines has fallen to 0.10 to 0.15 percent uranium. Ore grades for new
mining sites are projected at 0.13 percent uranium.
Demand for uranium has been projected to increase by 15 percent per
year through 1985. The controversy surrounding the nuclear industry
following the Three Mile Island incident and the accelerating cost of
nuclear construction coupled with the decreasing growth in demand for
electrical power may reduce the growth rate in the uranium industry. In
addition, the price of uranium has declined as shown in Table 9-52.
Growth in capacity in the uranium industry is expected to include two
23 Mg per hour plants and three 68 Mg per hour plants by 1985.
9-81
-------
Table 9-49. PRODUCT USES: URANIUMC
Product uses
1978
(percent)
Fuel
Nonnuclear
98
2
aU.S. Bureau of Mines, 1980.
9-82
-------
Table 9-50. INDUSTRY CHARACTERISTICS: URANIUM
Number of leading companies
Number of active operations
Percent of capacity controlled by leading
companies
Value of processing plant output
(as yellowcake U30g)
Major processing states
Ratio of ore to product
10
31 (1 temporarily
inactive)
74
$1608.7 million
New Mexico, Wyoming,
Colorado
.Range: 500 - 1,000
850 (future growth)
9-83
-------
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-------
Table 9-52. PRODUCTION PROFILE AND PRICE HISTORY:
URANIUM3'D
Parameters
Production
Ore, 1,000 Mg (1,000 tons)
Uranium content Mg (tons)
Imports, concentrate, Mg
(tons) as metal
Employment (reduction plants)
Average annual price (U30g)
Dollars per kg
Dollars per pound
1974 1975
6,456 6,681
(7,115) (7,362)
Year
1976
8,344
(9,195)
11,261 11,158 12,701
(12, 410)(12, 296)(13,997)
1,665 1,112
(1,835) (1,225)
100
25.24 52.20
11.45 23.68
5,023
(5,535)
200
87.52
39.70
r
1977 Oct. 1979-
NA
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(14,996)
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(3,999)
300
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NA
NA
NA
NA
'NA
66.12
30.00
aU.S. Bureau of Mines, 1980.
American Metal Markets, 1978.
c$ per pound U308 as of October 31, 1980 from the Engineering and
Mining Journal (1979).
For nonenergy applications.
9-88
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-------
Table 9-52. PRODUCTION PROFILE AND PRICE HISTORY:
URANIUMa'D
Parameters
Production
Ore, 1,000 Mg (1,000 tons)
Uranium content Mg (tons)
Imports, concentrate, Mg
(tons) as metal
Employment (reduction plants)
Average annual price (UgOg)
Dollars per kg
Dollars per pound
1974
6,456
(7,115)
1975
6,681
(7,362)
Year
1976
8,344
(9,195)
11,261 11,158 12,701
(12,410)(12,296)(13f997)
1,665
(1,835)
—
25.24
11.45
1,112
(1,225)
100
52.20
23.68
5,023
(5,535)
200
87.52
39.70
— FT
1977 Oct. 1979~
NA
13,608
(14,996)
3,629
(3,999)
300
93.03
42.20
NA
NA
NA
NA
NA
NA
66.12
30.00
aU.S. Bureau of Mines, 1980.
American Metal Markets, 1978.
c$ per pound U308 as of October 31, 1980 from the Engineering and
Mining Journal (1979).
For nonenergy applications.
9-88
-------
9.1.11 Zinc
Zinc is extremely versatile and has a number of uses as an alloy
ingredient, a protective coating, and a chemical compound. Table 9-53
summarizes product uses of zinc. Most zinc goes to the construction
industry where it is used in the galvanization of many materials. The
transportation industry also uses zinc for galvanization, in die castings
for automotive components, and in rubber for tires. Zinc is used in
electrical equipment, office equipment and machinery, in sensitizing
photocopying paper, as well as in a number of other applications.
Aluminum, magnesium, and plastics replace zinc in diecasting where
weight limitations or surface finishes are important factors. The price
of substitutes and zinc's superior durability affect the degree to which
these substitutions are made. In many cases, the automobile industry
has moved to lighter weight materials. Aluminum, magnesium, titanium
oxides, and zirconium compounds are competitive in the chemical and
pigment applications of zinc.
Zinc prices (covered in Table 9-54) and demand are correlated with
general economic activity due to zinc's use in the construction and
transportation industries. The producers of zinc also face competition
from imports as indicated on Table 9-55. Lead and zinc are often
processed in the same plant. Forty-three of the plants listed in
Table 9-28 process zinc either alone or as a coproduct with lead.
Table 9-56 lists additional industry characteristics. When mined in
conjunction with lead, the concentration of zinc typically averages
1 percent.
Demand for zinc is expected to increase at about 2 percent per year
through 1985. The three prospective new zinc processing plants were
covered under the section on lead (Section 9.1.5). These facilities are
expected to process both lead and zinc with a zinc ore grade of 1 percent.
9-89
-------
Table 9-53. PRODUCT USES: ZINCC
Product uses
1978
(percent)
1979
(percent)
Construction materials
Transportation equipment
Electrical equipment
Machinery and chemicals
Other
41
27
10
8
14
40
26
12
10
12
U.S. Bureau of Mines, 1980.
9-90
-------
Table 9-54. PRICE HISTORY: ZINCC
Year
Actual prices
-------
Table 9-55. PRODUCTION PROFILE: ZINCC
Parameters
Production 1,000 Mg (1,000
as metal
Mi ne
l l l l it-
Primary slab zinc
1974
tons)
453
(499)
504
(555)
Secondary redistilled slab 71
zinc . (78)
Imports for consumption, 1
(1,000 tons) as metal
Ore and concentrates
Slab zinc
Exports: Slab zinc, 1,000
(1,000 tons) as metal
Employment:
Mine and mill0
Smelter
Net import reliance as a
percent of apparent con-
sumption
,000 Mg
121
(133)
493
(543)
Mg 17
(19)
6,700
4,500
59
1975
426
(469)
397
(437)
53
(58)
389
(429)
340
(375)
6
(7)
6,700
4,100
61
Year
1976
440
(485)
453
(499)
62
(68)
141
(155)
631
(695)
3
(3)
".:
6,700
.4,100
58
1977
408
(450)
408
(450)
46
(51)
109
(120)
504
(555)
b
6,600
4,100
57
1978
303
(334)
407
(449)
35
(39)
106
(117)
622
(685)
1
(1)
5,700
4,100
66
aU.S. Bureau of Mines, 1980.
bl_ess than one-half unit.
clncludes all zinc and/or lead-zinc producing units.
dNet import reliance = imports-exports+adjustments for Government and
industry stock changes.
9-92
-------
Table 9-56. INDUSTRY CHARACTERISTICS: ZINC
Number of leading companies (lead/zinc)
Number of active operations (lead/zinc)
Percent of capacity controlled by
leading companies (as 95 percent
ZnS + PbS concentrate)
Major processing states
Ratio of ore to product
8
46 (11 temporarily
inactive)
.9 million
Missouri, Idaho,
New Jersey
Range: 10 •- 100
Average: 25
New lead/zinc
plants: 100
9-93
-------
9.1.12 Zirconium
Zirconium, covered by Tables 9-57 through 9-60, is consumed in two
basic forms: zircon (zirconium silicate) which represents over 90 percent
of production tonnage, and zirconium metal. As indicated in Table 9-59,
zircon is used in foundry sands, refractories, abrasives, ceramics, and
as a source of zirconium metal. Zirconium metal is used in nuclear
reactors, corrosion resistant industrial equipment, flash bulbs, and as
a refractory alloy. Commercial nuclear generating plants consume over
90 percent of nonmilitary zirconium metal production. Zircon may be
replaced in certain foundry applications by chromite and some aluminum
silicate minerals. There are no ready substitutes for zirconium in its
nuclear uses.
Plants that process zirconium and titanium as their main product
are listed in Table 9-42. Demand for zircon is expected to increase at
an annual rate of around 3 percent through 1985 (United States Bureau of
Mines, 1980). New demand will be met from the production of zirconium
as a coproduct of titanium from sand-type ores (see Section 9.1.8).
Based on the ore grades of existing plants, an ore grade of 0.9 percent
(as zircon) was assumed for new plants.
9.1.13 Strategic Stockpile
Many of the metals or metallic minerals under consideration for
this NSPS are stockpiled in various forms by the United States government
for strategic reasons. Table 9-61 lists the metals and the metallic
form stockpiled. Actual quantities stockpiled and the respective stock-
pile goals; are also given. The stockpiling efforts of the United States
government have sometimes been characterized as erratic and stockpiling
activities do not necessarily follow articulated policies. For the year
1979, the only two metals subject to government sales were tungsten and
gold. Tungsten sales amounted to 4,250,000 pounds of ores and
concentrates.
9-94
-------
Table 9-57. PRODUCTION PROFILE: ZIRCONIUM1
Parameters
Year
1974 1975 1976 WTT 1978"
Production Mg (tons)
Zircon
Zirconium metal
Imports Mg (tons)
Zircon
Zirconium metal
Exports Mg (tons)
Zircon
Zirconium, alloys, and
scrap
Employment
b
b
b
b
b
b
b
b
b
b
56,703 36,474 58,644 59,153 82,730
(62,487) (40,194)(64,626)(65,187)(91,168)
332 738 452 580 900
(366) (813) (498) (639) (992)
19,493 17,024 8,553 13,029 6,974
(21,481) (18,760) (9S429)(14,358) (7,685)
748 1,202 1,045
(824) (1,325) (1,152)
891 936
(982) (1,031)
Mine and mill
Metal plant
Net import reliance0 as a
percent of apparent con-
sumption
500
900
b
550
850
b
550
800
b
550
800
b
500
750
b
aU.S. Bureau of Mines, 1980.
Withheld.
cNet import reliance = imports-exports+adjustments for Government and
industry stock changes.
9-95
-------
Table 9-58. PRICE HISTORY: ZIRCONIUM0
Year
1974
1975
1976
1977
1978
1979
$/Mg
331
232
. 165
165
201
165
$/Short ton
. 300
210
150
150
183
150
Average annual price of Zirconium concentrate (65 percent ZrO^) from
Engineering and Mining Journal.
9-96
-------
Table 9-59. PRODUCT USES: ZIRCONIUM1
Product uses
1978
(percent)
1979
(percent)
Foundry sands
Refractories
Ceramics
Abrasives
Miscellaneous uses, including
nuclear
42
30
12
4
12
42
30
12
4
12
*U.S. Bureau of Mines, 1980.
9-97
-------
Table 9-60. INDUSTRY CHARACTERISTICS: ZIRCONIUM
Number of leading companies
(titanium and zirconium)
Number of active operations
Precent capacity controlled by
leading companies
Value of processing plant output
(as ilmenite/zircon concentrate)
Major processing states
Ratio of ore to product (as zircon)
5 (1 temporarily
inactive)
98
70.5
Florida, New Jersey
100
9-98
-------
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9.1.14 REFERENCES FOR SECTION 9.1
American Metal Market. 1978. |letal Statistics. Fairchild
Publications. New York. ^fT. 253-254v
Baumgardner, L. United States Bureau of Mines. 1981. Telephone
conversation with M. Buckwalter, TRW. February 11. Discussion of
ore grades for bauxite processing plants.
Butterman, W. C. 1978. Gold: Mineral Commodity Profile. U.S. Bureau
of Mines. Washington, D. C. 17pp.
Carter, R. A. 1978. Nations Newest Silver Mine Uses Open-Pit Methods.
Mining Engineering, p. 41-44.
Cammarota, V. A. 1978. Zinc: Mineral Commodity Profile. U.S. Bureau
of Mines. Washington, D. C. 25pp.
Drake, H. J. 1978. Silver: Mineral Commodity Profile. U.S. Bureau of
Mines. Washington, D. C. 14pp.
Engineering and Mining Journal. 1979. Engineering and Mining Journal
Markets. 180(5): p. 19-25.
Engineering and Mining Journal. 1980. 1980 Survey of Mine and Plant
Expansion. 181(1): p. 76-90.
Etheridge, D. A. 1980. Gold. Engineering and Mining Journal. 181(3):
p. 120-23.
Klinger, F. L. 1978. Iron Ore: Mineral Commodity Profile. U.S.
Bureau of Mines. Washington, D. C. 27pp.
Kornhauser, B. A. and Philip T. S. 1978. Tungsten: Mineral Commodity
Profile. U.S. Bureau of Mines. Washington, D. C. 22pp.
Kummer, J. T. 1979. Molybdenum: Mineral Commodity Profile. U.S.
Bureau of Mines. Washington, D. C. 23pp.
Lynd, L. F. 1978. Titanium: Mineral Commodity Profile. U.S. Bureau
of Mines. Washington, D. C. 19pp.
Mining Information Services. 1979. International Directory of Mining
and Mineral Processing Operations. Engineering and Mining Journal
(McGraw Hill). New York. p. 11-242.
Ryan, J. P. and J. M. Hague. 1977. Lead: Mineral Commodity Profile.
U.S. Bureau of Mines. 23pp.
Schroeder, H. J. 1979. Copper: Mineral Commodity Profile. U.S.
Bureau of Mines. Washington, D. C. 20pp.
9-101
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Stamper, J. W. arid H.' F. Kurtz., 1978. Aluminum: Mineral Commodity
Profile. U.S. Bureau of Mines. Washington, D. C. 29pp.
Stephenson, P.- U.S. Bureau of Mines. 1981. Telephone conversation
with M. Alexander, 'TRW. February 11. Discussion of start-up dates
and mill-capacity for bauxite processing plants.
United States Bureau of Mines. 1980. Mineral Commodity Summaries.
Veith, D. Minnesota Bureau of Mines. 1980. Telephone conversation
with E. Monnig, TRW. July 23. Discussion of nickel mining in
Minnesota.
9-102
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9.2 ECONOMIC IMPACT ASSESSMENT
9.2.1 Introduction and Summary
9-2.1.1 Introduction. This section assesses the economic impact
of the regulatory alternatives on the metallic mineral processing industries.
Economic profile information on the industries presented in Section 9.1 is a
principal input to this assessment. For the purpose of economic analysis
the 12 metals are divided into ten industries. In the economic analysis lead
and zinc are treated as coproductscof a single industry, as are titanium and
zirconium. Various financial analysis techniques are applied to the model
plants to determine potential impacts on control affordability and control
capital availability. These findings are assessed, based on the industry
profile, to determine the industry-wide impacts that will be presented in
Section 9.3.
As noted in previous chapters the facilities of interest, located at the
crude ore milling stage of the production process, are: crushers, screens,
ore bins, hammer mills, dryers, product transfer points and product loadout
facilities. Model plants for some of the metals contain all of the facili-
ties of interest, but not every model plant contains every facility of
interest.
9.2.1.2 Summary. Table 9-62 lists the percentage price increases, the
percentage capital cost increases, and the affordability conclusions, using
the most costly regulatory alternative for all industries and model plant
sizes. The most costly regulatory alternative for each model plant refers to
the regulatory alternative that has the highest net annualized cost, which is
alternative 3b.
A screening analysis shows that none of the ten industries is likely to
experience a significant impact for any model plant size when the most
costly regulatory alternative is added. Each of the ten products would
require a sales price increase, usually at the refined metal stage of proces-
sing, of two percent or less when the most costly regulatory alternative is
added.
Because the most costly regulatory alternative (3b) is likely to be
affordable, the less costly alternatives (2 and 3a) are also affordable
and therefore a separate analysis of these alternatives is not provided.
9-103
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Table 9-62. SUMMARY OF PRICE INCREASE
FOR THE MOST STRINGENT REGULATORY ALTERNATIVE
Cents Percentage
Plant Size Per Pound Price
Metal (TPH)
1. Aluminum (150)
(300)
2. Copper (150)
(600)
3. Gold (75)
(150)
4. Iron Ore (1200)
'(2400)
5. Lead/Zinc*** (300)
(600)
6. Molybdenum (300)
(1200)
7. Silver (50)
(150)
8. Titanium/ (300)
Zirconium (600)
(sand)
9. Tungsten (25)
10. Uranium (25)
(75)
Ins. = insignificant (<
Increase Increase
0.02
0.02
1.6
0.8
84. (troy oz)*
52. (troy oz)
0.16 (LTU)**
0.18 (LTU)
. 0.1
0.1
1.1
0.6
7. (troy oz)
3. (troy oz)
0.1
0.1
••/
3.6 ^
8.8 ''
3.6
.1 percent)
Ins.
Ins.
1.7
0.8
0.2
0.1
0.2
0.3
0.2
0.2
0.1
0.1
0.5
0.2
0.8
0.8
0.5 ,
0.2
0.1
Capital
Control
Percent Affordability
Increase
Ins.
Ins.
0.2
0.2
0.2
0.2
0.1
0.1
0.2
0.2
0.2
0.2
0.4
0.2
0.9
; !-2
1.0 ;
' 0.8
0.3
Conclusion
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
affordable
.affordable
affordable
*14.5 Troy Ounces = 1 pound avoirdupois
**1 Long Ton Unit (LTU)
***Note the discussion in
= 22.4 pounds
Section 8.1 on the possible
effects of the
.NAAQS for lead on the calculation of the control costs for lead/zinc.
processing plants.
— .
9-104
^^__^1_
I^H^^H
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9.2.2 Methodology
This section describes the methodology used to assess the economic
impact of the regulatory alternatives on the ten industries that include 19
model plants. The principal economic impact which is assessed is the effect
of incremental control costs on the profitability of new grassroots plants,
or expansions of existing plants. Expansions of existing plants are repre-
sented by the smaller model plant sizes and therefore a separate analysis for
expansions is not necessary.
Since each state implementation plan (SIP) contains particulate emission
control standards, any new plant would have to meet SIP standards even in
the absence of a NSPS. Incremental control costs are the control costs
above those baseline costs required to meet the various SIP standards.
In the analysis which follows, each model plant is evaluated as if it
stands alone, that is, the firm is not associated with any other business
activity nor is it associated with any larger parent company. This assump-
tion has the effect of isolating the control cost without any assistance from
other business activities or firms. This is a conservative assumption because
many of the companies in the metallic mineral processing industries are large
corporations with substantial management, financial, and other resources, any
or all of which could be used to aid other product lines or subsidiaries.
For example, a parent corporation could lend money to a subsidiary, or a
parent corporation could guarantee repayment of a subsidiary's loan.
This analysis assumes that a plant is profitable in the absence of a
NSPS. Therefore, the focus of this analysis is on incremental costs to
determine if a plant which would o'therwise be profitable is now rendered
unprofitable as a result of the incremental control costs.
Economic impact is evaluated on model plants whose description is based
on representative characteristics of new or expanded plants, such as produc-
tion capabilities, asset size, and other financial measures. The model
plants provide an indication of the degree of impact on all new plants in
.the industry by incorporating into the models the major characteristics
prevailing in various size segments of the metallic mineral processing
industry. They do not represent any particular existing plant as any indi-
vidual plant may differ in one or more of the above characteristics.
The methodology employs a screening analysis based on the percentage
price increase necessary to completely pass-through to customers the added
cost of the most costly regulatory alternative for each plant size.
9-105
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,9.2.2.1 Screening Analysis. The screening analysis is based on
the percentage price increase necessary to completely pass through to
customers the added cost of the most costly regulatory alternative. The
prices used are typically those prices shown in Section 9.1 for the indivi-
dual price histories of the metals. Prices are as of October 1979, the same
date as for the control costs. The price cited for each metal is for the
first product form that is normally sold in significant quantities and has a
published price. The prices cited are at the refined metal stage of the
production process, or contained metal, for, aluminum, copper, gold, lead/
zinc, and silver. The price for iron ore is in the form of pellets at Lake
Superior mines. The prices for molybdenum, titanium/zirconium, tungsten, and
uranium are in the concentrate form rather than the refined metal form. The
differences are a reflection of the differences in the degree of integration
of the producers of the various metals and the related commercial activity of
the marketplace. For example, approximately 62 percent of the copper that is
smelted domestically is part of an integrated operation (U.S. E.P.A., 1980 p.
9-5).
The model plant parameters are described in Chapter 6. For each model
plant the total hours of operation per year is multiplied by the capacity
utilization rate to provide the effective annual hours of operation. The
effective annual hours of operation are then multiplied by the hourly capa-
city of the plant to provide the tons of ore processed annually at the plant.
The tons of ore processed annually is then multiplied by the ore grade and
recovery rate and the result is the product output, or "yield", of the plant.
In order to simplify the analysis and to be conservative, a single ore grade
is employed for each metal, and no byproducts or coproducts are included
(except lead/zinc and titanium/zirconium). .-;•
The calculations for a copper model plant are provided as an example:
Copper (150) TPH
8,500 total hours of annual operation
x 96% capacity utilization rate
89160 effective hours of annual operation
150 tons per hour (TPH)
x 8..160 hours of operation per year
1,224,000 tons of ore processed per year
:• 9-106
-------
1,224,000 tons per year
x .45% ore grade
5,508 tons of product (contained copper metal)
5,508 tons of contained copper
x 93% recovery rate
5,122 yield
The yield is calculated for each model plant. The control costs are
described in Section 8.1. The net incremental annualized control cost above
the SIP for the most costly regulatory alternative is then divided by the
yield to provide the dollar cost increase per unit of product. The cost
increase per unit of product is then divided by the product sales price to
provide the percentage increase in sales price. The earlier copper (150) TPH
model plant illustration is again used as an example:
Copper (150) TPH
5,122 yield in tons
x 2,000 pounds per ton
10,244,000 pounds
$372,100 Alternative #3b
-204,700 less Alternative #1 (SIP)
$167,400 net incremental annualized cost of Alternative #3b
= net incremental annualized cost per pound = 1.6gf per pound
10,244,000
1.6ef incremental cost of Alternative #3b
95.3d copper sales price per pound as of October 1979
= 1.7%
1.7% = incremental cost of Alternative #3b.
The percentage price increases for all model plants are shown in Table
9-62.
9-107
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It is not unusual for the product prices of many of the ten industries
to fluctuate by substantially more than two percent. Further, prices quoted
among producers of the same metal may frequently vary by two percent or more
^due to differences in production costs, transportation costs, inventory
levels, contract terms, and so on. For example, two major copper producers
follow an announced pricing policy of charging a 2.5 cent premium over the
Comex quoted copper price (which is greater than 2.5 percent based on a 1979
price of less than $1.00 per pound). Also, even in the "worst case" situa-
tions two percent is considerably lower than the five percent industry average
rate which is one of the EPA review guideline criteria for major economic
impact. Additionally, a two percent cutoff limit was used in the nonmetallic
minerals NSPS. Therefore, it appears that a price increase of two percent or
less could be passed through without adverse impacts on the plants.
9.2.3 Findings
This section describes the findings for each of the metals. Various
economic factors have different degrees of significance among the ten metals,
for example imports may be highly significant for one mineral and insig-
nificant for another. Therefore, each of the ten metals is discussed
individually, with emphasis on those economic factors that are most signifi-
cant to an assessment of the economic impact of incremental control costs for
the particular metal at hand.
9.2.4 Aluminum
Section 9.1.1 has provided a profile of the aluminum industry and
Section 9.2.1.2 has noted that the addition of the most costly regulatory
alternative will require price increases of less than two percent, or speci-
fically .03 and .03 percent for the 150 and 300 TPH aluminum model plants.
Also, the increase in capital for the model plants as a result of the incre-
mental controls is insignificant for the model plants. The increased capital
required for control equipment will add $63,000 and $130,000 to total invest-
ments of $430,000,000 and $870,000,000 for the 150 and 300 TPH model plants,
respectively,. If an investment in an aluminum processing plant would other-
wise be accepted, neither the additional price increase nor the additional
capital requirement is likely to cause that investment to now be rejected.
9-108
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9.2.4.1 Ownership, Location, Concentration. There are three principal
corporations in the domestic aluminum industry: Aluminum Co. of America,
Reynolds Metals Co., and Kaiser Aluminum and Chemical Corp. These three
producers are fully integrated and as a group accounted for 86 percent of
domestic primary aluminum capacity in 1979. The principal processing states
are Texas and Louisiana.
The large size of the corporations in the aluminum industry, as well
as the small sizes of the control capital requirements for the model plants,
indicates that the necessary capital for the incremental controls will be
available.
9.2.4.2. Pricing. The price of aluminum metal has increased from 55
cents per pound in early 1979 to 58 cents in mid 1979. During early 1980
the price continued to increase to 66 cents per pound.
The incremental control costs will require a price increase, for the 150
and 300 TPH aluminum model plants, of less than .1 cent per pound, based on
an October 1979 sales price of 60 cents per pound.
In past years during periods of over capacity the industry has experi-
enced some discounting from the quoted price as well as some premium pricing
.when supply is constrained.
Beyond the normal elements that influence the price of any product, an
additional element influencing the price of aluminum is that the industry's
domestic prices are currently subject to the voluntary wage and price guide-
lines and as a result there is some disparity between domestic prices and
world prices (The Wall Street Journal, May 6, 1980 p. 2). (As of this writing
the guidelines are due to expire on December 31, 1980).
9.2.4.3 Supply. The aluminum industry is dominated by a relatively
small number of major participants. Also, government actions play a sub-
stantial role in the aluminum industry and the supply of aluminum. Six
international corporate groups (three domestic and three foreign) own or
control approximately 50 percent of the world's productive capacity. Another
50 firms, most nonintegrated and many associated with one of the above six
groups or with a government, own or control 25 percent of the world's capacity.
Governments of 24 countries own or control the remaining 25 percent of capa-
city. (Stamper and Kurtz, 1978 p. 1).
9-109
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The activity of governments may also influence the aluminum industry
through changes in stockpiles. The U.S. Government maintains a stockpile of
various forms of aluminum and through 1977 made sales from the stockpile.
By the end of 1977 the stockpile of primary metal was essentially depleted.
(Aluminum Association, 1978, Stamper and Kurtz, 1978 p. 20).
The United States has large quantities of aluminum resources; however,
the costs to use these domestic resources exceed the costs to use foreign
bauxite. Therefore, domestic producers import 90 percent of bauxite
requirements.
An additional important source of aluminum in the total supply of
aluminum is the recycling of aluminum scrap. Domestic secondary recovery of
aluminum accounted for approximately 22 percent of the total supply of
domestic aluminum in 1978.
Primary aluminum metal production requires large amounts of electrical
energy, particularly at the smelting stage of the production process. The
cost of electrical energy has risen considerably in recent years, parti-
cularly in the Northwestern United States. The domestic cost and availability
of electricity will play an increasingly important role in the continued
operation of existing facilities and in the location of new.facilities, both
domestic and foreign (Chemical Week, 1980 p. 17).
9.2.4.4 Demand. Roughly 88 percent of the total aluminum consumption
in 1978 was in the form of metal.
The aluminum industry is currently experiencing renewed financial strength
after several years of surplus capacity and depressed earnings. A principal
reason for the improved outlook for the industry is the increased substitution
of aluminum for steel by the transportation industry in order to reduce vehicle
weight and increase fuel efficiency.
From 1968 to 1977 domestic demand for primary aluminum grew at an average
annual rate of 3.3 percent. As noted in Section 9.1.1 the domestic demand
for aluminum is projected to increase at the rate of 2.1 percent per year
through 1985.
9.2.5 Copper
A profile of the copper industry was provided in Section 9.1.4. Table
9-83 shows that the addition of the most costly regulatory alternative re-
quires price increases of 1.7 and 0.8 percent for the 150 and 600 TPH model
plants, respectively. The increase in capital for-the model plants as a
9-110
-------
result of the incremental controls is .2 percent for both model plant sizes.
The increased capital required for control equipment will add $161,000 and
$323,000 to total investments of $65,000,000 and $133,000,000 for the 150 and
600 TPH model plants, respectively. If an investment in a copper ore proces-
sing plant would otherwise be accepted, neither the additional cost increase
nor the additional capital requirement is likely to cause that investment to
now be rejected. Although both plants are below the two percent limit, the
percentage price 'increase for the 600 TPH is substantially lower than the per-
centage price increase for the 150 TPH. This suggests that the added control
costs may influence new investments toward larger plant sizes.Also, a
higher ore grade, or the addition of byproduct revenues such as nickel or
silver, or both, would increase revenues and profits for the model plants and
reduce the impact of the control costs.
9.2.5.1 Ownership, Location, Concentration. As noted in Section 9.1.2,
there are eight leading companies in the copper industry which control 76
percent of the capacity. The leading companies are major corporations, most
of which are fully integrated from mining through refining. Also, several of
the leading companies are prominent in the mining of other metals discussed
here. Other major corporations, such as major oil companies, either directly
or through subsidiaries, maintain considerable ownership interests in the
primary copper producing companies both in the United States and in foreign
countries. A partial list of leading copper companies that are owned by
parent corporations would include: Anaconda Company — a subsidiary of ARCO;
Duval Corporation -- a subsidiary of Pennzoil Company; Magma Copper Company
-'- a subsidiary of'Newmont Mining Company; and Cyprus Mines Corporation — a
subsidiary of Standard Oil Company (Indiana). The major copper-producing
states are Arizona, Nevada, New Mexico, and Utah.
9.2.5.2 Pricing. The price of copper can be volatile. During December
1978 the price of copper metal averaged 70.9 cents per pound while one year
later during December 1979 the price averaged $1.05 per pound for a gain of
48.7 percent. Also, during early 1980 the price of copper rose to a record
high price of $1.41 per pound and then declined to 88 cents per pound by
April 1980, a decline of 37.5 percent.
9-111
-------
Copper is a widely-traded world metal with the bulk of trading taking
place on two major international exchanges: the New York Commodity Exchange
(Comex) and the London Metal Exchange '(L.ME).
Prior to 1978, U.S. producers followed a pricing policy not tied dir-
ectly to the major exchanges. The U.S. producer price was intended to be
more stable than the exchange price and thereby promote improved business
planning by participants in the industry. When the exchange price was high,
the producer price was normally lower, and when the exchange price was low,
the producer .price was normally higher.
In May 1978 two major U.S.. copper producers, Kennecott and Anaconda,
introduced a new pricing policy for their companies and began basing their
price directly on the exchange price and charging a 2.5 cent premium above
the Comex price. The new pricing policy permits these two producers to
compete more effectively with foreign imports by introducing greater flexi-
bility into their pricing policy. The domestic price of copper was subject
to price controls from June 1973 until May 1974. Another result of the
change in pricing policy is that domestic copper prices are less likely to be
subject to federal wage and price guidelines, since the price of copper is
determined as a widely-traded commodity.
9.2.5.3 Supply. The average U.S. dependence on imports of copper is 12
percent. However, the U.S. dependence on foreign imports has varied from a
position of 20 percent dependence in 1974 to net exporter in 1975, back to a
position of 19 percent dependence in 1978. '••
An important source of copper in the total supply of copper is the re-
cycling of copper scrap. During 1979 total scrap (new and old) provided
approximately 20 percent of total refined copper production at domestic
primary plants (U.S. Bureau of Mines, MIS).
Over 40 percent of the Free World's primary copper production is govern-
ment-owned or controlled. (Kennecott Copper Corporation, 1979, p.4). There-
fore, international political and economic events can have a significant
impact on the price and supply of copper both in the United States and
world-wide. For example, some less-developed countries that are copper
exporters have a critical need for foreign currency such that these countries
are willing to continue to sell copper on the world market even during
periods of over-supply or slack demand (The Wall Street Journal, February 25,
1980). Another example of the influence of political events on the supply of
9-112
-------
copper is provided by the fact that in the past U.S. companies have experi-
enced partial or complete nationalization of their interests in a number of
countries, including Chile, Zambia, and Peru.
9.2.5.4 Demand. Electrical applications account for more than half of '
domestic copper consumption. Other major applications are in the construction,
industrial machinery, and transportation,industries.
As noted in Section 9.1.4, the demand for copper is projected to increase
at an annual rate of approximately three percent through 1985.
9.2.6 Gold
Section 9.1.5 has provided a profile of the gold industry and Section
9.2.1.2 has noted that the addition of the most costly regulatory alternative
will require price increases of less than 2 percent, or specifically .2
and .1 percent for the 75 and 150 TPH gold model plants, respectively. The
increase in capital for each of the model plants as a result of the incremen-
tal controls is .2 percent. The increased capital required for control
equipment will add $65,000 and $93,000 to total investments of $34,000,000
and $52,000,000 for the 75 and 150 TPH model plants, respectively. If an
investment in a gold ore processing plant would otherwise be accepted,
neither the additional price increase nor the additional capital requirement
is likely to cause that investment to now be rejected.
9.2.6.1 Ownership, Location, Concentration. As noted in Section 9.1.5
there .are 17 domestic gold ore processing plants. The plants are located
principally in the states of Nevada, California, Colorado, South Dakota, and
Washington. There are four leading companies in the industry and these four
companies own 70 percent of the industry's capacity.
9.2.6.2 Pricing. Gold's unique position in international financial
markets has been accompanied by a history of substantial government control
over and involvement in the gold market. This has the effect of making the
price of gold relatively more dependent on political developments and rela-
tively less dependent on economic fundamentals.
In recent years the price of gold has been volatile. Gold is widely
regarded as a hedge against economic uncertainty and international political
turmoil, and therefore during such times the price of gold frequently experi-
ences sharp price increases, due to speculation. The price of gold has risen
from $36.41 per troy ounce in 1970 to $800 per troy ounce in early 1980
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while later declining to about $500 per troy ounce. During this time
daily price fluctuations of $20 per ounce or more have not been uncommon.
These price fluctuations can be viewed in relation to the incremental
control cost price increases of 84 cents per troy ounce and 52 cents per troy
ounce, which is equivalent to .2 and .1 percent for the 75 and 300 TPH model
plants, respectively. These price increases are based on a gold price of
$353.44 per troy ounce in October 1979 which is a conservative price when
compared to a more recent price of approximately $553 in March of 1980.
9.2.6.3 Supply. Government activities play a significant role in the
supply of gold. It is estimated that nearly half of all the gold that has
been mined in the world, or 1.3 billion ounces, is in government vaults.
In the United States roughly 40 percent of total output is a byproduct
of base metal mining, particularly copper. This byproduct relationship
creates a degree of dependence for the domestic supply of gold on the out-
look for copper and other base metals.
The U.S. relies on imports to supply approximately 50 to 60 percent
of domestic consumption. The major source of supply of imported gold into
the United States is the Republic of South Africa. The Republic of South
Africa produced 72 percent of the output of the market economy countries.
The political controversy surrounding the Republic of South Africa introduces
an element of uncertainty into the supply of gold.
9.2.6.4 Demand. Jewelry is the dominant fabricated use for gold, fol-
lowed by industrial uses, principally in the manufacture of electronic compo-
nents, and dentistry. This pattern is likely to continue into the future.
As stated in Section 9.1.5 the industrial demand for gold is projected
to grow at an annual rate of 2.7 percent through 1985. Speculative demand,
in addition to industrial demand, is likely to remain an important element in
the total demand for gold.
9.2.7 Iron Ore
Section 9.1.6 has provided a profile of the iron ore industry, and
Section 9.2.1.2 has noted that the addition of the most costly regulatory
alternative will require price increases of .2 and .3 percent for the 1,200
and 2,400 TPH iron ore model plants, respectively. The increase in capital
for the model plants as a result of the incremental controls is less than
.1 percent. The increased capital required for control equipment will add
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$444,000 and $1,013,000 to total investments of $707,000,000 and $1,430,000,000
for the 1200 and 2400 TPH model plants, respectively. If an investment in an
iron ore plant would otherwise be accepted, neither the additional control.
costs nor the additional, capital requirement is likely to cause that investment
to now be rejected.
9.2.7.1 Ownership, Location, Concentration. As noted in Section 9.1.6
there are five leading companies in the iron ore industry which control 56
percent of the capacity.
The steel companies are a dominant force in the iron ore industry. The
steel companies are essentially the only consumers of iron ore and they main-
tain considerable ownership in the iron ore companies.
The two major producing states are Minnesota and Michigan and particu-
larly Minnesota's Mesabi Range.
9.2.7.2 Pricing. The standard unit of weight for iron ore is the long
or gross ton which is 2,240 pounds. Published prices for pellets are for a
long ton unit (LTU) which is one percent of a long ton, or 22.4 pounds. The
price of an LTU as of October 1979 was 65.5 cents. The cost of controls will
add .16 and .18 cents to the price of an LTU for the 1200 and 2400 TPH model
plant sizes, respectively.
9.2.7.3 Supply. Foreign imports of iron ore have grown from less than
five percent of demand in 1953 to approximately one-third in 1977. Over half
of the imports in 1977 came from mines owned, operated, or partially owned by
U.S. mining and steel companies. Therefore, the major U.S. companies in the
iron ore industry are important not only in terms of domestic operations,
but also in foreign operations, which is indicative of their significance
throughout the marketplace for iron ore.
In addition to the actions of U.S. companies, availability or price of
iron ore from abroad may be influenced by foreign political developments.
Companies owned or controlled by foreign governments produced about 60
percent of the estimated 785 million tons of iron ore produced outside of
the United States in 1977. For example, nationalization of U.S.-owned mines
in Chile in 1971 and in Venezuela and Peru in 1975 affected -about one-third
of U.S. imports of iron ore. Imports from Chile dropped to a small fraction
of their original level for several years; imports from Peru ceased for a
year and a half; imports from Venezuela in 1977 were less .than 50 percent
of their volume in 1975. (Klinger, 1978 p. 3, 19).
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9.2.7.4 Demand. More than 98 percent of the iron ore consumed in the
United States is used in the production of iron and steel. Therefore the
financial condition of the iron ore industry is dependent upon the financial
condition and production plans of the steel industry.
As stated in Section 9.1.6 the steel industry is projected to maintain
good growth through 1985, with demand for iron and steel increasing at an
annual rate of 2.5 percent.
9.2.8 Lead/Zinc
A profile of the lead and zinc, industries was provided in Sections 9.1.7
and 9.1.1.5. As in earlier sections, lead and zinc are considered jointly for
this discussion since they are often mined as byproducts and coproducts. Table
9-83 shows that the addition of the most costly regulatory alternative will re-
quire a price increase of .2 percent for both the 300 and 600 TPH lead/zinc
plants. The increase in capital for the model plants, as a result of the
incremental controls, is .2 percent for both model plant sizes. The increased
capital required for control equipment will add $212,000 and $323,000 to total
investments of $95,000,000 and $214,000,000 for the 300 and 600 TPH model plants,
respectively. If an investment in a lead/zinc ore processing plant would
otherwise be accepted, neither the additional control costs nor the additional
capital requirements are likely to cause that investment to now be rejected.
9.2.8.1 Ownership, Location, Concentration. As noted in Sections 9.1.7
and 9.1.1.5, there are eight leading companies in the lead/zinc industry.
These eight companies control 85 percent of the industry's capacity.
The major lead and zinc primary producers are large corporations that
are vertically integrated from mining through refining. Several of the major
producers are also prominent in the mining of other rnetals among the fifteen
metals discussed here. Many of the leading producers also have substantial
foreign interests.
Except for the lead deposits in the Virburnum Trend in southeastern
Missouri, the largest lead-producing area in the United States, the value of
associated metals often exceeds the value of the lead. The principal proces-
sing states are Missouri, Idaho, Colorado, Utah, and New Jersey.
9.2.8.2 Pricing. During early and mid-1979, both lead and zinc experi-
enced increasing prices with lead rising from 40.8 to a high of 61.1 cents
per pound and zinc rising from 34.6 to a high of 39.4 cents per pound. Late
in 1979 and during early 1980, prices of both metals began to decline, with
lead falling below 49 cents per pound and zinc falling below 38 cents per pound.
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Both metals are commonly traded internationally, with the LME serving as
the most widely followed exchange.
United States government actions can be a significant force in the
market for both lead and zinc. Lead was subject to domestic price controls
from June 1973 to December 1973. Zinc was subject to price controls from
August 1971 to December 1973.
The price increases are .1 cent per pound for both the 300 and 600 TPH
model plants. This price increase is equivalent to .2 percent.
9.2.8.3 Supply. Foreign imports of lead comprise roughly 10 to 20
percent of consumption. Foreign imports of zinc account for roughly 60 per-
cent of domestic consumption (Commorata, 1978 p. 1). The composition of zinc
imports has changed over the past decade from predominantly ore and concen-
trate with metal playing a lesser role, to zinc imports which are now predomi-
nantly metal, with ores and concentrates now accounting for the lesser share.
The significance of the change in the composition of zinc imports is
that as less of the product's value is added in the U.S., less domestic zinc
smelting and refining capacity is needed. From December 1968 to May 1975,
eight primary zinc smelters or refineries closed in the United States due to
either obsolescence, or lack of concentrate feed materials, or environmental
costs, or some combination of these elements (one plant was converted'to an
eletrolytic process and a second plant was purchased by another company and
reopened in 1973) (International Trade Commission, 1978 p. A-24). These
closings represented a decline in domestic capacity of about 570,000 short
tons, or approximately 50 percent of domestic capacity (International Trade
Commission, 1978 p. A-24, Commorata, 1978 p. 1). An additional zinc smelter
closed in December 1979 (The Wall Street Journal, April 16, 1980).
Recycled lead is an important component of supply accounting for about
35 to 40 percent of lead consumption (Ryan and Hague, 1977 p. 1). Relative
to recycled lead, recycled zinc is less important accounting for only about
five percent of the total U.S. supply because much of zinc's consumption is
in dissipative uses (Commorata, 1978 p. 1)
The U.S. government maintains a stockpile of both lead and zinc. Sales
from the stockpile have had a substantial impact on both industries, particu-
larly from 1972 through 1974 when sales from the stockpile accounted for 3,
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13.2, and 17.4 percent of total domestic lead demand and 12.4, 16.5, and 18.7
percent of total domestic zinc demand (Ryan and Hague, 1977 p. 11, Commorata,
1978 p. 14).
9.2.8.4 Demand. The largest use of lead is in storage batteries (61
percent), particularly automobile batteries which contain about 20 pounds of
lead. Other major uses of lead are as a gasoline additive,(12 percent), elec-
trical uses (2 percent), paints (6 percent), ammunition (4 percent), construc-
tion (3 percent), with the remainder divided among a variety of other uses.
The principal uses of zinc are in galvanized steel products for the
construction industry (40 percent) and transportation industry (26 percent)
in electrical equipment (12 percent), in machinery and chemicals (10 percent)
, and other uses (12 percent). The demand for zinc in galvanizing has been
growing, while the demand for zinc in diecasting has been declining in favor
of aluminum and plastic. ,
Lead is faced with environmental problems in several areas relating to
both-its production and consumption. For example, lead smelters have a number
of environmental problems. The increased use of "unleaded" gasoline is
lowering demand for lead in this application. Also, lead is no longer used
in interior paints due to its harmful effects when children ingest the paint.
Additionally, the use of lead shot for waterfowl hunting is being replaced by
the use of steel shot in order to prevent lead poisoning of aquatic life.
Over the past decade the demand for lead has grown by 3 percent per year
while the demand for zinc has been stable. Through 1985 the demand for lead
and zinc is projected to increase at an annual rateof one to two percent per
year due primarily to the growth in demand for lead-acid storage batteries.
9.2.9 Molybdenum
Section 9.1.8 has provided a profile of the molybdenum industry, and
Section 9.2.1.2 has noted that the addition of the most costly regulatory
alternative will require price increases of less than 2 percent, or specifi-
cally .1 percent for both the 300 and 1200 TPH molybdenum model plants.
Also, the increase in capital for both of the model plants as a result of
the incremental controls is .2 percent. The increased capital required
for control equipment will add $213,000 and $464,000 to total investments
of $100,000,000 and $285,000,000 for the 300 and 1200 TPH model plants,
respectively. If an investment in a molybdenum ore processing plant would
otherwise be accepted, neither the additional price increase nor the
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additional capital requirement is likely to cause that investment to now be
rejected.
9-2.9.1 Ownership,. Location, Concentration. As noted in Section 9.1.8
two corporations mine deposits primarily for molybdenum. The principal firm
is the Climax Molybdenum Co., a division of Amax Inc. and the other firm is
Molycorp. Inc., which was acquired in 1977 by Union Oil Co. of California.
Additionally, Duval Copper, a subsidiary of Pennzoil Co., and Kennecott Corp.
recover a significant amount of molybdenum from their copper mining operations,
Two major corporations, neither of which has historically been a signifi-
cant participant in the molybdenum industry, have recently begun ambitious
expansion programs in the molybdenum industry. The two companies are Standard
Oil Company (Indiana), through its Cyprus Mines subsidiary, at the Thompson
Creek molybdenum mine in Idaho; and Atlantic Richfield, through its Anaconda
subsidiary, at the Liberty mine in Nevada.
9.2.9.2 Pricing. The price of molybdenum has increased twelve times
since early 1974 and each price increase has been from 5 to 16 percent over
the previous level. The actual price has risen considerably for molybdenum
concentrate to $8.84 as of October 1979. The incremental cost price increases
are 1.1 and .6 cents per pound for the 300 and 1200 TPH model plants respec-
tively. The control cost price increases are equivalent to percentage price
increases of .1 percent for both model plants, which can be viewed in relation
to historical percentage price increases of from 5 to 16 percent.
9.2.9.3 Supply. In 1977 the world mine output of molybdenum contained
in concentrate was an estimated 206 million pounds. Three countries, the
United States, Canada, and Chile provided 89 percent of the total of which
the United States provided approximately 60 percent. Historically, the
United States is the world's leading producer and is a net exporter of molyb-
denum. Approximately one-half of the U.S. domestic production is exported.
In the past the U.S. Government has maintained a stockpile of molybdenum.
By yearend 1977 the U.S. Government stockpile was fully depleted. Domestic
reserves and production capacity are currently considered adequate to supply
national emergency needs and thus no new government stockpile purchases are
anticipated.
The dominant position of the United States in the world molybdenum
industry and the element of stability associated with a domestic source of
supply creates a favorable set of circumstances for both the producers and
consumers of molybdenum.
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9.2.9.4 Demand. The major end use for molybdenum is in the production
of molybdenum containing steels. The steel industry consumes approximately
70 percent of domestic molybdenum production.
The molybdenum industry is experiencing a tight supply/demand balance.
Molybdenum demand exceeded supply in 1979 for the sixth time in the last
seven years, although the expansion programs noted above plus others, should
serve to moderate the tight supply demand balance. As discussed in Section
9.1.8 the demand for molybdenum is projected to increase at a rate, of approxi-
mately five percent annually through 1985.
9.2.10 Silver . .
Section 9.1.10 has provided a profile of the silver industry, and
Section 9.2.1.2 has noted that the addition of the most costly regulatory
alternative will require price increases of .5 and .2 percent for the 50
and 150 TPH model plants, respectively. The increase in capital for the
model plants as a result of the incremental controls is .4 and .2 percent,
respectively. The increased capital required for control equipment will add
$92,000 and $126,000 to total investments of $25,000,000 and $76,000,000 for
the 50 and 150 TPH model plants, respectively. If an investment in a silver
processing plant would otherwise be accepted neither the additional price
increase nor the additional capital requirement is likely to cause that
investment to now be rejected.
,9.2.10.1 Ownership, Location, Concentration. As noted in Section
9.1.10, there are five leading companies in the silver industry which control
85 percent of the capacity. The two principal producing states are Colorado
and Idaho, particularly the Coeur d'Alene mining district in Idaho.
9.2.10.2 Pricing. The price of silver has experienced sharp fluctua-
tions recently. During December 1978 the price of silver averaged $5.93 per
troy ounce while one year later, during December 1979, the price averaged
$21.79 per troy ounce for a gain of more than 350 percent. The price of
silver continued to rise during early 1980 to more than $40 per ounce and
then declined over a period of weeks to approximately $13 per ounce. The
sharp price fluctuations were largely the result of the trading activity of
speculators on the commodity exchange.
The incremental control costs will require price increases of 7 cents
and 3 cents per troy ounce for the 50 'and 150 TPH silver model plants. The
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price increases are equivalent to percentage price increases of .5 and .2
percent based on an October 1979 silver price of $13.89 per troy ounce.
9.2.10.3 Supply. About 70 percent of silver mined is produced"as a
byproduct of copper mining as well as lead and zinc mining (Drake, 1978 p.
10). As a result, the supply of silver provided by domestic production is
dependent on the outlook for other metals..
A second important source of supply of silver is. foreign imports.
Foreign imports normally supply approximately 40 percent of consumption.
The United States government maintains a silver stockpile although sales
from or purchases for the stockpile-have not been significant for a number of
years (Drake, 1978 p. 1, 9).
9.2.10.4 Demand. As mentioned above, the trading activity of specu-
lators on the commodity exchange can play a major role in the price and
demand for silver. The major industrial use of silver is for photography,
consuming 39 percent of domestic demand in 1979. Other principal uses are
electrical and electronic components which accounted for 25 percent, and
silverware, which accounted for 15 percent, with the remainder used in a
variety of other products.
In spite of progress in some special areas to develop substitutes for
silver, no satisfactory substitute exists for most of silver's uses (Drake,
1978 p. 12, Chemical Week, February 27, 1980 p. 15). Also, the demand for
silver has risen faster than the world supply for most of the last decade
(Drake, 1978 p. 8). Therefore, the general lack of close substitutes for
silver, plus the fact that demand is outpacing supply suggests that the incre-
mental control costs could be passed through to consumers (Chemical Week, 1980)
Demand for silver is projected to increase at an annual rate of three
percent through 1985.
9.2.11 Titanium/Zirconium
A profile of the titanium industry was provided in Section 9.1.11 and a
profile of the zirconium industry was provided in Section-9.1.16. Table 9-83
shows that the addition of the most costly regulatory alternative will
require price increases of .8 percent each for the 300 and 600 TPH titanium/
zirconium model plants. Also, the increase in capital for the model plants
as a result of the incremental controls is .9 and 1.2 percent, respec-
tively. The increased capital required for control equipment will add
$92,000 and $203,000 to total investments of $10^,000,000 and $17,000,000 for
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the 300 and 600 TPH model plants, respectively. If an investment in a
titanium/zirconium processing plant would otherwise be accepted, neither the
additional price increase nor the additional capital requirement is likely to
cause that investment to now be rejected.
9.2.11.1 Ownership, Location, Concentration. As noted in Section 9.1.11
there are essentially only three companies in the titanium/zirconium (sand)
industry, Asarco, Inc., Humphreys Mining Company, and E.I. DuPont deNemours &
Co., Inc. These three companies own four ore processing plants. The
principal processing states are Florida, Georgia, and New Jersey,,
9.2.11.2 Pricing. The price for rutile ore was $375-$400 per short ton,
as of October 1979, or. 18.8 cents to 20 cents per pound. The price for
zirconium ore (65 percent ZrOg) was $150 per short ton, or 7.5 cents per
pound (EMJ Nov. 79 p. 21). Assuming 50 percent of the processing plant's
output is titanium and 50 percent of the processing plant's output is zir-
conium, the average price of the two products combined is approximately 13.2
cents per pound (18.8 + 7.5 = 26.3 * 2 = 13.2).
9.2.11.3 Supply. As discussed in Section 9.1.11 the mineral sources
of titanium are rutile and ilmenite. Australia has large desposits of rutile
that supply much of the United States demand (the exact percent of demand
supplied by imports is proprietary). The large Australian rutile deposits
present formidable economic competition for domestic deposits.
9.2.11.4 Demand. Approximately 98 percent of the demand for titanium
is for consumption in the form of titanium dioxide pigment for use in paint
and paper coatings. The remaining demand for titanium is-consumed in the
form of titanium sponge metal for use primarily in aerospace applications.
9.2.12 Tungsten
A profile of the tungsten industry was provided in Section 9.1.12.
Table 9-62 shows that the addition of the most costly regulatory alternative
will require a price increase of .5 percent for the 25 TPH tungsten plant.
The increase in capital for the model plant as a result of the incremental
controls is one percent. The increased capital required for control equip-
ment will add $46,000 to a total investment of $4,400,000 for the 25 TPH
model plant. If an investment in a tungsten processing plant would otherwise
be accepted, neither the additional cost increase nor the additional capital
requirement is likely to cause that investment to now be rejected.
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9.2.12.1 Ownership, Location, Concentration. As noted in Section
9.1.1.2 there are four active tungsten operations. There is one leading
firm, Union Carbide Corporation, which owns 71 percent of the industry's
capacity. The principal tungsten operations are located in California and
Nevada.
9.2.12.2 Pricing. The standard industry unit of measure is the short
ton unit (STU) which is one percent of a ton or twenty pounds. The price of
tungsten expressed on a per pound basis has risen from $4.77 in 1974 to a
high of $9.77 in 1977 and then declined to $6.74 in 1979. The incremental
control costs will require a price increase of 3.3 cents per pound.
9.2.12.3 Supply. Production of domestic tungsten concentrate generally
supplies from one-third to two-thirds of US. demand (Kornhauser and Stafford,
1978 p. 1). Another important source of supply of tungsten is the U.S.
government tungsten stockpile. Sales from the stockpile have been a signi-
ficant factor in the marketplace over recent years. For example, during 1979
the General Services Administration sold 5.6 million pounds of tungsten from
the government stockpile and released an additional 0.2 million pounds
directly to consumers for use in government programs. This 5.8 million
pounds released from the government stockpile represents approximately 29
percent of the total U.S. consumption, estimated at 20.0 million pounds,
during 1979, and is also typical of the five year average percentage of 27 .
percent (Thurbur, 1980 p. 187).
9.2.12.4 Demand. Tungsten's extreme hardness at high temperatures is
its most important characteristic.
Its major end uses are in cutting and wear-resisting materials, high-
speed' and tool and die steels, superalloys, and nonferrous alloys.
Demand is projected to increase at a rate of five percent per year
through 1985.
9.2.13 Uranium
Section 9.1.13 has provided a profile of the uranium industry, and
Section 9.2.1.2 has noted that the addition of the most costly regulatory
alternative will require price increases of less than two percent, or speci-
fically .2 and .1 percent for the 25 and 75 TPH uranium model plants, respec-
tively. ,Also the increase in capital for the model plants as a result of the
incremental controls is .8 and .3 percent, respectively. The increased
capital required for control equipment will add $28,000 and $38,000 to total
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investments of $3,700,000 and $11,200,000 for the 25 and 75 TPH model plants,
respectively. If an investment in a uranium processing plant would otherwise
be accepted, neither the additional price increase nor the additional capital
requirement is likely to cause that investment to now be rejected.
9.2.13.1 Ownership, Location, Concentration. As described in Section
9.1.13 there are 31 operations located primarily in the Western states,
particularly, Colorado, New Mexico, Wyoming, Utah, and Texas. There are 10
leading companies which own 74 percent of the industry's capacity. Several
major oil companies are significant participants in the industry, as well as
other major corporations, some of which are prominent in the mining of
several metals discussed earlier.
9.2.13.2 Pricing. Uranium is marketed, and prices are quoted for
uranium, in the concentrate form which is uranium oxide (U^OQ), commonly
referred to as yellowcake.
From 1972 to 1979 the price of uranium rose 700 percent from roughly $6
per pound to over $40 per pound. The sharp increase in prices which began in
1972 led to widespread allegations that an international uranium cartel was
causing the price increases. Uranium is normally sold through long term
contracts. A major domestic corporation experienced considerable financial
loss as a result of the price increase which the corporation alleges was due
to the existence of a cartel. Several years ago the corporation signed long
term contracts to supply uranium that it expected to purchase and deliver in
the future. Subsequently, in 1976, the allegations that an international uran-
ium cartel was causing the price increases led to litigation. The final out-
come of the litigation is still pending; however, it is possible that the
price of uranium is not primarily the result of the free interaction of
supply and demand.
A perspective on the relative size of the incremental control cost price
increases can be gained by comparing historical price increases to the incre-
mental control cost price increases. The incremental control costs represent
price increases of 8.8 and 3.8 cents per pound for the 25 and 75 TPH model
plants, which is equivalent to .2 and .1 percent based on a uranium sales
price of $42.70 per pound in mid-19!79.
During late 1979 and through the middle of 1980 the price of uranium
experienced weakness, declining to approximately $30.00 per pound. At a more
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current price of $30.00 per pound, few domestic operations are profitable,
regardless of pollution controls. However, at a price of $30.00 per pound
the incremental control costs continue to represent modest price increases of
.3 and .1 percent, respectively.
9.2.13.3 Supply. The sharp increases in the price of uranium over
recent years, from $6 to $40 per pound, has stimulated new uranium mining
activity. Also world inventories of uranium are high; currently at a level
sufficient to meet requirements for two years. Both Canada and Australia
contain substantial deposits of low cost uranium, and Africa is increasing
its production capacity. An indication of the high level of inventories and
the certainty of supplies is provided by the fact that when prices were
recently at higher levels some utilities were liquidating portions of their
inventories. Therefore supplies of uranium should be more than adequate
through 1985.
A significant additional element that determines the supply of uranium
for domestic uses is United States Government policy. Congress is discussing
the idea of reducing imports of uranium. Imports are approximately 8 percent
of total U.S. consumption and growing. Imports of uranium were banned from
1964 to 1976 when there also were large supplies. Currently, imports are
restricted to 30 percent of the uranium that is enriched to become nuclear
fuel, but imports will be allowed to rise to 100 percent by 1984 (The Wall
Street Journal, May 28, 1980).
9.2.13.4 Demand. Roughly 98 percent of the demand for uranium is for
use in the production of nuclear energy. There are no substitutes for
uranium in the production of nuclear energy 'and since nuclear power provides
about 12.5 percent of total U.S. electricity needs this suggests a continuing
demand for uranium.
Current issues concerning the future of nuclear energy production,
underscored by the accident at Three Mile Island, plus slower growth in the
total demand for electricity, create considerable uncertainty in projections
of the demand for uranium. Projections made in July 1978 of the annual
uranium requirements of U.S. utilities for the years 1980 through 1986, were
reduced as of December 1979 by an average annual amount of approximately 18
percent (White, 1980).
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9.3 SOCIO-ECONOMIC IMPACT ASSESSMENT
The purpose of Section 9.3 is to address those tests of macroeconomic
impact as presented in interim guidelines for Executive Order 12291 and,
more generally, to assess any other significant macroeconomic impacts that
may result from the NSPS.
The economic impact assessment is concerned only with the costs or
negative impacts of the NSPS. The NSPS will also result in benefits or
positive impacts, such as cleaner air and improved health for the population,
potential increases in worker productivity, increased business for the
pollution control manufacturing industry, and so forth. However, the NSPS
benefits will not be discussed here.
There are three principal rev.iew criteria to determine significant
macroeconomic impact.
1. Additional annual costs of compliance, including capital charges
(interest and depreciation), total $100 million (i) within any one
of the first five years'of implementation, or (ii) if applicable
within any calendar year up to the date by which the law requires
attainment of the relevant pollution standard.
2. Total additional cost of production of any major industry product
or service exceeds 5 percent of'the selling price of the product.
3. The Administrator requests such an analysis (for example when
there appear to be major impacts on geographical regions or local
governments).
The metallic minerals NSPS will not trigger any of the above tests.
The metal that will experience the highest annual costs of compliance is
iron ore with one;projected 1,200 TPH plant and one projected 2,400 TPH
plant. The plants will have costs of compliance of $420,100 and $872,400
or a total of $1,292,500, which is far below the $100 million test.
Further, Table 9-63 shows that even if the costs of compliance for each of
the ten metals are summed, the grand total is $4,555,000; or far below the
$100 million test. Also, Table 9-62 has shown that all of the metals are
well below the test of an increase in costs of 5 percent of the selling
price. Finally, new plants that are subject to the NSPS will be
diversified geographically. Therefore, for the reasons given above, no
significant macroeconomic impacts are likely.
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Table 9-63. SUMMARY OF INDUSTRY ANNUALIZED COST
FOR THE MOST STRINGENT REGULATORY ALTERNATIVE
($ in OOO's)
Metal
Aluminum
Copper
Gold
Iron ore
Lead/Zinc*
Molybdenum
Silver
Titanium/
Zirconium
(sand)
Tungsten
Uranium
GRAND TOTAL
Plant
(Mg/hr)
140
270
140
540
68
140
1,100
2,200
270
540
270
1,100
45
140
270
540
23
23
68
size
(ton/hr)
(150)
(300)
(150)
(600)
(75)
(150)
(1,200)
(2,400)
(300)
(600)
(300)
(1,200)
(50)
(150)
(300)
(600)
(25)
(25)
(75)
\ * v J
Projected
number of
new sources
1
1
1
1
1
1
1
1
2
1
1
2
2
1
1
1
1
2
3
Annuali zed
cost of
NSPS increment
$ 53
95
167
303
66
82
441
867
174
264
218
464
76
108
102
156
41
28
36
Total
$ 53
95
167
303
66
82
441
867
348
264
218
928
- 152
108
102
156
41
56
108
$4,555
*Note the discussion in Section 8.1 on the possible effects of the NAAQS for
lead on the calculation of the control costs for lead/zinc processing plants.
9-127
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REFERENCES
Aluminum Statistical Review in 1978. The Aluminum Association p. 29.
Chemical Week. For Precious metals, it's a mad, mad world. February 27,
1980. p. 15.
Chemical Week. Power crisis eases in the Pacific Northwest. November 5,
1980 p. 17.
Commorata, V, Anthony. May 1978. Zinc: Mineral Commodity Profile. U.S.
Bureau of Mines. Washington, D.C. P. 1.
Drake, Harold J., September 1978. Silver: Mineral Commodity Profile. U.S.
Bureau of Mines. Washington, D.C. p. 1, 8, 9, 10, 12.
International Trade Commission. Unalloyed, Unwrought Zinc. USITC Publi-
cation 8949 June 1978 p. A-24, A-4.
Kennecott Copper Corporation. SEC Form 10-K. December 31, 1979, p. 4.
Klinger, F.L« May 1978. Iron Ore: Mineral Commodity Profile. U.S. Bureau
of Mines. Washington, D.C. p. 3 and 19.
Kornhauser, Ben A. and Philip T. Stafford. September 1978. Tungsten:
Mineral Commodity Profile. U.S. Bureau of Mines. Washington, D.C. p. 1.
Ryan, J.P. and J.M. Hague. December 1977. Lead: Mineral Commodity Profile.
U.S. Bureau of Mines. Washington, D.C. p.'l, 11.
Stamper, John W. and Horace F. Kurtz. 1978. Aluminum: Mineral Commodity
Profile. U.S. Bureau of Mines. Washington, D.C. p. 4, 1.
Thurbur, W.C.., Engineering and Mining Journal. March 1980. Tungsten:
Demand Tops Supply Despite GSA Releases, p. 187.
United States Bureau of Mines. Mineral Industry Surveys - Copper. July 1980
p. 2.
United States Environmental Protection Agency. Arsenic Emissions from Primary
Copper Smelters - Background Information. Section 9.1, p. 9-5.
Wall Street Journal, The.- Poland's Copper and Silver Ore Earning Nation
Critically Needed Hard Currency. February 25, 1980.
Wall Street Journal, The. St. Joe Won't Replace Zinc Smelter It Closed
Recently in Monaca, Pa. April 16, 1980.
Wall Street Journal, The. Reynionds Metals and Kaiser Aluminum Roll Back Price
Boosts on Some Products. May 6, 1980 p. 2.
9-128
-------
Wall Street Journal, The. Uranium Producers Hope Price Will Rise On Output
Cutbacks, Import Restrictions. May 28, 1980.
White, George Jr., Engineering and Mining Journal. March 1980. Uranium:
Improving Supplies Weaken Price Structure. P. 195.
9-129
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TECHNICAL REPORT DATA
(Please read Instructions on the reverse before completing)
1. REPORT NO,
EPA-450/3-81-009a and -009
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
5. REPORT DATE
Metallic Mineral Processing Plants - Background
Information for Proposed Standards
6. PERFORMING ORGANIZATION CODE
August 1982
7. AUTHOR(S)
8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADpRESS
Office of Air Quality Planning and Standards
U.S. Environmental Protection Agency
Research Triangle Park, North Carolina 27711
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-02-3063
12. SPONSORING AGENCY NAME AND ADDRESS
DAA for Air Quality Planning and Standards
Office of Air, Noise, and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, North Carolina 27711
13. TYPE OF REPORT AND PERIOD COVERED
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
Standards of performance for the control of particulate matter emissions from
metallic mineral processing plants are being proposed under the authority of
Section 111 of the Clean Air Act. These standards would apply to facilities at
processing plants for which construction or modification began on or .after the
date of proposal of the regulation. This document contains background .
information and environmental and economic impact assessments of the regulatory
alternatives considered in .developing proposed standards.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
Air pollution
Pollution control
Standards of performance
Metallie'mineral processing plants
Particulate matter
I).IDENTIFIERS/OPEN ENDED TERMS C. COSATI Held/Group
Air pollution control
13B
18, DISTRIBUTION STATEMENT
Unlimited
19. SECURITY CLASS (This Report)
Unclassified
21. NO. OF PAGES
822
20. SECURITY CLASS (This page')
Unclassified
22. PRICE
EPA Fo»m 2220-1 tR°v. 4-77) .PREVIOUS FOITION is OBS.OL.ETE
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