EPA 230/1-74-034
Phase 2
DECEMBER 1974
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES
ON THE ELECTROLYTICALLY PRODUCED
CHROMIUM, MANGANESE AND SYNTHETIC
MANGANESE DIOXIDE INDUSTRIES; AND ON
THE CALCIUM CARBIDE INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 20460
-------
EPA - 230/1-74-034
Phase 2
December 1974
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES
ON THE ELECTROLYTICALLY PRODUCED
CHROMIUM, MANGANESE AND SYNTHETIC
MANGANESE DIOXIDE INDUSTRIES; AND ON
THE CALCIUM CARBIDE INDUSTRY
DECEMBER, 1974
OFFICE OF PLANNING AND EVALUATION
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
CONTRACT NO. 68-01-1545
-------
PREFACE
The attached document is a contractor's study prepared for
the Office of Planning and Evaluation of the Environmental
Protection Agency ("EPA"). The purpose of the study is to ana-
lyze the economic impact which could result from the application
of alternative effluent limitation guidelines and standards of
performance to be established under section 304(b) and 306 of
the Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development
Document") supporting the issuance of proposed regulations under
sections 304(b) and 306. The Development Document surveys exist-
ing and potential waste treatment control methods and technology
within particular industrial source categories and supports pro-
posal of certain effluent limitation guidelines and standards of
performance based upon an analysis of the feasibility of these
guidelines and standards in accordance with the requirements of
sections 304(b) and 306 of the Act. Presented in the Development
Document are the investment and operating costs associated with
various alternative control and treatment technologies. The
attached document supplements this analysis by estimating the
broader economic effects which might result from the required
application of various control methods and technologies. This
study investigates the effect of alternative approaches in terms
of product price increases, effects upon employment and the con-
tinued viability of affected plants, effects upon foreign trade
and other competitive effects.
The study has been prepared with the supervision and review
of the Office of Planning and Evaluation of EPA. This report was
submitted in fulfillment of Contract No. 68 01 1545, Task Order
No. 4 by Kearney: Management Consultants. Work was completed as
of December 20, 1974.
This report is being released and circulated at approximately
the same time as publication in the Federal Register of a notice
of proposed rule making under sections 304(b) and 306 of the Act
for the subject point source category. The study is not an offi-
cial EPA publication. It will be considered along with the infor-
mation contained in the Development Document and any comments re-
vealed by EPA on either document before or during proposed rule
making proceedings necessary to establish final regulations. Prior
to final promulgation of regulations, the accompanying study shall
have standing in any EPA proceedings or court proceeding only to
the extent that it represents the views of the contractor who
studied the subject industry. It cannot be cited, referenced, or
represented in any respect in any such proceeding as a statement
of EPA's views regarding the subject industry.
-------
ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
EXECUTIVE SUMMARY
Electrolytically Produced
Chromium, Manganese and
Synthetic Manganese Dioxide 1
Calcium Carbide 2'
Impact Conclusions 4
INTRODUCTION
I ECONOMIC ANALYSIS OF PROPOSED
EFFLUENT GUIDELINES ON THE
ELECTROLYTICALLY PRODUCED CHROMIUM,
MANGANESE AND SYNTHETIC MANGANESE
DIOXIDE INDUSTRIES - SIC 3313
Industry Description I - 1
Principal Applications and
Potential Substitute Products 1-3
Production Techniques 1-4
Financial Characteristics of
the Firms in the Industry 1-5
Pricing Analysis 1-6
Technical and Cost Data Base 1-7
Impact Analysis 1-7
Impact Conclusions 1-9
II ECONOMIC ANALYSIS OF PROPOSED
EFFLUENT GUIDELINES ON THE CALCIUM
CARBIDE INDUSTRY - SIC 2819912
Industry Description II - 1
Principal Applications and
Potential Substitute Products II
-------
-ii-
SECTION DESCRIPTION PAGE
II Foreign Trade II - 3
Production Techniques II - 4
Financial Characteristics of
Firms in the Industry II - 4
Pricing Analysis II - 5
Technical and Cost Data Base II - 5
Impact Analysis II - 6
Impact Conclusions II - 7
-------
LIST OF TABLES
Table
Number Title Page
1-1 Firms Which Electrolytically I - I
Produce Cr, Mn, and Mn02
1-2 Domestic Consumption and Imports 1-2
of Selected Electroytically
Produced Ferroalloys
1-3 Financial Profiles of Electrolytic I - 5
Chromium, Manganese and Synthetic
Manganese Dioxide Producers - 1973
1-4 Combined Incremental Total Annual 1-7
Operating Costs
1-5 Combined Incremental Investment 1-8
Costs for Pollution Control (BPT
plus BAT)
II-l Calcium Carbide Producers II - 1
II-2 Calcium Carbide Production, II - 2
Shipments and Value of Shipments
-------
-iv-
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
1-1 Producers of Specialty Ferroalloys
1-2 1972 Production Data of Specialty-
Ferroalloys
1-3 1973 Financial Profiles of Ferroalloy
Producers - SIC 3313
1-4 Incremental Cost Data for Waste Water
Treatment
II-l Annual Production and Shipments of
Calcium Carbide
II-2 1973 Financial Profiles of Calcium
Carbide Producers (or their Parent
Company)
II-3 Investment and Total Annual Operating
Costs for Water Pollution for Calcium
Carbide Producers
-------
ECONOMIC ANALYSIS OF PROPOSED EFFLUENT
GUIDELINES ON THE ELECTROLTYICALLY
PRODUCED CHROMIUM, MANGANESE AND
SYNTHETIC MANGANESE DIOXIDE INDUSTRIES;
AND ON THE CALCIUM CARBIDE INDUSTRY
EXECUTIVE SUMMARY
ELECTROLYTICALLY PRODUCED
CHROMIUM, MANGANESE AND
SYNTHETIC MANGANESE DIOXIDE
Four firms operating five plants are currently manufacturing
electrolytically produced chromium, manganese and synthetic man-
ganese dioxide. Consumption of chromium metal was 5.2 thousand
short tons in 1973. Of this, approximately 52% was imported.
Consumption of manganese metal was 35.2 thousand short tons in
1973. Of this, approximately 6% was imported.
Where pure chromium or manganese is a requirement, there are
no technically feasible substitutes. Where high grade manganese
dioxide is a requirement, there is no economically feasible sub-
stitute product. These products are each produced by electrolytic
methods.
The firms which produce electrolytic chromium, manganese and
synthetic manganese dioxide are large and financially sound. Each
of these firms is engaged not only in the production of electro-
lytic products, but also other ferroalloys, metals and industrial
chemicals.
The demand for these electrolytically produced products is
primarily derived from the demand for major end use products.
-------
- 2 -
Prices are determined by supply and demand conditions.
The combined incremental total annual operating costs (those
for 1977 plus those for 1983), for water pollution abatement on
a per ton basis are less than 3% of the price for each product
sidered.
The combined total incremental investment costs (those for
1977 plus those for 1983) as a percent of net earnings are in all
cases less than 1%. Thus, these costs will not unduly burden the
financial positions of the firms producing these products.
If these costs are "passed on" to end users, a significant
decrease in the quantity demanded is not anticipated. This is
because the demand for each of these electrolytic products is a
"derived demand" and the costs of electrolytic products are a
very small portion of the total manufacturing costs of the pro-
ducts that use them. Also, there are no technically feasible or
economic direct substitutes, and the minor cost increase will
not change the relative market share for imported products.
CALCIUM
CARBIDE
The calcium carbide industry is comprised of four firms
operating five installations. The latest estimate of 1973 cal-
cium carbide production is 350,000 tons. The two principal end
uses for calcium carbide are for the production of cyanamide and
acetylene. There is no economic substitute for calcium carbide
-------
in the production of cyanamide. Petroleum based raw materials
may be substituted in the production of acetylene. These mate-
rials currently have over 25% of this market. However, this
market share will decline as the price of petroleum based sub-
stitutes for calcium carbide increases relative to the price of
calcium carbide, as is expected due to the current energy
situation.
Calcium carbide is produced in modified electric arc reduc-
tion furnances. The firms which produce calcium carbide are
large, diversified and financially sound.
The demand for calcium carbide is primarily derived from re-
quirements for cyanamide and acetylene. Prices are primarily re-
lated to supply and demand conditions in these markets and the
price and availability of petroleum based substitutes.
The combined incremental total annual operating costs (for
1977 plus those for 1983) for water pollution abatement on a per
ton basis are less than .5% of the market price.
The combined incremental investment costs (for 1977 plus
those for 1983) as a percent of net earnings are less than 1%.
Thus, these costs will not unduly burden the financial positions
of the firms producing calcium carbide.
If these costs are "passed on" to end users, a significant
* Primarily natural gas and liquid hydrocarbon feeds.
-------
decrease in the quantity demanded is not anticipated. This is
because the demand is a "derived demand" and the price increase
necessary to cover pollution control costs is minor. There are
few technically feasible and economic substitutes, and the price
of petroleum based substitutes is anticipated to increase more
than the price of calcium carbide (with pollution control costs).
Also, the minor cost increase will not change the relative mar-
ket share for imports.
IMPACT
CONCLUSIONS
Costs associated with conforming to the proposed effluent
guidelines are expected to be passed on to end users. The minor
anticipated price increases are not expected to produce a signi-
ficant decrease in shipments. No significant net effect on the
earnings or profitability of the firms producing these products
is expected. No closures or significant curtailment of opera-
tions nor reduction in industry employment are forecast.
-------
ECONOMIC ANALYSIS OF PROPOSED EFFLUENT
GUIDELINES ON THE ELECTROLYTICALLY
PRODUCED CHROMIUM, MANGANESE AND
SYNTHETIC MANGANESE DIOXIDE INDUSTRIES;
AND ON THE CALCIUM CARBIDE INDUSTRY
INTRODUCTION
This report assesses the economic impact of proposed efflu-
ent guidelines on establishments which electrolytically produce
chromium (Cr), manganese (Mn), and synthetic manganese dioxide
(MnO-); and on establishments which produce calcium carbide (CaC-)
in modified electric arc reduction furnances. This report is
divided into two sections. Section I deals with the electroly-
tically produced products and Section II with calcium carbide.
Capital recovery factors were used to prorate the total in-
vestment cost and debt service over the depreciable life of the
capital equipment required to effect compliance with the proposed
effluent guidelines. The capital recovery factor used for elec-
trolytically produced chromium, manganese and synthetic manganese
dioxide reflects an interest rate of 8% and a depreciable life of
15 years. The capital recovery factor used for calcium carbide
relects an interest rate of 10% and a depreciable life of 15
years. These capital recovery factors are different than the cap-
ital recovery factor originally supplied by the Environmental
Protection Agency reflecting an interest rate of 6% and a depre-
ciable life of 10 years. This was done because an interest rate
of 6% did not reflect market conditions and a depreciable life of
-------
- 2 -
10 years was not consistent with prevailing Internal Revenue
Service allowances.
The two capital recovery factors used in this report differ
from each other due to the prevailing capital market conditions
at the time the two sections were written. The two different
capital recovery factors are used in this interim final report.
However, Kearney anticipates that the capital recovery factor
used for the final report will reflect an interest rate of 10%
and a depreciable life of 15 years for all industries considered
In any case, the difference in interest rates does not have any
important effect on the conclusions of the impact analysis.
The EPA Technical Manager approved this approach.
-------
SECTION I
ECONOMIC ANALYSIS OF PROPOSED EFFLUENT
GUIDELINES ON THE ELECTROLYTICALLY
PRODUCED CHROMIUM, MANGANESE AND
SYNTHETIC MANGANESE DIOXIDE INDUSTRIES
- SIC 3313
INDUSTRY
DESCRIPTION
Firms which electrolytically produce chromium, manganese and
synthetic manganese dioxide are shown in Table 1-1 below.
Table 1-1
Firms Which Electrolytically
Produce Cr, Mn, and MnO
Product(s) Produced
Firm Location Cr Mn
ESB, Inc. Covington,
Tennessee x
Foote Mineral New Johnsonville ,
Company Tennessee x
Kerr-McGee Hamilton,
Chemical Company Mississippi x
Henderson, Nevada x
Union Carbide
Corporation Marietta, Ohio x x x
Source: Exhibit 1-1.
These firms are part of the larger industry category of specialty
ferroalloy producers shown in Exhibit 1-1.
Consumption and imports of chromium metal and manganese
metal from 1967 to 1973 are shown in Table 1-2 on the following
page.
-------
1-2
Table 1-2
Domestic Consumption and Imports of Selected
Electrolytically Produced Ferroalloys
(Thousands of Short Tons)
Average
1961 1973
1966 1967 1968 1969 1970 1971 1972 Pre.
Chromium Metal
Total Consumption N.A. 3.6 3.1 3.3 3.5 3.1 3.2 5.2
Imports 1.1 1.2 1.4 1.5 1.9 1.6 1.9 2.7
Percent of Total
Consumption N.A. 33.8 44.3 44.2 54.7 52.2 59.4 . 51.9
Manganese Metal
Total Consumption 21.1 24.0 25.7 28.0 24.5 27.5 30.2 35.2
Imports 1.6 2.3 3.2 1.4 1.3 2.9 4.1 2.2
Percent of Total
Consumption 7.5 9.7 12.4 4.9 5.2 10.5 13.6 6.3
Source: Statement for Relief from Excessive Imports, 1973;
The Ferroalloys Association.
The data in Table 1-2 indicate that until 1973 the consump-
tion of chromium metal and manganese metal was fairly constant.
The increase in consumption in 1973 is mainly attributable to
large increases in the production of iron and steel castings and
steel mill products.
Production, foreign trade and net consumption data for the
larger class of specialty ferroalloys for 1972 are shown in
Exhibit 1-2.
-------
1-3
PRINCIPAL APPLICATIONS
AND POTENTIAL
SUBSTITUTE PRODUCTS
(a) Chromium
Principal applications for chromium metal are as an alloying
agent in the production of specialty ferrous products and in plat-
ing ferrous products. Metals such as nickel, cobalt, molybdenum,
and titanium can be substituted for chromium in some alloys.
However, the use of these substitutes frequently results in high-
er costs or decreased performance of the alloy. Generally'where
the requirement is for pure chromium, no technically feasible
substitutes exist.
(b) Manganese
The major use of manganese metal is in the production of low
carbon sheet steel, welding electrode coatings, primary aluminum
and copper alloys, and manganese chemicals. Where pure manganese
is required, no technically feasible substitutes exist.
(c) Synthetic Manganese
Dioxide
Electrolytically produced synthetic manganese dioxide is
principally used in the manufacture of dry cell batteries, par-
ticularly for the manganese-alkaline battery and the premium or
heavy-duty Leclanche cells. This product can also be used in the
manufacture of glass, and certain types of chemicals. High grade
Mn02 ore, (naturally occurring, called pyrolusite) can be used in
battery production, but the resulting product is of lower quality.
-------
1-4
Other types of batteries are manufactured that do not require
manganese dioxide in any form. In all other applications, sub-
stitutes for synthetic manganese dioxide usually increase cost
or alter the overall quality of the end product.
PRODUCTION
TECHNIQUES
(a) Chromium
Electrolytic chromium is the purest form of the metal com-
mercially available, 99+% pure. It is produced by electrolysis
from one of several electrolytes containing chromium. Approx-
imately 75% of the electrolytic production utilizes a chromium-
alum solution.
(b) Manganese
Manganese metal is produced by electrolytic methods. High
grade manganese ore and slag generated during the electric fur-
nace production of ferromanganese are used as raw material inputs
(c) Synthetic Manganese
Dioxide
Synthetic manganese dioxide of high purity is produced by
electrolytic means. Manganese ore is first dried and calcined.
It is then leached with depleted cell solution to generate new
cell solution and then plated out. This process is separate and
distinct from the electrolytic manganese production process.
-------
1-5
FINANCIAL CHARACTERISTICS
OF THE FIRMS IN
THE INDUSTRY
Financial profiles of the producers of specialty ferroalloys
for 1973 are shown in Exhibit 1-3. The 1973 financial profiles
of the producers of electrolytic chromium, electrolytic manganese
and electrolytic synthetic manganese dioxide are presented in
Table 1-3.
Table 1-3
Financial Profiles of Electrolytic Chromium
Manganese and Synthetic Manganese
Dioxide Producers - 1973(1)
^ ^Company
ESB, Inc
Fuote Mineral
Company
Korr-McCee Chcm L-
cal Company
Union Carbide
Corporation
Plant Location
Covington, Tennes-
see
New Johnsonville,
Tennessee
Hamilton,
Mississippi
Henderson,
Nevada
Marietta,
Ohio
Net
Sales
Millions)
436.0
87 0
728 0
Net
Earnings
(S Kill ions)
19.3
2.8
62 8
Equity
(S Millions)
156.0
58 7
558.6
Earnings as
a Percent
of Sales
4 4
3 2
«.6
Earn
a P.
of Ei
12
a
11
t Total
of Equity Employees
17 000
2,172
S . 966
3,938 8
290.9
2,105.2
13 8
109,417
Note: (1) No information is available on specific investment and earnings of tht*se companies as related to sales of
electrolytically produced chromium, manganese and synthetic manganese dioxide. The reason for this is that
these products constitute a small portion of the total investment and earnings of these producers. It is
Kearney's understanding that production of these products is profitable.
Source: Exhibit 1-3.
Each of these firms is engaged not only in the production of
electrolytic products, but also other ferroalloys, metals and in-
dustrial chemicals.
-------
1-6
PRICING
ANALYSIS
The demand for electrolytically produced chromium is derived
from the demand for plating ferrous products and the production
of iron alloys and steel requiring high purity chrome. The de-
mand for electrolytically produced manganese is derived from the
demand for low carbon sheet steel, welding electrode coatings,
and primary aluminum and copper alloys. The demand for synthetic
manganese dioxide is almost exclusively determined by the require-
ment for dry cell batteries. Therefore, the prices of the elec-
trolytic products considered in this report are primarily deter-
mined by supply and demand conditions in these markets. Other
factors affecting price are purity in the case of chromium and
manganese, and volume discounts for large bulk purchases.
Historically, the quantity sold has been insensitive to price
increases because of the small portion of the cost of end use
products represented by these electrolytically produced products.
Recent quotes for these special ferroalloys are: chromium,
$2.10 per pound; manganese, $0.39 per pound; and synthetic mangan-
ese dioxide $0.30 per pound.* High grade Mn02 ore (pyrolusite)
was recently quoted at $0.08 per pound.* However, as pointed out
previously, synthetic manganese dioxide and high grade Mn02 ore
are not directly competitive in most instances.
* Quotations are from major current producers.
-------
1-7
TECHNICAL AND
COST DATA BASE
Kearney was provided costs of meeting the proposed effluent
guidelines by EPA through its technical contractor, Datagraphics,
Inc. Exhibit 1-4 presents costs to meet Level I, or Best Prac-
ticable Control Technology Currently Available (BPCTCA); and
Level II, or Best Available Control Technology Economically Achiev-
able (BACTEA) as calculated by Datagraphics, Inc.
The annual costs were developed by calculating the annual
capital costs for 15 years at 8% interest and adding the operat-
ing costs.
IMPACT
ANALYSIS
The combined incremental total annual operating costs, (those
for 1977 plus those for 1983), for water pollution abatement on
a per ton basis by product are presented in Table I~4 shown below.
Table 1-4
Combined Incremental Total
Annual Operating Costs
Product
Chromium
Manganese
Increased Annual
Operating Cost per
Ton Due to Pollution
Abatement
$52.12
20.02
Price
per Ton
$4,200.00
780.00
Cost as a
Percent
of Price
1.24%
2.57
Synthetic Manganese
Dioxide 15.96 600.00 2.66
Source: Exhibit 1-4.
-------
1-8
If the entire increased annual costs are "passed on" to the
users of electrolytic chromium, manganese, and synthetic mangan-
ese dioxide they would represent less than a 3% price increase.
The combined total incremental investment costs (those for
1977 plus those for 1983), on a typical capacity tonnage basis,
by product are shown in Table 1-5.
Table 1-5
Combined Incremental Investment Costs
for Pollution Control (BPT plus BAT)
Product
Total
Investment
Tonnage(l) Cost(2)
Cr
Mn
MnO
3,000
9,000
5,500
{$ Millions)
.30
.34
.15
Net
Earnings(3)
($ Millions)
300
50
50
Total Investment
as a Percent of
Net Earnings(4)
0.1%
0.7
0.3
Notes: (1)
(2)
(3)
(4)
Tonnage figures approximate single producer capacity,
a weighted average of the capacities of all producers,
or a typical tonnage.
The 1977 investment cost per input product ton plus
the 1983 investment cost per input product ton as
cited in Exhibit 1-4 multiplied by tonnage.
Net earnings figures approximate single producer
earnings, a weighted average of the earnings of all
producers or typical net earnings.
Calculated by dividing total investment costs by net
earnings.
Sources: Exhibits 1-3 and 1-4.
Thus, the combined total incremental investment cost for
water pollution abatement systems will not unduly burden the
financial positions of the firms producing electrolytic chromium,
-------
1-9
electrolytic manganese and electrolytic synthetic manganese
dioxide.
If all costs associated with conforming to the proposed
effluent guidelines are "passed on" to end users in the form of
price increases, a significant decrease in demand is not antic-
ipated due to the following factors.
1. The demand for each of the electrolytic products
is primarily a "derived demand."
2. The costs of electrolytic products are a very small
portion of the total manufacturing costs of the products that
use them.
3. There are few feasible or economic substitutes for
electrolytically produced products in most applications.
4. The minor anticipated price increase is not ex-
pected to substantially change the relative demand for imports
of these electrolytically produced products.
IMPACT
CONCLUSIONS
The costs associated with conforming to the proposed efflu-
ent guidelines are expected to be passed on to end users. The
minor anticipated price increases are not expected to produce a
significant decrease in shipments. No significant net effect on
the earnings or profitability of the firms producing these pro-
ducts is expected. No closures or significant curtailment of
operations and reduction in industry employment are forecast.
-------
ENVIRONMENTAL PROTECTION AGENCY
PRODUCERS OF SPECIALTY FERROALLOYS
Products
Company
Plant
Climax Molybdenum
Diamond Shamrock Corp.
ESB, Inc.
Foote Mineral Co.
Kawecki Chemical Co.
Kerr-McGee Chemical
Company
Mobil Chemical Co.
Molybdenum Corp.
Monsanto Chemical
Company
Reading Alloys Co.
Shieldalloy Corp.
Union Carbide Corp.
Langeloth, Pa.
Kingwood, W. Va.
Covingt on, Tenn.
New Johnsonville,
Tenn.
Easton, Pa.
Hamilton, Miss.
Henderson, Nev.
Nichols, Fla
Washington, Pa.
Columbia, Tenn.
Robesonia, Pa.
Newfield, N. J.
Marietta, Ohio
Cr Mn Mn02 FeB FeCb FeMn FeMo FeTi FeW FeV
A
A
A
A
A
A
A
A
Notes: A - Aluminothermic Process
C - Electrolytic Process
Sources: 1972 Minerals Yearbook, Preprint, EG/EPA and Datagraphics, Inc.
H
M
I
-------
EXHIBIT 1-2
ENVIRONMENTAL PROTECTION AGENCY
1972 PRODUCTION DATA OF SPECIALTY FERROALLOYS
U.S. Net
Prc
Chromium Metal
Manganese Metal
Manganese Dioxide
Ferroboroh
Ferrocolumbium
Ferromanganese
Ferromolybdenum
Ferrotitanium
Ferrotungsten
Ferrovanadium
Notes: (1) Gross Weight
(2) Calculated, based on 25.7% average contained element.
(3) Includes scrap Titanium Metal.
Source: 1972 Minerals Yearbook. Preprint.
Production
N.A.
23,200
N.Ac
N.A.
737
N.A.
N.A.
938
N.A.
NoAo
Imports
1.9
N.A.
N.A.
N.A.
N.A.
NoA.
N.A.
23 (2)
407
334
Exports
N.A.
N.A.
N.Ao
N.A.
N.A.
N.A.
454
N.A.
11
269
Consumption
3,200
29,949
-------
ENVIRONMENTAL PROTECTION AGENCY
1973 FINANCIAL PROFILES OF FERROALLOY
PRODUCERS - SIC 3313
Company
Climax Molybdenum Co.
Diamond Shamrock Corp.
ESB Inc. (*)
Foote Mineral Co.
Kawecki Chemical Co.
Kerr-McGee Chemical Co.
Mobil Chemical Co.
Molybdenum Corp.
Monsanto Chemical Co.
Reading Alloys Co.
Shieldalloy Co.
Union Carbide Corp.
Plant Location
Langeloth, Pa.
Kingwood, W. Va.
Covington, Tenn.
New Johnsonvllle, Tenn.
Easton, Pa.
Hamilton, Miss.
Henderson, Nev.
Nichols, Fla.
Washington, Pa.
Columbia, Tenn.
Robesonia, Pa.
Newfield, N. j.
Marietta, Ohio
Net
Net Sales Earnings
($ Millions) ($ Millions)
$ 1,336.8 $105.1
651.1 50.5
436.0 19.3
87.0 2.8
86.7 4.7
728.0 62.8
12,755.6 849.3
2,647.7 238.3
N/A^3> N/A
18.0 N/A
3,938.8 290.9
Earnings Earnings
Percent Percent Total
Equity of Sales of Equity Employees
($ Millions)
$ 840 .4 7.97. 12.5% 17.940
412.3 7.8 12.2 9,295
156.0 4.4 12.4 17,000
58.7 3.2 4.8 2,122
49.7 5.4 9.5 1,800(2*
558.6 8.6 11.2 8,966
5,714.8 6.7 14.9 73,900
1,496.2 9.0 15.9 58,277
N/A N/A N/A N/A
1.5 N/A N/A 180
2,105.2 7.4 13.8 109,417
Notes: (1) Fiscal year ended March 31, 1974.
(2) As of December 31, 1970.
(3) N/A is not available.
Source: Annual Reports.
S
M
M
M
1
OO
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL COST DATA FOR WASTE WATER TREATMENT
Product
Cr
Mn
Mn02
Note:
Source:
1977
Investment
Cost /Annual
IPT(l)
$90.71
29.79
23.40
(1) Based on an annual
1977
Cr 3,068
Mn 9,048
Mn02 5,876
1983 NSPS
Investment Investment
Annual Cost/Annual Annual Cost/Annual Annual
Cost/Ton IPT(l) Cost/Ton IPT(l) Cost/Ton
$47.43 $8.96 $4.69 $157.62 $59.16
15.57 8.51 4.45 92.33 30.68
12.24 7.11 3.72 30.51 15.95
input product tonnage (IPT) of:
1983 NSPS
3,068 3,068
9,048 9,410
5,876 5,876
EG/EPA and Datagraphics, Inc.
r*S
SC
w
H
M
1
-------
SECTION II
ECONOMIC ANALYSIS OF PROPOSED
EFFLUENT GUIDELINES ON THE CALCIUM
CARBIDE INDUSTRY - SIC 2819912
INDUSTRY
DESCRIPTION
The calcium carbide industry is comprised of four firms
operating five installations as shown in Table II-l.
Table II-l
Calcium Carbide Producers
Firm Name Plant Location
Airco Alloys & Carbide Division,
Airco, Inc. Louisville, Kentucky
Chemetron, Midwest Carbide Corp. Koekirk, Iowa
Pryor, Oklahoma
Pacific Carbide & Alloys Corp. Portland, Oregon
Union Carbide Corporation,
Ferroalloys Division Ashtabula, Ohio
Source: EG/EPA, Datagraphics, Inc., and annual reports.
Of these four firms, three are large diversified firms.
Very little information is available for Pacific Carbide & Alloys
Corporation.
Airco, Inc. intends to resume production of calcium carbide
at its Calvert City, Kentucky plant in the near future.
The latest estimate of total 1973 calcium carbide production
is 350,000 tons. Total calcium carbide production, shipments and
value of shipments for the years 1968 through 1972 are presented
in Table II-2 on the following page.
-------
II - 2
Table II-2
Calcium Carbide Production, Shipment
and Value of Shipments
Production
(Tons)
942,098
856,039
791,346
625,338
493,418
Exhibit II-l.
Shipments
(Tons)
596,376
514,172
503,172
455,876
354,972
s
Value
($)
$56,002,000
40,354,000
41,046,000
40,906,000
24,619,00'0
Year
1968
1969
1970
1971
1972
Source:
Over this five year period production steadily declined.
The total decline was approximately 47.6%. Similarly, shipments
steadily declined 40.4% and the value of shipments dropped by
56.1%. These declines occurred due to the substitution of cheaper
petroleum based raw materials in the production of acetylene.
This downward trend will stop or reverse as the price of petroleum
based substitutes* for calcium carbide increases relative to the
price of calcium carbide.
PRINCIPAL APPLICATIONS
AND POTENTIAL SUBSTITUTE
PRODUCTS
The two principal end uses for calcium carbide are for the
production of cyanamide and acetylene. Calcium carbide is heated
in an atmosphere of nitrogen to produce cyanamide. Cyanamide is
* Primarily natural gas and liquid hydrocarbon feeds.
-------
II - 3
used as a raw material in the chemical process industries and
agriculture. Acetylene is produced by reacting calcium carbide
with water. Acetylene is used in metalworking applications such
as cutting and welding and as a chemical feed stock.
Other markets for calcium carbide include uses as a reducing
agent in some metallurgical processes, a desulfurizing agent for
ductile iron treatment, and as a drying agent in various applica-
tions. These are minor markets in comparison to cyanamide and
acetylene.
There is no direct economic substitute for calcium carbide
in the production of cyanamide.
Acetylene for use as a chemical raw material can be generated
from natural gas or liquid hydrocarbon feeds. This is more eco-
nomical in the case of many large scale chemical plants. Acety-
lene produced from natural gas (petro-acetylene) currently accounts
for in excess of 25% of the acetylene market. However, in other
cases, calcium carbide has a cost advantage. Rising natural gas
prices will tend to reduce any petro-acetylene cost advantage.
FOREIGN
TRADE
Detailed calcium carbide import and export data is not avail-
able. However, information from producers indicates that imports
and exports represent only a minor portion of total domestic con-
sumption and production respectively.
-------
II - 4
PRODUCTION
TECHNIQUES
Calcium carbide (CaC2) is an inorganic chemical made from
quicklime and carbon. Quicklime is prepared by burning lime-
stone. Carbon is most frequently obtained from coke, although it
can also be obtained from anthracite or petroleum coke.
Molten calcium carbide is produced in modified electric arc
reduction furnaces. These furnaces are continuously charged
and are tapped directly into chill pots of approximately five-ton
capacity on a continuous or intermittent schedule. After solid-
ifying, the calcium carbide is crushed, sized and packed for ship-
ment. Shipping sizes range from ten pounds to five tons.
FINANCIAL CHARACTERISTICS
OF FIRMS IN THE INDUSTRY
Airco, Inc., Chemetron and Union Carbide Corporation had a
composite margin on sales of 6.6% in 1972. This compares with an
average 1973 margin on sales of 6.9% for 82 companies in the
chemical process industry.* The return on net worth of these
calcium carbide companies was 12.6% in 1973. This compares with
an average 1973 return on net worth of 15.0% for 82 companies in
the chemical process industry.* Detailed financial data for
Airco, Inc., Chemetron and Union Carbide Corporation is presented
in Exhibit II-2. Financial data is not available for Pacific
Carbide and Alloys Corporation. No information is available on
* Monthly Economic Letter of the First National City
Bank, April, 1974.
-------
II - 5
investment and earnings of these companies as related to sales of
calcium carbide. The reason for this is that calcium carbide
constitutes a small portion of the investment and earnings of
these producers. It is Kearney's understanding that the produc-
tion of calcium carbide is profitable.
PRICING
ANALYSIS
Producers attempt to price on the basis of manufacturing
costs. Raw materials typically account for 80% of total calcium
carbide production costs. The remaining costs, referred to as
conversion costs, include labor, maintenance, power, etc. This
industry is extremely sensitive to the price of coal as it pro-
vides three vital ingredients which are coke, carbon electrodes
and very often electric power.
The demand for calcium carbide is primarily derived from the
demand for cyanamide and acetylene. Therefore, the price of
calcium carbide is directly related to supply and demand condi-
tions in these markets and the price and availability of petroleum
based substitutes. The current price of calcium carbide is ap-
proximately $180 per ton.*
TECHNICAL AND
COST DATA BASE
Sources of water pollution are wet air pollution devices and
contact cooling. Many modern carbide furnaces are "closed" in
* Quotations are from a major current producer
-------
II - 6
that almost all of the by-product gas (carbon monoxide), is col-
lected and utilized.
Kearney was provided costs of meeting the proposed effluent
guidelines by EPA through its technical contractor, Datagraphics,
Inc. Exhibit II-3 presents costs to meet Level I, or Best
Practicable Control Technology Currently Available (BPCTCA),
and Level II, or Best Available Control Technology Economically
Achievable (BACTEA) as calculated by Datagraphics, Inc. These
costs have been calculated applying the "6/10 Rule" to the
investment costs supplied by EPA when appropriate. Total annual
operating costs include annualized capital charges (interest and
depreciation) and actual operating costs. The capital charges
included in the total annual costs are based on 10% and 15 years.
IMPACT
ANALYSIS
The combined incremental total annual operating costs (for
1977 plus those for 1983) for water pollution abatement per
capacity ton range from 18 to 38 cents. If this entire cost in-
crease is "passed on" to calcium carbide customers it represents
a 0.2% increase based on a selling price of $180 per ton.
The combined incremental investment costs (for 1977 plus
those for 1983) as a percentage of 1972 net earnings (for the
three firms where financial information is available) range from
0.035% to 0.936%. These costs per capacity ton range from $0.62
to $1.62. Based on a selling price of $180 per ton this is less
than 1%.
-------
II - 7
If all costs associated with conforming to the proposed
effluent guidelines are "passed on" to end users in the form of
price increases, a significant decrease in demand is not anti-
cipated for the following reasons.
1. The demand for calcium carbide is primarily a
"derived demand."
2. The anticipated price increase necessary to cover
pollution control costs is minor.
3. There are few feasible and economic substitutes for
calcium carbide. Where petroleum based substitutes are technically
feasible and economic, the price of these substitutes is antici-
pated to increase relative to the price of calcium carbide (with
pollution control costs).
4. Imports are presently not a factor in this market.
The minor price increase anticipated will not change the relative
demand for imports.
IMPACT
CONCLUSIONS
The costs associated with conforming to the proposed efflu-
ent guidelines are expected to be passed on to end users. The
minor anticipated price increase is not expected to produce a
significant decrease in shipments. No significant net effect on
the earnings or profitability of the firms producing calcium
carbide is expected. No closures or significant curtailment of
operations and reduction in industry employment are forecast.
-------
ENVIRONMENTAL PROTECTION AGENCY
ANNUAL PRODUCTION AND
Total
Number of Production
Year Establishments Quantity
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
(N/A)
11
11
11
11
8
8
8
7
7
(N/A)
1,109,109
1,131,659
1,098,003
1,063,202
912,293
942,098
856,039
791,346
625,338
493,418
298,884(P)
(Quantity Figures - Snort
Total Shipments
Average
Quantity Value (fob Plant) Price/Ton
641,391
689,737
643,767
586,966
564,392
596,376
514,172
503,967
455,876
354,972
(N/A)
60,697
62,608
57,404
51,299
53,184
56,002
40,354
41,046
40,906
24,619
(N/A)
94.63
90.77
89.17
87.40
94.23
93.90
78.48
81.45
89.73
69.35
(N/A)
SHIPMENTS OF CALCIUM CARBIDE
(CaC2)
Tons, Values in Thousands of Dollars)
Average
Quantity Value (fob Plant) Price/Ton
284,554
241,083
278,701
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
25,103
21,293
22,225
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
88.22
88.32
79.74
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
Value (In Average
Quantity Foreign Country) Price/Ton
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
17,876
18,649
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
1,215
1,301
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
(N/A)
67.97
69.76
(N/A)
(N/A)
(N/A)
Notes: (D) Withheld to avoid disclosing figures for individual companies.
(N/A) Not available.
(P) Preliminary.
Source: Current Industrial Reports: Inorganic_C!heinical_s.i Jjeries: M28A.
a
M
-------
ENVIRONMENTAL PROTECTION AGENCY
1973 FINANCIAL PROFILES OF CALCIUM CARBIDE PRODUCERS (OR THEIR PARENT COMPANIES)
Airco, Inc.
Chemetron (Midwest Carbide Corp.)
Pacific Carbide & Alloys Co.
Union Carbide Corp.
Note: (1) N/A is not available.
Source: Annual reports.
Net Sales
? Millions)
584.8
364.1
3,938.8
Earnings Equity
($ Millions) ($ Millions)
19.1
10.4
N/A
290.9
266.1
167.4
N/A
2,105.2
Earnings as
a Percent
of Sales
3.3
2.9
N/A
7.4
Earnings as
a Percent
of Equity
7.2
6.2
N/A
13.8
Current
Assets Current
($ Millions) Ratio
249.7
146.3
N/A
2,022.4
3.30
2.64
N/A
Working
Capital
($ Millions)
174.0
90.9
N/A
2.46 1,201.8
M
X
W
N>
-------
ENVIRONMENTAL PROTECTION AGENCY
INVESTMENT AND TOTAL ANNUAL OPERATING COSTS
FOR WATER POLLUTION CONTROL FOR CALCIUM CARBIDE PRODUCERS
Company
Airco, Inc.
Chemetron (Midwest Carbide Corp.)
Pacific Carbide & Alloys Co.
Union Carbide Corp.
Location
Louisville, Ky.
Keokuk , Iowa
Pryor, Okla.
Portland, Ore.
Ashtabula} Ohio
BPT - 1977(!) BAT - 1983(J)
Total Total
Capacity Annual Annual
Thousand Investment Operating Investment Operating
Tons (2) Cost Cost Cost Cost
150 $10,000(3) $6,456(4> $68,000(3) $26,040(4)
30 4,500 1,941 36,758 8'250
50 6,096 3,050 50,000 12,273
20 3,518 1,360 28,833 6,072
200(5) -0-(6) -0-(6) 100,000(4) 35,947(4)
Notes: (1) BPT = Best practicable control technology currently available.
BAT = Best available control technology economically achievable.
(2) Sources of capacities: EG/EPA.
(3) Actual figures obtained by EG/EPA, and supplied to Kearney.
(4) Recalculated using Crf (107,, 15 yrs.), Original data reflected Crf (6%, 10 yrs.).
(5) CaC2 capacity calculated.
(6) Assumed zero.
Sources: EG/EPA and Datagraphics,
Inc.
SC
W
H
M
1
U>
------- |