-------
EXHIBIT III
Environmental Protection Agency
PERCENT OF TOTAL PRODUCTION
BY TOP 20 COMPANIES
Top 20
Producers Combined
All Other
Producers Combined
Lime
Nitric Acid
Phosphorou
Sulfuric Acid
n Chloride 44%
n Sulfates 50*
kali 51
oric Acid 50*
aric Acid 57
i Peroxide 70
None*
:id 42
-ous 91
cid 37
Facts and Figures, Chemical and Engineering
56%
50
49
50
43
30
100
58
9
63
News, June 5, 1
1972 Directory of Chemical Producers, U.S.A.
* Based on number of plants.
-------
chemical industry basis. Statistics on employment, costs, sales and
profits by specific chemical are considered proprietary information.
"Industrial Chemicals" is the classification of reported statistics
which relates most closely to inorganic chemicals. Industrial chemicals
(SIC 281) are defined, by the 1967 SIC Manual, as including all inorganics
and some organics. The statistics cited for industrial chemicals in the
balance of this report represent SIC 281.
2. THE INDUSTRIAL CHEMICAL INDUSTRY IS CHARACTERIZED BY
STABLE OR SLOWLY RISING PRICES
The price indices for industrial chemicals and all industrial commodities
are shown in Exhibit IV, following this page. Although the index for all indus-
trial commodities has gone up 19 points from 1961 to 1971, the industrial
chemical index has only increased one point from 101. 0 to 102. 0.
(1) The Industrial Chemical Producer Faces Price Competition from
Other Producers of the Same Chemical
The industrial chemicals studied are, mature products.
The technology for producing these chemicals is well established and the
products are differentiated only by the standard concentrations and grades.
These chemicals are generally sold strictly on a price basis.
(2) The Industrial Chemical Producer Faces Competition from Producers
of Competing Chemicals
In theory, there are few basic chemicals that cannot be replaced by
another to accomplish the same purpose. In practice, there is substitu-
tion both within the chemicals studied and between these and other chemicals.
-2-
-------
EXHIBIT IV
Environmental Protection Agency
PRICE INDEXES 1961-1971
ALL INDUSTRIALS VS. INDUSTRIAL CHEMICALS
1967 = 100%
1971 * 1970 1969 1968 1961
Industrial Commodities 114.0 110.0 106.0 102.5 94.8
Industrial Chemicals 102.0 100.9 100.3 101.0 101.0
Source: Facts and Figures, Chemical and Engineering News, June 5, 1972,
-------
3. THE INDUSTRIAL CHEMICAL INDUSTRY EMPLOYED 313.000 PEOPLE
IN 1971
The 313, 000 employees included 170,000 production workers and 143, 000
white collar and other employees. The employment levels of total employees,
production workers and others are shown in Exhibit V, following this page.
(1) Employment Grew Steadily Prior to 1971
As shown in Exhibit V, total industrial chemical employment grew
steadily from 1961 to 1970. In 1971, however, in a general industry effort
to improve productivity and profit margins, employment was cut back
from 323,000 to 313,000.
(2) Industrial Chemical Industry Wages Are Higher than the National
Average
The average hourly and weekly wages for industrial chemicals as
compared to the averages for all manufacturing are shown in Exhibit VI,
following Exhibit V.
4. THE INDUSTRIAL CHEMICAL INDUSTRY COST/PRICE SQUEEZE IS
REFLECTED IN PRODUCER OPERATING RESULTS AND BALANCE
3HEETS
Summary financial statistics for the industry are shown in Exhibit VII,
following Exhibit VI. In spite of increasing sales, profitability both in total
dollars and as a percent of sales and stockholders equity has declined steadily
since 1968. This decline is likely due to the general reduction in plant utiliza-
tion which the industry has faced since 1968. As is shown later in the discus-
sion of each of the specific chemicals studied, plant utilization has, in general,
declined to the marginally profitable level of 70 to 80 percent in 1970.
-3-
-------
EXHIBIT V
Environmental Protection Agency
INDUSTRIAL CHEMICAL LABOR FORCE
BREAKDOWN--1961 - 1971
Year
1961
1962
1963
1964
1965
1966
1967'
1968
1969
1970
1971
All Employees
281, 800
282,900
284,600
288,400
290, 100
303,500
314, 500
315,500
319,400
323,400
313,000
Production Workers
163, 300
164,900
164,700
165, 500
166, 700
171,500
174, 900
173,400
174, 500
174,600
170,000
Other Employees
118, 500
118,000
119, 900
122, 900
123,400
132,000
139,600
142, 100
144,900
144,800
143,000
Source: Employment and Earnings, United States, 1909 - 71.
Bulletin 1312 - 8, U.S. Department of Labor, Bureau of
Labor Statistics.
-------
EXHIBIT VI
Environmental Protection Agency
WAGES: INDUSTRIAL CHEMICALS VERSUS
ALL MANUFACTURING AVERAGE
Hourly Earnings _____ ____ Weejd^ Earnings ____
197J. ^970 ^969 1961
Industrial Chemicals 4.37 4.08 3.84 2.90 183.54 172.58 162.82 120.93
All Manufacturing
$3.57 (3,36 $3,10 $2,32 $142,44 $133.73 $129.51 $92.34
Source: Facts and Figures', Cher^_aj_ajid^n^i^ej-in£_New£,t June 5, 1972.
-------
EXHIBIT VII
Environmental Protection Agency
FINANCIAL DATA FOR INDUSTRIAL
CHEMICAL INDUSTRY
(Millions of Dollars)
Net Income
Year
1968
1969
1970
1971
Net
$26,
27,
27,
29,
Sales
223
148
447
421
Net
Income
$1.
1,
1,
1,
654
621
365
463
as % of as % of
Sales Stockholders
6.
6.
5.
5.
3
0
0
0
Equity
11.
10.
8.
8.
1
4
4
4
Debt
Ratio
29.
29.
30.
30.
1%
2
1
4
Total Cash
Dividends
$956
939
937
915
Source: Facts and Figures, Chemical and Engineering News,
September 6, 1971.
Facts and Figures, Chemical and Engineering News,
June 5, 1972.
-------
II. DETAILED FINDINGS
This chapter presents our detailed findings concerning each of
the ten chemicals. The findings are summarized in the main body of
the report, but for easy reference the summary exhibit is also included
in this section as Exhibit VIII, following this page.
-------
S3
M
EXHIBIT VIE
Environmental Protection Agency
POLLUTION ABATEMENT COST
IMPACT SUMMARY
10 *- r-
ss
> 9
- O 0) <0
o o
gr
S S 5 S
8 8
o~ to 03" (M~ Q oT w rt n
» aSS'w S (Nvotfl
in ^- (N «- «- -- — (Mr*
5 o N o o. 5 5 5
j ^ 2 S S S
- s
Si
o o g
< 5
x | -S 3 ||3 | | 3 5 |
"£ 3
81 £
Q. O
a s s s 88
' > "S"S 5 "5 2
F | 3 < | 3 < 3
III Jill!
HI
ill
c
IM 6
-------
II -A. ALUMINUM CHLORIDE
1. ALUMINUM CHLORIDE HAS ONE BASIC USE. BUT SEVERAL TYPES
OF CUSTOMERS.
Aluminum chloride is used as a catalyst in the manufacture of a
variety of products. The uses of aluminum chloride are listed below:
Anhydrous (85% of total production)
Ethylbenzene 30%
Dyestuff Intermediates 25%
Detergent Alkylate 20%
Hydrocarson Resins 9%
Ethyl Chloride 6%
Butyl Rubber, Titanium
Dioxide and other uses 10%
Total 100%
Hydrous (14% of total Production — based on 100% AClJ
" O
Pharmaceuticals and
Cosmetics 50%
Pigments 15%
Roofing Granules 10%
Special Papers 10%
Photography 7%
Wool Treatment & Other 8%
Total 100%
(1) Aluminum Chloride Markets are Not Geographically Concentrated
Aluminum chloride is produced in a relatively small number of
plants and in relatively small quantities compared to most of the other
chemicals discussed in this report. However, it is used in several in-
dustries and in the manufacture of a variety of products, and therefore,
its market is not concentrated in any one geographical area. Imports and
exports are negligible.
A-l
-------
(2) The Federal Government Is Not A Factor In The Aluminum Chloride
Market.
(3) Preliminary Investigation Indicates That Captive Use of Aluminum
Chloride Is Insignificant.
2. PRESENT CAPACITY UTILIZATION IS ABOUT 69 PERCENT. BUT
CAPACITY IS QUITE VARIABLE.
At present there are eight producers with eleven plants producing
aluminum chloride. However, 84 percent of aluminum chloride (100 per-
cent AC13 basis) is produced by only five producers from six plants. A
list of producers and their plants is shown in Exhibit A-l, following this page.
Production has fluctuated about ten percent around an average of
about 36,000 tons per year for the past ten years. Capacity has also re-
mained relatively stable. For the past five years it has been about 58,000
tons per year until very recently it decreased about 14 percent to about
50,000 tons per year. Since small incremental changes in capacity on
the order of - 20 percent do not involve large amounts of capital in this
industry, capacity utilization is not a critical factor. Production has
remained relatively stable for the past eight years, as shown on Exhibit
A-2, following Exhibit A-l.
3. MAJOR SHIFTS IN THE MARKET DUE TO SUBSTITUTE PRODUCTS IS
REPORTED TO BE UNLIKELY
Since aluminum chloride is primarily used as a catalyst in a variety
of complex chemical processes, a detailed analysis of possible substitute
products is beyond the scope of this study. However, industry sources do
not expect significant changes in the market in the near future. Decline
in some uses for aluminum chloride is expected to be offset by a five per-
cent increase in overall consumption due to a fifteen percent increase in
Ethylbenzine capacity. The weakest segment of the aluminum chloride
market is detergent alkylate which presently accounts for about seventeen
percent of total sales.
A-2
-------
EXHIBIT A-l
Anhydrous
CAPACITY
000 Tons/Year
Environmental Protection Agency
ALUMINUM CHLORIDE
PRODUCERS
ACL Industries
Elkton, Md.
Allied,
Elberta, N.Y.
Pearsalt,
LaPorte, Tex.
Pearsalt
Phillipsburg, N. J.
Stauffer
Baton Rouge, La.
Van de Mark,
Lockport, N. Y.
Total
10
11
16
_3
49
49
I /drous
CAPACITY
000 Tons/year
28% Solution
Allied,
Chicago, 111.
Chattem
Ardmore, Pa.
Dupont
East Chicago, Ind.
Dupont,
Grasselli, N. J.
Reheis,
Berkeley Heights, N. J.
Total
Total Combined Capacity
_5
32
CAPACITY
000 Tons/year
100% ACLs
2.2
.6
1.4
2.2
1.7
9.5
58.5
-------
EXHIBIT A-2
Environmental Protection Agency
ALUMINUM CHLORIDE
PRODUCTION
HOUSANDS OF SilORT TONS
PRODUCTION, TOTAL (o)
SHIPMENTS, TOTAL
VALUE OF SHIPMENTS, TOTAL
(MILLIONS OF DOLLARS)
1915
1955
I960 19.65
1970
1975
1980
PRODUCTION
1350
1961
1952
1S63
1954
1965
1966
1967
19G8p
°
7£>
ANHYDROUS
24.0
22.4
25.0
25.1
29.9
33.4
36. 1
37.8
33.9
LIQUID AND
CRYSTAL
7.2
6.4
6.7
7.5
8.1
7.2
6.8
6.3
--
TOTAL
31. 2
28.3
31.7
32.6
38.0
40.6
42.9
44. 1
--
23.
-------
4. PUBLISHED ALUMINUM CHLORIDE PRICES HAVE REMAINED STABLE
FOR THE PAST FOUR YEARS.
Published prices for aluminum chloride have remained stable at 15. 5
to 16. 5 cents per pound for the past four years. However, actual selling
prices are 1. 5 to 2 cents per pound less, depending on quantity. Aluminum
chloride price history is shown in Exhibit A-3, following this page. Sudden
fluctuations in the price of aluminum chloride are relatively unlikely since
the two elements used in its manufacture are extremely abundant and do
not vary greatly in short periods of time. Between 1965 and 1969, the
cost of aluminum and chlorine stayed constant at 55 percent plus or minus
two percent of the selling price for aluminum chloride. During this same
period aluminum prices rose about nine percent, and chlorine prices rose
about fourteen percent, while aluminum chloride prices rose about twenty
percent. There is four times as much chlorine by weight as there is
aluminum in aluminum chloride. However, in recent years the chlorine
in aluminum chloride has cost only about half as much as the aluminum,
because chlorine is only about fourteen percent of the price of aluminum
on an equal weight basis. For all of the above reasons, large changes in
the cost of producing aluminum chloride are unlikely.
5. DETAILED DATA ON THE PROFITABILITY OF PRODUCING ALUMINUM
CHLORIDE IS NOT AVAILABLE FROM PUBLISHED SOURCES
All but three aluminum chloride producers are large integrated
companies which do not report separately on individual divisions or pro-
ducts. Plant profitability data is considered highly proprietary. Dis-
cussions with some aluminum chloride producers have indicated piofit-
ability in the range of 4 to 10 percent of sales, however, as shown in
Exhibit A-4 following Exhibit A-3.
6. ALUMINUM CHLORIDE IS PRODUCED FROM ALUMINUM METAL SCRAP,
FROM BAUXITE, AND AS BY-PRODUCT OF LONG-CHAIN ALCOHOL
PRODUCTION
(1) Production From Scrap Aluminum Is the Primary Process
Most aluminum chloride is currently produced by bringing chlorine
gas in contact with molten aluminum, as shown in the Flowchart in
Exhibit A-5, following Exhibit A-4.
A-3
-------
EXHIBIT A-3
Environmental Protection Agency
ALUMINUM CHLORIDE
PRICES
CEKTS IPERjPOUJft
16
12 f
10
COMMERCIAL (Q)
~ "T "
1950
1955
I960
I9S5
1970
IS75
1330
1930
1961
1962
1S63
1964
1965
1966
1967
196B
1969
1970
1971
1972-
(CENTS PER POUND)
COUtlERCUL CRYSTALLINE SOLUTION
16.0
16.0
16.0
12.0
12.0
13.0
14.0
14.5
14.5
15.5
15.5
14.5
21.0
21.0
21.0
21.0
21.0
21.0
21.0
21.6
21.6
3.95
95
95
95
95
95
95
25
25
55
4.75
-------
EXHIBIT A-4
Environmental Protection Agency
1972 COSTS OF ALUMINUM
CHLORIDE PRODUCTION
ANHYDROUS
Capacity: 10,000 tons/year (costs below reflect production at 69 percent
capacity, which is typical)
Capital Investment: $1,200,000 ^
Product Economics: Percent
Dollar/ Selling Typical
Ton Price Range
Sales Price $290.00 100 $280.-350. (2)
Cost of Goods
Raw Materials (Aluminum Ingot) 96.80 33 93. -98.
(Chlorine) 45.65 16 42.-47.
Operating Labor 39.20^ 14 30.-40.
Maintenance 4.75 2
Depreciation 10.43j^ 3
Materials, supplies, packaging 26.00 ' 9
All Others: Tax, Admin. , Utilities 3.50 1
Total COG 226.33 78
Gross Profit 63.67 22
Corp. Sales, Admin. , Dist., O/H Exp. 16.43 6
Federal Income Tax 23.62 8
Net Profit 23.62 8 13. -29.
(1) +20 percent
(2) Depending primarily on container size. Since aluminum chlorine is used primarily
as catalyst, it is packaged in exact quantities so that a whole container can be added
to a process batch. There are at least 18 standard package sizes, ranging from
27. 5 pound polyethylene pails to bulk trucks.
(3) Six percent
(4) For hydrous plants operating labor can be as low as $3. -$4. per ton for comparably
sized plants.
(5) For hydrous plants, packaging materials are not required, therefore, this item is
in the $4. -$8. per ton range.
-------
EXHIBIT A-5
Environmental Protection Agency
ALUMINUM CHLORIDE
PRODUCTION
From Aluminum Metal and Chlorine
Water
1 r—^-Exhaust
T I gases
chionnt
Aluminum chloride
•iri* L—*-Wi
aste
Reaction
2A1 + 3C]2 -» 2A!C13
Material Requirements (Theoretical)
Basis—1 ton aluminum chloride
Aluminum scrap
Chlorine
-100 Ib
l.OOOlb
FROM BAUXITE AND CHLORINE
From Bauxite and Chlorine
Coal or cok«
Bauxite—*-
-|Condenser(-<<-j Cooler |
Aluminum chloride
Reaction
A1203 + 3C + 3C12 -> 2A1C13 + SCO
Material Requirements (Theoretical)
Basis—1 ton aluminum chloride
Bauxite
(58% A1203) 1,32.-) Ib
Coke 275 Ib
Asphalt 80 Ib
Chlorine
Air
1,000 Ib
Variable
Taken from: Industrial Chemicals 3rd, edition, 1967, W. L. Faith, D. B.Keves.
and R. L. Clark;
-------
(2) Production From Bauxite Still Exists In One Or Two Plants
This process is being phased out primarily because present uses
of aluminum chloride require a product of maximum purity, which can
only be obtained directly from the metallic aluminum production process.
Also the minimum economic plant size is about two and a half times
larger with this process than with the process using metallic aluminum
7. ALUMINUM CHLORIDE PLANTS ARE NOT LIKELY TO CLOSE
WITH THE INDICATED LEVEL OF COST IMPACT
The maximum after-tax cost increase required to amortize the
capital investment and cover the operating costs over a five year
period is $5. 07 per ton, about 1. 8 percent of the selling price, as
shown in Exhibit A-6, following this page.
With capacity utilization at 69 percent, the availability of some
possible substitutes, and negligible captive use, it will be difficult to
sustain a price increase to cover the full cost. No major abatement
costs differences between producers have been identified, however,
and it appears likely that some cost increases can be passed on.
Even if some costs have to be absorbed, however, the costs do not
appear sufficiently large to be the determining factor in closing an
otherwise profitable plant.
A-4
-------
TT-B. ALUMINUM SULFATE
1. ALUMINUM SULFATE HAS TWO MAJOR USES AND CUSTOMERS
Aluminum sulfate has only two major uses, paper manufacturing and wat-
purification, which account for 96 percent of production. Nevertheless, aluir
num sulfate was still the 35th largest volume chemical produced in the U. S. i
1971 with 1,129,000 tons produced.
(1) Ninety-six Percent of Aluminum Sulfate is Used in the Paper Industry
and Water Purification as Shown Below
Pulp and Paper:
Water Treatment:
Waste Treatment:
Other:
Chiefly for precipitating rosin size 67%
on paper fibers and for conditioning
the water of the pulp stock system
As a coagulant to remove turbidity 29%
for taste and color control; for water
softening (with lime and soda ash)
As a coagulant and as conditioning 3%
agent for sewage sludge
Includes use as a fire-fighting agent 1%
for petroleum fires, as a coagulant
for SBR elastomer manufacture, in
the manufacture of aluminum double
salts, and miscellaneous uses of iron
free aluminum sulfate. The iron-free
sulfate is consumed for sizing high-
grade papers, in catalyst (aluminum
silicate) manufacture, and in medi-
cimals, deodorants, and leather
treating.
TOTAL 100%
B-l
-------
Total 1971 consumption was 1,129 thousand tons, sold on a basis of 17
percent aluminum oxide (A^Os) content, which is equivalent to 57 percent
aluminum sulfate (A12(SO^)3). The value of this consumption was about
$47 million.
(2) Aluminum Sulfate Markets Are Regional and Local
Since two thirds of all aluminum sulfate produced is used in paper
manufacture, most aluminum sulfate plants are located in proximity to
paper plants. Large paper producers often maintain captive aluminum
sulfate production on their own plant sites, or adjacent to them, either
operating them themselves or purchasing the entire output on a long -term
contract basis. Plants vary in size from 5-10, 000 tons/yr. to 60-70,000
tons/yr. In areas with numerous paper mills, producers will attempt to
locate plants central to a number of mills, and supply them with aqueous
aluminum sulfate. However, the economics of transporting water only
permit this up to a radius of perhaps a hundred miles. If it is necessary
to ship greater distances in order to reach a more scattered market, then
the aluminum sulfate must be dried and bagged, which entails a consider-
able additional plant cost in both capital and operating expense. Therefore
economical dry production requires both a larger plant size greater than
15, 000 tons/yr., and also a larger potential market.
Imports and exports have been negligible, amounting to less than
one percent of U. S. consumption.
(3) No Significant Changes Are Forecast in Either the Pattern of
Consumption or the Structure/Economics of the Industry
(4) The Federal Government is Not a Factor in the Aluminum Su +ate
Market
The Federal Government exercises no economic controls over the
production of aluminum sulfate. However, the FDA has stringent purity
requirements for the product because its use in paper brings it in contact
with food through paper packaging. Also the AWWA controls aluminum
sulfate quality because of its use in water purification.
E-2
-------
(5) Less Than Ten Percent Is Used Captively, Though Exact Data Is
Unavailable.
Some municipalities still maintain captive production for water puri-
fication and so do a few large paper companies, but this is not a significant
factor in the market. However, a large portion of the production is limited
to from one to several paper mills so that most aluminum sulfate is sold
on a long-term, negotiated contract basis. This portion of the trade could
be considered semi-captive.
2. DOMESTIC CAPACITY UTILIZATION HAS INCREASED SLIGHTLY FROM
1960 - 1968
Although various sources report in detail on total production, consumption,
imports, and exports, data on plant capacities are not reported anywhere. Only
one source provides an estimate of total industry capacity, and this is shown in
Exhibit B-l, following this page. According to Stanford Research Institute total
capacity utilization was about 75% in 1968. As individual plant capacities are
considered proprietary, especially because of the unusually localized nature of
the markets involved, and there are about 101 plants in the industry, a more
concise evaluation of current capacity utilization is not within the scope of this
report.
(1) Aluminum Sulfate Production/Consumption Have Grown Steadily
The steady growth of aluminum sulfate can be seen in Exhibit B-l
following this page. Between 1960 and 1970 production increased 27% or
nearly 3% per year.
(2) Economics of Scale Are Less a Factor Than Local Market, Local
Consumption and Transportation Costs
The growth of aluminum sulfate is tied directly to population growth,
since it is a key ingredient in two basic resources, water and paper. How-
ever, paper mills tend to be in rural areas near pulp supplies, and alumi-
num sulfate plants are for the most part kept relatively small in size be-
cause transportation economics work against aggragating large segments
of a geographically scattered, rural market.
B-3
-------
EXHIBIT B-l
Environmental Protection Agency
ALUMINUM SULFATE PRODUCTION
1,000.
THOUSANDS OF SHORT TONS
>QT CAPACITY
(GENERAL GRADE)
^TOTAL
COMMERCIAL
1950 1955 I960
1965
1970
1975
(THOUSANDS OF SHORT TONS)
57?. AI 2(804)3
100K
GENERAL
COMMERCIAL
1960 879
1961 890
1962 917
1963 948
1964 1,011
1965 ,063
1966
1967
1968
1969
1970
1971
,112
,033
,179
,253
,202
,129
MUNICIPAL
4
4
5
3
4
4
4
5
5
5
6
6
IRON-FREE
52
55
64
59
56
59
65
60
73
71
71
70
GENERAL
TOTAL COMMERCIAL
935
949
986
,010
,070
,125
,181
,098
,257
,329
1,279
1,205
501
508
523
541
576
606
634
589
MUNICIPAL
2
2
3
2
2
2
2
IRON-FREE
33
31
'1
34
32
33
37
TOTAL
533
541
563
576
610
642
674
626
716
757
729
687
(2) GRADES:
GENERAL: A MAXIMUM IRON CONTENT or 0.5%.
1. COMMERCIAL: AVAILABLE ON THE OPEN MARKET.
2. MUNICIPAL: MANUFACTURED AND CAPTIVCLV CONSUMED FOR THE CLARIFICATION AND DECOLORATION OF
MUNICIPAL WATER SUPPLIES.
IRON-FREE: * MAXIMUM IRON CONTENT OF 0.005%.
-------
(3) No Substitutes For Aluminum Sulfate in Either of its Two Major Uses
Are Known or Forecast in the Near Future
3. RAW MATERIALS FOR ALUMINUM SULFATE ARE OBTAINED FROM
VARIOUS SOURCES
The basic raw material for aluminum sulfate production is aluminum oxide,
or alumina, which is reacted with sulfuric acid to produce aluminum sulfate.
The most common form of alumina used is natural bauxite found in the S. E. or
imported from South America, Jamaica, or the Guianas. Alumina bearing clay
found in Arkansas, Alabama, and Missouri is also used, though it contains
proportionally less alumina than bauxite, and is therefore more expensive to
ship long distances. In addition it creates a solid waste disposal problem in
non-rural areas, since the inert portion is considerably greater. For example,
high-grade bauxite will produce only one part by weight of silica, and silicates
for every ten parts of aluminum sulfate, whereas low grade clay may produce
several times this amount of solid waste. If this waste must be moved by truck
to land fill sites, this can be a decisive factor.
About ten percent of current aluminum sulfate is produced as a by-product
of long-chain alcohol production by two oil companies.
4. PUBLISHED ALUMINUM SULFATE PRICES HAVE INCREASED
MODERATELY SINCE 1963
Published aluminum sulfate prices increased about 25% between 1963 and
1970. Published prices for the past 20 years are shown in Exhibit B-2, follow-
ing this page.
(1) Most Aluminum Sulfate Is Sold At a Discount
Most aluminum sulfate is sold at significantly less than published
prices. Recent published prices have been as high as $60 per ton. How-
ever, most aluminum sulfate has recently sold from $40-45 per ton. Large
steady users are able to negotiate larger discounts. Price is also deter-
mined locally by local supply vs. demand situations and by the local avail-
ability of bauxite or alumina bearing clay.
B-4
-------
EXHIBIT B-2
Environmental Protection Agency
ALUMINUM SULFATE PRICES
90
80
:J±
t " *
DOLllARS t'ER TO!
:t *.:..• T
-4 i.
70
60
50
140
30
/ r
COMMERCIAL I RON-FREE
-COMMERCIAL GROUND
/- I COMMERCE LUMP
ACTUAL
PRICE
RANGE
/
1950
1955
I960
1965
1970
1975
1980
-------
(2) Local Capacity Utilization Is A Major Factor In Price
Since aluminum sulfate is marketed regionally, local capacity
considerations often play an important role in price competition.
Approximately two thirds of the cost of aluminum sulfate is raw
material cost. The remaining one third is called the "conversion cost. "
At least 80 percent of the conversion cost is fixed cost, as can be seen
in Exhibit B-3 following this page. This means that unit cost per ton
decreases significantly as capacity utilization increases. This in turn
permits either higher profits, or greater leaway for discounting and
price comptition.
5. PROFITABILITY OF ALUMINUM SULFATE PRODUCTION WILL
PROBABLY CONTINUE TO BE RELATIVELY STABLE
(1) Detailed Data on Profitability of Aluminum Sulfate Production Are
Hard To Obtain and Vary Widely
Producers for which financial data is available are large integrated
companies which produce large varieties of products, and several have
from a few up to as many as 27 aluminum sulfate plants. Data on individual
plant economics is considered highly proprietory, especially by small com-
panies vulnerable to price cutting by larger producers. Though costs vary
greatly from plant to plant primarily with raw material cost, local supply/
demand functions, and local pollution abatement and solid watete disposal
considerations, some general production cost figures are shown in Exhibit
B-3 following this page.
(2) A Gradual Trend Away From Small Individual Producers Appears
to be Continuing
While regionally of markets and transportation economics, as well
as the relatively low capital cost of building a plant, permits many small
plants to continue profitably, many single plant producers have dropped
out of the market in the past 10 years, especially smaller plants. At the
same time several large, integrated producers have increased their num-
bers of plants considerably. There are presently 101 plants producing
aluminum sulfate, and 50 of these are owned by only three producers. A
list of producers and plant locations is shown in Exhibit B-4, following
Exhibit B-3.
B-5
-------
EXHIBIT
B-3
Environmental Protection Agency
1972 COSTS OF LIQUID ALUMINUM
SULFATE PRODUCTION
Capacity: 100 tons per day, 330 days per year
Figures below reflect operations at 60% of capacity, which is
typical.
(1)
Dollar/
Ton
$42.00
Capital Inve stment: $1,000,000
Product Economics:
Sales Price
Cost of Goods
Raw Materials (Bauxite
delivered)
(Sulfuric acid delivered)
Operating Labor
Maintenance/Supplies
Depreciation
Sludge Removal
All others: Tax, Adm. ,Util.
Total COG
Gross Profit
Corp. Sales,Adm., O/H Expense
Federal Income Taxes
Net Profit 3. 00
Percent
Selling
Price
100
Typical
Range $
$ 40.-46.
11.50
10.50
1.62
3.40
3.03<4>
.25
1.70
32.00
10.00
4.00
3.00
97 Q — 1 9 ^
Li I iJ , ±. £4 , \j
25 7. -16.
4
8
7
1 0-. 50
4
76 20. -35.
24 3. -20.
10 0-5.
7
1.-10.
(2)
(3)
'+20%.
Local captive clay versus imported South American Bauxite.
Captive at cost in same complex versus out^de with transportation.
(4)At 6% of capital.
-------
EXHIBIT B-4
Environmental Protection Agency
ALUMINUM SULFATE PRODUCERS
AlliedTFTem. Lilly.
Indust. Chems. Oiv.
American Cyanamid Co.
Indust. Chems. and Plastics Oiv.
Birmingham. City Of
Burns Chem.. Inc.
Cities Service Co.. Inc.
North American Chems. and Metals
Group
Indust. Chems. Div.
Co'umhus. City o!
Water SoUenmg and Filtration Plant
Div.
Crown Zeiierbach Corp.
Chem. Products Div.
Chilhcoths, Ohio
Cleveland. Ohio
Covmgton. Va.
Denver. Colo.
Detroit. Mich.
East Point. Ga.
Fact St. Louis. III.
El Segundo. Calif.
Hopewell. Va.
Jacksonville. Fla.
Johnsonburg. Pa.
Knlamazoo. Mich.
Kennewick. Wash.
Macon. Ga.
Menasha. Wise.
Middletown. Ohio
Monroe, La. f
Newell. Pa
North Claymont. Del.
Pine Bljff. Ark.
Pittsburg. Calif.
Port St. Joe. Fla.
Savannah, Ga.
'Tecoma. Wash.
Vancouver, Wash.
Vicksburg. Miss.
Wisconsin Rapids. Wise.
Chattanooga. Tenn.
Cloquet. Minn.
Coosa Pines. Ala.
De Ridder, La.
Escaneba, Mich.
Georgetown. S.C.
Hamilton. Ohio
Johet. III.
Kalamazoo. Mich.
Lmdon. N.J.
Michigan City. Ind.
Mobile. Ala.
Monticello. Miss.
Plymouth. N.C.
Birmingham. Ala.
Catawba. S.C.
East Point. Ga.
Springfield. Tenn.
Augusta. Ga.
Cedar Springs, Ga.
Fernandma Beach, Fla.
Columbus, Ohio
Bogalusa. l.a.
Delta Chems.. Inc
E. I. du Pont de Nemours & Co.. Inc.
Indust. and Biochems. Dept.
Essex Chem. Corp.
Chems. Div.
Ethyl Corp.
Indust. Chems. Div.
Filo Color and Chem. Corp.
Filtrol Corp.
Howerton Gowen Chems.. Inc.
W. R. Grace & Co.
Indust. Chems. Group
Oavison Chem. Oiv.
Hamblet & Hayes Co.
J. M. Huber Corp.
Imperial West Chem. Co.
Mallmckrodt Chem. Works
Indust Chems. Div.
The Mead Corp.
Nalco Chem Co.
Indust Drv
North Star Chems.. Inc.
Olm Corp.
Chems. Div.
Sacramento. City of
Southern States Chem. Co.
Stauffer Chem. Co.
Indust. Chem. Div.
Wright Chem. Corp.
Searsport. Me.
Linden, N J.
Newark. N.J.
Pasadena. Tex.
Newark. N.J.
Jackson. Miss
Los Angeles. Calif.
Sail Lake City. Utah
Norfolk. Va.
Cincinnati. Ohio
Curtis Bav. Md.
lake Charles. La.
Salem. Mass
Etowah. Tenn.
Havre de Grace. Md.
Antioch. Calif.
St. Louis. Mo.
Kmgsport. Tenn.
•Chicaio. Ill
Pine Bend. Minn.
Baltimore. Md.
Sacramento. Calif.
Atlanta. Ga.
Bastrop. La
Baton Re jge. La
Counce. Tenn
N/.anche or. Tex.
Naheola. Ala
North Portianrj. Ore.
Richmond (Stege). Calif.
Springhill. La ,
Tacoma. Wash.
Acme. N.C.
-------
6. NINETY PERCENT OF ALUMINUM SULFATE IS PRODUCED BY THE SAME
PROCESS
(1) The Primary Process Is the Reaction of Bauxite or Clay with Sulfurlc
Acid
Aluminum sulfate is produced by reacting sulfuric acid with natural
bauxite or clay. The process is relatively simple and problem free. A
flow chart for aluminum sulfate production is shown in Exhibit B-5, fol-
lowing this page. Aluminum sulfate is produced in solution and is sold
either as a liquid, or as a solid after evaporation of water. Excess acid-
ity is closely controlled because of product purity requirements due to u_ o
in contact with food and in drinking water purification. The primary waste
problem is inert solids, primarily silica and silicates, which are either
settled out in ponds, or filtered out, depending on space and local disposal
requirements.
(2) Ten Percent of Aluminum Sulfate Produced as By-Product
Ten percent of aluminum sulfate is produced by two oil companies
as a by-product of long-chain alcohol production. There are no abatement
problems associated with this production attributable to the by-product
production.
7. THERE ARE APPROXIMATELY 101 ALUMINUM SULFATE PLANTS
OPERATED BY 27 PRODUCERS
A list of producers and plant locations is provided in Exhibit B-4, prece 1-
ing this page.
(1) Three Major Producers Have 50 Percent All Plants
(2) Data On Industry Capacity Is Not Available. But Is Estimated At 50
Percent Above Present Production
Data on individual plant capacities is not available. However, capa-
cities could be somewhat elastic depending on alumina source used. For
example, high grade bauxite will produce more aluminum sulfate than clay
in the same time. Total U. S. capacity is estimated by one source to be about
50 percent above present production.
B-6
-------
EXHIBIT B-5
Environmental Protection Agency
ALUMINUM SULFATE PRODUCTION
From Bauxite
Sulfuric
Ground Blark
bauxite ash Glue
Suiiuric I I I
-5ST1 J (
fL
Steam Waste
solids
T
Cooling tioor
f
Aluminum
sultate
Reaction
A1203-2H20 + 3IT2S04 -* A]2(S04)3 + 5H20
92% yield
Material Reqniremente
Basis—1 ton aluminum sulfate (17% A1203)
Bauxite (55% Al«03) 670 Ib
Sulfuric acid (60°Be) 1,140 Ib
Black ash (70% BaS) 13 Ib
Flake glue 0.4 Ib
Taken from: Industrial Chemicals 3rd Edition, 1967, W. L. Faith, D. B. Keyes,
and R. L. Clark;
-------
Plants are considered to be small if in the 5-10,000 ton/year
range, medium sized if in the 10-30,000 ton/year range, and large if in
the 30-70,000 ton/year range. One major producer had about 20 percent
large plants, 30 percent medium plants, and 50 percent small plants.
However, it is not known 'whether this distribution holds true through-
out the industry.
(3) Plants Are Evenly Distributed Geographically Except In The^
Midwest
Aluminum sulfate plants are dispersed widely throughout the country,
except for the midwest and Rocky Mountain states, which contain too l^tle
of both population and paper production to justify many plants. Slightly
higher concentrations of production facilities are found in both the south-
east and northwest in areas of extensive paper production.
THE IMPACT OF THE EPA'S WATER POLLUTION ABATEMENT COST
ESTIMATES IS NOT IJKELY TO CAUSE ANY BUT A FEW ALREADY
MARGINAL SMALL PLANTS TO CLOSE
(1) The Pollution Abatement Cost Developed by EPA Are
Based On The Use of Neutralization, Settling, and
Recycling
The treatment configurations proposed by EPA are presented
in the table below.
Treatment Configuration
Neutralization (including Neutralization
equalization and sludge Settling Pond
de watering) Recycle
Settling Pond
Treatment I is sxpected to meet the ELG "B" water effluent
guidelines of. 08 pounds per ton of suspended solids. Treatment II is
based on the requirements of the ELG "A" guidelines of no waterborne
process effluent.
B-7
-------
(2) Producer Comments On EPA Cost Estimates Indicate
General Agreement With The Costs, But Disagreement
With The Technology For Treatment
While most producers who commented in detail on the EPA
cost estimates thought the estimates were low for most plants,
their own estimates were not significantly higher. Most producers
appear to already be utilizing Treatment I, and many plants may
incur little additional cost in meeting the ELG "B" Guidelines.
However, several producers objected strongly to the Treat-
ment EL technology, stating that neutralization is not possible with
a total recycle system with this product, because product quality
requirements are very high, and product contamination would
result.
Some producers were also concerned that if pond lining were
required to prevent percolation of dissolved solids to ground water
supplies, this could cause problems with pond overflow and sludge
dewatering in some areas where both rainfall and humidity are high.
In such areas recycle might have to be supplemented by treatment of
pond overflow.
(3) The Impact of Water Pollution Abatement Costs Is Not Likely To
Cause Any But A Few Already Marginal Small Plants Tc^Close
The impact of EPA's water pollution abatement cost estimates on
after tax profitability per ton are shown in Exhibit B-6, following this page.
The table below summarizes these impacts and compares them with the
range of profitability per ton for plants of approximately 33,000 tons/year
capacity operating at about 60 percent capacity.
Range of After Tax Net Profit Per Ton For
Plants of About 33,000 Tons/Year Capacity $1. -10.
Abatement Costs Per Ton
Treatment I (16,500 Tons/year) $2.55
Treatment n (16,500 Tons/year) 2.33
Treatment I (165,000 Tons/year) .55
Treatment n (165,000 Tons/year) .39
B-e
-------
The abatement costs shown above for Treatment I could exceed
the present profit margin of the least profitable plants shown in the
range above. This analysis leads to the conclusion that some presently
marginal plants might be forced to close simply from the added costs
of water pollution abatement estimated by EPA. However, neither of the
plant sizes on which EPA based its cost estimates are compatible
with the plant sizes on which financial data were obtained in this
study, although these plants are within the range of the two plant
sizes used by EPA, and it therefore seems likely that the abate-
ment cost per ton range is relevant to actual profitability data
obtained. It should also be noted that the abatement costs per ton
were calculated on the relatively conservative basis of five year
capital recovery in order to estimate the maximum probable im-
pact. Industry sources indicate that negative cash flow rather than
lack of profitability would be the criterion used in deciding to close
plants. Nevertheless, some few marginal plants could be forced
to close if obliged to spend the full amount estimated by EPA. With
the financial data obtained, however, it was not possible to identify
these plants specifically.
(5) Nevertheless Comparison Of Pollution Abatement Costs
Per Ton With Unit Production Costs Indicate That Pro-
fitability Impacts Could Be Significant For Some Small
Plants
Calculated on the basis of a current average selling price of
$42. per ton, EPA's cost estimates for a small plant could require
a price increase of up to six percent to fully pass on the capital costs
and operating costs over a five year period. It should be noted, how-
ever, that the EPA "small" plant was 16,500 tons per year, whic\ is
actually a medium-sized plant. The cost impact may be substantially
higher on a per ton basis for smaller producers if they are presently
marginal, thus placing these smaller producers at significant com-
petitive disadvantage in those areas where they compete directly with
larger producers. EPA's abatement cost estimates for larger plants
would require only a one percent increase in selling price to pass on.
EPA's estimates were for a "large" plant of 165-182,000 tons per year,
considerably larger than the largest plant encountered to date in the
study.
In addition, some plants have been operating in locations where
water pollution standards have been enforced locally for some time.
Therefore, a wide spread exists between plants regarding their present
state of compliance with new EPA "Temporary Guidelines. " To date,
the major waste/pollution problem faced by most producers has been
solid waste or sludge. The particular technology used to deal with this
problem can lead to significant variat5 us in the incremental cost of
meeting water quality standards.
B-9
-------
(6) The Capital Costs May Be Hard for Some Producers to Raise
Existing plants are estimated to cost from $50,000 to $1 million,
depending on size and sophistication. EPA has estimated capital re-
quired for abatement facilities at $87-$95,000 for a 16-18, 000 tons
per year plant. Preliminary estimates are that such a plant would cost
between $200,000 and $750,000, depending on location, sophistication,
and whether dry product was required. This would mean a capital
increase from about 13 percent to 50 percent of the present plant
investment, and this relative amount of capital may be hard to raise
for some small producers.
(7) Except for Small Plants Competing Directly With Large Plants,
Producers Will Probably Pass Costs on as Price Increases
Demand is steady and growing and no substitute products exist.
Where small plants are competing directly with large plants, the abate-
ment costs will place the small plants at a significant competitive dis-
advantage, and these plants will probably close. All other plants,
however, should be able to pass on the added costs.
B-10
-------
II-C. CHLORINE - CAUSTIC SODA
The key product of the chlor-alkali industry is chlorine produced by the
electrolysis of a brine solution. However, during the process caustic soda is
produced as a co-product in almost equivalent quantities. Therefore, both
products are discussed in this section.
1. BOTH CHLORINE AND CAUSTIC SODA HAVE MANY USES AND CUSTOMERS
Chlorine and caustic soda have different uses and customers, however.
This section discusses first chlorine and then caustic.
CHLORINE
(1) Chlorine Has Over Fifty End-Uses And These Can Be Conveniently
Categorized Into Four Major Classifications
Total chlorine production in 1971 amounted to 9. 35 million tons
valued at an estimated $428 million.
Chlorine use, by major end-use, is summarized in the following
table.
CHLORINE USES, 1964-1970
1964 1967 1970
Organic chemicals 65% 65% 64%
Inorganic chemicals 9 10 11
Paper and pulp 17 12 11
Water and sewage 444
Miscellaneous 5_ 9 10
100% 100% 100%
Source: Foster D. Snell, Inc. estimates
C-l
-------
(2) Chlorine Markets Are Regional and Local
Major domestic markets are concentrated along the Atlantic and
Gulf coasts, and regional capacity and demand for chlorine are fairly well
balanced. There is, however, a surplus of capacity on the Gulf coast.
It is beyond the scope of this study to detail sales by specific end-use;
however, sales for major uses are shown in the following table.
Estimated Chlorine Sales, By Use (1971)
(thousand short tons)
Use Volume
Organic chemicals 5,980
Inorganic chemicals 1,026
Paper and pulp 1,026
Water and sewage 383
Miscellaneous 935
Total 9,350
Source: Foster D. Snell, Inc. estimates
Exports have remained relatively constant over the past 10 years at
about 20, 000 tons, and are not a major factor in the demand for chlorine.
Imports are also small.
(3) The Federal Government Is Not A Major Factor In The Chlorine
Market
Although the Federal Government is not a major customer, pending
and future legislation regarding uses of some products containing chlorine,
i.e. chlorinated solvents, pesticides, etc., can have a marked influence
on chlorine consumption.
(4) About 58 Percent Of Industry Production Is Used Captively
Continued supply is essential to production of many other products.
Large manufacturers may, therefore, be willing to operate less efficient
plants, if the plant is part of a complex using chlorine as an intermediate.
C-2
-------
(5) The Balance Of Industry Production Is Sold Either To Adjoining Plants
Or Within Reasonable Distances From The Producing Plant
Chlorine is shipped on a freight equalized basis, which entails that
a producer charge a customer no more freight than he would pay in buying
from the producer nearest his plant. Due to the amount of freight cost the
producer must absorb, customers located at quite a distance are not profit-
able to supply directly.
CAUSTIC SODA
(6) Caustic Soda Has Over Forty End-Uses And Can Be Conveniently
Categorized Into Four Classifications
Total caustic soda production in 1971 amounted to 9.69 million
tons valued at about $373, 000, 000. Caustic use, by major
end-use, is summarized in the following table.
U. S. CAUSTIC USES. 1970
(per cent)
Use
Chemical and metal processing 56
Cellulosics 16
Petroleum, textiles, soaps, food and
other merchant uses 15
Exports 8
Other 5
100%
Source: Foster U. Sneli, Inc. estimates
(7) Caustic Soda Markets Include Substantial Export Volume
The demand for caustic soda appears to be more widely distributed
than chlorine with no single end use consuming more than 10-12% of total
production. Sales by major end-uses is shown in the following table.
C-3
-------
ESTIMATED DOMESTIC CAUSTIC SALES. BY USE (1970)
(thousand short tons)
Use Volume
Chemical and metal processing 5,640
Cellulosics 1,610
Petroleum, textiles, soaps, food,
and other merchant uses 1,510
Exports 806
Other 498
10,064
Source: Foster D. Snell, Inc. estimates
(8) The Federal-Government Is Not A Major Factor In The Caustic
Market
All end-uses are in the industrial sector.
(9) Approximately 36% Of Industry Production Is Used Captively
Continued supply of caustic soda is essential to production of many
other products.
(10) The Balance Of Industry Production Is Sold To Local Plants Or
Within Reasonable Distances From The Producing Plant
Caustic is also shipped on a freight equalized basis so that a producer
will try to sell customers as close to the producing point as possible.
2. SINCE MOST CAUSTIC SODA IS MADE AS A CO-PRODUCT OF CHLORINE,
CAPACITY UTILIZATION IS SIMILAR
Chlorine capacity, production and capacity utilization for the period 1961-
1971, are shown in Exhibit C-l, following this page. Domestic production, trade,
and apparent chlorine consumption are shown in Exhibit C-2, following C-l.
C-4
-------
EXHIBIT C-l
Environmental Protection Agency
CHLORINE CAPACITY, PRODUCTION
AND PERCENT UTILIZATION
(tons per day)
Percent
Capacity
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
14
14
15
16
17
18
21
23
25
28
29
,405
,697
,503
,404
,245
,939
,216
,238
,124
,276
,131
Production
12,605
14,090
14,967
16,244
17,855
19,705
21,041
23,072
25,687
26,940
25,614
Utilization
87.3
95.8
96.6
99.0
103.5
104.0
95.0
99.4
102.5
95.2
87.9
Source: Chlorine Institute Pamphlet No. 10
-------
EXHIBIT C-2
Environmental Protection Agency
U. S. CHLORINE PRODUCTION, TRADE
AND APPARENT CONSUMPTION
1961 - 1971
(million short tons)
Apparent
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
Production
4.60
5.14
5.46
5.95
6.52
7.20
7.68
8.44
9.38
9.76
9.35
Imports
0.02
0.03
0.02
0.02
0.04
0.07
0.02
0.02
Exports
0.03
0.04
0.04
0.04
0.04
0.02
0.03
0.02
Consumption
4.59
5.13
5.44
5.93
6.52
7.27
9.37
9.76
Source: Bureau of Census, Current Industrial Reports
-------
(1) Chlorine Capacity Utilization Has Remained High During The Period
1961-1971
During this period, capacity utilization has ranged from 87 percent
to 104 percent.
(2) Chlorine Capacity Utilization in 1970 and 1971 Dropped Due To The
Impact Of Qxychlorination Processes And A Lagging Economy
Oxychlorination is a process of chlorinating a material using hydrogen
chloride and oxygen, i. e., manufacture of vinyl chloride from acetylene
instead of ethylene. The impact of these processes appears to have been
absorbed and near future increases in chlorine consumption look favorable.
(3) Caustic Soda As A Chlorine Co-Product, Represents Approximately
96 Percent Of The Total Caustic Product
Total caustic/chlorine-caustic production is shown in Exhibit C-3
following this page.
(4) Caustic Production Has Increased At A Faster Rate Than Consumption
For The Period 1961-1970.
Caustic production and apparent consumption are shown in Exhibit
C-4, following Exhibit C-3. Production has increased 105 percent whi'e
apparent consumption has increased 93 percent for this period.
3. RAW MATERIAL FOR CHLORINE-CAUSTIC PRODUCTION IS OBTAINED
FROM SEVERAL SOURCES
(1) Salt Is The Prime Material
Some manufacturers use solid salt which is then dissolved in water.
Others are located over a brine source which provides a ready source of
dissolved salt.
C-5
-------
EXHIBIT C-3
Environmental Protection Agency
RATIO OF TOTAL CAUSTIC TO
CHLORINE-CAUSTIC, 1961-1971
(million short tons)
Total
Caustic
Production
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
4
5
5
6
6
7
8
8
9
10
9
.914
.486
.814
.389
.802
.596
.398
.868
.917
.064
.692
Caustic W
From
Chlorine
4
5
5
6
6
7
8
8
9
10
9
.87
.44
.78
.30
.89
.62
.12
.93
.92
.34
.90
Difference
+0
+0
+0
+0
-0
-0
+0
-0
0
-0
-0
.04
.05
.03
.09
.09
.02
.28
.06
.28
.21
(1) Source: Bureau of Census, Current Industrial Reports
(2) Based on estimated
caustic yield from chlorine production of 1.1 tons
caustic per ton chlorine.
-------
EXHIBIT C-4
Environmental Protection Agency
U.S. CAUSTIC SODA, PRODUCTION
TRADE, AND APPARENT CONSUMPTION
(million short tons)
Apparent
Production
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
4
5
5
6
6
7
8
8
9
10
9
.914
.486
.814
.389
.842
.596
.398
.868
.917
.064
.692
Imports
Small
Small
Small
0.001
0.003
0.040
0.063
Exports
0
0
0
0
0
0
1
.228
.202
.321
.496
.420
.814
.062
Consumption
4
5
5
5
6
9
9
.686
.284
.493
.894
.425
.1.43
.065
Source: Bureau of Census, Current Industrial Reports
-------
(2) Salt Costs Vary By Distance From Source and Salt Type
Prices are typically quoted on an "FOB works" basis. Evaporated
salt in October, 1971 is quoted at $1. 54/100 Ibs. works. Rock salt is
quoted at $. 97/100 Ibs. works.
Brine prices are not quoted, but many chlorine producers have
built plants over, a brine source. The brine costs are, therefore, deter-
mined through internal costing, but at any rate, considerably below salt
costs.
4. PUBLISHED CHLORINE AND CAUSTIC PRICES HAVE INCREASED
MODERATELY SINCE 1961
Quoted prices for chlorine: single tank car, liquid and freight equalized,
are shown in Exhibit C-5, following this page. Quoted chlorine prices have in-
creased from $64 per ton in 1961 to $75 per ton in 1972.
Quoted prices for caustic: sellers tanks, works, freight equalized, are
shown in Exhibit C-6 following Exhibit C-5. Quoted liquid (50% caustic prices
have increased from $58 per ton in 1961 to $80 per ton in 1972.
List prices are generally set by major producers. Discounting from list
prices is prevalent, however, due to pressures from large, long-term contract
users. Published prices and reported average prices paid by caustic and
chlorine customers are shown in Exhibit C-7, following Exhibit C-6.
5. DIAPHRAGM AND MERCURY CELL PLANTS APPEAR TO BE OF
APPROXIMATELY EQUAL PROFITABILITY
Profitability data for plants using 100 tons per day mercury cells are
shown in Exhibit C-8, following Exhibit C-7. Profitability data for producers
using 350 tons per day diaphragm cells is shown in Exhibit C-9, following C-8.
The plant data were drawn from different parts of the country as reflected in
the difference in average selling prices.
6. CHLORINE AND CAUSTIC ARE PRESENTLY PRODUCED BY
ELECTROLYTIC PROCESSES
Chlorine is produced almost entirely by electrolytic methods from fused
chlorides or aqueous solutions of alkali metal chlorides. In the electrolysis of
brines, chlorine is produced at the anode. Hydrogen, together with caustic soda
(sodium hydroxide or potassium hydroxide) formed at the cathode. As the anode
and cathode products much obviously be kep, entirely separate, various cell de-
signs have been developed including the presently used diaphragm and mercury
cells.
C-6
-------
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
EXHIBIT C-5
Environmental Protection Agency
PUBLISHED CHLORINE PRICES
1961 - 1972
(dollars per ton)
Source: Oil, Paint & Drug Reporter
Price Bases, single tank cars, liquid, freight equalized
-------
EXHIBIT C-6
Environmental Protection Agency
PUBLISHED CAUSTIC SODA PRICES
1961 - 1971
(dollars per ton)
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
Price
$58
58
58
58
58
58
60
60
71-80
Source: Oil, Print and Drug Reporter
Price Bases: 50% NaOH, sellers' tanks, works, freight equalized
-------
EXHIBIT C-7
Environmental Protection Agency
PUBLISHED AND ACTUAL PRICES
PAID FOR CHLORINE AND CAUSTIC
1961 - 1971
(dollars per ton)
Published Price
(1)
Actual Average Value of Shipments
(2)
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
Chlorine
$ 64
64
64
64
64
64
67-69
69-73
73-75
75
75
Caustic
$ 58
58
58
58
58
58
60
60
66
66
Chlorine
$ 59
58
57
56
52
51.80
51.20
47.70
47.40
45.60
Caustic
44.90
42.70
37.40
33.90
3' .90
Source: (1) Chemical Marketing Reporter
(2) U.S. Department of Commerce, Current Industrial Reports,
Series M28A: Value of marketing FOB plant, reported by producers.
Caustic is 50% liquid.
-------
EXHIBIT C-8
Environmental Protection Agency
1972 PRODUCTION COSTS OF
CHLOR-CAUSTIC: MERCURY CELL
CAPACITY: 200 tons per day, 230 days per year
CAPITAL INVESTMENT: $13,000,000
PRODUCT ECONOMICS
Chlorine Price
Caustic Soda Price
Total Sales Price
Cost of Goods
Raw Materials
Electric Power
Operating Labor
Maintenance
Depreciation
Other (3)
(1)
(2)
Total Cost of Goods
Gross Profit
Corp. Sales, Adm. ,Dist
O/H Exp.
Federal Income Tax
Net Profit
Dollars/
Ton
$ 68.76
56.25
125. 01
$ 16.87
34.97
8.03
11.66
11.82
23.98
$107.33
17.68
9.76
3.80
Percent
Selling
Price
55
45
100
14
28
6
9
10
19
86
14
8
3
Typical
Range
$50.00 - 71.00
42. 00 - 58. 00
92.10 - 130.00
$11.00 - 19.00
23.00 - 36.00
9.00 - 26.00
4.12
0.00 - 7.00
(4)
(1) Includes mercury, salt, misc. chemicals
(2) At 6% of capital
(3) Includes freight equalization, plant administration
(4) Maximum profitability is for plants located over brine sources.
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EXHIBIT C-9
Environmental Protection Agency
1972 PRODUCTION COSTS OF
CHLOR-CAUSTIC: DIAPHRAGM CELL
CAPACITY: 350 tons per day, 330 days per year
CAPITAL INVESTMENT: $20,000,000
PRODUCT ECONOMICS
Chlorine Price
Cuastic Soda Price
Total Sales Price
Cost of Goods
Raw Materials
Electric Power
Operating Labor
Maintenance
Depreciation
Other (3)
(1)
(2)
Total Cost of Goods
Gross Profit
Corp. Sales, Adm. , Dist. ,
O/H Exp.
Federal Income Tax
Net Profit
Dollars/
Ton
$ 53.73
43.97
97.70
6.77
21.24
6.35
9.45
10.38
18.53
$ 81.10
24.71
8.09
3.76
Percent
Selling
Price
55
45
100
7
22
6
9
10
19
83
17
8
4
Typical
Range
$ 51.00 - 71.
42.00 - 58.
92.00 - 130.
4.00- 20.
17.00- 32.
7.00- 11.
00
00
00
00
00
00
4.33
1.00 - 8.00
(4)
(1) Includes graphite, salt, miscellaneous chemicals
(2) At 6% of capital
(3) Includes freight equalization, plant administration
(4) Maximum profitability is for plants located over brine sources
-------
(1) There Are 31 Facilities Using Diaphram Cells
A process flow chart for the diaphram cell is shown in Exhibit C-10
following this page. In the diaphram process, brine is fed continuously
and flows from the anode compartment through an asbestos diaphram
backed by an iron cathode. Hydrogen ions are discharged from the solution,
containing caustic soda and unchanged sodium chloride, is evaporated to
obtain the caustic soda. In the course of the evaporation the sodium
chloride precipitates, is separated and redissolved, and sent back to the
electrolysis.
The use of the diaphram cell has decreased slightly from 76 percent
of total production in 1960 to 72 percent in 1971.
Waste loads include not only unreacted raw materials, but products
of the reaction as well as some of the diaphram and electrodes.
Purification muds
Sodium or potassium hydroxide
Sulfuric acid
Chlorinated hydrocarbons
Sodium sulfate
Chlorine
Asbestos
Filter aids
Lead
Hydrochloric acid
Other
(2) There Are 24 Facilities Using Mercury Cells
A process flow chart for the mercury cell process is shown in
Exhibit C-ll, following Exhibit C-10. In the intermediate mercury electrode
process, the cation, after discharge forms an alloy with mercury where
this amalgam is reacted electrochemically to form hydrogen and a com-
paratively strong caustic soda solution containing almost no sodium or
potassium chloride. The use of mercury cells has increased from 18% of
total production in 1960 to 24 percent in 1971.
Waste loads contain similar products as from the diaphram cell.
(3) Some Five Facilities Operate Mixed Diaphram - Mercury Cells
Waste products from these facilities are similar to the products of
the component cells.
C-7
-------
EXHIBIT C-10
Environmental Protection Agency
FLOW IDAGRAM OF DIAPHRAGM CELL
OPERATION IN A CHLORINE-CUASTIC PLANT
CI2 Free Vent
Source: Kirk-Othmer, "Encyclopedia of Chemical Technology
-------
EXHIBIT C-ll
Environmental Protection Agency
FLOW DIAGRAM OF MERCURY CATHODE
CELL OPERATION IN A CHLORINE-CAUSTIC PLANT
Soil
CAUS1 C
CONCENTRATOR
737
Pro
CAUSTIC HJSION
5 FLAKING
Liquid C\
Product
Product
Anhydrous
-NaOH
Products
Source: Kirk-Othmer, "Encyclopedia of Chemical Technology"
-------
(4) There Are Eight Facilities Using Other Processes To Make Chlorine
Four plants use the Downs Cell which electrolyzes fused salt and
produces sodium and chlorine. Waste loads for this cell appear to be con-
siderably less than those previously described.
The four remaining plants produce chlorine as follows:
Hydrochloric acid electrolysis
Combination diaphram and fused salt cell
Magnesium cell
Combination diaphram and magnesium cell.
(5) The Solvay-Lime Process and the Trona Miner In Wyoming Produce Soda
Ash Which Competes Directly With Caustic Soda
Both of these products involve direct production costs, however. With the
significant growth in chlorine demand since 1961, caustic has become a low-
cost by-product which competes favorably with both sources of soda ash. The
Solvay-Lime process faces severe competition from both the Trona Mine soda
ash and chlorine-caustic. Industry contacts believe most of these plants are
either shut-down or placed in a standby status.
7. THERE ARE 60 CHLORINE-CAUSTIC PLANTS CURRENTLY IN OPERATION
Chlorine caustic plants, locations, firms and process used are shown in Ex-
hibit C-12, following this page. Caustic and chlorine capacity, by producer is shown
in Exhibit-C-13, following Exhibit Cr 12,- - -
Productive capacity is concentrated in a few firms. The top three flrns re-
present 51 percent of capacity; the top 10 firms represent 80 percent of capacity.
(1) Chlorine-Caustic Producers Are Concentrated In Two Geographic
Areas
Production locations of chlorine-caustic producers are shown on the
map in Exhibit C-14, following C-13. Producers are concentrated on
the Gulf coast and east of the Mississippi River.
C-8
-------
EXHIBIT C-12(l)
Environmental Protection Agency
CHLORINE PLANTS IN THE UNITED STATES
State t City
Alabama
Hunt svi 1 le
Le ro/ne
Me Intosh
Mobi le
Muscle Shoals
Arkansas
Pine Bluff
Cal i forn ia
Oominguez
Pi ttsburg
Delaware
Delaware City
Georg ia
Augusta
Brunswick
Brunswick
11 1 inois
East St. Louis
Kansas
Wichita
Kentucky
Calvert City
Calvert City
Loui s iana
Baton Rouge
Baton Rouge
Gei smar
Gramercy
Lake Charles
laquL., ine
->t. Gabriel
Taft
Ha ine
Orr ington
Michigan
Midland
' Montague
Wyandotte
Wyandotte
Nevada
Henderson
New Jersey
L inden
Newark
New York
Niagara Fal 1 s
Niagara Falls
Niagara Tails
N iagara Fal 1 s
Niagara Falls
Syracuse
Producer
(U.S. GovR'rv i- ' t }
Stauf fer C^et-io.,1 Co--;- - .•
Oi in Corpora: ion
Diamond Shamrock Chemical Co.
Diamond Shamrock Chemical Co.
(U.S. Government)
Stauffer Chemical Company
The Dow Chemical Company
Diamond Shamrock Chemical Co.
01 in Corporat ion
Allied Chemical Corp.
Brunswick Chemical Co.
'
Monsanto Company
Vulcan Materials Co.
B.F. Goodrich Chemical Corp.
Pennwalt Corp.
Ethyl Corporation
Allied Chemical Corp.
BASF Wyandotte Corp.
Kaiser Aluminum t Chemical Corp.
PPG Industries, Inc.
The Dow Chemical Company
Stauffer Chemical Company
Hooker Chemical Corp.
Sobin Chlor-Alkali Inc.
The Dow Chemical Company
Hooker Chemical Corp.
BASF Wyandotte Corp.
Pennwalt Corp.
Stauffer Chemical Co. of Nevada Inc.
GAF Corp.
Vulcan Materials Co.
E.I. du Pont de Nemours I Co., Inc.
Hooker Chemical Corp.
Hooker Sobin Chemical*
01 in Corporat ion
Stauffer CHcn.ical Co.
Allied Chemical Corp.
, • • r
b n 1 I*
•
;;'3
i yjS
1952
i96^
1952
tg'O
1963
1917
1965
1965
1957
1967
1922 '
1952
1966
1953
1938
1937
1959
1958
13^7
1958
1970
1966
1967
1897
19511
1938
1898
19*12
1956
f96l
1898
1898
1971
1897
1898
1927
Ccl Is f i
}- io>.cr- S (diaph.)
Oe t,oi-3 22 x 5 (mere.) - -
Olin £8 (mere.) - -
DC Nora (mere.) - -
De Nora 2*« x 2h(mere.) - -
Hooker S (ai»ph.)
BASF (mere.)
Dow (diaph.) - T
De Nora If M * (marc.)
Olin EllF (mere.) • -
Solvay V-100 (mere.) - -
Hooker S<» (diaph.) - -
Oe Nor* 18 x 6 (mtrc.) ('62)
Hooker S.S3A.S3B (diaph.) C T
De Nora 2l»H5 (mere.)
Olin EIIF (mere.) ('6?) - -
Downs (fused salt), - -
Hooker S3D (diaph.)
Allen-Moore (mod i f ied')(d iaph.) - -
Hooker S1* (diaph. ('68)
Diamond D3 (diaph.), Uhde 30 sq.m. - -
(Mrc.)('6
-------
EXHIBIT C-12(2)
Environmental Protection Agency
CHLORINE PLANTS IN THE UMTED STATE
State f, C i ty
North Carol ina
Acme
Canton
Pi sgah
Ohio
Ashtabula
Ashtabula
Borberton
Pa incsvi 1 le
Oregon
Al bany
Portland
Tennessee
Charleston
Memphi s
Memphi s
cxas
Cedar Bayou
Corpus Christl
Denver City
Freeport *'•''
Deer Park
(Houston)
Houston
Houston
Houston
Point Comfort
Port Neches
Snyder
Virginia
Hopewel 1
Saltvil le
Wash ington
Bel 1 i ngham
Longv i ew
Tacc i
Tacor.ia
West Virginia
Moundsvi 1 le
New Mart insvi 1 le
So. Charleston
Wisconsin
Green Bay
Port Edwards
PUERTO RICO
GuayanI 1 la
* Refers to year
**. Dow Freeport i
Producer
Allied Chemical Corp.
U.S. Plywood -Chomp ion Papers, Inc.
Olin, Ecusta Operations
Detrex Chcmic.il Industries, Inc.
RMI Company
PPG Industries Inc.
Diamond Shamrock Chemical Co.
Oregon Metallurgical Co.-
Pennwa 1 t Corp.
•
01 in Corporat Ion
E.I. du Pont de Nemours t, Co., Inc.
Velsicol Chemical Corp.
Baychem Corp.
PPG- Industries , Inc.
Vulcan Materials Co.
The Dow Chemical Co.
Diamond Shamrock Chemical Co.
Ethyl Corporation
Shell Chemical Co.
U.S. Plywood -Champ ion Papers, Inc.
Aluminum Co. of America
Jefferson Chemical Co., Inc.
American Magnesium Co.
Hercules, Inc.
01 in Corporat ion
Georgia-Pacific Corp.
Weyerhaeuser Company
Hooker Chemical Corp. ,
Pennwa 1 t Corp.
Allied Chemical Corp.
PPG Industries Inc.
FMC Corporation
Fort Howard Paper Co.
BASF Wyandotte Corp.
PPG Industries Inc.
Year
Bui It*
1963
1916
191)7
1963
19'. 9
1936
1928
1970
I9*i7
1962
1958
191.3
1972
1938
1 9*17
ig'.o
1938
1952
1966
1936
1966
1959
1969
1939
1951
1965
1957
1929
1929
1953
191*3
1916
1968
1967
1971
chlorine production started at location
ncludes both Texas and Oyster Creek division
Cel Is
Solvay V-200 (mere.)
Hooker S (dioph.)
Sorensen (mere.)
Olin EllFfmerc.)
Downs (fused salt)
Columbia (diaph.)
Diamond D3 (diaph.) ('59)
Alcan (magnesium)
Glbbf, Gibbs (modified) (diaph.) ,
Diamond (d iaph.) ( '67)
Olin EOF, E812 (mere.)
Downs (fused salt)
Hooker S^ (diaph.) ( '69)
Uhde (HCI)
Columbia N 1 , N 3 (diaph.)
Hooker S (diaph.)
Dow (diaph.), Dow (magnesium)
Diamond (d iaph. ) ,
De Nora 18 SGL (mere.)
Downs (fused salt)
Hooker S1! (diaph.)
Hooker S (diaph.)
De Nora Ik x 5 (mere.)
Hooker S3B (diaph.)
(magnes I urn)
Hooker S3 (diaph.)
01 in E8 (mere.)
Oe Nora 18 x k (mere. )
De Nora 1
-------
EXHIBIT C- 12
Environmental Protection Agency
CAUSTIC-CHLORINE CAPACITY
BY PRODUCER
(tons per day)
Dow
PPG Industries
Diamond Shamrock
Hooker
Olin
Allied
BASF Wyandotte
Stauffer
Pennwalt
FMC
Paper Companies
Ethyl Corporation
Alcoa
Linden Chlorine Products
Kaiser
Vulcan
DuPont
B. F. Goodrich
Shell
Other
Source: Chemical Marketing
January 1, 1971
Chlorine
10,
3,
2,
I,
1,
1,
1,
1,
1
515
050
000
750
700
650
550
250
950
770
650
640
470
460
450
425
340
300
250
,505
Caustic
11,570
3,330
2,100
1,820
1,880
1.760
1,780
1,375
990
850
715
-
520
510
500
470
-
330
275
980
30,675
Reporter, Chemical Profile,
-------
EXHIBIT C- 14
-------
SUBSTANTIAL CHLOR-ALKALI POLLUTION ABATEMENT COSTS
FORCE MAJOR PRICE INCREASES. REDUCE THE DEMAND FOR
CHLOR-ALKALI. AND RESULT IN PLANT CLOSINGS
Water pollution abatement costs for mercury and diaphragm cell
plants appear to be similar. The maximum cost increase for a diaphragm
cell plant is $5.48 per ton or 6.9 percent of the selling price. The maxi-
mum cost increase for a comparably sized mercury cell plant is $4. 88 per
ton or 6.1 percent of the selling price, as shown in Exhibit C-15, following
this page.
Although 58 percent of chlorine production is captive and capacity
utilization is approximately 95 percent, substitutes exist for both chlorine
and its coproduct, caustic soda. To maintain present profitability, general
price increases of 12 to 18 percent will be required to produce additional
after tax revenues of $4. 00 to %5. 50 per ton. Price increases of this magni-
tude may reduce the overall demand for chlorine and cuastic and thus force
some plants to close.
C-9
-------
II -D. HYDROCHLORIC ACID
1. HYDROCHLORIC ACID HAS MANY USES AND CUSTOMERS
(1) Hydrochloric Acid Has Four Major Areas of Use
The estimated percentage of Hydrochloric Acid consumption by end
use for 1970 is shown in table below:
Estimated Percent HCl Consumption by End Use
1970
Chemical Intermediate 74%
Steel Pickling 10
Food Processing 2
Oil Well Acidizing 7
Miscellaneous (mineral processing
industrial cleaning, asphalt 7
emulsions
Source: Industry contacts
Total 1971 hydrochloric acid pardouction amounted to 2,021,736
short tons (expressed as 100% HC1) of which only 236,205 tons were de-
rived from other than by-product sources. Non by-product hydrochloric
acid in 1971 amounted to only about 12 percent of total production.
(2) Hydrochloric Acid Markets are Nation Wide
Hydrochloric acid consumption by region for 1970 is shown in
table below
Estimated Percent of Total U.S. Hydrochloric Acid Consumption by
Region (100% HC1)
1970
Northeast 15%
So. Atlantic 6
East North Central 21
East South Central 7
West North Central 2
Gulf 44
Western 5'
Source: Industry contacts
D-l
-------
The major domestic market Is concentrated In the Gulf states.
Smaller but substantial markets are located in the east north central and
northeastern states.
Export sales are a very minor factor in the U. S. market. Exports
average about 0.2 percent of reported U. S. production.
(3) The Federal Government is Not a Major Factor in the Hydrochloric
Acid Market
Industry sources indicate that the Federal government is not a sign-
ificant factor in the hydrochloric acid market. The Atomic Energy Com-
mission purchases perhaps 10 tankcars per year. Stock piles and quotas
do not apply.
(4) Over 60 Percent of Industry Production is for Captive
Use
As reported by the Bureau of the Census, approximately 61 percent
of 1970 hydrochloric acid production was made and consumed in the same
plant. The percent of hydrochloric acid ^hat was produced for captive
use, by production source, is shown in the table below:
Quantity of Captive Hydrochloric Acid (100% - 1970)
(Short Tons)
Percent of Captive as Per-
Total Captive Total Cap- cent of Total Pro-
Production Use tive Use duction By Source
H Cl (including anhydrous)
from salt 108,356 33,699 3.0 2
from chlorine 130,372 22,616 2.0 1
by product & other 1,678,935 1,112,604 95.0 66
Total 1,917,663 1,168,919 100.0 61
Source: Bureau of Census
Continued supply of hydrochloric acid is critical to the steel pro-
duction processes as well as the manufacture of a variety of chemicals
including:
D-2
-------
Methyl, ethyl and vinyl chlorides
Chloroprene
Chlorine
Metal chlorides
Chlorosulfonic acid
(5) The Balance of Industry Production is Sold Directly
Industry contacts estimate that better than 90 percent of the mar-
keted hydrochloric acid is sold directly to the customer rather than
through distribution points or jobbers. Perhaps five percent may be sold
through distribution points.
2. HYDROCHLORIC AGED PRODUCTION IS DETERMINED PRIMARILY BY
THE VOLUME OF BY-PRODUCT ACID PRODUCTION
As shown in Exhibit D-l, following this page, the volume of hydrochloric
acid produced directly is only a minor part of total production.
(1) Total Hydrochloric Acid Production Has Expeeded Consumption by
More than 25 Percent Since 1961
Total production and consumption data for the years 1965, 1967,
and 1970 are shown in the table below:
Total Production (1) Total Demand (1) Percent Excess Production (2)
1965 1370 1011 26%
1967 1600 1139 29%
1970 2000 1358 32%
(1) Thousands of short tons
(2) Excess includes acid used for process netralization and acid that is
dumped.
Source: Industry contacts
D-3
-------
EXHIBIT D-l
Environmental Protection Agency
HC1 DOMESTIC PRODUCTION
AND CONSUMPTION
(Shipments)
• TOTAL PRODUCTION
PRODUCTION,
-° BY PRODUCTS OTHER
TOTAL SHIPMENTS
PRODUCTION FROM
CHLORINE & HYDROGEN
^-^_ •*" PRODUCTION FROM
I I J I I I I II jSAuT&SULFURICACID
61 62 63 64 65 66 67 68 69 70 71
-------
(2) Hydrochloric Acid Production Has Been Affected to only a Minor
Extent by Imports and Exports
Exports are so small as to not be reported; imports are less than
three percent of total production as shown in Exhibit D-2, following
this page .
3. RAW MATERIALS FOR THE PRODUCTION OF HYDROCHLORIC ACID ARE
OBTAINED FROM VARIOUS SOURCES
(1) Hydrochloric Acid Is Produced as a By-Product from Organic
Chlorination
As already shown most hydrochloric acid production is by-product
in nature. Recovery of by-product hydrochloric acid from organic
chlorinations is by far the largest source. The cost of recovering by-
product HC1 depends upon how much cleanup of the acid is required and
what credit is available to the producer of chlorinated hydrocarbons for
by-product hydrochloric-acid, in general, the cost of obtaining by-pro-
duct hydrochloric acid is reported to be significantly lower than the
cost of manufacturing by chlorine burning or the salt plus sulfuric acid
process.
(2) Hydrochloric Acid Can Be Produced From Sodium Chloride And
Sulfuric Acid
Average raw material costs for salt and sulfuric acid (60 Baume')
for the years 1967 and 1971 are shown in the table below:
Raw Material Costs (HC1 from Salt and Sulfuric Acid)
1967 1971 Percent Increase
Sulfuric acid, 60 Baume', tanks,
works $22.65/T $31.26/T 38%
Sodium Chloride F. O. B. Plant 1. 25/cwt. 1.54/cwt. 23%
Source: Oil, Paint and Drug Reporter
D-4
-------
EXHIBIT D-2
Environmental Protection Agency
IMPORTS AND EXPORTS OF HYDROCHLORIC ACID
IN THE U.S. 1961 - 1970
(Thousand short tons, 100% HC1)
Reported Production
Year Total Imports ^ ' Exports^
I96T 911.0 5.3 2.0
1962 1052.1 13.5 1.8
1963 1053.6 12.4 2.2
1964 1236.9 13.6 2.2
1965 1370.0 28.7 n.a.
1966 1519.4 19.0 n.a.
1967 1597.0 17.0 n.a.
1969 1910.7 48.0 n.a.
1970 1996.5 49.0 n.a.
Figures represent actual weight shipped. Some ie
Anhydrous HC1 but most is 20 Baume'.
n.a. - not available
Source: Bureau of Census
-------
There are approximately fifty companies operating ninety plants for
production of sodium chloride in the U. S. The states of Louisiana, Mich-
igan, New York, Ohio and Texas account for most production of sodium
chloride.
Sulfuric acid is produced in at least twenty states located in the
Middle Atlantic, New England, North Central, South and Western States.
(3) Hydrochloric Acid Can Also Be Produced From Chlorine and Hydrogen
Average raw material costs for chlorine for the years 1961 and
1971 are shown in table below:
Raw Material Costs (HCl from Chlorine)
Percent
1967 1971 Increase
Chlorine, Tanks, freight equalized $3.35/cwt $3.45/cwt 3%
Source: Oil, Paint and Drug Reporter
At least 19 companies manufacture chlorine at a variety of loca-
tions in the U. S. In many instances, hydrochloric acid manufacturers
are located near chlorine production facilities, if not actually a part
of the same process complex (as in the chlor-alkali industry). The
chlorine from various types of electrolytic chlorine cells may be wet or
dry cell gas, evaporated chlorine or waste gas from liquid chlorine
plants. The hydrogen may come from various sources including chlorine-
caustic cells and the hydrocarbon-steam reaction.
4. PUBLISHED PRICES FOR HYDROCHLORIC ACID HAVE DECLINED IN
1969, 1970 AND 1971.
Exhibit D-3 shows the published prices for the various grades of
hydrochloric acid for the 1960-1971 period.
For the 1960 to 1968 period prices for all grades were stable. In
1969, prices increased $7/ton for all grades. Since 1969 prices have
D-5
-------
EXHIBIT D-3
Environmental Protection Agency
HYDROCHLORIC ACID PRICE HISTORY (1)
o
a
50
45
40
35
30
1
CO
3 25
20
15
U)
U i\.22°BAUME
20° BAUME
1B°BAUME
I
1960 1965
1970
1975
1980
-------
been in a steady decline. In 1971 prices were down $12/ton for 22° Baume',
and $1 I/ton for 18° Baume'and 200Baumexgrades, from the 1969 high.
According to industry contacts the 1969 high indicated in Exhibit
D-3 is exaggerated. A more modest increase of $2 to $3 per ton was
said to be a more accurate indication of the 1969 average price increase
possibly ascribable to a temporary demand increase by the steel industry.
(1) Excess Production Has Had a Major Depressing Effect on HCl
Prices
As shown in Exhibit D-2, consumption of HCl as indicated by
shipments was less than 50 percent of total production for the 1961-71
period. Although total production shown in Exhibit D-l includes captive
use production, it is apparent that non-captive consumption (as reflected
by shipments) has not kept pace with production. The decline in ship-
ments that took place in 1969 corresponds with the price decline starting
in 1969 and continuing through 1970 and 1971.
(2) The Availability of Substitutes Has Not Had a Major Effect On
Hydrochloric Acid Prices
A confidential industry survey of hydrochloric acid consumption
in areas such as brine treatment for chlorine production; production of
metal chlorides, magnesium chloride, sodium chlorate, organic chemi-
cals; Pharmaceuticals; steel pickling; asphalt emulsions; oil well acidiz-
ing; mineral processing; and food processing indicates a fairly stable
market since 1965 with expectations for a moderate increase in future
consumption.
5. IN ADDITION TOBY-PRODUCT PRODUCTION. HYDROCHLORIC ACID
IS PRODUCED BY THE MANNHEIM PROCESS. THE SYNTHETIC PROC-
ESS AND THE HARGREAVES PROCESS
(1) The By-Product Process Is the Dominant Process
By-product hydrocloric acid is produced primarily as a result of
chlorinating organic compounds. In this process, the waste stream of
hydrochloric acid production is indistinguishable from the waste stream
of the basic process. Hydrochloric acid produced as a by-product has
no separately identifiable water pollution abatement costs.
D-6
-------
Production from this process as reported to the Bureau of Cen-
sus has increased from 77 percent of total production in 1961 to 88
percent of total production in 1971.
(2) The Mannheim Process Produces Hydrochloric Acid From Salt and
Sulfuric Acid
A flow chart for the Mannheim Process is shewn in Exhibit D-4 follow-
ing this page. In this process, sodium chloride and sulfuric acid react
in a furnace to form hydrogen chloride and sodium acid sulfate or more
commonly sodium sulfate depending upon the reaction temperature.
The combustion gases are cooled then passed through a coke
tower to remove solid particles and sulfuric acid mist. The gases are
then passed to Tyler absorbers where the hydrogen chloride is absorbed
by water to form hydrochloric acid. Washing of the coke tower and
scrubbing of the exhaust gases from the absorber produce a waste stream
of acid and salt.
Production from this process decreased from nine percent of
total output in 1960 to five percent in 1971. One factor preventing growth
of Mannheim hydrochloric acid has been the rapid rise in manufacturing
cost due to rising salt and acid prices. Another factor is the depressed
prices for the sodium sulfate co-product. Competition from by-product
hydrochloric acid as well as a declining sodium sulfate market are ex-
pected to further reduce Mannheim production.
(3) Synthetic Process Produces Hydrochloric Acid From Chlorine
and Hydrogen
Chlorine is burned in a slight excess of hydrogen to produce
hydrogen chloride. A flow chart of this process is shown in Exhibit r>-5,
following Exh. D-4. In this process the burner gases, practically pure
hydrogen chloride, are cooled, absorbed, and scrubbed in a system
essentially the same as that used in the salt process. The purifying coke
tower, however, is omitted, and in some systems (where the gas con-
centration approaches 100 percent hydrochloric acid.) the scrubber may
be omitted. Strong hydrochloric acid (22° Be') is removed directly from
the bottom of the cooler by means of a trap, and weak acid (180 Be')
leaves the bottom of the absorber. The scrubber solution forms a waste
stream of acid.
D-7
-------
From Salt
EXHIBIT D-4
Environmental Protection Agency
HYDROCHLORIC ACID
Mannheim Process
Sulfunc acid jj — TT
or niter cake .-— -. f •§
Salt Furnace fj;^
Fuel f I M,
'""""' T 1 — _J
Salt cake
'-»•
S
T
ij
c
Hydi
r-VVatcr
1
o
-Q
och
acid
rU
V
oric
1
5
'asti
•Exhaust
gases
Reaction
NaCl + H2SO4 -+ HC1 + XaHS04
NaCl + NaHSO4 -» HC1 + Xa2S04
98% yield
Material Requirements
Basis—1 ton hydrochloric acid (?0°B6)
and 1,260 ib salt cake from sulfurie arid or 2,840 Ib salt cake from ni'er cake
Salt 1,0:0 Ib
Sulfuris acid (100%) 945 Ib
or
Niter cake 2,630 >b
Coal 740 Ib
Source: Industrial Chemicals, 3rd Edition, 1967,
W. C. Faith, D. B. Keyes, and R. C. Clark
-------
EXHIBIT D-5
x
Environmental Protection Agency
HYDROCHLORIC ACID
SYNTHETIC PROCESS
From Chlorine and Hydrogen
Cooling
water
T j-Water—i ^ Exhaust
pases
1
Hydfochtoric acid Wss~
Reaction
H2 + C12 -* 2HC1
90-99% yield
Material Requirements
Basis—1 ton hydrochloric acid (20°B6)
Chlorine 623 Ib
Hydrogen 20 Ib
Source: Industrial Chemicals, Third Edition, 1967,
Faith, Keyes & Clarik (See Previous Refs. For Details)
-------
Production from this process decreased from 15 percent of total
output in 1960 to four percent in 1968 and rose slightly to seven percent
in 1971.
(4) The Hargreaves Process Produces Hydrochloric Acid From Salt
and Wet Sulfur Dioxide
A wet sulfur dioxide-air mixture containing some sulfur trioxide
is passed through a series of vertical chambers containing salt briquettes
lying on a perforated false bottom. The process is cyclical in that strong
sulfur dioxide enters the chamber (containing spent salt) which is next to
be removed from the line for dumping. The gas then passes essentially
countercurrent to the salt and just before leaving the process comes into
contact with the fresh salt in the chamber most recently added to the the
line. The operating temperature decreases from 1, 000°F on the spent
salt end to 800°F at the raw salt end. The hydrogen chloride in the gas
stream (7 to 12 percent) is recovered by conventional means.
Production figures for this process are usually included as part
of the total production from salt and sulfuric acid. Only one plant
(Morton Chemical, Weeks Island, La.) is reported to be using this
process.
6. THERE ARE APPROXIMATELY 89 HYDROCHLORIC ACID PLANTS
CURRENTLY IN OPERATION OWNED BY 42 FIRMS
A listing of hydrochloric acid producing firms and plant locations, as
given in the 1971-72 Directory of Chemical Producers, is shown in Exhibit
D-6, following this page.
Hydrochloric acid production is reported in twenty-four states. The
number of plants reporting Hydrochloric Acid production by source in 1970, is
shown in Exhibit D-7, following Exhibit D-6.
D-8
-------
EXHIBIT D-6
Environmental Protection Agency
PRODUCERS AND PLANTS:
HYDROCHLORIC ACID
Allied Chem. Corp.
Indust. Chems. Div.
Specialty Chems. Div.
American Chem. Corp.
BASF Wyandotte Corp.
Indust. Chems. Group
Baychem Corp.
Mobay Chem. Co., Div.
Chris Craft Indust. Inc.
Montrose Chem. Div.
Climax Chem. Co.
Continental Oil Co.
Conoco Chems. Div.
Detrex Chem. Indust., Inc.
Diamond Shamrock Corp.
Diamond Shamrock Chem. Co.
Biochems. Div.
Electro Chems. Div.
Dover Chem. Corp.
Dow Chem. Co. U.S.A.
Baton Rouge, La..
Baton Rouge, La.
Danville, III.
Elizabeth, N. J.
Moundsville, W. Va.
Syracuse (Solvay) N. Y.
Long Beach, Calif.
Wyandotte, Mich.
New Martinsville, W. Va.
Cedar Bayon, Texas
Newark, N.J.
Monument, N. M.
Baltimore, Md.
Ashtabula, Ohio
Greens Bayou, Texas
Belle, W. Va.
Deer Park, Texas
Painesville, Ohio
Dover, Ohio
Freeport, Tex.
Midland, Mich.
Pittsburg, Calif.
Plaquemine, La.
-------
EXHIBIT D-6 (Cont'd)
E.I. du Pont de Nemours & Co., Inc.
Indust. and Biochems. Dept. Cleveland, Ohio
East Chicago, Ind.
La Porte, Texas
Linden, New Jersey
Ethyl Corp.
Indust. Chems. Div. Baton Rouge, La.
Pasadena, Texas
FMC Corp.
Organic Chems. Div. Baltimore, Md.
Nitro, W.Va.
The B.F. Goodrich Co.
B.F. Goodrich Chem. Co., div. Calvert City, Ky.
Hercules Inc.
Coatings & Specialty Products Dept.Hopewell, Va.
Polymers Dept. Parlin, N.J.
Synthetics Dept. Brunswick, Ga.
Ideal Basic Indust., Inc.
Potash Co. of America, div. Dumas, Texas
Jones-Hamilton Co. Newark, Calif.
Kaiser Aluminum & Chem. Corp.
Kaiser Chems. Div. Gramercy, La.
Monsanto Co.
Monsanto Indust. Chems. Co. Anniston, Ala.
Everett, Mass.
Sauget, 111.
Montrose Chem. Corp. of Calif. Henderson, Nev.
Morton-Norwich Products, Inc.
Motton Chem. Co., div. Geismar, La.
Weeks Island, La.
Neville Chem. Co.
Chlorinated Products Div. Santa Fe Springs, Calif,
-------
EXHIBIT D-6 (Cont'd)
N L Indust., Inc.
H-K Inc., subsid.
Magnesium Div.
Northwest Indust., Inc.
Velsicol Chem. Corp.-, subsid,
Occidental Petroleum Corp.
Hooker Chem. Corp., subsid.
Indust. Chems Div.
Rowley, Utah
Chattanooga, Tenn,
Montague, Mich.
Niagara Falls, N.Y.
Yacoma, Wash.
Olin Corp.
Chems. Div.
Pearsall Corp.
Pearsall Chem. Co., div
Pennwalt Corp.
Chem. Div.
PPG Indust. Inc.
Chem. Div.
Indust. Chem. Div.
Reichhold Chems. Inc.
Rohm and Haas Co.
Will Ross, Inc.
Matheson Gas Products, Div.
Mclntosh, Ala.
Saltville, Va.
Phillipsburg, New JERSEY
Calvert City, Ky.
Portland, Oregon
Tacoma, Washington
Wyandotte, Mich.
Guayanilla, P.R.
Barberton, Ohio
Lake Charles, La.
New Martinsville, W.Va,
Tacoma, Wash.
Philadelphia, Pa.
Cucumonga, Calif.
East Rutherford, N.J.
Gloucester, Mass.
Joliet, 111.
La Porte, Texas
Morrow, Ga.
Newark, Calif.
-------
EXHIBIT D-6 (Cont'd)
Shell Chem. Co.
Indust. chems. Div.
Solvent Chem. Co., Inc.
Standard Chlorine Chem. Co., Inc.
Stauffer Chem. Co.
Agricultural Chem. Div.
Indust. Chem. Div.
Specialty
K. A. Steel Chems., Inc.
Steelco Chem. Corp., subsid.
Deer Park, Texas
Geismar, La.
Norco, La.
Maiden, Mass.
Kearny, N.J.
Mt. Plesant, Tenn.
Dominguez, Calif.
Henderson, Nev.
Louisville, Ky.
Edison, N.J.
Gallipolis Ferry, W.Va.
Lemont, 111.
Tenneco Inc.
Tenneco Chems., Inc.
Tenneco Intermediates Div,
Toms River Chem. Corp.
Union Carbide Corp.
Chains. and Plastics Div.
Vulcan Materials Co.
Chems. Div.
Fords, N.J.
Toms River, N.J.
Institute and South
Charleston, W.Va.
Texas City, Texas
Denver City, Texas
Newark, N.J.
Wichita, Kansas
-------
EXHIBIT D-7
Environment Protection Agency
NUMBER OF PLANTS REPORTING
HC1 PRODUCTION - 1970
By Product
Mannheim
(salt + Acid)
Synthetic
(chlorine + hydrogen)
Alabama
California
Georgia
Illinois
Indiana
Kansas
Kentucky
Louisiana
Massachusetts
Maryland
Michigan
Missouri
Nevada
New Jersey
New Mexico
New York
Ohio
Oregon
Pennsylvania
Texas
Virginia
Washington
Wisconsin
West Virginia
tT.S. TOTAL
1
4
1
3
1
1
4
7 1
1 1
1
3
1
1
10 2
1
4
1 2
1
2
3
1
1
1
1
1
1
1
6
61
15
Source: Bureau of Census
-------
7. WATER POLLUTION ABATEMENT COSTS MAY FORCE PLANTS
PRODUCING HYDROCHLORIC ACID OTHER THAN AS A BY
PRODUCT TO CLOSE
Water pollution abatement costs for direct hydrochloric acid production
are estimated to be $2. 27 per ton or 5. 2 percent of the selling price, as
shown in Exhibit D-8 following this page. By-product production, however,
has no separately identifiable water pollution abatement costs.
Over 88 percent of hydrochloric acid is produced as a by-product, and
the price level is determined by the price negotiated for by-product acid,
There appears to be little or no special market need for direct product acid
and, therefore, no opportunity for these producers to pass on the substantial
costs of pollution abatement. The water pollution abatement costs will
probably force direct producers to close. Plants producing hydrochloric
acid directly that are part of chlor-alkali facilities, however, will not have
the pollution abatement costs due to using the waste acid stream to neutralize
caustic effluent.
D-9
-------
II -E. HYDROFLUORIC ACID
1. HYDROFLOURIC ACID HAS TWO PRIMARY USES AND CUSTOMERS
Hydrofluoric Acid is presently essential in the production of Aluminum and
Fluorocarbons. There are no other chemicals which can be substituted for
hydrofluoric acid in current aluminum and fluorocarbon production technology,
so changes in the economics of hydrofluoric acid production are not likely to
lead to significant substitution affects in the next decade. Although research is
being done to develop alternatives to hydrofluoric acid in aluminum production,
this is still in the experimental stage.
(1) Hydrofluoric Acid Has Two Major Uses
The following table summarizes the present and forcast relative
importance of the uses of hydrofluoric acid based on 1972 data. The per-
centage of total production going to fluorocarbons is expected to increase,
primarily due to expected increases in the aluminum industry's efficiency
in recycling flourine values presently lost.
PRESENT AISD FORCAST HYDROFLUORIC ACID CONSUMPTION
USE
Fluorocarbons
Aluminum production
Petroleum aikylation
Nuclear fuels
Stainless steel pickling
Other uses --inorganic
chemicals, etc.
TOTALS
1972
H F
Net Tons
135,000
155,000
15,000
8,000
12,000
35,000
3GO.OOO
•;:• of
Total
37
43
4
2
4
10
100
1975
H F
Net Tons
225,000
125,000
15,000
8,000
15,000
21,000
400, 000
"-, or
Total
55. 1
30. 5
3.7
2.0
3. 7
5.0
100.0
1980
H F
Net Tong
320,000
120, 000
18,500
15, 000
18,000
2G,000
517,500
"'o of
Total
61.3
23. 3
3.6
2. 9
3.5
5.0
100. 0
Source: Ph;llip M. Busch, Bureau of Domestic Commerce, US Department of
Commerce
Also: CMRA paper 5/5/72 W.R. Jones, DuPont
E-l
-------
(2) Hydrofluoric Acid Markets Are Highly Concentrated
The trend over the past ten years has been toward increasing plant
sizes, and this trend has been greatly facilitated by the concentration of
the two major users of hydrofluoric acid. The hydrofluoric acid industry
has only nine producers with fourteen plants, and these plants tend to be
located in proximity to major users, especially in the case of new plants.
However, there is no single factor governing plant location absolutely.
Transportation economics do not play a critical role since 96 - 98% of all
production is used captively or sold on a contract basis. The market is
characterized by a relatively small number of large, steady users, and
relatively little competition. The major factor affecting prices has been
the price and availability of fluorspar, the mineral used in hydrofluoric
acid production. The price of fluorspar has varied as much as 50% in
recent years with a corresponding impact of 25 - 35% on acid prices.
Imports and exports of hydrofluoric acid have been negligible at con-
siderably less than one percent. However, this situation may change in
the next two years with the completion of a large 75, 000 ton/yr. plant just
across the Mexican border, which is presently under construction. It is
expected that the entire output of this plant will be used in the U. S.
Present producers of hydrofluoric acid are listed in Table below,
together with locations and capacities.
U.S. HYDROFLUORIC ACID PRODUCERS
Annual Capacity
(Tnousands of Tons)
Allied Chem. Corp.
Indust. Chems. Div. Baton Rouge, La.
Geismar, La.
Nitro, W. Va.
North Claymont. Del.
Pittsburg, Calif.
Aluminum Co. of America Point Comfort, Tex. 45
E.I. duPont deNemours &Co.Inc.
Indust. & Biochems. Dept. La Porte, Tex. 75
Organic Chems. Dept.
Dyes and Chems. Div. Deepwater, F.J. 15
90
Essex Chem. Corp.
Chems. Div. Paulsboro, I\.J. 11
Kaiser Aluminum & Chem. Co. Div.
Kaiser Chem. Div Gramercy, La. 50
Kewanee Oil Co.
Harshaw Chem. Co. , Div.
Indust. Chems. Dept. Cleveland, Ohio 18
Olin Corp.
Chems. Div. Johet, 111. 13
Pennwalt Corp.
Chem. Div. Calvert City, Ky. 25
Stauffer Chem. Co.
Indust Chem. Div. Greens Bayou, Tex. 18
TOTAL 380
E-2
-------
(3) The Federal Government Is Not A Factor In The Hydrofluoric Acid
Market
While the Federal government considers the mineral fluorspar suffi-
ciently strategic to stockpile, it does not excercise any controls over the
production of hydrofluoric acid in peacetime.
(4) Approximately 75% of Hydrofluoric Acid Production Is Used Captively
Because hydrofluoric acid is a critical ingredient for two major in-
dustries, and a steady, reliable supply is required, most major users
maintain their own captive production. Only when requirements exceed
captive capacity by an amount too small to justify a new plant do major
users go outside for hydrofluoric acid. In 1972 approximately 75% of the
total production is expected to be used captively. In 1970, 25% of the total
production was used in the same plant or plant complex. Of the remaining
25% of total production 21 - 23% is sold on a long-term negotiated contract,
with price-changes primarily tied to Fluorspar prices and availability. Only
2-4% is actually sold on a price per order merchant basis.
2. DOMESTIC CAPACITY UTILIZATION HAS INCREASED IN THE LAST 10
YEARS WHILE CAPACITY HAS ALMOST DOUBLED
Capacity increases in recent years have only slightly led demand. In 1962
capacity was about 210, 000 tons, while production was about 170, 000 ton (80%).
In the 10 years period to the present, capacity has increased 80% to 380, 000 tons,
while capacity utilization has increased to 95%. See Table below for recent
capacity vs. production trends.
In the next three years demand is forcast to increase about 14% to 409, 000
tons by 1975. The new DuPont plant in Matamoros, Mexico should be operational
by 1974 increasing total capacity available to U. S. to 455,000 tons, though some
capacity in the U. S. will probably be retired by this time. In addition Allied has
two plants in Canada with combined capacity of about 65 K tons, and a substantial
E-3
-------
_ Hydrofluoric Acid Capacity/Production
1962 - 1972
'' onn LrHOUSANDS 'OFJHORjTONS._-—. U: ' I ' ' '
: (1007. HF) ] !——
900
800
700
600
500 H
100
300
200
100
90
80
70
CAPACITY
PRODUCTION,
I960
1965
1970
1975
1980
1935
1990
portion of this is expected to be coming into the U. S. in the near future, if not
already. Up-to-date import figures are not available at this time.
(1) Hydrofluoric Acid Consumption Headed Up Again After Three Year
Lull
After growing rapidly throughout the '60's, hydrofluoric acid demand
leveled off from 1969 to 1971, even declining slightly in 1971. However,
this was primarily due to the economic recession of 1970 and its impact
on aluminum production to which hydrofluoric acid demand is strongly tied.
(2) U. S. Hydrofluoric Acid Production May Feel Increasing Pressure
From Imports In Next Decade
E-4
-------
Though the estimated water pollution abatement costs provided by
EPA were relatively large compared with most of the other nine chemicals
involved in this study, these costs are still not likely to be decisive re-
garding the U. S. hydrofluoric acid industry, when compared with other
economic factors, most noteably the price and supply of the mineral fluor-
spar. Only 20% of the fluorspar used in acid production is mined within
the U. S., and this percentage is expected to decrease. Most of the balance
comes from Mexico. Four U. S. companies have recently announced in-
tentions to build hydrofluoric acid plants in Mexico, though only one com-
pany has actually begun a plant. Aside from lower operating costs, a
major attraction of building in Mexico is the potential for gaining increased
control over fluorspar resources. DuPont's plant in Matamoros will raise
imports from less than 1,000 tons to a potential 75,000 tons when it comes
on stream in 1974. It is quite possible that a variety of pressures could
cause a further shift of U. S. production to Mexico. In recent years the
price of fluorspar has varied as much as 33% from $40 to $54 per ton.
Since it takes approximately 2. 25 tons (depending somewhat on grade) to
make one ton of hydrofluoric acid, this price variation results in about
a $31. 50 cost impact per ton of acid. Since demand is forecast to increase
steadily, and known Mexican reserves are far greater than in the U. S.,
varying degrees of increased integration into Mexican mining operations
seem likely, especially if costs of production rise sharply.
(3) Substitution Of Other Products Does Not Seem Likely In The Near
Future
Substitution by other products does not seem likely in the near future,
since no economically feasible alternatives to hydrofluoric acid are presently
developed. Alcoa has done research on the possibility of producing alumi-
num fluoride from fluosilicic acid, which could lead to decreased demand
for hydrofluoric acid in aluminum production, but the outcome of this re-
search is still uncertain and its immediate impact would in any event not
be large.
3. RAW MATERIAL FOR HYDROFLUORIC ACID IS OBTAINED FROM
RELATIVELY FEW SOURCES
The two basic raw materials for hydrofluoric acid production are sulfuric
acid and the mineral fluorspar (CaF2). There is only one commercial process
for hydrofluoric acid production, ana only one mineral used. While differing
grades of this mineral are marketed for different uses containing varying amounts
of CaF2, the acid grade generally contains not less than 97% CaF2< The U. S.
production presently equals only 6. 5% of world production, as shown in Exhibit E-l
following this page.
E-5
-------
EXHIBIT E-l
Environmental Protection Agency
WORLD FLUORSPAR PRODUCTION
WORLD PRODUCTION
1/1.800 [3SOOI
U.S.S R
198 (4201
Chine
132 [2801
Theiland
127 (270)
France
126 12701
Soulh African
Republic
56(117]
East Germany
41 183]
Mongolia
31 [65]
South Korea
24 [531
North Koree
16 I34|
Japan
8117]
Other
25 [521
United States
118 [2521
Mexico
480[1.021I
Spain
133 [2801
Italy
117 12451
United
Kingdom
75(1601
West
Germany
47 (100)
Canada
46 199)
3601
61
45
6 J
401
r. Imports
— V 483(1.010]
Industry stocks
1/1/68
219 [4601
Stockpile
release
9(19)
J
J
Industry stock i
.—*. 12/31/68
SIM1 (3721
U S supply U S denwid
(1.740) (1.355)
Export!
6113)
Govtrnment stockpile
balinct 691.2
KEY
i/ Estimate
6IC Sl..nd.»d Industrie.! Classification
Unit Thousand ihorl lorn of Fluorine
( I Equivalent fluofipeW tonnnge
......
1*-
Rt fngerentt. aerosols.
solvents, and plastics
(SIC 2819. 2B18, 2821)
228 |480|
Steel fluxing
ISIC 3312)
215 14481
Aluminum
(SIC 3334)
114 1240)
Electrometallurtjy
(lux (SIC 3313)
39 [631
Glass opdCitiff
and Mu*
ISIC 321, 322)
16 134)
Iron foundry flux
(SIC 3331
12 125]
Ferroalloy & nonferrout
11 [231
Other
20 (421
World PnxlucUun and American Uuo of Pluuripar »nd Kluonnc, 1968
U.S. FLUORSPAR CONSUMPTION
1000
900
800
700
VI
600
a
I
§ 500
I
300
200
100
1840
Other uses
; Steel
IMS
1950
1955
1960
Kluornpar ConHtimptiun In Lhv United NLiituH hy tltjuH, 1
-------
(1) 80% of Fluorspar Used in_y._S. Is Imported - Mostly from Mexico
Eighty percent of fluorspar used in the U. S. is imported, mostly
from Mexico. However, numerous other countries have large fluorspar
deposits (see Exhibit E-l) and in periods of short supply and high price,
importation from more distant sources can become attractive. The proxi-
mity of major deposits close to the surface in Mexico has led at least one
large U. S. producer to invest in Mexican fluorspar production. However,
Mexican law prohibits control of Mexican companies by Non-Mexicans.
The Mexican government has also shown some interest in integrating for-
ward into hydrofluoric acid production, although this has not occurred to
date.
(2) Fluorsgar^ Prices Havg_hicreasedjigniflcantly in Periods of Short
SupjDly
Average acid-grade fluorspar prices trended slightly downward in
the 1960's, and are now starting to trend upwards. The upward trend is
expected to continue due to increasing world demand. However, fluorspar
prices can fluctuate as much as +_ 25% for short periods.
4. PUBLISHED HYDROFLUORIC ACID PRICES HAVE INCREASED SLIGHTLY
Published hydrofluoric acid prices have increased slightly over the last
decade, as shown in Exhibit E-2 following this page. However, since about 75%
of U. S. production is used captively, and an additional 21-23% is sold on a nego-
tiated contract basis, very little acid is sold at the published price (less than 4%).
The 21-23% which is sold on contract is generally tied to the price of fluorspar,
but is usually 20-25% below published prices to bulk users. Significant changes
in both published and unpublished prices have primarily been caused by fluctua-
tions in the price of fluorspar.
5. DISC U SSJ.ONS WITH_ HYDROFLUORIC J^.CID PKODUCERS I N[DIC ATE
AFTER-'TAX PROFITABILTTY'IN THE RANGE'DF"* TO"i'6"PERCENT
Product cost and profitability data for the production of hydrofluoric acid
is shown in Exhibit E-3, following Exhibit E-2.
E-6
-------
EXHIBIT E-2
Environmental Protection ^Agency
HYDROFLUORIC ACID PRICES
YEAR
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
PRICE (CENTS PER POUND)
ANHYDROUSa
18.0
16.0
16.0
16.0
16.0
16.0
18.0
18.0
21.0
AQUEOUSb
DRUMS
19. 25
17. 25
17.25
17. 25
17. 25
19.25
19.25
19.25
TANKS
13.40
11.50
10. 70
10. 70
10. 70
13.40
13.40
14.50
a. ANHYDROUS PRICE BASES ARE:
1944-1966 Tanks, works
1967 Tanks, delivered west
b. AQUEOUS PRICE BASES ARE:
DRUMS:
1957-1967
70%, 55 or 30 gallon drums, carloads, truckloads,
delivered (all states east of Arizona, California,
Colorado, Idaho, Montana, Nevada, New Mexico,
Oregon, Washington, and Wyoming).
TANKS: 70% Works, freight equalized
Source: Oil, Paint and Drug Reporter
-------
EXHIBIT E-3
Environmental Protection Agency
1972 COSTS OF HYDROFLUORIC
ACID PRODUCTION
Capacity: 60 Tons/day, 330 days per year (costs below reflect production
at 95 percent of this capacity, which is typical)
Present Capital Investment: $5,000,000(1)
Product Economics: Percent
Dollar/ Selling Typical
Ton Price Range
Sales Price 475. 100 $400.-500.
Cost of Goods
Raw Materials (fluorspar) 203. 43 60. -100.
(Sulfuric Acid) 47. 10 41. - 52.
Operation Labor 65. 14 60. - 70.
Maintenance/Supplies 20. 4
Depreciation 16. 3
All Others (Tax, Utilities, Power) 15. 3
Total COG 366. 77
Gross Profit 109. 23
Corp. Sales, Adm., Dist., O/H Exp. 43. 9 10.- 50.
Federal Income Taxes 33. 7
Net Profit 33. 7 19. - 47.
(1) + 20% or -5%
(2) 6% of Capital
-------
6. ONLY ONE PROCESS IS IN COMMERCIAL USE FOR HYDROFLUORIC
ACID PRODUCTION
Only one basic process is presently in use for producing hydrofluoric acid.
A flow chart of this process is included in Exhibit E-4, following ExhibitE-3.
Although the basic process is the same in all present plants, technological
variations may significantly affect plant economics. The technological varia-
tions are patented or closely guarded secrets. One producer won a judgment
not long ago against a second producer for copying patented aspects of plant
design, which indicates the proprietary nature of minor process variations.
Anhydrous hydrofluoric acid is a gas under normal conditions of atmospheric
temperature and pressure. The basic production process involves heating fluor-
spar and sulfuric acid together in a rotary kiln from which hydrofluoric acid to-
gether in a rotary kiln from which hydrofluoric acid is evolved as a gas. The
gaseous hydrofluoric acid is then condensed by refrigeration and pressurization,
and is stored and shipped under pressure. Anhydrous hydrofluoric acid is ex-
tremely corrosive to human tissue, and extensive safety measure must be em-
ployed in its manufacture and handling.
7. FEW PLANT CLOSINGS ARE LIKELY IN NEXT FIVE YEARS
With demand forecast to increase steadily, and 95% average capacity utili-
zation at present throughout the country, plant shutdowns in the near future seem
relatively unlikely. Industry sources believe that an exception may be that DuPont
may shut down its 15,000 ton/yr plant in New Jersey after its 75,000 ton/yr plant
in Mexico becomes operational in 1974.
8. WATER POLLUTION ABATEMENT COSTS FOR HYDROFLUORIC
ACID ARE LIKELY TO BE COVERED BY PRICE INCREASES
The maximum cost impact per ton for hydrofluoric acid producers is
$8. 34 per ton or 2. 5 percent of the selling price, as shown in Exhibit E-5
following Exhibit E-4.
This cost increase could probably be passed on to end users. Capacity
utilization is approximately 95 percent, production is 98 percent captive or
long term negotiated contract, and there are no major substitutes.
E-7
-------
EXHIBIT E-4
Environmental Protection Agency
HYDROFLUORIC ACID PRODUCTION PROCESS
From Fluorspar and Sulfuvic Acid
Acid-grade
fluorspai
•Vent
Anhydrous
hydrogen
fluoride
Reaction
CaF2 + H2S04 -> H2F2 + CaSO4
85-90% yield
Material and Utility Requirements
Basis—1 ton anhydrous hydrogen fluoride
Fluorspar (98% CaF2)
Sulfuric acid (96%)
Electricity
Fuel
Water
3,500 Ib
6,400 Ib
700 kw-hr
7,000,000 Btu
70,000 gal
Taken from: Industrial Chemicals 3rd. edition, 1967, W. L. Faith,
D.B. Keyes, andR.L. Clark;
-------
II-F. HYDROGEN PEROXIDE
1. HYDROGEN PEROXIDE HAS MANY USES AND CUSTOMERS
(1) Hydrogen Peroxide Has Three Major Uses
Hydrogen peroxide is an important chemical with many uses, all of
which are based on its reactions. The largest number of uses are based on
its oxidizing properties, others being based on its decomposition and dis-
placement reations. The major end uses are summarized below.
TABLE F-l
PERCENT HYDROGEN PEROXIDE PRODUCTION BY END USE
% of Total Production % Total Production*
Use 1971 (a) 1968 (b)
Merchant 67
Textiles 32 30
Paper and Pulp 8 8
Plasticizers and
other chemicals 15 41
Miscellaneous 12 21
Captive 33
Chemicals 10
Glycerine 15
Miscellaneous 8
* Not broken down into merchant and captive users.
(a) Source: Chemical Profiles 1972
(b) Source: Chemical Economics Handbook
In 1970, hydrogen peroxide output was 61, 488 tons. Total shipments includ-
ing interplant transfers for the same year was 50,137 tons for a value of $29, 872, 000
f. o.b. plant.
F-l
-------
(2) Hydrogen Peroxide Markets Are Nationwide
Hydrogen peroxide is an important industrial chemical and is avail-
able in several grades depending on concentration. As indicated by the use
pattern (Table F-l) the domestic markets are scattered across the nation,
with the major users being the textile and chemical industry.
Hydrogen peroxide export figures are not available but 18,000 tons
were reportedly exported in 1971 to Canada where two producers discon-
tinued output.
(3) The Federal Government Is Not A Major Factor In The Hydrogen
Peroxide Market
Hydrogen peroxide is used by the military as a propellant in rockets
and torpedoes. However, the amount used is too small to represent a
major outlet, or to classify the Federal Government as a major factor in
this market.
(4) Over 30 Percent Of Industry Production Is Produced For Captive Use
Hydrogen peroxide is used captively for various applications, includ-
ing glycerine, chemicals and other miscellaneous uses. Continued supply
is critical for the continued production of these chemicals.
(5) The Balance Of Industry Production Is Sold Through Regional Dis-
tribution Points
Non-captive users of hydrogen peroxide account for almost 70% of
the consumption and are scattered across the nation. The product is sold
in drums or tank cars and trucks. Transportation costs are significant
in the total manufacturing cost, and may be as high as $34/ton ^ ' or
11.1% of total delivered price.
2. DOMESTIC CAPACITY UTILIZATION HAS DECREASED FOR THE
PERIOD 1967-1972
Total production, plant capacity and present utilization are given in
Exhibit F-l, following this page, the graph shows that total production
has increased at a slower rate than industry capacity, with highest percent
plant utilization achieved in 1965. Recently, there is an indication that
capacity is stabilizing at around 147, 000 tons.
^ ' Calculated from reported prices of 15. 2£/lb delivered and 13. 5£/lb
freight equalized, for 35% weight product.
F-2
-------
EXHIBIT F-l
Environmental Protection Agency
HYDROGEN PEROXIDE
TOTAL CAPACITY VS. PRODUCTION
150
90
80
70
I 60
O
I
50
40
30
TOTAL PRODUCTION (1)
61
62
63
64
65
66
67
68
69
70
71
100
90
O
N 80
_j
F
D
S9 70
60
50
\
(3)
(1) CURRENT INDUSTRIAL REPORTS, SERIES
(2) CHEMICAL PROFILES, 1972 DIRECTORY OF CHEMICAL PRODUCERS
AND CHEMICAL ECONOMICS HANDBOOK, STANFORD RESEARCH INSTITUTE
(3) CALCULATED
-------
(1) Hydrogen Peroxide Capacity Has Grown At a Faster Rate Than
Production Since 1968
Industry capacity almost doubled from 1968 to 1971. Total production,
however, was almost constant for this same period.
(2) Hydrogen Peroxide Consumption Increased Steadily In The Period
1961-1968, But Leveled Off Between 1968 and 1971
Hydrogen peroxide consumption as judged by total industry production
increased steadily from 1961 to 1968. This increase is apparently related
to the increased consumption of hydrogen peroxide in chemicals production.
Consumption has remained at approximately the 1968 level for the past
three years, however.
(3) Hydrogen Peroxide Output Has Been Limited To A Minor Extent
By Increasing Import Penetration
Imports of hydrogen peroxide were 2,827 tons and 2, 488 tons for
1970 and 2969 respectively. This represents about 5% of total production
for the year 1970, with the major supply coming from Austria, France
and Japan.
Imports, while relatively small, bring some price pressure to bear
and have an affect on the market. With the exception of 1971, imports are
believed to exceed exports.
No substitutes are easily available for hydrogen peroxide that are as
safe and as acceptable from an ecological standpoint. Since hydrogen
peroxide is acceptable from an ecological standpoint, there is a great
deal of interest in its potential use in waste water treatment.
3. PUBLISHED HYDROGEN PEROXIDE PRICE-S HAVE DECREASED SINCE
1961
(i) Hydrogen peroxide is Available in the Market in Several Graoeb
Based on Concentration
Concentrations of 35 and 50% HO are consumed by most industrial
uses. To these solutions, stabilizers are added to insure safety in use and
to decrease the rate of decomposition.
F-3
-------
The 70% f^Og concentration is used for certain organic oxidations.
Some users purchase 70% H2O2 "dilution" grades, and dilute them to 35
or 50% concentration after delivery. This represents some savings in
transportation costs. Other grades are also manufactured, but their
use is limited to special applications.
(2) Prices of Hydrogen Peroxide Have Declined Since 1561
Prices of hydrogen peroxide have declined since 1961, as shown in
Exhibit F-2 following this page. The price for 35% hydrogen peroxide in
tanks, delivered was 18. 0£/lb in 1961 while current price is 15.2£/lb,
same basis.
(3) Competitive Pressure Due to Low Capacity Utilization Has Been
The Major Restraining Influence On Hydrogen Peroxide Prices
The substantial increase in industry capacity and the low utilization
have restrained hydrogen peroxide prices. Imports, although small, also
bring some price pressure to bear.
4. IT IS PROBABLE THAT LOW CAPACITY UTILIZATION HAS RESULTED
IN LOWER PROFITABILITY
The decrease in capacity utilization as well as the decrease in prices have
most likely tightened profit margins of this industry. However, improvements
in processing may have been responsible for the continued growth of production.
Chemical Profiles estimate that hydrogen peroxide demand will grow in the next
five years by about 4% per year reaching an output of 80, 000 tons in 1976.
Detailed profitability data are not available, however, because the producers
of hydrogen peroxide are major integrated companies and a separate profitability
figures for hydrogen peroxide production are not available from published sources.
With the small impact of the pollution abatement costs, no special effort was
made to obtain these costs.
5. HYDROGEN PEROXIDE IS PRODUCED BY THREE BASIC PROCESSES
(1) The Anthraquinone Oxidation Process Is Used In More Than 80% Of
Production Capacity
F-4
-------
EXHIBIT F-2
Environmental Protection Agency
HYDROGEN PEROXIDE
PRICE HISTORY
(Price Basis - Tanks Delivered)
40
30
70% by
weight
o
PH
t*
0)
a
CO
20
10
•50% by
weight
35% by
weight
61
62
63
64
65 66
Year
67
68
69
70
71
-------
In this process a hydroquinone is oxidized to the quinone form with
concurrent formation of hydrogen peroxide. The peroxide is extracted
and concentrated and the quinone is reduced catlytically and reused.
The process is outlined in a schematic form in Exhibit F-3, following
this page. The same exhibit contains the material requirements.
This organic based process produces a waste stream containing
organic solvents.
(2) The Electrolytic Process is Declining in Importance
In the electrolytic process hydrogen peroxide is produced by the
hydrolysis of a solution containing the persulfate ion. The process is
outlined in a flow chart in Exhibit F-4, following Exhibit F-3. The
same exhibit also contains the material and energy requirements of
this process.
The electrolytic process, in contrast to the currently more popular
processes, utilizes electrical energy. The operating costs of the process
tend to be higher than competing processes, and therefore it is being
phased out.
In this process, the major water pollutant is a stream of dilute
sulfuric acid.
(3) The Oxidation of Isopropyl Alcohol is Used By One Plant Only
The process consists of joint production of hydrogen peroxide and
acetone through the oxidation of isopropanol with an oxygen containing gas.
The process is outlined in a schematic form in Exhibit F-5, follow-
ing Exhibit F-4. The same Exhibit contains the material requirements.
From water pollution standpoint the process produces effluents
similar to the anthraquinone based process.
F-5
-------
EXHIBIT F-3
Environmental Production Agency
HYDROGEN PEROXIDE PRODUCTION
• By Oxidation of Alkylhydroanthraquinones
Alliylanthraquinone
Solvent >
i
Water
Alkylanthraqumone and solvent
^ 2 AI,O,
Eth ^ lanthraquinone
OCCr11-
o
H
I—C2H5
0
H
Ethylhydroonthraqumonc
o
i-C2Hs
+ H202
O
90% yield (based on hydrogen)
Material Requirements
Basis—1 ton hydrogen poroxiclr (2f>'/0
Oxygon
Ilydrngcn
Kthylnnthrnquinonc!
Solvent
5,2SO en ft (STP)
f>,R70 PU ft (STJ1)
Mechanical looses only1
Mechanical losses onlv
Palladium (catalyst) Mechaniral losses onlv
Water
180 gallons
-------
EXHIBIT F-4
Environmental Protection Agency
HYDROGEN PEROXIDE PRODUCTION
From Ammonium Bisulfate by Electrolysis
Reaction
Water Water
•Water
T
Waste
51
Waste
Hydrogen peroxide
(30%)
2XII4IIS<>, (XII,US..()S-|- H,
current
_.()K -f 2II..O-»2XJ[|IISOI
80-85/f cuiTcrr ,:f; -iicy
Hydrogen
peroxide
Hydrogen peroxide (80-85%)
(65%)
Material and Energy Requirements
Il,i-i—1 ton ',i()'/r hydid^cn prnmdc
Ainniuma 50 Hi
SuH'inir .-iciti r.o ii)
Dflliiner.ill/r'rl Wfltcr 2],"),(!()() rjal
l^lfTtiifity 5,7(10 knhr
Steam IG.SOO II,
I'lalinuin \'er\' .-mall
-------
EXHIBIT F-5
Environmental Protection Agency
HYDROGEN PEROXIDE PRODUCTION
By Oxidation of Isopropyl Alcohol
Hydrogen
peroxide
Isopropanol
Water
Oxygen
I "T
Aceto ne and
• unreacter'i isopropanol
(to se paration)
Hydrogen peroxide
(to concentrators)
Reaction
CII.,CinOH)CIi:; + 0« -> CII,COCH3 + H202
87 7o yield
Material Requirements
15:i.-i>—1 ton hydrogen perox'ide (25%)
(plus 910 Ih acetone)
I.-oprop;inol 1,000 Ih
Ox\-fion 6,000 cu ft (STP)
-------
6. THERE ARE FOUR PLANTS CURRENTLY IN OPERATION OWNED
BY THREE FIRMS
A matrix of hydrogen peroxide plants and firms is given in Exhibit F-6,
following this page. Allied Chemical Corporation reportedly shut down its
plant in Syracuse, N. Y. Also, Pennwalt Corp. is not currently operating
its plant in Ohio.
Shell Chemicals Co. has a plant in Louisiana operating on isopropanol
oxidation process and most of the production is used captively.
FMC Corporation and DuPont are the two major producers with
capabilities of 60 and 27 percent of the total U.S. production capacity
respectively. The concentration of current output by firms is given below.
(1) Hydrogen Peroxide Production Is Concentrated In Three Geographic
Locations
Production of hydrogen peroxide is concentrated in the states of
Tennessee, West Virginia and Louisiana, as shown in Exhibit F-6, following
this page.
(2) Integrated Hydrogen Peroxide Production Is Primarily Used by
Shell Chemical Company
Shell Chemical Company uses most of its hydrogen peroxide produc-
tion captively. Part of DuPont de Nemours & Company, Inc. production is
also used captively for the manufacture of other chemicals.
CONCENTRATION OF CURRENT OUTPUT BY FIRM
1.
2.
3.
4.
Firms
DuPont Co. , Inc.
FMC Corp.
PPG Indust. , Inc.
Shell Chem. Co.
Capacity
tons/yr
40, 000
89,000
3,750
15,000
% of Total
U. S. Capacity
27.1
60.2
2.5
10.2
Total 147,750
Sources: Chemical Production
1972 Directory of Chemical Producers, SRR
Industry interviews
F-6
-------
EXHIBIT F-6
Environmental Protection Agency
HYDROGEN PEROXIDE PRODUCERS
Firm
1. Allied Chem. Corp.
Indust. Chems. Div.
2. E.I. DuPont do Nemours £ Co.
Inc.
Electrochemicals Dept.
3. FMC Con).
Inorganic Chcms. Div.
Pcnnwalt. Corp.
Plant Site
Syracuse, N.Y.
Memphis, Tenn.
Capacity
(tons/yr)
4,000**
40,000
S. Charleston, \V. Va. 40, 000" **
Vancouver, Wash. 9,000
Process
Anthraquinone
Anthraquinone
Modified anthraquinone
Electrolytic
'5.
6.
*
**
***
Chem. Div.
PPG Indust. , Inc.
Shell Chem. Co.
Indust. Cheinr;. Div.
Total U. S.
On standby
Reportedly shut down
Chemical Profiles caoacitv es
Wyandotte, Mich.
Barberton, Ohio
Gcj'smar, La.
-
timate 40. 000 tons. Di]
1,750*
3,750
15,000
113,500
rectorv of Chemi
Electrolytic
Anthraquinone
Oxidation of isopropanol
_
cal Producers estimated
capacity 80,000 tons.
Sources: Chemical Profiles
1972 Directory of Chemical Producers
-------
7. WATER POLLUTION ABATEMENT COSTS ARE NOT LIKELY TO BE THE
DETERMINING FACTOR IN CLOSING HYDROGEN PEROXIDE PLANTS
(1) The Potential Water Pollution Abatement Cost Per Unit of Output
for Organic Process Producers Appears To Be Minor
The expected water pollution abatement costs for the organic processes
were estimated by EPA and are shown in Exhibit F-7, following this page.
These costs do not apply to electrolytic plants. The electrolytic plant
abatement costs are small, however, according to FMC Corporation, which
has the only plant in operation using the electrolytic process, they have in-
vested $20,000 in capital investment to reduce the cyanide discharge from
150 Ibs. per year to 2. 7 Ibs. per year.
Discussions with other producers using the organic process indicate
that the abatement costs, as established by EPA, are realistic though pos-
sibly high for some plants.
(2) Cost Increases May Be Difficult to Pass On
Although it would not be easy to find commercial substitutes for
hydrogen peroxide in some uses such as textile bleaching and the oxida-
tion of organic and inorganic compounds, there are other uses such as
bleaching paper pulp where chlorides are satisfactory substitutes.
There are three additional factors which indicate that it would be diffi-
cult to pass on price increases:
Only about 33% of hydrogen peroxide produced is consumed
captively, the other 77% is sold competitively.
All producers will not incur the same cost. The smaller
producers will incur higher costs.
The industry is substantially over capacity and competition,
as well as competing imports may lead major producers to
further absorb costs in an attempt to increase joint utilization.
F-7
-------
(3) The Added Costs While They Might Hasten the Decision, Are Not
Sufficiently Large To Be The Deciding Factor in Closing An
Otherwise Viable Plant
The maximum percent cost impact is 2.0% of the selling price for a
small capacity plant. For large plants, the maximum percent cost impact
is 1.2% of the selling price. While absorbing the costs would place greater
burden on the smaller plants, the added cost difference of 0. 8% is well with-
in the range of variation in operating profits that might be expected in normal
operations.
(4) Plants May Close For Reasons Other Than Pollution Abatement
Costs, However
Two plants have been identified through industry contacts as being
most vulnerable. These are summarized below:
Company Plant Capacity Process
(Thousand Tons)
PPG Industry, Inc. Barberton, 3.7 Anthraquinone
Ohio
FMC Corp. Vancouver 9.0 Electrolytic
Washington
The PPG plant is by far the smallest Anthraquinone Plant in operation
and the next largest organic plant has a capacity of 15,000 tons. The FMC
Corporation Plant is the last of the electrolytic plants in operation. It has
a capacity of 9,000 tons. With substantial over-capacity in the industry, the
plants may be closed because they cannot compete with the economics of the
larger plants and more efficient producers.
F-8
-------
II. B. LIME
1. LIME HAS FEW MAJOR USES AND ITS CUSTOMERS ARE
LOCAL AND REGIONAL
(1) Lime Has Four Major Uses
The four principal uses for lime sold by producers
were chemical, 79%; construction, 12%; refractory, 8%;
and agricultural, 1%.
The leading individual uses were basic oxygen steel
furnaces, alkalies, water purification, other chemical uses,
and refractories. Each of these uses required more than
one million tons of lime.
Lime consumed by producers was 37% of the total
compared with 36% in 1970 and 35% in 1969.
The total tonnage of quicklime, hydrated lime, and
dead-burned dolomitic, either sold or used by producers
during 1971, was 19, 591, 000 tons valued at $308,100, 000
(calculated at an average f.o.b. plant value of $15. 73/ton).
Of this total, 12, 337, 000 tons was commercial (sold) lime
valued at approximately 194 million dollars.
(2) Commercial Lime Markets Are Local and Regional
Lime is a low cost commodity. Transportation costs
are high relative to the selling price. Large users of lime
are generally located near both limestone and lime calcining
operations.
Commercial lime production by districts versus lime
shipments by destination for 1971 are shown in Exhibit
G-l, following this page. By far the largest tonnage of
G-l
-------
EXHIBIT G-l
Environmental Protection Agency
COMMERCIAL LIME PRODUCTION BY DISTRICTS
vs. SHIPMENTS BY DESTINATION FOR 1971
COMMERCIAL LIME PRODUCTION BY DISTRICTS vs. SHIPMENTS BY DESTINATION FOR 1971
Legend
Q Production
4000 h- 0 Used by District
% Ratio of Use to Production. (No. below
is corresponding ratio for '70 )
3000
2000
1000
370%
(345)
.
107%
(106)
(155)
95%
(77)
70%
(71)
90%
(88]
A
/
106%
(103)
f^|..
A
Northeast Pennsylvania Mid-Atlantic Southeast
Ohio
Midwest Southwest & West
National Lime Association
Washington, D.C. 20016
-------
commercial lime was shipped into the midwest district
followed by the Southwest and West districts. Shipments
into other districts were significantly smaller.
(3) The Federal Government Is Not A Factor In The
Lime Market
Although road building under Federal auspices is an
important area of lime consumption (cement and soil stabili-
zation), the market comprises private contractors for the
most part rather than Federal agencies.
(4) Thirty-Seven Percent Of Industry Production In 1971
Was For Captive Use
Statistics reported by the Bureau of Mines for the
total amount of lime sold or used by producers indicate
that 7, 254, 000 tons out of 19, 591, 000 tons were used by
producers. Continued supply of lime is essential to pro-
duction of:
Steel (EOF process)
Aluminum
Copper
Sugar
Soda Ash (solvay)
Glass & ceramics
However, in some areas of use, limestone can be
substituted for all or part of the lime required.
About 66% of the commercial lime producers are large
companies with interests in steel, cement, food processing,
chemicals, and building materials. These companies allocate
a major portion of their total production for captive uses.
G-2
-------
(5) The Balance of the Total Industry Production Is Sold
Directly to Customers
Transportation costs involved in selling direct to
customers are high. The costs of double handling involved
in using distribution points would be prohibitive. A 1968
study by the Bureau of Mines provides an estimate of
average transportation costs for that period and illustrates
the impact of delivery costs, as shown in the table below:
Average Cost/Ton of Lime - 1968
F.O.B. Plant $13.39
Average Delivered Price
Hydrated Lime 42. 51
Quicklime 39. 52
2. DOMESTIC CONSUMPTION OF LIME SHOWED A STEADY
INCREASE OVER THE 1964-1969 PERIOD AND A DECLINE
FOR THE 1969-1971 PERIOD
Domestic consumption (total and commercial only) of lime
for the 1964-1971 period, as indicated by the Bureau of Mines data for
lime sold or used by producers, is shown in Exhibit G-2, follow-
ing this page. For the 1964-1969 period, total consumption was
up 26%, while commercial lime consumption was up 33%. For the
1969-1971 period, total consumption was down about 1%, while
commercial lime consumption was down about 5%. Data obtained
from the National Lime Association indicate that substantially all
of the loss occurred in quicklime.
(1) Lime Consumption Dropped From 1969 to 1971,
Primarily Due to Reduced Use in Steel Making
The steel industry is primarily responsible for the
decline since 1969 due to a combination of the following reasons:
U.S. Steel has developed a BOF-G process, which
permits the consumption of about 20% less lime.
G-3
-------
20
19
18
17
16
1«
EXHIBIT G-2
Environmental Protection Agency
LIME
TOTAL DOMESTIC CONSUMPTION
AND COMMERCIAL CONSUMPTION
t TOTAL
CONSUMPTION
« 14
g
_i
I 13
12
COMMERCIAL
CONSUMPTION
11
10
SOURCE: BUREAU OF MINES
1964
1965
1966
1967
1968
1969
1970
1971
-------
Lime or limestone can be used for fluxing in
open hearth or electric steel furnaces. In-
creases in delivered costs of one over the other
frequently tips the scales in favor of the least
inflated cost.
(2) Domestic Lime Consumption Is Affected by Imports
and Exports to Only a Limited Extent
Imports and exports as they relate to total domestic
lime consumption, are shown for 1964-1971 in Exhibit G-3,
following this page.
3. THE BASIC RAW MATERIAL FOR LIME MANUFACTURE
IS LIMESTONE
(1) Limestone Deposits Are Widespread in the U. S.
Only a small proportion, however, is of a grade
suitable to meet requirements for industrial lime production.
Additionally, a small portion of the lime produced in the
U. S. is derived from oyster shells mainly in the Gulf area
where no limestone deposits of consequence are found
within 200 miles of the coast. The National Lime Association
estimates that somewhere between 2% and 5% of the existing
limestone deposits and reserves are suitable (economical)
for lime manufacture. Dense, five grained limestone of at
least 95% carbonate is demanded to meet consumer specifications.
Therefore, chemical and metallurgical grade deposits of a
size and location that are exploitable are limited.
Large volume users of lime, such as the steel, sugar
refining, glass, soda ash, aluminum, and copper industries
own and operate limestone quarries and processing plants
as do the vast majority of less diversified lime manufac-
turers. Because of industry economics and the significance
of transportation costs to selling price, it is doubtful that
nonintegrated producers or producers not tied to a few major
customers, represent more than a small fraction of the
industry.
G-4
-------
EXHIBIT G-3
Environmental Protection Agency
EFFECT OF IMPORTS/EXPORTS ON
DOMESTIC LIME CONSUMPTION
Total Domestic Consumption
(Sold or Used by Producers)
(thousands of tons)
Percent of Total
Domestic Consumption
Exports
Imports
1964
1965
1966
1967
1968
1969
1970
1971
16,089
16,794
18,057
17,974
18,637
20,209
19,747
19,591
0.2%
0.2%
0.3%
0.3%
0.4%
0.3%
0.3%
0.3%
0.8%
1.6%
1.1%
0.7%
0.6%
0.9%
1.0%
1.2%
Source: Bureau of Mines and Minerals Yearbook.
-------
(2) Raw Material Prices Have Increased 9. 5% Since 1967
The average cost per ton for crushed and broken lime-
stone in 1971 was estimated to be approximately $1. 60/ton.
There is wide variance in prices, contingent upon the amount
of processing (grinding and classifying) involved. The
average cost per ton for crushed stone, as reported by the
Bureau of Mines for the years 1964-1968 and 1971, has in-
creased from $1.44 to $1. 60 as shown in the table below:
Average Cost/Ton for Crushed Stone
Year
1964
1965
1966
1967
1968
1971
Average Price/Ton
(Crushed Stone)
$1.44
1.42
1.44
46
49
1.60
4. PUBLISHED PRICES FOR LIME HAVE INCREASED
SIGNIFICANTLY SINCE 1969
The following table gives the average F.O.B. per-ton
price for lime in bulk for the 1961-71 period as reported by the
Bureau of Mines.
G-5
-------
Average F.O.B. Per Ton Price for Lime
in Bulk: 1961-1971
Average Price
Year Per Ton
1961 $13.39
1962 13.58
1963 13.73
1964 13.87
1965 13.87
1966 13.27
1967 13.36
1968 13.39
1969 13.89
1970 14.53
1971 15.78
The F.O.B. plant, bulk price for lime increased 18% over
the 1961-1971 period. Seventy-nine percent of the total price in-
crease for the period occurred during 1970 and 1971. An 8. 6%
price increase in 1971 was the largest yearly increase recorded
for the 1961-71 period.
(1) Increased Fuel Costs Have Had a Major Effect on
Lime Prices
The National Lime Association states that fuel
scarcities and fuel price increases of 50% to 100% have had
and will continue to have a major inflationary effect on lime
prices. They have estimated that the fuel factor will con-
tinue to increase lime costs by $1.00 to $2.25/ton (6% to
14% of the average F.O.B. lime price reported for 1971).
(2) Limestone, With Its Lack of Dependence on Fuel
Costs, May Tend to Hold Lime Prices Down,
However
Limestone can be substituted for lime in steel making,
agricultural and soil stabilization uses. Limestone involves
only quarrying costs and thus is independent of fuel costs.
G-6
-------
5. LIME IS PRODUCED BY THE CALCINATION OF
LIMESTONE IN A KILN
A single process involving the burning of limestone in a kiln
at 1, 700-3, 000" F. is used to product quicklime (CaO). A flow
chart of the process is shown in Exhibit G-4, following this page.
Slaked or hydrated lime [Ca(OH>2] results from the addition of water
to quicklime. Carbon dioxide is evolved during calcination. A variety
of kilns are employed, including rotary, vertical, and fluidized bed.
Wasts that occur result from removing dust from the CC>2 stream
and from the air during preprocessing (grinding) of the limestone.
Customary procedures involve wet scrubbing, air-bag filtration, and
electrostatic precipitation of CC>2 stream. Wet scrubbing produces the
major water pollution problem. A high pH effluent can also come from
plants using only dry collection methods due to leakage during hydration,
equipment clean-up, and high alkalinity well water sources. This prob-
lem is relatively minor, however.
6. THERE ARE APPROXIMATELY 188 LIME PRODUCING
PLANTS CURRENTLY OPERATIONAL IN THE U. S.
Approximately 116 plants market all or a protion of their
production. The remainder represent captive lime producers.
Exhibit G-5, following Exhibit G-4, shows the locations of
commercial lime producers in the U. S. as of 1970.
In the order of 1971 total output of captive and commercial
lime, the leading individual plants (Bureau of Mines Survey for
1971) were:
Mississippi Lime Co., St. Genevieve, Mo. (1)
Allied Chemical Corp., Syracuse, N.Y. (2)
Allied Chemical Corp., Baton Rouge, La. (2)
PPG Industries, Inc., Buffington, Ind. (2)
Marblehead Lime Co., Buffington, Ind. (1)
Diamond Shamrock Chem. Co. , Painesville, Ohio (2)
BASF Wyandotte Corp., Wayne Co., Michigan (2)
Marblehead Lime Co., South Chicago, Illinois (1)
Marblehead Lime Co., River Rouge, Michigan (1)
Bethlehem Mines Corp., Anniville, Pa. (1)
(TjCommercial Lime (all or a portion of total production marketed)
(2) Captive Lime (more of production marketed)
G-7
-------
EXHIBIT G-4
Environmental Protection Agency
PROCESS FLOW CHART — LIME
From Limestone by Calcinat
ion
Sized
limestone 1 r~^-Carbon dioxide
gases *
Secondary
air
Kiln
*l
Dump
car
(lump)
Water
r-, ,L,
\
orusmng and
screening
-r*j Hydrator
Quicklime
(pulverized)
r
r*
Screen
separator
ilaked lime
Oversize
Reaction
CaCO:i -» Ca() + COL- (Calcining)
CaO + H20 -» Ca (OH I., (Hydrating)
Material and Heat Requirements
Basis—1 ton quirklime (C;iO)
Limestone (pure) 3,750 Ib
Fuel
5,000,000 Btu
-------
EXHIBIT G-5
Environmental Protection Agency
COMMERCIAL LIME PLANT LOCATIONS
5i|>! ,i!^ ?h ?ll^:- :M :h:;;'
u'lj in ? fi' ii;n>; -i; ;.i; •
-------
These 10 plants accounted for 30% of the total commercial
and captive lime produced in 1971.
(1) Lime Production Is Concentrated in Five States
Although lime is produced at locations throughout the
U.S., total production for 1971 was concentrated in Ohio,
California, Texas, Pennsylvania, and Colorado. These five
states accounted for 37% of the total number of plants in 1971,
(2) Integrated Lime Production Is Dominant
According to the National Lime Association, about 66%
of the commercial lime producers are large diversified
companies and conglomerates having interests in cement,
iron and steel, chemicals, drugs, building materials, and
aerospace. Fifteen to twenty years ago only about 20% of
the commercial producers were large diversified companies.
7. PRODUCERS USING WATER SCRUBBERS WILL BE
AFFECTED BY POLLUTION ABATEMENT COSTS
(1) Producers Presently Using Water Scrubbers Will
Incur Substantial Costs
The capital investment and operating and maintenance costs
provided by EPA are presented in Exhibit G-6, following this page,
on an after tax basis. Also shown are industry estimates of the
cost for installing and operating bag-house air-infiltration equipment.
(2) Plants Presently Using Water Scrubbers May Be Forced
To Close
Approximately 25% of the plants are presently using water
scrubbers.
Some cost increases will be passed on as they have been
with increased fuel costs forcing the price per ton to increase from
$13. 69 to $15. 78 between 1969 and 1971. In local competitive situ-
ations, however, it is likely that competition either from other
producers or competitive products will force some plants to close.
Go
-o
-------
II-H. NITRIC ACID
1. NITRIC ACID IS PRIMARILY USED FOR THE PRODUCTION OF
AMMONIUM NITRATE
Approximately 75 percent of nitric acid production is converted
into ammonium nitrate.
(1) Nitric Acid has Seven Basic uses in Addition to Ammonium
Nitrate
The uses of nitric acid, including its use for ammonium nitrate,
and the relative importance of each based on estimated 1968 data, are
shown in the table below:
Nitric Acid Consumption By Major Use*
QUANTITY
(OOO's Short Tons)
100% HNO3 PERCENT
Ammonium Nitrate 4, 617 73%
AdipicAcid 529 8
Iso-cyanstes 133 2
Military Production 452 7
Miscellaneous Fertilizer 380 6
Nitro Buzene 105 2
Potassium Nitrate 66 1
Steel Pickling 26
Other 62 1_
Total 6, 370 100%
In 1970, 75 percent of nitric acid was converted to ammonium
nitrate. Total 1970 production volume, as reported to the Bureau of
Census, was 6, 684, 574 short tons of 100 percent HNO.-. with an
estimated market value of $422, 000, 000.
(2) Most Nitric Acid is Converted to Ammonium Nitrate at the
Same Site
Over 90 percent of domestic nitric acid output is captively
consumed. With its relatively low cost, it cannot be shipped very
far. Practical distances range from 150 miles for low strength
*Source, Chemical Economics Handbook, report dated December 1968,
Stanford Research Institute.
H-l
-------
fertilizer acid, to 7-800 miles for 98 percent acid. Thrity-four
states have at least one nitric acid plant.
Imports and exports are negligible. Imports have not been
reported since 1952-when they were 40 pounds. Exports have not
been listed since 1963 when they were 235 short tons. *
(3) The Federal Government is not a Major Factor in the
Commercial Nitric Acid Market During Peace Time
The Federal Government tends to maintain its own ordinance
plants for producing the nitric acid necessary for munitions production.
In times of military buildups, however, it has become a major pur-
chaser until its own productive capacity could be increased.
(4) The Number of Plants Producing Nitric Acid Has Decreased
Since 1967
There were approximately 98 operating plants in 1968. By 1971,
the number of operating plants was reduced to approximately 80.
Smaller plants and plants with outmoded low-pressure processes have
been closed in favor of larger plants with high pressure processes.
The transition has been spurred by the lagging fertilizer market
demand and the need to incur substantial air pollution abatement
expenditures.
(5) Merchant Acid is Sold both Direct to the Consumer and
Through Distributors
Of approximately 10 percent of nitric acid production that is
not used captively, about 5 percent is sold direct to the consumer
and 5 percent through distributors in small lots.
2. DOMESTIC CAPACITY UTILIZATION HAS DECREASED FOR THE
PERIOD 1967-1971 DUE TO LAGGING SALES GROWTH
Capacity increases in recent years have significantly exceeded the
growth in demand. As can be seen from Exhibit H-l following this page,
capacity has continued to increase in spite of an almost stagnant sales
growth since 1968.
*U. S. Exports of Domestic and Foreign Merchandise, FT-410, U. S.
Department of Commerce, Bureau of Census.
H-2
-------
1. CAPACITY VS PRODUCTION
10,000
cc
o
I
CO
UL
O
CO
0
1
O
I
8,000
6,000
A
[
4,000
(
3,000
A
a
a
A
O
A
O
EXHIBIT H-l
Environmental Protection Agency
CAPACITY, PRODUCTION
AND PERCENT UTILIZATION
NITRIC ACID
CAPACITY
D
O
PRODUCTION (1)
O
PRODUCTION (2)
(1) ESTIMATED BY CEH, STANFORD RESEARCH INSTITUTE,
TO INCLUDE ESTIMATED UNREPORTED PRODUCTION
(2) BUREAU OF CENSUS, CURRENT INDUSTRIAL REPORTS SERIES
2. PERCENT UTILIZATION
100
C
90
(
80
7n
-
]
)
-
61
D
O
i
62
Q n i-i D
D
O
0 o °
1 1 1 1 1
63 64 65 66 67
D
0
1
68
PRODI
0 ?
69 70
SOURCE: CHEMICAL ECONOMICS HANDBOOK, BUREAU OF CENSUS,
CURRENT INDUSTRIAL REPORTS, 1972 DIRECTORY OF
CHEMICAL PRODUCERS
-------
(1) Nitric Acid Consumption Has Been Held Back Due to a Weak
Fertilizer Market
The major market for nitric acid, the fertilizer market
(approximately 70 percent of total production), has been depressed
in 1968, 1969, and 1970.
(2) Lagging Sales Growth is not a Function of Increasing Imports
As already noted, imports are negligible and are not a factor
in this market.
3. ANHYDROUS AMMONIA IS THE BASIC RAW MATERIAL FOR
NITRIC ACID
Anhydrous ammonia requires natural gas or coke oven gas in its
production. Production is concentrated in the Gulf States with additional
production in the Central States and the Far West.
Value of manufacturer's prices of anhydrous ammonia for the period
1965-1970 are shown in Exhibit H-2 following this page.
4. PUBLISHED NITRIC ACID PRICES HAVE INCREASED BY APPROX-
IMATELY FIVE PERCENT SINCE 1968
Published prices for representative concentrations and quantities are
Shown in Exhibit H-3, following Exhibit H-2. Published prices remained
constant from 1961 to 1962 when the price of 95 percent tank load acid went
up 10 percent. Since 1968, the published tank acid price has gone up an
additional 5 percent.
Price increases have occurred primarily as a result of increased
amonia prices due to shortages of natural gas. Prices increases on the
strong acid have been greater than those of the weak acid used in the
fertilizer market. There are few producers of the strong acid and demand
for explosives, unlike the demand for fertilizer acid, has remained strong.
5. DECLINING PROFITABILITY HAS LIKELY RESULTED FROM
EXCESS CAPACITY
Detailed data on the profitability of producing nitric acid was not
obtained in this study. With the apparent minor impact of the water
pollution abatement costs, no special effort was made to obtain this data.
H-3
-------
EXHIBIT H-2
Environmental Protection Acency
ANHYDROUS AMMONIA
VALUE OF MANUFACTURER PRICES
1965 - 1970
Year Price/Ton
1965 $67.50
1966 $63.50
1967 $54.80
1968 $41. 70
1969 $34.00
1970 $33.50
Source: Current Industrial Reports, Inorganic Chemicals, 1969,
U. S. Department of Commerce
Current Industrial Reports, Inorganic Chemicals,
U. S. Department of Commerce
-------
EXHIBIT H- 3
Environmental Protection Agency
LIST PRICES: NITRIC ACID
1961 - 1972
YEAR CARBOY'S (1)
TANKS (2)
1961
1962
1963
1964
1965
1966
1967
1968
1972
42° BE (67.2%)
7. 25
7.25
7.25
7.25
7.25
7.25
7.25
7. 25
7.25
58. 5 - 68%
3.90
3. 90
3. 90
3.90
3.90
3. 90
3.90
3. 90
4.51
94.5 - 95. 5%
4. 90
4. 90
4. 90
4. 90
4.90
4.90
4. 90
5.40
5. 65
-------
The economics of the chemical process industries are such, however,
that capacity utilization in the range of 70 to 80 percent is only marginally
profitable if profitable at all. In 1970, the average capacity utilization
for nitric acid producers was in the range of 70 to 80 percent.
6. THE INDUSTRY TYPICALLY OFFERS SUBSTANTIAL DISCOUNTS
FROM LIST PRICE ON LONG-TERM, NEGOTIATED CONTRACTS
Almost all nitric acid that is not used captively is sold on the basis
of negotiated contracts.
The value of "manufacturers value" price as reported to the Bureau
of Census by the manufacturers is shown in Exhibit H-4 following this
page. As can be seen by comparison with Exhibit H-3 these prices are
approximately 20 percent below the list price of tank load 58 percent
acid.
7. NITRIC ACID IS PRODUCED BY THE OXIDATION OF AMMONIA
This process is the only chemical process used commerically to
manufacture nitric acid. A flow chart of the process is shown in
Exhibit H-5 following Exhibit H-4. The acid is produced by the step-
wise oxidation of ammonia through nitrogen oxide to nitrogen dioxide
which is then absorbed in water.
The only water pollution resulting from this process comes from
leaks, spills, and cooling tower blowdowns.
8- THERE ARE APPROXIMATELY 85 PLANTS CURRENT OPERATING
NITRIC ACID PLANTS OWNED BY 47 FIRMS
A list of producers and plant locations is provided in Exhibit H-6
following H-5. Information on plant size, date, stream, and process
variation is also shown where possible.
H-4
-------
EXHIBIT H-4
Environmental Protection Agency
NITRIC ACID VALUE OF MANUFACTURi
PRICES 1965-1970
YEAR
1965
1966
1967
1968
1969
1970
PRICE
Cents/lbs.
2.83
3.17
3.26
3.20
3..19
3.17
Source: Current Industrial Reports Inorganic Chemicals 1969,
U.S. Department of Commerce
Current Industrial Reports Inorganic Chemicals 1970,
U.S. Department of Commerce
-------
EXHIBIT H- 5
Environmental Protection Agency
AMMONIA OXIDATION PROCESS
NITRIC ACID
NITRIC ACID
HNO;,
Water
Nitric acid
(61-65S)
Reaction
2X0 — o^
93-9")^ yu
Material Reqiiirt'inents
B;.-i—1 ion nitric .icul i 100', j
Aiiiiiiiini.i i.inhyilruu.-i o"."> Ib
J'l.cuumu ditl r» (i.n-J oz
Air 110,000 cu ft
Source: Industrial Chemicals, 3rd Edition, 1967,
W. C. Faith, D. B. Keyes, andR. C. Clark;
Used by Permission: John Wiley & Sons, Inc., New York
-------
EXHIBIT
H-4
ENVIRONMENTAL PROTECTION,
AGENCY
Producers and Plants: 1972
Nitric Acid"
PRODUCER
Agway, Inc.
Air Products and Chems. , Inc.
Allied Chem. Corp.
Agricultural Div.
Indust. Chems. Div.
American Cyanamid Co.
Agricultural Div.
Indust. Chems. and Plastics
Div.
Apache Powder Co.
Arkansas Louisiana Gas Co.
Arkla Chem. Corp., Subsid.
Baychem Corp.
Mobay Chem. Co. , Div.
Celanese Corp.
Celanese Chem. Co. , Div.
CF Indust. , Inc.
Fremont Nitrogen Complex
Terre Haute Nitrogen Complex
Cherokee Nitrogen Co.
Colorado Interstate Corp.
Wycon Chem. Co. , Subsid.
Columbia Nitrogen Corp.
Cominco American Inc.
Commercial Solvents Corp.
Cooperative Farm Chems.
Association
E. I. du Pont de Nemours &
Co., Inc. Explosives Dept.
Plastics Dept.
El Paso Natural Gas Co.
El Paso Products Co. , Subsid.
Farmers Chem. Association, Inc.
Goodpasture, Inc.
W. R. Grace & Co.
Agricultural Chems. Group
Gulf Oil Corp.
Gulf Oil Chems. Co. , Div.
Indust. and Specialty Chems. Div
Div.
Vicksburg Chemical
Hercules Inc.
Explosives & Chem. Propulsion
Dept.
Polymers Dept.
Synthetics Dept.
U. S. Army Ordnance Plants,
operated by Hercules Inc.
PLANT
Olean, N.Y.
Pensacola, Fla.
Geismar, La.
Hopewell, Va.
*Ironton, Ohio
Omaha, Neb.
Buffalo, N.Y.
Newell, Pa.
Hannibal, Mo.
Willow Island, W.Va.
Benson, Ariz.
Helena, Ark.
New Martinsville , W.Va.
Bay City, Tex.
Fremont, Neb.
Terre Haute, Inc.
Pryor, Okla.
Cheyenne, Wyo.
Augusta, Ga.
Beatrice, Neb.
Sterlmgton, La.
Lawrence, Kans.
Du Pont, Wash.
Gibbstown, N.J.
Old Hickory, Tenn.
Seneca, 111.
Orange, Tex.
Victoria, Tex.
Odessa, Tex.
*Tunis, N. C.
Tyner, Tenn.
Dimmitt, Tex.
Wilmington, N. C.
Pittsburg, Kans.
Vicksburg, Miss.
Bessemer, Ala.
Donora, Pa.
Hercules, Calif.
*Kenvil, N. J.
Parlin, N. J.
Louisiana, Mo.
Lawrence, Kans.
Radford, Va.
DATE
ON
STREAM
1967
1954
1956
1928
1957 & 1965
1967
1957
1967
1967
NA
1964 & 1966
1966
1964
1967
1965 & 1969
1964
1966
1951,1953,
1956
1954,60,62,
63,68
NA
1966
1960
1968
1956,1967
1968
1965
1969
NA
1963
1942, 50,
51, 60
1954 & 1956
1968
—
1928
—
1966
unknown
PROCESS
Hp/57-60%
Hp/57%
Atmospheric/42%
Hp/58%
Hp/57
Atmospheric /40%
Hp/57%
Hp/63%
Hp/60%
Hp/60%
Hp/58%
Hp/57%
Hp/57%
Hp/57%.
Hp/57. 5%
Hp/57%
3 Atmospheric/57%
Hp/56%
Hp/57%
Hp/57%
Hp/60% & Hp/65%
Hp/60% & Hp/
57-60%
Hp/60%
Hp/60%
Hp/60%
Hp/57%
Hp/57%
Hp/58%
Lp/55% & Hp/57%
Hp/55%
Hp/unknown
Hp /unknown
Hp/unknown
Hp/unknown
Hp/unknown
unknown
ANNUAL CAPACITY
(THOUSANDS OF TONS)
60
90
200
>250
(240)
90
>25
60
110
>27
60
90
82
77
133
65
62
>162
135
>163
384
20
660
44
215
180
120
63
340
170
187
>281
>85
20
120
65
16
53
400
>125
-------
EXHIBIT H-6 (Contd)
PRODUCER
I C I America Inc.
Atlas Explosives Div.
Illinois Nitrogen Co.
Kaiser Aluminum & Chem. Corp.
Kaiser Agricultural Chems. Div.
Lone Star Gas Co.
Nipak, Inc., Subsid.
MisCoa
Mobil Oil Corp.
Mobil Chem. Co., Div.
Petrochems, Div.
Monsanto Co.
Monsanto Commercial Products
Co., Agricultural Div.
Monsanto Textiles Co.
National Distillers and Chem.
Corp.
U. S. Indust. Chems. Co., Div.
Nitram, Inc.
Olm Corp.
Chems. Div.
Winchester-Western Div.
Associated Products Operations
Government plants managed by
Associated Products
Operations:
Phillips Pacific Chem. Co.
Phillips Petroleum Co.
Rubicon Chems. Inc.
St. Paul Ammonia Products, Inc.
Shell Chem. Co.
Agricultural Div.
SkellyOil Co.
Hawkeye Chem. Co., Subsid.
Standard Oil Co. of California
Chevron Chem. Co., Subsid.
Ortho Div.
The Standard Oil Co. (Ohio)
Vistron Corp., Subsid.
Chems. Dept.
Tennessee Valley Authority
Terra Chems. Internat'l. Inc.
Union Oil Co. of California
Collier Carbon and Chem.
Corp., Subsid.
Uniroyal, Inc.
United States Ordnance Plant
operated by Uniroyal, Inc.
United States Steel Corp.
USS Agri-Chemicals, Div.
Valley Nitrogen Producers, Inc.
The Williams Companies
Willchemco, Inc., Subsid.
PLANT
Joplin, Mo.
Tamaqua, Pa.
Tyner, Tenn.
Marseilles, m.
Bainbridge, Ga.
North Bend, Ohio
Savannah, Ga.
Tampa, Fla.
Kerens, Tex.
Yazoo City, Miss.
DATE
ON
STREAM
NA
NA
NA
1964
1965
.1965
1957
1960
1964
1951,52,54,
58,63,66
PROCESS
Hp/56%
Hp/57%
Hp/57%
Hp/57%
Hp/57%
Hp /unknown
Hp/unknown
Beaumont, Tex.
El Dorado, Ark.
Luling, La.
*Pensacola, Fla.
*Tuscola, Ul.
Tampa, Fla.
Lake Charles, La.
Clinton, Iowa
1967
Hp/57%
1962 Hp/57%
1954,60,63, Hp/57%
66
1956,57,64, Hp/57%
65
1954
1963
1947
Hp/57%
Hp/55%
Hp/unknown
ANNUAL CAPACITY
THOUSANDS OF TONS>
122
24
285
120
47
84
162
42
50
388
154
275
270
258
(45)
120
95
Baraboo, Wise.
Charleston, Ind.
Childersburg, Ala.
Kennewick, Wash.
Beatrice, Neb.
Etter, Tex.
Pasadena, Tex.
Geismar, La.
Pine Bend, Minn.
*St. Helens, Ore.
*Ventura, Calif.
NA
NA
NA
1964 & 1968
1965
1964
1964
1966
1957
1965 & 1969
1965
Hp/53%
Hp/53%
Hp/58%
Hp/56%
Hp/65%
Hp/57%
Hp/57%
Hp/57%
1963
Hp/57%
Brea, Calif.
Johet, 111.
Cherokee, Ala.
Crystal City, Mo.
Geneva, Utah
El Centre, Calif.
"Henderson, Ky.
1955
1963
Hp/57%
Hp/56%
1962 Hp/56%
1955 Hp/56%
1957 & 1967 MP/53% & Hp/57%
1967 MP/55%
43
55
164
13
26
180
20
20
120
Fort Madison, Iowa
Kennewick, Wash.
Richmond, Calif.
Lima, Ohio
Muscle Shoals, Ala.
Port Neal, Iowa
1961
1960
1957
1956
NA
1967
Hp/57%
Hp/57%
Hp/57%.
Hp/58 & Hp/63%
Hp/57%
94
130
85
65
100
123
47
^195
110
100
81
35
*Identified by industry sources as possibly closed
Source: 1972 Directory of Chemical Producers, Stanford Research Institute
-------
The plants are widely distributed throughout the fifty states. The
distribution of production by state and region is shown in Exhibit H-7
following this page.
9. PRELIMINARY INDICATIONS ARE THAT AT LEAST TEN PLANTS
WILL CLOSE DURING THE NEXT FIVE YEARS, THOUGH NOT
NECESSARILY DUE TO WATER POLLUTION ABATEMENT COSTS
(1) The Industry Continues to Suffer from Substantial Over-
Capacity
Some plants have been shut down during the past year and
placed on standby, but current operating capacity is still in
excess of 8 million short tons a year - substantially above the
1971 production of 6, 700, 000 tons.
(2) Substantial Air Pollution Abatement Costs are already
Causing Producers to Reconsider Their Make or Buy
Decision
Industry contacts have been uniformly surprised at our
interest in the financial impact of water pollution abatement costs.
Air pollution costs are much higher than water pollution abatement
costs for a 100, 000 ton per year nitric acid plant, as shown in
Exhibit H-8 following Exhibit H-7.
(3) Interviews with Industry Specialists have Identified Plants
which are Marginal and Likely to Close within the Next
Three to Five Years
These plants include most remaining low and medium pressure
plants. In general, these plants are also over five years old and
service the fertilizer market. The plants identified as likely to
close are shown in Exhibit H-8 following Exhibit H-7.
10. PRELIMINARY INDICATIONS ARE THAT WATER POLLUTION
ABATEMENT COSTS ARE NOT LIKELY TO BE THE DETERMINING
FACTOR IN DECIDING WHICH PLANTS TO CLOSE
(1) The Costs are Likely to be Lower Than Those Provided by EPA
The cost data provided by EPA are shown in Exhibit H-9, following
Exhibit H-8. The costlpresumed the use of a water scrubber to clean the
nitric oxide exhaust gas as an air pollution control device.
H-5
-------
EXHIBIT H-7
Environmental Protection Agency
PRODUCTION OF NITRIC ACID
IN GEOGRAPHIC AREAS: 1970
AND 1963
Ceograph Ic area
boouiana
T
Nitric
( 10O<(ttO, )
(28^9111)
! C^-oi t tons J
1970
6,684,574
479,214
C»)
(D)
(D)
516,376
(D)
282,525
1,581,270
300, 2 26
531,937
(D)
1,305,009
103,285
(n)
458,240
1,124,037
(D)
444,361
(D)
1,207,380
400,328
371,390
470,388
(D)
171,396
1969
6,443,437
471,453
(D)
(u)
(D)
539,055
it>)
320,629
1,396,013
269,021
474, 0«2
(D)
1,222,287
136,513
(D)
481,468
1,178,737
(D)
544,138
(D)
1,209,386
434,595
381,299
426,506
(D)
167,949
-------
EXHIBIT H-8
Environmental Protection Agency
PLANTS IDENTIFIED AS LIKELY
TO CLOSE
Producer
Allied Chemical Co.
American Cyanamid Co.
Cherokee Nitrogen Co.
Plant
Hope we 11, Va.
Buffalo, N.Y.
Willo Island,
W.Va.
Pryor, Okla.
Date On
Stream
1954
1928
1957
1967
Process (
Atmospheric 42% >
Hp/58% j
Atmospheric 40%
Hp/60%
Hn/57.5%
?apacit>
250
25
27
65
Gulf Oil Corp.
Kaiser Aluminum &
Chemical Corp.
St. Paul Ammonia
Products, Inc.
United States Steel Corp.
Pittsburg, Kans.
1942 LP/55% -N
1950-\ C
1951 ( Hp/57% J
1960 J
281
Vicksburg,
Miss;
North Bend, O.
Tampa, Fla.
Pine Bend, Minn.
Crystal City, Mo.
1954-S
19565
1965
1960
1957
1955
Hp/55%
Hp/57%
Hp/57%
Hp/57%
Hp/56%
85
84
42
180
100
-------
Industry contacts, however, are not aware of anyone using a water
scrubber approach to the air pollution problem. There are three
preferred treatment methods including thermal catalytic reaction,
thermal, and molecular sieve, and none of these involves a water
pollution problem.
The only water pollution problems with a nitric acid plant
involve leaks, spills, and cooling tower blowdown. These problems
are typically treated by curbing and draining the pollutants to a
sump where they are held until they can be tested. The costs of
this treatment, even assuming some curbing draining facilities are
not present, would be as high as $80, 000 to $100, 000 capital cost
only for the oldest plants. These plants typically have only a
gravel base which needs to be covered with a concrete pad and
curbed.
(2) Air Pollution Abatement Costs Appear to be the Dj^tejrjnining
Factor in Deciding Which Plants Continue and WhichJPlants
will_Close
If the management decision is to commit the $300, 000 to
$400, 000 for air pollution abatement, the additional maximum
$80, 000 to $100, 000 for water pollution abatement will also be
committed. Without the air pollution abatement equipment, the
plant may be forced to close regardless of its water pollution
activities. The water pollution cost impact, therefore, does not
appear to be the determining factor in the decision to invest in
pollution abatement equipment or to close the plant.
(3) Cost Increases for Producers Serving the Fertilizer Market
Would Likely have to be Absorbed
There is substantial over-capacity in the fertilizer market as
already noted, and producers serving this market, unlike producers
serving the explosives market, have had difficulty in increasing
prices.
(4) Some Nitric Acid Plants Are Expected to Close in the Next
Five Years, But Not Primarily Because of Pollution
Abatement Costs
The maximum cost impact for nitric acid producers is $0.23
per ton or 0. 4 percent of the selling price.
H-6
-------
There are substitutes for nitric acid in each of its uses
and industry production is substantially under capacity. Plant
utilization is estimated to be in the range of 70 to 80 percent, so
it is unlikely that cost increases could be readily passed on.
Although the water pollution abatement costs may hasten the
decision to close plants as producers adjust capacity to meet
demand, the air pollution abatement capital costs of $300, 000
to $400, 000, as compared to water pollution abatement capital
costs of $80, 000 to $100, 000, will have already spurred the
decision to close marginal plants in many cases.
The 0. 4 percent impact of water pollution costs does not
appear likely to have a major economic impact or to be the
determining factor in closing an otherwise viable plant.
H-7
-------
II-I. ELEMENTAL PHOSPHORUS
1. PHOSPHORUS HAS FEW USES AND ITS CUSTOMERS ARE
NATIONWIDE
(1) Phosphorus Has One Major Use
Over 87% of the total phosphorus production is con-
verted to furnace phosphoric acid. The majority of acid is
used to prepare phosphates for detergents production. About
5% is consumed for the manufacture of a variety of indus-
trial chemicals which are used in production of pesticides,
plasticizers, etc. The balance is consumed for such mis-
cellaneous applications as munition, pyrotechnics, matches,
and the rest is exported. The percent consumption of phos-
phorus by end uses is given in Table 1-1, following this
page.
1-1
-------
TABLE 1-1
(a) (b)
Percent of Total Percent of Total
Use Production (1971) Production (1968)
Furnace phosphoric acid 87 77
Non-acid chemical use 5 5
Export and miscellaneous 8* 18
Total phosphorus production was 605, 068 tons. The
total shipments, including interplant transfers for the same
year was 558, 493 tons for a value of $200, 296, 000, f. o. b.
plant.
* This figure includes exports, unreported phosphoric
acid production, and other uses.
(a) Source: Chemical Profiles, June 12, 1972
(b) Source: Chemical Economics Handbook,
Standford Research Institute, 1969.
(2) Phosphorus Markets Are Nationwide
In the United States, phosphorus is shipped from point
of production to processing plants located near the end use
markets. Since the major use is in the production of phos-
phoric acid, phosphorus users are concentrated in the areas
of acid production. The majority of acid plants are concen-
trated in the Middle Atlantic and East North Central States.
Export figures for phosphorus are not available, but
are believed to represent about 4% to 5% of the total produc-
tion. The exports for 1971 are estimated to be about 20, 000
tons with over 80% being exported to Mexico.
1-2
-------
(3) The Federal Government Is Not a Major Factor in the
Elemental Phosphorus Market
Phosphorus is used by the U. S. Army for munitions
and phrotechnics. However, the quantities consumed are
very small and believed to be under 1% of the total supply.
The Tennessee Valley Authority (TVA) is reportedly the sole
supplier.
(4) Over 90% of Industry Production Is Used Captively
Continued supply of phosphorus is critical to the pro-
duction of many applications. About 20% of the total phos-
phoric acid production was produced from phosphorus in
1970. Other products produced by phosphorus manufacturers
include phosphorus, trichloride, phosphorus pentoxide, phos-
phorus pentasulfide, and other miscellaneous chemicals and
alloys. Thus, almost every phosphorus producer needs a
phosphorus supply for continued production of these chemicals.
(5) The Balance of Industry Production Is Sold to Other
Customers
The non-captive uses of phosphrous exports, manufac-
ture of munitions, pyrotechnics, matches, and other mis-
cellaneous chemicals and alloys. Large shipments of phos-
phorus are made with insulated steel tank cars while smaller
quantities are shipped in metal drums or smaller metal con-
tainers. Most sales are direct, with minor quantities sold
through distributors.
2. DOMESTIC CAPACITY UTILIZATION HAS INCREASED FOR
THE PERIOD 1967-1969 AND DECREASED FOR 1970-1971
Total phosphorus production, plant capacity, and percent
utilization for 1961-1971 are shown in Exhibit 1-1, following this
page. There was an increase in production, plant capacity, and
percent utilization for the period 1961-1969, whereas from 1969
to 1971 there was a decrease.
1-3
-------
EXHIBIT 1-1
Environmental Protection Agency
ELEMENTAL PHOSPHORUS
PRODUCTION, CAPACITY AND PERCENT UTILIZATION
100
z
o
80
H-
60
650
600
CO
to
Q
CO
O
I
550
500
450
400
1961
CAPACITY
PRODUCTION
CHEMICAL ECONOMICS HANDBOOK, BUREAU OF CENSUS,
CURRENT INDUSTRIAL REPORTS, 1972 DIRECTORY OF
CHEMICAL PRODUCERS
I
62
63
64
65
66
67
YEAR
68
69
70
71
-------
Phosphorus output versus total shipments, including inter-
plant transfer, for the period 1967-1971 is shown in Exhibit 1-2,
following this page.
(1) Phosphorus Consumption Has Dropped, Primarily Due
To Decreases in Demand for Furnace Phosphoric Acid
This decrease is related to the ecological attacks on the
use of tripolyphosphate in detergents and the use of in pesti-
cides. In addition, the fertilizer industry has been a stagnant
outlet for furnace phosphoric acid. While the production of
furnace phosphoric acid has been stagnant in the period 1966-
1970, the total phosphoric acid produced by the wet process
showed a constant growth for the same period.
(2) Phosphorus Consumption Has Not Been affected by
Imports
Phosphorus imports are negligible and accounted to
less than 0, 05% of the total production in 1970. No major
import penetration is foreseen in the near future.
(3) The Emergence of Substitutes to Tripolyphosphates Has
Been Very Slow
Substitutes to tripolyphosphate that are safe, economical,
and effective are hard to find. However, the future of the
market seems to depend on the use of this chemical.
Other uses of furnace acid hold little prospects for
growth, due to competition from lower-cost wet process
acid.
3. RAW MATERIAL FOR PHOSPHORUS PRODUCTION IS
AVAILABLE AT SEVERAL LOCATIONS
Phosphate rock, used in the manufacture of phosphorus, orig-
inates in the State of Florida, Idaho, Tennessee, and Montana.
1-4
-------
EXHIBIT 1-2
Environmental Protection Agency
.MATRIX SHOWING PHOSPHORUS
OUTPUT VERSUS CONSUMPTION^)
Year
Total
Production (tons)
Total
Consumption (tons)
1971
1970
1969
1968
1967
544,326
605,068
628,957
613,343
587,006
558,493
573,444
567,531
536,166
* Total shipments including interplant transfers
^ (.
(a) Source: Current Industrial Reports, Bureau of the Census
U.S. Department of Commerce
-------
(1) The Basic Raw Material for Phosphorus Production
Is Phosphate Rock
Elemental phosphorus production consumes about 18%
of the domestic phosphate rock consumption. The balance
is used for phosphoric acid production by the wet process
and for the production of other phosphorus compounds, such
as superphosphate, etc. In the United States, most phos-
phorus production is based on low grade rock (24-28% phos-
phorus pentasulfide).
(2) Raw Material Published Prices for Phosphate Rock
Are Not Relevant to Phosphorus
All phosphorus producers, with the exception of
Stauffer Chemicals, who purchase phosphate rock for their
plant in Florida, have their own raw material supply. Since
most of the rock used for phosphorus production is inferior
and is probably unsaleable for other purposes, published
prices for high grade raw material are probably not relevant.
4. PUBLISHED PHOSPHORUS PRICES HAVE BEEN STABLE
SINCE 1961 WITH VERY LITTLE FLUCTUATION
The high price of white phosphorus in tanks, freight equalized,
has been $380 per ton. The low price, on the same basis, has been
$340 per ton. The same price stability was shown for red phos-
phorus with the published price being $1, 100 per ton, same basis.
Phosphorus prices are only partially subject to market pressures.
As mentioned earlier, most phosphorus is used captively. Thus,
the price of the major portion of consumption is determined by com-
plex intercompany transfer factors rather than market pressures.
1-5
-------
5. IT IS PROBABLE THAT LAGGING DEMAND HAS
RESULTED IN A DECLINE IN PROFITABILITY
The decrease in capacity utilization as well as the decrease
in total production and total plant capacity have probably tightened
profit margins of this industry. Chemical Profiles estimate that
total production will decline for the next 5 years by about 5% per
year, reaching a volume of 422, 000 in 1976.
Profitability data obtained from industry sources is shown
in Exhibit 1-3, following this page; it indicates an after-tax net
profit of two percent of sales.
6. PHOSPHORUS IS PRODUCED SOLELY BY THE FURNACE
PROCESS
In the furnace process, phosphate rock is smelted with coke
and silica in an electric furnace. The vapors from the burners
(containing phosphorus) are collected in condensing towers equipped
with water sprays. A schematic of the process is given in Exhibit
1-4, following Exhibit 1-3. In the same exhibit, an energy and ma-
terial balance is given.
While all plants use the same process, variations between
plants are related to production techniques, such as:
Furnace design
Pre-treatment of phosphate rock
Characteristics of raw materials
Ratio of feed ingredients
The major water pollution source is a stream containing a
high amount of phosphorus, known as "phossy" water. At least
one producer claims to have no discharge, and that all water is
recycled.
7. THERE ARE 12 PHOSPHORUS PLANTS OWNED BY 7 FIRMS
Twelve plants owned by seven firms were identified as phos-
phorus producers. These plants are listed in Exhibit 1-5, following
Exhibit 1-4, and the output concentration by firm is given in Exhibit
1-6, following Exhibit 1-5.
1-6
-------
EXHIBIT 1-3
1>.\ ironni.. :-.tal IV '.•.•v'ti.-n Agency
1972 COSTS OF PHOSPl!ORTrS PROPUCTTOY
Capacity: 137,.100 tons/ye: r (costs below reflect production
at S7',^ of this c: paciL}) W
Capital Investment: $55, 000, 000
(2)
Product Economics:
Sales Price
Cost of Goods
Raw Materials
Electric Power
Operating Labor
Maintenance
Depreciation
All Other
Total COG
Gross Profit
Corp. Sales, Adm., Dist. , O/H Exp.
Federal Income Taxes
Net Profit
Dollars/
Ton
$380.
(3)
60.
44.
8.
8.
Percent
Selling
Price
100
$ 62. A '
78.
60.
44.
20.
56.
320.
16
21
16
12
5
14
84
16
12
2
Typical
Range $
$360.-380.
'$3.-11.
(1) Washing 10-11 percent phosphorus ore. Higher grade ore for which washing
is not required may partially offset higher freight cost to market.
(2) Includes $8,000,000. Water pollution abatement, plus $4,000,000 air pollution
abatement. Approximately $2,000,000 additional air and water pollution abate-
ment planned.
(3) Freight equalized
(4) Includes: Phosphate ore, coke, silica, furnace electrodes and lime
(5) Includes: Freight equalization and by-product credit
-------
EXHIBIT 1-4
Environmental Protection Agency
PHOSPHORUS PRODUCTION
From Phosphate Rock (E!<-olric Furnace)
Sand
Phosiltat?
1 Coke
nm
Eie^inc
furnace
J^L:
Cgibon
'iC.-oxide
—Water
S'ordge
Ferrophcsphcruc, Phosphorus
Reaction
2Ca3(P04)2 + IOC + 63i02 -» P* + 6CaSi03 -f 10CO
9'2-9u% yield
Material and Energy Requirements
Basis—1 ton phosphorus (yellow)
Calcium phosphate * Carbon electrode
(70 EPL) 15,000 lb consumption .r-0 lb
Sand (silica) 4,450 lb Electricity 13COO:;w-hr
Coke 2,050 lb
Source: Industrial Chemicals, 3rd Edition, p. 67
W. L. Faith, O. B. Keyes, and R. L. Clark;
John Wilson & Sons, Inc., New York
-------
EXHIBIT I- 5
Environmental Protection Agency
LIST OF PHOSPHORUS PLANTS
(1)
Annual Capacity
Firm Plant Site (Thousands of tons)
1. FMC Corp.
Inorganic Chems. Div. Pocatello, Idaho 145
2. Mobil Oil Corp.
Mobil Chem. Co. Div. Mt. Pleasant, Tenn.** 20-24
Indust. Chems. Div. Nichols, Florida* 5
Charleston, S.C.** 8
3. Monsanto Co.
Monsanto Indust.
Chems. Co. Columbia, Tenn. 135-140
Soda Springs, Idaho 100-110
4. Occidental Petroleum Corp.
Hooker Chem. Corp.,
Subsidiary
Indust. Chem. Div. Columbia, Tenn. 45-70
5. Stauffer Chem. Co.
Indust. Chem. Div. Mt. Pleasant, Tenn. 45-55
Silver Bow, Montana 42
Tarpon Springs, Fla. 23-25
6. Tennessee Valley
Authority (TVA) Muscle Shoals, Ala. 18-40
7. The Williams Companies
Agrico Chem. Co., Inc.,
Subsidiary Pierce, Fla.*** 11-24
Total U.S. Capacity 597-688
(1)
Lower range reported operating design capacity and upper
range overrated capacity.
* Recently reported shut down.
** Reported on standby.
*** Reported as being sold to Holmes Co. and may not be producing
at the moment.
-------
Firm
1. FMC Corp.
2. Mobil Oil Corp,
3. Monsanto Co.
EXHIBIT I - 6
Environmental Protection Agency
CONCENTRATION OF OUTPUT BY FIRMS
Annual Capacity
Thousands of Tons
145
33 - 37
235 - 250
4. Occidental Petroleum
Corp. 45 - 70
5. Stauffer Chem. Co. 110 - 122
6. TVA 18-40
7. The Williams Companies 11 - 24
Percent of Total
U. S. Capacity
24.3 - 21.1
5.5 - 5.4
39.4 - 36.3
7.5 - 10.2
18.5 - 17.7
5.8
3.0
1.8
- 3.5
Total U.S.
597 - 688
100.0 - 100.0
-------
Two firms, FMC Corporation, and Monsanto Company,
account for more than 60% of the total U. S. capacity production,
Stauffer Chemical Company is the third largest firm in phosphorus
and accounts for an additional 18% of the total U. S. capacity. Thus,
these 3 firms account for almost 80% of the total U. S. capacity.
Small and old plants are being shut down as evidenced by the
unofficially reported shutdowns of two plants in Florida and one plant
in South Carolina, as indicated in Exhibit 1-4. Additional shutdowns
of the smaller, older, and higher cost plants are likely as the indus-
try adjusts to a decreasing demand.
Phosphorus production is concentrated in two states. Over
80% of total U. S. production is concentrated in the States of Idaho
and Tennessee. The balance is produced in Florida, Montana,
Alabama, and South Carolina.
8. WATER POLLUTION ABATEMENT COSTS, WHILE NOT
THE DETERMINING FACTOR, MAY HASTEN DECISIONS
TO CLOSE PHOSPHORUS PLANTS
The maximum cost impact for phosphorus producers, based
on cost estimates provided by EPA, is $0. 71 per ton or 0. 2 percent
of the selling price as shown in Exhibit 1-7 following this page.
Industry contacts estimate the costs to be substantially higher,
approximately $3. 35 per ton or 0. 9 percent of the selling price.
The added costs estimated by industry sources do not appear
likely to be a significant factor in deciding to close otherwise viable
plants. The substantial capital expenditures estimated by industry
to be required (up to 2 million), however, may hasten the decision
to close plants facing a declining market. The market for phosphorus
is declining. The eutrophication problem has led to substantial reduc-
tions in the use of phosphates for detergents; phosphoric acid is
increasingly being produced by the wet method rather than from
furnace phosphorus.
1-7
-------
II- J. SULFURIC ACID
1. SULFURIC ACID HAS MANY USES AND CUSTOMERS
Sulfuric acid, because of its wide use in industry, has been identified as a
leading indicator of business activity. Although there has been some substitution
by other chemicals for particular uses, the wide usage of sulfuric acid has lead
to off-setting increases in its uses for other purposes.
(1) Sulfuric Acid Has Eight Major Uses
The following table summarizes the relative importance of the major
uses of sulfuric acid based on 1965 data.
Sulfuric Acid Consumption by Major Use*
(Thousands of Short Tons)
Fertilizer 10,517
Chemicals 6,435
Petroleum Refining 2,496
Inorganic Pigments 1,530
Iron and Steel Pickling 1,029
Rayon and Film 850
Explosives 73 5
Nonferrous metallogy 220
Miscellaneous 2,499
Total 26,311
*Source: Chemical Economics Handbook,
Stanford Research Institute
J-l
-------
Total 1970 production volume was 29,576,700 short tons with an estimated
market value of $563 million. Based on trends since 1965, an estimated
fifty percent of present sulfuric acid production is used in making fertil-
izer.
(2) Sulfuric Acid Markets Are Local and Regional
The costs of transporting sulphuric acid any substantial distance are
prohibitive with its low dollar value of $19-$23 per ton of product. The
practical distance for shipping sulfuric acid varies from 50 to 100 miles
in the densely populated Mid-Atlantic states to 500 - 1000 miles in the
Southeast to 1000 to 1500 miles in the West. As a consequence, the plants
tend to be widely scattered but concentrated near industralized areas.
Imports and exports have been negligible. Census data for 1970 in-
dicates imports amounted to only 1.5 percent of manufacturers shipments;
exports amount to 0.3 percent of domestic production. There are indica-
tions, however, that imports may begin to be a major factor in the sulfuric
acid market. European and Canadian producers, with substantial sources
of low-cost by-product sulfur, are considering the possible import of up
to one million tons per year along the East Coast at a competitive price
with domestic producers.
(3) The Federal Government Is Not a Major Factor in the Sulfuric Acid
Market
The Federal government has its own plants for making the acid
necessary for military explosives. Other than in war time, the govern-
ment exercises no controls over the production of sulfuric acid.
(4) Approximately 59 Percent of Sulfuric Acid Production Is for Captive
Use
As noted, transportation costs tend to make shipping sulfuric acid
for any distance impractical. In addition, the use of the acid is critical
to many continuous processes and a steady source of supply is required.
The percentage of captively consumed sulfuric acid has been increas-
ing steadily since 1967 as shown in the following table.
J-2
-------
Total Production. Eercent Used Captively
Production Percent Captive
(In Short Tons)
1967 28,815.2 54
1968 . 28,543.8 55
1969 29,536.9 56
1970 29,524.8 57
1971 29,422.2 59
Source: Bureau of Census, Current Industrial Reports,
Sulfuric Acid
This data represents a growth in major producer/users rather than a
proliferation of smaller plants. The number of plants producing sulfuric
acid, has decreased over this period as shown in the following table.
Number of Sulfuric Acid Plants 1967-1972
1967 220^
1969
1970
1972 150(3)
(5) The Balance of Industry Production Is Sold Direct From the Produc-
ing Plant to the User
Transportation costs limit the use of regional distribution points,
and essentially all production not used captively is sold direct to the con-
sumer on a negotiated contract basis.
(1) Chemical Economics Handbook, Stanford Research Institute
(2) Bureau of Census, Current Industrial Reports, Sulfuric Acid
(3) 1972 Directory of Chemical Producers; Industry Series M28-A (71)-13
Supplement
J-3
-------
2. DOMESTIC CAPACITY UTILIZATION HAS DECREASED FOR THE
PERIOD 1966-1971 DUE TO LAGGING SALES GROWTH AND CONTINUED
INCREASES IN PRODUCTIVE CAPACITY
Capacity increases in recent years have significantly exceeded the growth
in demand. Capacity has continued to increase in spite of an almost stagnant
sales growth since 1966, as shown in Exhibit J-l following this page.
(1) Sulfuric Acid Consumption Has Been Held Back Due To A Sluggist
Economy and a Weak Fertilizer Market
Sulfuric acid, like many inorganic chemicals, moves with the basic
economy. It's industrial uses are so diverse that its growth is a function
of the basic economy. The recession in 1967 - 1968 and the stagnant
economy since that time has combined to hold down growth in the indus -
trial uses for sulfuric acid. In addition its major market fertilizer
production, has been depressed in 1968, 69 and 70.
(2) Sulfuric Acid Production Has Been Limited to Only A Minimum
Extent By Increasing Import Penetration
Imports and exports are only a minor factor in the sulfuric acid
market, as shown in Exhibit J-2, following Exhibit J-l. Imports
account for less than 0. 5 percent of total domestic consumption.
With developing sources for low cost by-product sulfuric acid in
Canada and Europe, however, the next five years may see a substantial
growth in the use of imported acid along the East coast. The price of
Canadian sulfur has gone downfrom$34.54/Long Ton at the plant in
1968 to $7/Long Ton in 1970. There is, at present, a European group
that is investigating the feasibility of exporting to the United States one
million short tons of sulfuric acid per year.
(3) A Detailed Analysis of The Impact Of Substitute Products on the
Use of Sulfuric Acid Is Beyond the Scope of This Study
Previous studies, such as the Stanford Research Institute study
dated December 1967 have identified twenty-two different major uses of
sulfuric acid and a multitude of lesser uses. In most cases, there is an
J-4
-------
EXHIBIT J-l
Environmental Protection Agency
INDUSTRY CAPACITY VS. PRODUCTION AND
% UTILIZATION 1961-1971
1. CAPACITY VS PRODUCTION
40,000 r-
co
z
o
O 30,000
I
CO
LL
O
CO
Q
CO
O
20,000
10,000
CAPACITY
o o
PRODUCTION
2. PERCENT UTILIZATION
100 r-
90
80
70
60
50
40
1961 62
63
64
65
66
67
68
69
70
71
SOURCE: CHEMICAL ECONOMICS HANDBOOK, BUREAU OF CENSUS,
CURRENT INDUSTRIAL REPORTS, 1972 DIRECTORY OF
CHEMICAL PRODUCERS
-------
EXHIBIT J-2
Environmental Protection Agency
SULFURIC ACID PRODUCTION,
IMPORTS, EXPORTS, & CON-
SUMPTION
1961
1962
1963
1964
1965
1966
1967
IPS 8
1069
1970
1971
Production
17,848
19, 701
20, 936
22, 924
24, 851
28,477
29,537
29,577
29 422
Imports
38
36
38
68
43
50
99
148 '
Exports
9
10
7
14
7
16
50
37
Stocks
568
679
615
553
704
701
724
731
^Consumption
. 17,940
19,616
21,031
23,040
24, 736
28,514
29,586
* 29,687
Consumption = Production plus Imports minus Exports + Stock Charges
Sources: Bureau of Census, Current Industrial Reports, Sulfuric Acid
-------
alternative to using sulfuric acid; either another acid, such as the use of
hydrochloric acid in pickling steel, or another technology such as making
ethyl alcohol directly from ethylene (without going through ethyl sulfate) „
A detailed study of the possible substitutes for sulfuric acid and the
impact of these substitutes on the demand for sulfuric acid would in itself
be a major study. The major uses, volumes, competition, and estimate
of probable future demand for each of the uses as identified by SRI in their
report, is summarized in Exhibit J-3 following this page.
3. RAW MATERIAL FOR SULFURIC ACID IS OBTAINED FROM SEVERAL
SOURCES
The basic raw material is sulfur, either as the pure element or as sulfur
dioxide (SO ) gas.
(1) The Basic Raw Material Is Obtained From Several Sources
The sources include elemental sulfur obtained through the Frasch
process; "recovered" sulfur from the purification of natural gas, refinery
gas; smelter gas; and pyrites ore. The relative importance of each
sulfur source in 1968, number of producers, number of plants, and geo-
graphic area of operations is shown in Exhibit J-4, following Exhibit J-3.
As shown in the exhibit, elemental sulfur accounted for 76 percent of total
sulfur production. Two companies, Texas Gulf Sulphur and Freeport Sulphur,
produce 75 percent of the total elemental sulfur production. Although
Freeport Sulphur and Texas Gulf Sulphur are basically mining companies,
Texas Gulf Sulphur has a large 1100 thousand ton per year sulfuric acid
plant in Aurora, N.C. Freeport Sulphur has a 1700 thousand ton per year
plant in Uncle Sam, Louisiana.
(2) Sulfur Prices Have Increased Significantly In Periods Of Short
Supply
In a period of tight sulfur supply in 1964 to 1967 the price of sulfur
went from $2.60 per 100 Ibs. to $3.55 per 100 Ibs. as shown in Exhibit
J-5 following Exhibit J-4.
J-5
-------
EXHIBIT J-3
Environmental Protection Agency
USES FOR SULPHURIC ACID AND
ALTERNATIVES
1965 Volume
Competition
USE
Alcohols
Aluminum
Sulfate
(M Short Tons)
2,081
572
Technology
None
Projected Sulfuric
Acid Use
Decline
3-4% growth
Ammonium
Sulfal e
-Byproduct 1,219
-Prime product 803
Batteries 115
Boric Acid 56
Cat -Cracking
Catalysts 112
CelluJosics 850
Selected Chrome 74
Chemicals
Technology
Other sulfur forms
Technology
HCl/Alternatives
to Boric Acid
Technology
None
]S one
Decline
Decline
Growth 2-3% through
70's
Stable
Decline
Slower ^rowtli-morc
efficient acid use
3-5% growth
DOT/Chlcoral
107
None
Declining
DOT/Chloral market
Source: Chemical Economics Handbook, December, 1967;
Stanford Research Institute, Menlo Park, California
-------
EXHIBIT J-5
Projected
Use
Explosives and Other
Ferti 1 izers -Phosphate
Fertilizers - Other
Hydrochloric Acid
Hydrogen Flouride
Iron & Steel Pickling
Petroleum Refining
Petroleum Sulfonates-
Synthetic
Phenol
Selected Inorganic
Sulfates
Surface Active Agents
Titanium Dioxide
Uranium Ore Processing
Subtotal
Other
1965 Volume
(Short-Tons)
735
9,756
761
195
647
1,029
2,384
25
141
52
348
1,530
220
23,812
2,499
Competition
Ammoni um Ni t rat e
HC1 /Nitric Acid/
Technology
Phosphate
Fertilizers
By product HC1
Technology
HCl/Technology
HF/Technology
None
New Technology
—
503
HC1
Carbonate
Sulfuric Acid
Use
6-8 percent growth
possible
doubling to
198
some growth
no growth
uncertain
decline
decline
uncertain
decline
stable
same as pop-
ulation
growth
decline
growth with
uranium
processing
Total Domestic
Supply
26,311
-------
EXHIBIT J-4
Environmental Protection Agency
SULFUR SOURCES AND IMPOR-
TANCE IN 1968 SULFURIC ACID
Source
Of
Total Supply
ISumber of
Suppliers
ISiurnber oi'__ Geographic
Plants Area
Elemental
Sulfur
Recovered
Sulfur
Pyrites
Smelter Gas
76
15
4
4
20*
92*
Texas, Louisian'
Mexico
21 states &
Canada
6 states
14 states
Oiher
Tot:il
100
137
•'Number of plrnt-. producing sulfur; Dther figures in this column represent
number of suliuric acid producers using pyrites or smelter gas for some
position of SOo needs
Source: Plants producing sulfur: Bureau of Mines, Minework Facts and Problems,
1970 Edition, Sulfur Report of Producers Using Pyrites and Smelter Gas:
1972 Directory of Chemical Producers, Stanford Research Institute.
-10-
-------
EXHIBIT J-5
Environmental Protection Agency
SULFUR PRICES 1961-1971
YEAR
PRICE
(Dollars Per 100 Ibs. )
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
$2.25 - 3. 30
2.25 - 3. 30
2.25 - 3. 30
2. 60 - 3.50
2.75. - 3.70
3.10 - 4. 05
3.55 - 4. 50
3.55 - 4. 50
3.55 - 4. 50
3.55 - 4. 50
2.60 -
Source: Oil, Paint and Drug Reporter
-------
4. PUBLISHED SULFURIC ACID PRICES HAVE INCREASED MODESTLY
SINCE 1961
Published sulfuric acid prices for each of the major concentrations are
shown in Exhibit J-6, following this page.
Price increases have occurred as a result of increased raw material costs.
Raw materials account for two-thirds of the cost of producing sulfuric acid.
Sulfur prices are a major determinant of sulfuric acid prices as can be
seen by comparing Exhibit J-5 and J-6. Sulfuric acid price increases have
lagged sulfur increases by a year. The sharp rise in sulfur prices in 1964 to
1967 led to a corresponding series of sulfuric acid prices increases in 1965 to
1968. Industry contacts stated that the general industry concern with the
unknown costs of pollution abatement has led them to attempt to maintain the
acid price, although the quoted price of sulfur has dropped back to its 1964
level.
DECLINING PROFITABILITY HAS PROBABLY RESULTED FROM
EXCESS CAPACITY
The economics of the chemical process industries are such, however,
that capacity utilization in the range of 70 to 80 percent is generally only
marginally profitable if profitable at all. Average capacity utilization for
sulfuric acid producers has dropped steadily since 1965 to a low of 73 percent
in 1971.
6. THE CURRENT CONDITION OF THE INDUSTRY IS PROBABLY
RESULTING IN SIGNIFICANT PRICE SHADING
Almost all sulfuric acid that is not used captively is sold on the basis of
negotiated contacts, typically priced below the published prices. The Chemical
Economics Handbook study found that prices in certain areas in the Spring of
1967 (the first year of substantial over capacity) were 30 to 40 percent below
the published prices.
J-6
-------
EXHIBIT J-6
Environmental Protection Agency
PUBLISHED SULFURIC, ACID PRICES:
1961-1971
Price1 (Dollars Per Short Ton)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
60° Banme
18.60
18.65
18.60
18.60
19.40
21. 50
22. 65
26. 90
26. 90
26.36
26.36
26'. 26
98 Percent3
23.50
23.50
23. 50
23.50
24.50
27. 10
28.55
33.95
33. 95
33. 95
33. 95
31. 59
Oleum-20 Percent4
25.00
25.00
25.00
25.00
26.05
28. 90
30.45
36.20
36.20
35.48
35.48
35.42
Source: Oil, Paint and Drug Reporter
(1) Data are "spot prices" taken on or near July 1 of each'year. Lowest
of range prices is shown
(2) Tanks, Works
(3) 1961 - 1965; Tanks, Eastern Works; 1966-1971, Tanks, Works
(4) Tanks, Works
-------
With continually dropping capacity utilization, it is likely that producers
have continued to offer substantial discounts to large accounts in an attempt to
increase their utilization. The value of manufacturers' prices, as reported to
the Bureau of Census, are shown in Exhibit J-7, following this page.
The industry has a practice of meeting a competitor's price offer to a
customer even though the customer is under contract to take so much acid at a
stipulated price. The contracts prove to be meaningless in the face of price
cutting. As a consequence, the price shading is probably significant and has
likely brought negotiated prices to the point where profits are marginal for most
producers.
7. SULFUEIC ACID IS PRODUCED BY THE CHAMBER AND CONTACT
PROCESSES
(1) The Contact Process Is The Dominant Production Process
A flow chart of the contract process is shown in Exhibit J-8 follow-
ing Exhibit J-7.
The essential feature of the contact process is that it uses plati-
num or vanadium catalysts to oxidize the incoming sulfur dioxide to
sulfur trioxide. The sulfur trioxide is obtained from the same sources
as are used in the chamber process, but the use of the catalysts requires
further purification of the sulfur dioxide gas to remove moisture and
other gases in addition to the dust.
The key competitive advantage of the contact process is its ability
to produce a full range of acid strengths and adimm
Wastes from this process are leaks and, for plants decomposing
refinery sludge, the waste waters from the sulfur dioxide scrubbing unit.
Output from the contract process has increased to 98. 9 percent of total
production in 1970.
(2) The Chamber Process Is Still Used in a Few Plants Constructed
Prior To 1957
A flow chart of the chamber process is shown in Exhibit J-9 follow-
ing Exhibit J-8.
The essential feature of this process is that nitrogen oxides are
used to oxidize the sulfur dioxide obtained by burning sulfur, pyrites,
J-7
-------
EXHIBIT J-7
Environmental Protection Agency
VALUE OF MANUFACTURERS'
PRICES: SULPHURIC ACID
Average Price/Short Ton
Year (f.o.b. plane)
1965 $16.80
1966 17.40
1967 18.70
1968 21.20
1969 21.00
1970 19.00
1971
Source: Current Industrial Reports Inorganic Chemicals, 1969,
U.S. Dept. of Commerce
Current Industrial Reports Inorganic Chemicals, 1970,
U.S. Dept. of Commerce
-------
EXHIBIT J-8
Environmental Protection Agency
CONTACT PROCESS; SULFURIC
ACID
SULFURIC ACID
H2S04
Contact l'r 2S03
S03 + II20 — II2S04
9G-9S% conversion
92-9G7o yield (sulfur)
Labor, Heat, and Material Requirements
B'i«!=--l ton pulfuric cu-id (Ifll) per /^nt)
in plant of 50 tons per day capacity
Sulfur 088 Ib Illoctricit;- 5 k\v-hr
Water 4,000 gal Li l^r 0.(5-i m.an-hr
Ste:i"i f 2001!) Air 250,000 en ;'t
* Furnished by waste heat boiler or heat exch.'injter (pnhe._tc-i).
Taken from: Industrial Chemjcals by W. L. Faith, D.B. Keys, andR.L.
Clark; ;3rd Edition, 1967. Used by permission: John Wiley
& Sons, Inc., Nc\v York
-------
EXHIBIT J-9
Environmental Protection Agency
CHAMBER PROCESS, SULFURIC
ACID
CHAMBER PHOCEsrS
Chamber Vroc<-ss
..:mber Chamber
LJ
To stack
NO
Sulfunr acid
(50"Re')
Reaction
2X0 + 02 ~> 2
N02 + S02 + II20 ->
98-99% convert on
92-96% yield (sulfur)
Laber, lie:it, and Material ivffquirementf
Bnsis— 1 ton sulfuiic acH (!f107o)
in ji'.ani ol 50 tons p-r clay capacity
Sulfur 677 Ib \Vhivcr 2,500 gal
Nitrogen oxides (as
anhydrous au-
monia)
5 Ib
Air - 275,000 cu ft
Electricity 15 kw-lir
Labor 1.1 man-hr
Source: Industrial Chemicals 3rd. edition, 1967, W. L. Faith, D. B. Keyes,
and R.L. Clark
-------
hydrogen sulfide, by purifying smelter gas, or by decomposing spent acid.
As compared to the contact process, the chamber process can operate
with removal of only dust impurities from the sulfur dioxide gas, but the
strength of acid produced by the chamber process is limited to 77 percent
sulfuric acid which can be subsequently concentrated to only 93 percent
sulfuric acid. By contrast, the contract process can produce acid con-
centrations up to 100 percent and oleum which contains free sulfur
trioxide.
Output using the chamber process has declined from 10.5 percent
of total production in 1960 to 1.1 percent in 1970.
8. THERE ARE APPROXIMATELY 150 OPERATING SULFURIC ACID
PLANTS OWNED BY 71 FIRMS
A list of producers and plant locations is provided in Exhibit J-10, follow-
ing this page. Information on plant site, date on stream, process type, and
raw material source is also given where available. The importance of seven
major producers, in terms of their percentage of total capacity, is summarized
in Exhibit J-ll, following Exhibit J-10.
The top seven producers account for one-third of the plants and fifty per-
cent of the capacity. Most producers have only one or two sulfuric acid plants.
(1) The Contact Process Accounts For 95 Percent of the Plants and
99 Percent of the Output
The importance of the chamber process has been steadily declining
since 1941 as can be seen from the following table.
Production by Process 1941 - 1970
Chamber Contact
Total
1941
1950
1960
1970
Units
3,012
2,956
1,881
329
Percent
44.5
22.7
10.5
1.1
Units
N.A.
10,074
16,003
29,248
Percent Units Peraent
77.3
89.5
98.9
6,770
13,030
17,884
29,577
100.0
100.0
100.0
100.0
Source: Bureau of Census, Current Industrial Reports, Sulfuric Acid
-------
EXHIBIT J-10
ENVIRONMENTAL PROTECTION
PRODUCER
AFC, Inc.
Allied Chcm. Corp.
Indust. Chems. Div.
American Can Co.
Wilson Pharmaceutical
& Chem. Corp. Subsid.
Central Chem. Co. Div.
American Cyanamid Co.
Indust. Chems. and Plastics
Div.
Organic Chems. Div.
American Metal Climax, Inc.
AMAX Lead & Zinc, Inc., Div.
American Plant Food Corp.
American Smelting and Refining Co.
The Anaconda Co.*
Arkansas Louisiana Gas Co.
Arkla Chem. Corp., Subsid.
Atlantic Richfield Co.
ARCO Chem. Co., Div.
Atlas Corp.
Atlas Minerals, Div.
Bagdad Copper Corp.
Beker Indust. Corp.
Agricultural Products Corp.
National Phosphate Corp.
Bethlehem Steel Corp.
Borden, Inc.
Borden Chem, Div.
Smith-Douglass
Krtisim C.ibl.
Anac-nrtes. Wash.
Baton Uouni-, La.
Buffalo. N. V.
Chicago, 111.
Cleveland Ohio
*Detroit, Mich.
East St. Ixjuis. 111.
Elizabeth. N J.
*E1 Segundo, Callt.
Front Roval, Y.i.
Geismar, La.
IIopewc'H. Va.
Newrll, P.i.
Nitro, \V. Va.
North Cl.lvmont, Del.
Pittsburg, Calif.
Richmond, Callt.
El wood. 111.
Hamilton, Ohio
Johet, 111.
Kalamazoo, Mich.
Linden, N. J.
*New Orleans, La.
Bound Brook, N. J.
Bixby, Mo.
*Galena Park, Tex.
Columbus, Ohio
Corpus Christi, Tex.
El Paso, Tex.
Hayden, Ariz.
Tacoma, Wash.
Anaconda, Mont.
Weed Heights, Nev.
Helena, Ark.
Fort Madison, Iowa
Philadelphia, Pa.
•Mexican Hat, Utah
Bagdad, Ariz.
Conda, Idaho
Marseilles, 111.
Taft, La.
Sparrows Point, Md.
Norfolk, Va.
Palmetto, Fla.
*Streator, 111.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
200
100
160
500
200
250
140
350
140
220
'10
50
25
240
65
125
65
70
170
270
65
360
140
510
140
75
300
255
513
90
80
4SO
40
AGENCY
List of Producers and Plants: 1972
DATE ON STREAMS
PROCESS TYPE
1967 - C
l'l.->s - 0
l'IT>4 - C
]<>06 - C
I'llHi - C
I'll') - C
1 '14 1 - C
1
-------
PRODUCER
Burdett Oxygen Co. of Cleveland,
Inc.
Caribe Nitrogen Corp.
CF Indust., Inc.
Bartow Phosphate Complex
Plant City Phosphate Complex
Cities Service Co. , Inc.
North American Chems. and
Metals Group
Agricultural Chems. Div.
Indust. Chems. Div.
North American Petrochems. Group
Pigments and Specialties Div.
North American Petroleum Group
Climax Chem. Co.
Coastal Chemical
Columbia Nitrogen Corp.
Commonwealth Oil Refining Co.,
Inc.
Delta Chems., Inc.
Detroit Chem. Works
Pressure Vessel Services. Div.
Diamond Shamrock Corp.
Diamond Shamrock Oil and
Gas Co.
E. I. du Pont de Nemours & Co.,
Inc.
Explosives Dept.
Indust. and Biochems. Dept.
Organic Chems. Dept.
Dyes and Chems. Div.
Eagle-Picher-Indust., Inc.
Agricultural Chems. Div.
Eastman Kodak Co.
Eastman Chem. Products, Inc.
Subsid.
Distillation Products Indust.
Div.
Eli-Lilly Marian Mfg. Div.
Essex Chem. Corp.
Chems. Div.
Farmland Indust., Inc.
Freeport Minerals Co.
Freeport Chem. Co., Div.
Georgia Fertilizer Co.
Georgia-Pacific Corp.
Bellmgham Div.
W. R. Grace & Co.
Agricultural Chems. Group
'LANT
Parkersburg. \V. Va.
Guanica. P.R.
Hal'tow . Fla.
Plant Cit\ Fla.
Tampa, Fla.
Augusta, Ga.
Copperhill. Tenn.
Monmoulh Junction. N.J.
Lake Charles. La.
Monument. \. M.
Paseagoulo, Miss.
Augusta. Ga.
Charleston. S. C.
Penuelas, P.R.
Searsport, Me.
Detroit, Mich.
Dumas Tex.
Gibbstown, N. J.
Burnside, La.
Cleveland, Ohio
Cornwells Heights,
East Chicago, Ind.
La Porte, Tex.
Linden, N.J.
North Bend, Ohio
Richmond, Va.
Wurtland, Ky.
Deepwater, N. J.
Galena, Kans.
*Rochester, N. Y.
Streator, 111.
Newark, N. J.
Rumford, R.I.
Bartow, Fla.
Uncle Sam, La.
*Valdosta, Ga.
Bellmgham, Wash.
Baltimore, Md.
Bartow, Fla.
Charleston, S. C.
*Norfolk, Va.
ANNUAL CAPACITY
(THOUSANDS OF T< >NS)
I) Vl'E ON STKKAMS
PROCESS TYPK
110
40
180
20
1100
1700
JO
250
850
40
22
NA -C
1967 - C
NA - C
NA
1943 - C
1952 - C
195H - C
NA - CH
NA - CH
NA
NA - C
NA - C
1958 - C
RAW MATERIAL
AND REMARKS
Elemental
Elemental - May
be closed
Elemental
Elemental
E le mental
Elemental
Pyrites; smelter gases
sludge; hydrogen
sulfide
Elemental;
hydrogen sulfide
Elemental
Elemental
Elemental, sludge;
hydrogen sulfide
Elemental
Elemental
sludge; hydrogen
sulfide
NA
19B7
NA
NA
NA
NA
NA
NA
NA
NA
NA
1 954
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
Elemental
Elemental;
Elemental
Elemental;
Elemental,
Elemental;
Elemental
Elemental
Elemental
Elemental;
Elemental
Elemental;
gases
sludge
sludge
sludge
sludge
smelter
1930
1951
1956
1929
1965
1968
NA
- C
- C
- C
- C
- C"
- C
- CH
Elemental
Elemental;
hydrogen sulfide
Power plant stack
gas emissions
Elemental
Elemental
Elemental
1965 - C
NA - C
NA - C
NA - C
NA - CH
Elemental
Elemental
Elemental
Elemental
Elemental
(Continued)
-------
PRODUCER
Gulf Oil Corp.
Gulf Oil Chems. Co., Div.
Petrochems Div.
Gulf Resources 6 Chem. Corp.
The Bunker Hill Co. , Subsid.
Gulf ^ Western Indust., Inc.
The New Jersey Zinc Co. , Subsitl.
G + W Plant Life Services Inc.
Home Guano Co.
International Minerals &
Chem. Corp.
Agricultural Operations
Rainbow Div.
Kennecott Copper Corp.
Ray Mines Div.
Utah Copper Div.
Kerr-McGee Corp.
Kerr-McGee Chem. Corp. Subsid.
L. J. & M. La Place Co.
Minnesota Mining and Mfg. Co.
Chem. Div.
MisCoa
Monsanto Co.
Monsanto Commercial Products
Co., Agricultural Div.
Monsanto Indust. Chems. Co.
National Distillers and Chem.
Corp., U. S. Indust. Chems.
Co., Div.
National Zinc Co.
Newmont Mining Corp.
N L Indust., Inc.
Titanium Pigment Div.
North Star Chems., Inc.
Occidental Petroleum Corp.
Hosker Chem. Corp., Subsid.
Farm Chems. Div.
Occidental Chem. Co., Subsid.
Occidental of Florida Div.
Western Div.
Olin Corp.
Agricultural Chems. Div.
Chems. Div.
PLANT
Port Arthur. Tex.
Kellogg. Idaho
Palmerton, Pa.
Sandusky. Ohio
*Duthan, Ala.
ANNUAL CAPACITY
(TIIOJ'SANDS OF TONS)
Ozark-Mahoning Co.
*Americus, Ga.
*Florence, Ala.
*Hartsville, S. C.
*Indianapohs, Ind.
*Spartanburg, S. C.
*Tupelo, Miss.
Hay den, Ariz.
Salt Lake City, Utah
Grants, N. M.
*Baltimore, Md.
Cottondale, Fla.
"Jacksonville, Fla.
Edison, N. J.
Copley, Ohio
*Paseagoulo, Miss.
El Dorado, Ark.
Avon, Calif.
Everett, Mass.
Sauget, 111.
De Soto, Kans.
Dubuque, Iowa
Bartlesville, Okla.
San Manuel, Ariz.
St. Louis, Mo.
Sayreville, N. J.
Pine Bend, Minn.
*Taft, La.
White Springs, Fla.
Lathrop, Calif.
Plamview, Tex.
Pasadena, Tex.
Baltimore, Md.
Beaumont, Tex.
*Joliet, m.
North Little Rock, Ark.
Paulsboro, N. J.
Shreveport, La.
Tulsa, Okla.
:un
160
10
65
20
20
275
600
70
no
30
40
70
60
320
120
340
100
70
100
(650)
350
600
120
510
700
225
100
440
400
190
405
100
300
140
120
DATE ON STREAMS
PROCESS TYPE
NA - C
1954 - C
NA - C
NA
NA
NA
1968 - C
NA - C
1958 - C
1917 - CH
1950 - CH
1946 - CH
1967 - C
1942 - C
1958 - C
NA - C
NA - C
NA - C
NA -C
1943 - C
1943 - C
NA -C
1934 - C
1934 - C
1959 - C
1966 - C
1957 - C
1963 - C
1947 - C
1941 - C
1957 - C
1942 - C
1947 - C
1959 - C
1941 - C
RAW MATERIAL
AND REMARKS
Sludge;
hydrogen sulfide
Smelter gases
Elemental;
smelter gases
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Smelter gases
Smelter gases
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental; sludge;
hydrogen sulfide
Elemental
Elemental
Elemental
Elemental
Elemental; smelter
gases
Smelter gases;
by 1973
Elemental
Elemental
Elemental; sludge -
May be closed
Elemental -
For sale
Elemental
Elemental
Elemental
Elemental
Elemental
Sludge;
hydrogen sulfide
Elemental
Elemental
Elemental; sludge
Elemental
(Continued)
-------
PRODUCER
Pelham Phosphate Co.
Pehnwalt Corp.
Chem. Div.
Pfizer Inc.
C. K. Williams & Co., Div.
Phelps Dodge Refining Corp.
Reignhold Chems., Inc.
Rohm and Haas Co.
Royster Co.
St. Joe Minerals Corp.
J. R. Simplot Co.
Minerals and Chem. Div.
Southern States Phosphate
& Fertilizer Co.
Standard Oil Co. of California
Standard Oil Co. (Indiana)
American Oil Co., Subsid.
Stauffer Chem. Co.
Fertilizer and Mining Div.
Indust. Chem. Div.
Swift & Co.
Swift Agricultural Chems. Corp.
Div.
Texaco Inc.
Texas Gulf Sulphur Co.
Union Carbide Corp.
Chems. and Plastics Div.
Union Oil Co. of California
Colmer Carbon and Chem.
Corp., Subsid.
United States Steel Corp.
USS Agri-Chemicals, Div.
PLANT
Pelham, Ga.
*Calvert City, Ky.
*East St. Loms, 111.
Easton, Pa.
Morcnci, Ariz.
Tuscaloosa, Ala.
Deer Park, Tex.
*Philadelphia, Pa.
*Athens, Ga.
Charleston, S. C.
Chesapeake, Va.
Mulberry, Fla.
Herculaneum, Mo.
Monaca, Pa.
Pocatello, Idaho
Savannah, Ga.
El Segundo, Calif.
Honolulu, Hawaii
Texas City, Tex.
Pasadena, Tex.
Baton Rouge, La.
Baytown, Tex.
Dommguez, Calif.
Fort Worth, Tex.
Hammond, Ind.
Le Moyne, Ala.
Manchester, Tex.
Martinez, Calif.
*Richmond (Stage), Calif.
Calumet City, 111.
Dothan, Ala.
*Memphis, Term.
Norfolk, Va.
*Savannah, Ga.
Wilmington, N. C.
Port Arthur, Tex.
Aurora (Lee Creek), N. C.
Texas City, Tex.
Wilmington, Calif.
Bartow, Fla.
Fort Meade, Fla.
Wilmington, N. C.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
800
3.")
NA
40
450
750
275
120
275
210
1400
250
175
50
30
15
60
20
35
95
1100
NA
140
290
540
95
(Continued)
DATE ON STREAMS
_PROCESS TYPE
1912 - CH
1948 - C
NA - C
NA - C
1965 - C
NA - C
RAW MATERIAL
AND REMARKS
NA
NA
NA
NA
NA
NA
- CH
- CH
- CH
- C
- C
- C
1959 - C
NA - CH
NA - C
NA - C
NA - C
1925 - C
1955 - C
1924 - C
1925 - C
1929 - C
1956 - C
1920 - C
NA - C
1944 - C
1947 - C
1966 - C
1903 - CH
1947 - C
1902 - CH
1955 - C
1965 - C
1966 - C
NA
1950 - C
1964 - C
1963 - C
1968 - C
Elemental
Elemental
Eerrous sulfate -
High-purity iron
oxides as by -product
Ferrous sulfate -
High-purity iron
oxides as by-product
Smelter gases
Elemental - May
be closed
Recovery from
methyl methacrylate
Elemental - May
be closed
Elemental
Elemental
Elemental
Elemental
Smelter gases
Smelter gases
Elemental
Elemental
Refinery
Sludge; other
Elemental; sludge;
hydrogen sulfide
Elemental
Elemental; sludge
Elemental; sludge;
hydrogen sulfide
Elemental; sludge;
hydrogen sulfide
Elemental
Elemental; sludge
Elemental
Elemental; sludge;
hydrogen sulfide
Elemental; sludge
Elemental
Elemental - Some
may be closed.
Sludge; hydrogen
sulfide - May be
closed.
Elemental
Elemental
Elemental; sludge;
hydrogen sulfide
Elemental
Elemental
Elemental - May
be closed
-------
PRODUCER
USS Chems. Dw.
Valley Nitrogen Producers, Inc.
Arizona Agrochemical Corp.
Subsid.
Weaver Fertilizer Co., Inc.
Western Nuclear, Inc.
The Williams Companies
Agrico Chem. Co., Inc.,
Subsid.
Witco Chem. Corp.
Sonneborn Div.
Wright Chem. Corp.
PLANT
Neville Island, Pa.
Helm, Cahl.
Chandler, An/.
Norfolk, Va.
Jeffrey Citv, Wyo.
Riverton, W\o.
*Baltimore, Md.
Bay City, Mich.
Cairo, Ohio
Humboldt, Iowa
Pierce, Fla.
Petroha, Pa.
Acme. N. C.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
25
40
45
20
700
45
60
DATE ON STREAMS
PROCESS
MA
TYPE
- C
RAW MATERIAL
AND REMARKS
Elemental;
hydrogen sulfide
1959
1959
NA
1962
]!)."> 8
NA
1957
1960
1956
1964
1933
1964
- C
- C
- C
- C
- C
- CH
- C
-C
- CH
- C
- C
- C
Elemental
Elemental
Elemental
Elemental
Elemental
Sludge
Elemental -
be closed
May
Note: Capacity data are in thousands of short tons, 100', I!,;SO equivalent.
* Plants starred are reported by mdustn contacts to be closed.
Source:1972 Directory of Chem. and Procedures
-------
EXHIBIT J -11
Environmental Protection Agency
MAJOR PRODUCER CAPACITY
AS PERCENT OF TOTAL CAPA-
CITY
Thousands of
of Plants
Stanford Chemical Co. 9
Cities Service Co.a Inc. 5
Allied Chemical Corp. 15
E.I. duPont deNemours
& Co. Inc. 11
C. F. Industries, Inc. 2
Freeport Minerals 1
Olin Corp. 6
Subtotal 49
Totals: 71 producers 150
Short Tons
4,055
3,075
3,015
2,550
2,300
1,700
1,570
18,265
38,265
Percent
10.6
8.0
7.8
6.6
6.0
4.4
4.1
47.5
100.0
-------
(2) Sulfuric Acid Production Is Widely Distributed Throughout the
Fifty States
The distribution of plants by states and process type is shown in
Exhibit J-12, following this page. The chamber process plants are con-
centrated in the South Atlantic states. The contact plants, however, are
widely distributed and 42 of the states had at least one sulfuric acid
plant in 1970. The changes which have occurred since 1970 have affected
primarily the number of chamber plants: the effects of closing these
plants have been concentrated in the South Atlantic states.
9. FINANCIAL DATA WERE OBTAINED FOR BOTH SULFUR BURNING
AND REFINERY SLUDGE REGENERATION PLANTS
Typical production costs for a 1,000 ton per day sulfur burning contact
plant are shown in Exhibit J-13 following Exhibit J-12. Cost ranges are shown
where major variations were found to exist. Production costs for a refinery
sludge regeneration plant are shown in Exhibit J-14 following Exhibit J-13.
Costs are shown for plants of equal size to facilitate comparison.
(1) Both Plant Types Have Profitability Ranges Between 2-10 Percent,
Though Regeneration Plant Profitability Has Been Negotiated to
Correspond to Overall Industry Economics Up to the Present
Both plant types have profitability ranges between 2-10 percent as
shown in Exhibits J-13 and J-14. However, a comparison of these two
exhibits indicates that the regeneration plant has significantly greater con-
version costs 18 percent above the sulfur burning plant. The total of all
costs except raw materials is called the conversion cost. In actual practice,
the differential between the conversion costs of these two plant types can
be as great as 100 percent. This situation cannot be reflected by com-
paring two average plants.
The higher costs of conversion for regeneration are often offset by
higher negotiated prices, as shown in Exhibit J-14. Regeneration can also
be made profitable by allowing reduced credits to refineries for sludge
acid. While theoretically both sludge credits and regenerated acid prices
are negotiated to permit profitability competitive with the dominant sulfur
burning process, in actuality the economics of the two plant types are less
interdependent, because disposal of sludge acid would be a critical problem
for refineries, if recycling through regeneration were not available. Also
J-9
-------
EXHIBIT J-12
Environmental Protection Agency
DISTRIBUTION OF PLANTS BY
STATE AND REGION
5.— .\i .. .! OF E.SiVL!»!.'l.:.To KlroPTISG M.r.L.tCl ION O> Ml J'IK 11. ACID W IUVIS IC'.\ .'..\.i t>l.V£ AM) PY !•
Division ajvJ Stato
tMITU STA
Middle Atlanti
l-'ennsy] \.inia
, . , pfJ
;,' . i ;t C-iroJ j
«. uth Can/I i
Vest. South CPH
I'tah. .......
,
i
i[[[ i
............
i
Tot. a
'1ST
3
1
1
1
9
9
29
8
3
12
1
0
10
3
'33
1
5
•J
1
'if!
11
3
2
3
9
2
13
15
i
7
2
2
2
4
1
1
IK
12
hunber ol ;>roU4Cir.t Ci;t:: jl io' -iunt *
Contact fro'.', ts
1
1
1
o
9
'J
S
3
12
4
2
9
*
I
1
3
1
1
1
13
11
}
2
u
1
"
9
1J
i
Z
•j
1
3
-
23
_
-
1
1
1 9
:
:
,
• 3
1
1
i"*
_
_
_
—
loitltlti
of bjont ac
-------
EXHIBIT J-13
Environmental Protection Agency
1972 PRODUCTION COSTS OF SULFURIC ACID
SULFUR BURNING CONTACT PLANT
Capacity: 1, 000 tons per day, 330 days per year
Figures below reflect production at 75% of this capacity, which
is typical.
Capital Investment:
Fixed $6,000,000^
Working 500,000
Product Economics:
Sales Price
Cost of Goods
Raw Materials (Sulfur)
Operating Labor (Salaries
and O/H)
Maintenance (Labor, Supplies,
and O/H)
Depreciation
Utilities
All Other (Local Tax, In-
surance, etc.)
Total COG
Gross Profit
Corp. Selling, Admin. , O/H
Expense
Distribution (Freight) Expense
Federal Income Taxes
Net Profit
$6,500,000
Percent
Dollar/ Selling
Ton Price
Typical
Range
$19.75
5.35
2.18
.77
1.20
1.20
100
19.-21.
8.40
1.20
1.60
1.58*2)
.60
1.02
14.40
43 8. -8. 70
6^
8
0 I
O i
3
5.>
4.50-6.50
> for
"conversion
73
27
11
4
6
6
.50-2.00
Basis: Fixed capital = $5,000 (1972) per daily ton, plus approximately
$1,000,000 for air pollution control modifications for plants in
this size category. Capital requirements can vary +20% for
modified plants.
(2)6% of capital.
-------
EXHIBIT J-14
Environmental Protection Agency
1972 PRODUCTION COSTS OF SULFURIC ACID
REFINERY SLUDGE REGENERATION CONTACT
PLANT
Capacity: 1,000 Tons per Day, 330 Days per Year (figures reflect production at 75%
of this capacity, which is typical)
(1)
Capital Investment:
Fixed - $9,000,000
Working 500,000
$9,500,000
Product Economics:
Sales Price
Cost of Goods:
(2)
Raw Materials (Sulfur) 8.60
Operating Labor (Salaries & O/H) 1.40
Maintenance (Labor, supplies & O/H) 1.90
Depreciation 2.30(3)
Utilities .70
All Other (local tax, insurance, etc.) 1.02
Total Cost of Goods $15. 92
Gross Profit 6.08
Corporate Selling, Administration, O/H, Exp. 2.18
Freight Expense (2 ways) 1.50
Federal Income Taxes 1.20
'o Selling
Price
100
10
7
5
Typical
Range
20.- 23.
Note (2)
5. - 7. for
"conversion'
Net Profit
1.20
.50 - 2.CO
(1) Basis: Fixed capital = $8,000. (1972) per daily ton, plus approximately $1, 000, 000.
For Air Pollution Control Modifications for plants in this size category, capital re-
quirements can vary +20% for modified plants.
(2) The price paid to refineries is negotiated. It must include the cost of round trip
freight. This freight is a major factor in the raw material cost. Theoretically
this cost should result in regenerated acid being noncompetitive in price with acid
from other raw material. However, in practice some of the higher cost of re-
generation can be passed through to refineries because they have no cheap alter-
native way of disposing of spent acid.
(3) 6% of capital.
-------
the higher regeneration costs are partially due to increased transportation
costs since on each regeneration cycle 90 percent of the acid is shipped
two ways. At present the demand for sulfuric acid in petroleum refining
is increasing, and no substitutes are known which are economically com-
petitive. For these reasons,some degree of higher costs may be passed
on to refineries either in higher prices or reduced sludge credits.
(2) However Plant Capacity Utilization Is an Especially Critical
Problem for Regeneration Plants Which May Inhibit Price Increases
Capacity utilization is an important factor in all sulfuric acid plants
because 80-90 percent of the conversion costs are fixed costs. To operate
a plant at 10 percent of capacity does not cost significantly less than oper-
ating at 100 percent of capacity. Therefore higher utilization rates can have
a significant effect on unit costs. It is a particularly important problem for
regeneration plants, because conversion costs and fixed costs are higher.
Also, regeneration plants can also make acid from elemental sulfur or other
sources of sulfur and sell acid to other markets besides refineries. These
other markets are called "disappearance" markets in the regeneration in-
dustry, because this acid is not recycled. Disappearance markets have
been an important factor in capacity utilization for regeneration plants. How-
ever, competition is increasing for all acid producers due to greatly increas-
ing supplies of surplus sulfur. As high cost producers, regeneration plant
managers face difficult trade off decisions between margins and utilization,
which they will have to make on a plant-by-plant basis.
(3) Regeneration Acid Demand Is Increasing, But Probably Not Enough
to Offset Probable Loss of Disappearance Markets Due to
Regeneration's High Cost Structure in an Increasingly Competitive
Situation
Most regeneration plants produce at least some of their output from
raw material other than sludge, and sell at least part of their production to
disappearance markets. The market for regenerated sulfuric acid is fore-
cast to increase because pollution problems have caused the discontinuance
of the use of lead as a catalyst in raising the octane of gasoline at a time
when air pollution control devices on automobiles is causing decreased
engine efficiency, thus increasing the requirement for higher octane fuel.
The use of sulfuric acid in the alkylation process is presently the only eco-
nomical alternative to lead for raising the octane of gasoline. However, it
is unlikely that the increase in the demand for regeneration acid will offset
the loss of disappearance markets due to increasing supplies of cheap sulfur
J-10
-------
and cheap acid as by-products of air pollution control, both of which con-
tribute to increasing competition in the sulfuric acid industry. While pro-
ducing acid in regeneration plants from elemental sulfur costs slightly less
than producing acid in the same plant from refinery sludge, this acid is
nevertheless more expensive to produce than in a cheaper plant, all other
things being equal, because of the 46 percent higher cost of amortizing the
higher plant investment, which is equivalent to $. 76 per ton. This one higher
overhead item alone is equal to the maximum probable impact of water
abatement costs in the worst case considered in Exhibit J-15, following this
page.
The combined and interrelated effects of these factors, aggravated
by the serious financial burden of air pollution control requirements make
it especially difficult to forecast the impact of water abatement costs for
this segment of the sulfuric industry, since several major changes are
occurring simultaneously.
10. A NUMBER OF PLANTS MAY CLOSE DURING THE NEXT FIVE YEARS,
THOUGH NOT PRIMARILY DUE TO WATER POLLUTION ABATEMENT
COSTS
The industry continues to suffer from substantial over capacity. Some
plants have shut down within the last year, but the capacity reduction from
40,000,000 short tons in 1971 to 38,400,000 in 1972 has likely only increased
capacity utilization from 73 percent to 76 percent.
(1) Trends Are Occurring Which May Provide Substantial Volumes
of Low Cost Sulfuric Acid in the South West and Along the East
Coast
Air pollution abatement of smelters in the southwest is projected
to provide substantial volumes of low cost by-product sulfuric acid
within the next 3 to 5 years. This development is expected to depress
the acid prices in the southwest and force out small marginal producers.
The development of large, low cost acid plants such as Cities Service's
Copperhill plant in Tennessee, in addition to possible import of low cost
acid on the East coast are also expected to depress the sulfuric acid
price along the East coast and South Atlantic states and also force out
the smaller marginal producers.
J-ll
-------
(2) Substantial Air Pollution Abatement Costs Are Already Causing
Producers to Reconsider Their Decision to Produce Their Own
Sulfuric Acid or to Bring It on the Market
Industry contacts have been uniformly surprised at interest in the
financial impact of water pollution abatement costs. The following table
summarizes the relative importance of the air and water pollution abate-
ment costs for a 100, 000 ton per year elemental sulfur burning contact
plant.
Pollution Abatement Cost Comparison: Air vs Water
Capital _ Operating
Low 80,000 16,000
Water Righ 203,000 44,000
Low 1,200,000 150,000
Air High 2,000,000 200,000
(3) Interviews With Industry Specialists Have Identified 37 Plants
Which Are Marginal and Likely to Close Within the Next Two
to Five Years
These plants include all remaining chamber plants, with the excep-
tion of the newest one built in 1957 and dedicated to captive fertilization
production. In general, these plants also include contact plants under 100
to 150 thousand short tons per year production, with the exceptions of
plants in a geographic area with little competition or tied into a larger
process.
With the construction of larger plants with lower unit costs and low-
cost sulfur supplies to operate these plants, it is believed that the manage-
ments of chamber and smaller contacts will not spend the money for
necessary pollution abatement. Rather than spend additional money on
plants in a poor competitive position, they will take the opportunity to close
the plant and buy acid if they can not shift the production to other plants.
J-12
-------
11. INDUSTRY CONTACTS AGREE FOR THE MOST PART WITH THE WATER
POLLUTION ABATEMENT TECHNOLOGY PROPOSED BY EPA, BUT
THEY INDICATE THE COST ESTIMATES SHOULD BE SUBSTANTIALLY
HIGHER FOR REFINERY SLUDGE PROCESSING
(1) The Pollution Abatement Costs Developed by EPA Are Based on the
Use of Neutralization, Settling, and Recycling
Treatment Configuration
i n
Neutralization (including Recycle
equalization and sludge
de water ing)
Settling
Treatment I is expected to meet the ELG "B" water effluent guide-
lines of . 25 pounds per ton of suspended solids. Treatment II is based
on the requirements of the ELG "B" guidelines of no waterborne process
effluent.
(2) Industry Sources Indicate Actual Water Abatement Costs For
Regeneration Plants Are Higher Than EPA's Estimates
The EPA water abatement cost for contract plants ranges from $0. 29
to $0. 76 per ton as shown in Exhibit J-14 following Page J-ll. However,
industry sources indicate that actual water abatement costs for refinery
sludge regeneration plants are at least 44 percent above EPA cost estimates
on the average for large plants in the 1,500 TPD range, and in some actual
cases as much as 250 percent above.
(3) Industry Sources Believe That Treatment II—Recycle—Is not
a Realistic Technology
Industry sources explain that leaks and spills must be neutralized
with soda ash or other material for occupational safety reasons, and that
effluents from wash downs of this treatment cannot practically be recycled
because of product contamination.
J-13
-------
12. THE IMPACT OF WATER POLLUTION ABATEMENT COSTS
ALONE~IS NOT LIKELY TO RESULT IN MORE THAN A FEW
SMALL PLANTS CLOSING
(1) Comparison of Pollution Abatement Costs Per Ton With Unit
Production Costs for Sulfur Burning Contact Plants Indicates
That Profitability Impact Could Be Significant for Some Plants
The estimated range of after tax net income for a 330,000 ton per
year plant operating at 75 percent capacity, as compared to the EPA
cost estimates, is shown below.
Range of After Tax Net Profit Per
Ton for Plants in the Capacity Range
250,000-410,000 Tons/Year $0.50 -$2.00
Abatement Costs Per ton
Treatment I 94,000 Tons/Year $0.76
Treatment II 94, 000 Tons/Year $0.29
Treatment I 495,000 Tons/Year $0.54
Treatment H 495,000 Tons/Year $0.31
Although neither of the plant sizes on which EPA based its cost
estimates are directly comparable with the plant sizes on which financial
data were obtained in this study, the plant sizes analyzed are within the
range of the two plant sizes used by EPA. It therefore seems likely that
the range of abatement cost per ton is reasonable for the plants for which
operating data were obtained. The abatement costs shown above for
Treatment I exceed the present profit margin of the least profitable plants
shown in the range above. Some presently marginal plants might, therefore,
be forced to close from the added costs of water pollution abatement unless
prices can be raised. Industry sources indicate that negative cash flow
rather than lack of profitability generally would be the criterion used in
deciding to close plants. Nevertheless, some few marginal plants could
be forced to close if obliged to spend the full amount estimated by EPA.
It was not possible within the scope of this study, however, to identify
these plants specifically.
J-14
-------
(2) Cost Data Obtained Are Only Indicative of Average Sulfuric Acid
Profitability and Do Not Permit Identification of Specific Plant
Effects
There are major cost variations between plants depending on plant
location, proximity to source of raw materials, management techniques,
market conditions, etc.
(3) Financial Data Indicate That Water Pollution Abatement Costs of
the Magnitude Estimated by EPA for Treatment I Could be Absorbed
by Most Sulfur Burning Contact Plants
The profit margin, if the increased cost is absorbed, would be
reduced from six percent to four percent. If fifty percent of the added
costs were passed on, the profit margin would be five percent.
(4) Refinery Sludge Processors, Although Facing Significantly
Greater Pollution Abatement Costs, Will Probably Pass These
Costs on to the Refineries
Industry contacts estimate the added costs for water pollution
abatement in a 285 tons per day plant processing sludge-acid may be
as high as $0. 75 to $1. 50 per ton. The average profit margin, if the
costs were absorbed, would be reduced from a range of $0. 50-$2. 00/ton
to a range of $1.50 (loss)-$0. 50/ton.
The refinery sludge processors are, however, passing some of the
added costs of refinery sludge processing on to refineries in the form of
higher prices. While this market segment only absorbs about ten percent
of total sulfuric acid production, some amount of added cost due to special
abatement problems may be accepted by refineries in higher prices, since
without sludge processors, refineries would face critical sludge disposal
problems.
In addition, the demand for sulfuric acid, instead of lead as a
catalyst to raise gasoline octane, is increasing. The refineries have no
economic alternative to sulfuric acid as a substitute for lead.
J-15
-------
There may be some temporary dislocations as some refineries build
their own plant rather than pay to abate the plants of their supplier. The
dislocations are expected to be only temporary, however.
(5) Plants Will Probably Continue to Close
The added costs of water pollution abatement are not likely to be the
determining factor causing their closing. As compared to the air pollution
abatement costs of $1. 2 million to $2. 0 million per year for a 100,000 ton
per year sulfur burning plant, the water pollution abatement capital costs
of $80,000 to $200,000 are relatively minor.
Industry utilization is, however, approximately 75 percent; the indus-
try has substantial excess capacity. There will be additional closings as
producers adjust capacity to meet demand.
J-16
-------
FINAL REPORT
Study of
the Economic Impact of
the Cost of Alternative Federal
Water Quality Standards on Ten Inorganic Chemicals
ENVIRONMENTAL PROTECTION AGENCY
Washington, D. C.
December 4, 1972
-------
BOOZ • ALLEN PUBLIC ADMINISTRATION SERVICES, Inc. 1025 Connecticut Avenue, N w.
Washington D C 20036
(202) 293-3600
January 5, 1973
Mr. Lyman Clark
Environmental Protection Agency
Waterside Mall
Room 3 234-A
401 M Street, S. W.
Washington, D. C.
Dear Mr. Clark:
We are pleased to submit a final report on the economic impact of water pollu-
tion abatement costs on producers often inorganic chemicals.
The attached report contains a summary of our findings for each of the ten
chemicals. It also contains analyses for each of the six chemicals identified as most
likely to be affected significantly. The Appendix, containing our detailed findings for
each of the ten chemicals as presented in our interim report, is submitted under sep-
arate cover.
Although it has not been possible to obtain complete financial data on all pro-
ducers and plants, we believe the data obtained does indicate the probable impact of
water pollution abatement costs on manufacture of these chemicals. It is important
t recognize, however, that the scope of the study was limited to the impact of water
pollution abatement costs alone. The study did not include the impact of other costs
such as air pollution or occupational safety and health. The study also did not con-
sider the impact of water pollution abatement costs on products using these chemicals.
In terms of identifying the total impact and those plants likely to close, the data ob-
i,aiiied may be most useful as a measure of the financial capability of these producers
to cover the total costs.
We have found this study to be extremely challenging and stimulating and look
forward to working with you again.
Very truly yours,
a subsidiary of BOOZ • ALLEN & HAMILTON Inc
-------
TABLE OF CONTENTS
Page
Number
LETTER OF TRANSMITTAL
INTRODUCTION i
I. SUMMARY 1
II. DETAILED ECONOMIC IMPACT FINDINGS 9
II. A. ALUMINUM SULFATE H
II. B. CHLOR-ALKALI 18
II. C. HYDROCHLORIC ACID 25
II. D. LIME 29
II. E. SULFURIC ACID 36
II. F. PHOSPHORUS 45
-------
INDEX OF EXHIBITS
Following
Page
A- I. ALUMINUM SULFATE PRODUCERS 11
A-H. NET ANNUAL AFTER TAX IMPACT OF EPA
WATER POLLUTION COST ESTIMATES DURING
INITIAL FIVE YEARS 12
A-IE. 1972 COSTS OF LIQUID ALUMINUM SULFATE
PRODUCTION 12
B- I. CHLORINE PLANTS IN THE UNITED STATES 18
B- H. 1972 PRODUCTION COSTS OF CHLOR-CAUSTIC:
MERCURY CELL 20
B-m. 1972 PRODUCTION COSTS OF CHLOR-CAUSTIC:
DIAPHRAGM CE LL 20
B-IV. NET ANNUAL AFTER TAX IMPACT OF EPA WATER
POLLUTION COST 'ESTIMATES DURING INITIAL
FIVE YEARS 21
C- I. NET ANNUAL AFTER TAX IMPACT OF EPA
WATER POLLUTION COST ESTIMATES DURING
INITIAL FIVE YEARS 27
D- I. COMMERCIAL LIME PLANTS: WATER SCRUBBER 29
USAGE
D- H. MODEL LIME PLANTS BASIC DESCRIPTION AND
INCOME STATEMENT 31
D-m. NET ANNUAL AFTER TAX IMPACT OF EPA
WATER POLLUTION COST ESTIMATES DURING
INITIAL FIVE YEARS 32
E- I. LIST OF PRODUCERS AND PLANTS: 1972 36
E - H. 1972 PRODUCTION COSTS OF SULFURIC ACID 38
SULFUR BURNING CONTACT PLANT
-------
INDEX OF EXHIBITS (Continued)
Following
Page
E -IE. 1972 PRODUCTION COSTS OF SULFURIC ACID
REFINERY SLUDGE REGENERATION CONTACT
PLANT 38
E -IV. NET ANNUAL AFTER TAX IMPACT OF EPA WATER
POLLUTION COST ESTIMATES DURING INITIAL FIVE
YEARS 40
F- I. 1972 COSTS OF PHOSPHORUS PRODUCTION 46
F- H. NET ANNUAL AFTER TAX IMPACT OF EPA WATER
POLLUTION COST ESTIMATES DURING INITIAL
FIVE YEARS 46
-------
INTRODUCTION
1. THE OBJECTIVE OF THIS STUDY WAS TO EVALUATE THE ECONOMIC
IMPACT OF WATER POLLUTION ABATEMENT COSTS ON PRODUCERS
OF TEN BASIC INORGANIC CHEMICALS
(1) The Chemicals Studied Are Commodity Chemicals
The ten chemicals are:
Aluminum Chloride . Hydrogen Peroxide
Aluminum Sulfate . Lime/Calcination
Chlor-Alkali . Nitric Acid
Hydrochloric Acid . Phosphorus
Hydrofluoric Acid . Sulfuric Acid
The basic technology for producing these chemicals is widely known
and the product of one producer is commercially equivalent to that of
another.
(2) The Study Was to Consider Seven Areas of Possible Economic
Impact
The seven areas to be considered were:
Price effects
Adjustments in profitability, growth and capital availability
Number, size, and location of plants expected to shut down
or curtail production
Changes in employment
Community impacts
Balance of payments consequences
The effect on related industries
A detailed analysis of each of these areas was well beyond the scope
of the study. The primary objective was to concentrate on those areas
most indicative of the economic impact of water pollution abatement costs
on producers of the ten chemicals.
-------
(3) Two Major Results Were Expected
The study was expected to provide the Environmental Protection
Agency with (1) an analytical framework for determining the economic
impact of water pollution control requirements and (2) analyses of the
expected impact of proposed effluent guidelines.
2. THE WATER POLLUTION ABATEMENT TECHNOLOGY AND ESTIMATED
COSTS WERE PROVIDED BY EPA
EPA developed abatement approaches and costs for each of the ten
chemicals which were given to us at the beginning of the study.
(1) Booz, Allen Did no Internal Evaluation of Either the Proposed
Abatement Approaches or the Associated Cost Estimates
The team was to evaluate the capability, of producers of the ten
chemicals to incur added pollution abatement costs of the magnitude es-
timated, and was not to assess either the abatement technology or the
cost estimates.
(2) The Approaches and Costs Were Presented to Industry Pollution
Abatement Specialists for Review
This was done to insure that the abatement approaches and estimated
costs agreed, at least in some broad sense, with industry's actual ex-
perience in installing the proposed or similar abatement technology.
Although the people contacted indicated that they did not have sufficient
time to do a detailed review, they generally concurred with the abatement
approaches proposed. Commenting that the costs would vary widely between
plants based on the plant's age, process, and abatement work already done,
they also agreed—with some major exceptions—that the costs were generally
of the right order of magnitude.
3. THE STUDY RELIED HEAVILY ON EXTENSIVE INDUSTRY SUPPORT
Extensive industry support was necessary to ensure the study resulted in
a sound analysis.
11
-------
(1) Industry Pollution Abatement Specialists Were Asked to Evaluate
the Reasonableness of the Abatement Cost Estimates
Environmental specialists in 11 major chemical companies were
contacted, both directly and through the Manufacturing Chemists Association,
to obtain their evaluation of the abatement technology proposed by EPA and
the associated costs estimates.
The environmental specialists were also asked to identify special
circumstances where the abatement costs might be substantially different
from those indicated. The objective was to identify those groups of pro-
ducers that would incur the greatest water pollution abatement costs and
thus be most seriously affected by those costs.
(2) Executives of 14 Major Chemical Companies Were Contacted
Through the Manufacturing Chemists Association
Industry ope rating prof it and loss data, by specific plant and process
type, is necessary to evaluate the capability of various industry segments
to incur added costs and continue profitable operations. These data are
highly confidential, and top management approval was necessary to obtain
access to these data. Executive contacts were also necessary to obtain an
understanding of the criteria that would be applied in deciding to close or
continue operations on a olant-by-plant basis.
4. INDUSTRY RESPONSE WAS CAUTIOUS BUT HELPFUL
(1) The Abatement Approaches and Associated Costs Have Received
General Concurrence by Industry With Few Exceptions
The pollution abatement standards cited in the ELGW guide lines —
which were used in developing the abatement cost estimates—are less
restrictive, in some cases, than abatement standards currently being applied.
The producers were reluctant to make detailed engineering evaluations of
standards to which they have had little exposure and which are labeled
"Temporary Guidelines," particularly within the limited time available.
They wanted to be sure the pollution abatement standards being evaluated
were likely to be implemented, and that the costs developed would be used
in evaluating those standards.
(l)Effluent Limitation Guidance (1972) - prepared by the Office of Permit
Programs EPA
111
-------
Industry specialists were able to identify specific situations where
the abatement costs would be significantly greater than those identified
by EPA. For example, sulfuric acid contact plants processing refinery
sludge have abatement costs of two to five times the cost for elemental
sulfur burning contact plants.
(2) Companies Contacted Were Highly Sensitive About Divulging
Confidential Information
In some cases financial data were only provided orally in face-to-
face interviews. In other cases, the companies provided data in writing
and insisted on a written agreement between Booz, Allen and themselves
that the confidentiality of their data would be maintained.
Companies provided limited financial data for each of the chemicals
most likely to be affected, with the exception of the lime producers. In a
previous economic impact study done within EPA, the Internal Revenue
Service provided EPA with grouped, total company profitability data on
lime producers. These data were never used because they were on a total
company basis and contained data not related to lime production. The lime
producers, however, angry at the previous attempt to use IRS data, re-
fused to provide financial data for this study.
Companies contacted have also been willing to discuss the criteria
they would apply in deciding whether to continue operations on a plant-by-
plant basis.
llll
-------
I. SUMMARY
In general, the water pollution abatement costs are not sufficiently large
to be the determining factor in deciding to close otherwise viable plants. Specific
producer segments for some of these chemicals will, however, probably be
forced to close.
1. WATER POLLUTION ABATEMENT COSTS ARE NOT LIKELY TO BE THE
DETERMINING FACTOR IN CLOSING PLANTS FOR MOST OF THE CHEMICALS
The water pollution abatement costs may hasten the decision to close an other-
wise marginal plant; but with the exception of aluminum sulfate, chlor-alkali, lime,
and hydrochloric acid, the water pollution abatement costs are not large enough to
cause any but the most marginal plants to shut down. While pollution abatement expendi-
tures for aluminum sulfate, chlor-alkali, lime, and hydrochloric acid are estimated to
to be in the range of six to nine percent of sales, the estimated expenditures for
remaining chemicals are in therange of three percent or less.
(1) The Reduced Profitability Caused By Water Pollution Abatement Costs May
Discourage Investment In New Plants But It Is Not Likely To Cause
Any But The Most Marginal Plants To Shut Down
The criteria that are used in deciding to build new plants are different
from those applied in deciding to continue an existing plant. Companies
generally use a projected return on investment of nine to twelve percent
(discounted cash flow, after tax) as a guideline in deciding to build a new plant.
They will continue operating an existing plant, however, at essentially zero
profitability if the plant is producing a positive cash flow, has a competitive
process, and is in a stable or growing market. New plant investment decisions
require a high rate of returnbscause the assets are liquid; the new plant
investment must compete with other alternative investments. There is
rarely a market for low profitability plants, and thus the alternative invest-
ment possibilities for those assets are limited. If a plant is operating a
competitive process in a stable or growing market, the company will tend
to keep the plant in operation and try to outlast its competition.
The major problems posed by the added pollution abatement costs may
be those of long-term technological obsolescence. With the reduced
profitability, producers are not likely to invest the money necessary to keep
pace with technological change.
-1-
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The added pollution abatement costs, unless they significantly affect
the profitability of a particular segment of producers and thus make them
non-competitive, are not likely to result in the closing of many plants.
Some costs will be passed on and others will be absorbed up to the limit
of the profit marsrins of present producers.
(2) Total Industry-Wide Capital Requirements Are Difficult To Estimate
But Appear To Be Within The Financial Capability Of The Industry
Data on the water pollution abatement expenditures required for
plants producing these chemicals were provided by EPA. The actual ex-
penditures required will vary widely, from substantial expenditures for
older plants to relatively little for new plants. The estimated capital costs
as provided by EPA were used, however, to develop an estimate of the
total water pollution abatement capital requirements for these ten chemicals.
Making the simplifying assumptions that abatement capital costs vary
exponentially (0. 6) with plant size and that all plants require the full pollution
abatement treatment, total capital costs by chemical to meet the ELG "A"
and "B" guidelines are shown in Exhibit I, following this page. The total
capital costs are approximately $150 to $300 million; or 10 to 20 percent of
the $1,463 million income and 20 to 30 percent of the $915 million paid
in dividends by the industrial chemical industry in 1971.
(3) Major Air Pollution Expenditures Have Already Triggered Decisions
On Whether To Continue Operating Plants Producing Some Of These
Chemicals
Air pollution abatement capital expenditures for nitric acid and sulfuric
acid (sulphur-burning, contact) plants are approximately three to ten times
the water abatement capital requirements, as shown in the following table.
Water Air
Nitric Acid 80-100 300-400
Sulfuric Acid 80-200 1,200-2,000
If a company has committed funds for air pollution of the magnitude
indicated, it will probably commit the additional funds necessary for water
pollution abatement.
-2-
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EXHIBIT I
Environmental Protection Agency
SUMMARY OF CAPITAL COSTS TO
MEET ELG A & B GUIDELINES
BASED ON EPA COST ESTIMATES
Chemicals "A" Guidelines "B" Guidelines
(In Millions) (In Millions)
Aluminum Chloride $0.8 $ 0.5
Aluminum Sulfate 0.7 14.6
Chlor-Alkali (Diaphragm) 38.7 9.4
Chlor-Alkali (Mercury) 53.3 12.9
Hydrochloric Acid 9.6 9.6
Hydrofluoric Acid 8.7 8.7
Hydrogen Peroxide 1.7 0.7
Lime 39.5 26.7
Nitric Acid 12.9 12.9
Phosphorus 1.5 1.2
Sulfuric Acid 45.3 25.8
(Sulfur Burning)
Sulfuric Acid 40.3 20.1
(Other Than Sulfur)
Total
-------
(4) Marginal Plants Will Continue To Close As Production Is Brought
Back In Line With Demand
Capacity utilization for the chemicals studied was in the range of 44
to 95 percent in 1971, as shown in the following table.
Percent
Utilization
Aluminum Chloride 69
Aluminum Sulfate NA
Chlor-Alkali 88
Hydrochloric Acid 68
Hydrofluoric Acid 95
Hydrogen Peroxide 44
Lime NA
Nitric Acid 70-30
Phosphorus 88
Sulfuric Acid 75
Since chemical process industries are generally only marginally
profitable with capacity utilization in the range of 70 to 80 percent or be-
low, it is likely that some plants in low utilization segments will be closed
as producers adjust capacity to meet demand.
(5) The Water Pollution Abatement Costs May Force Plants To Close In
The Aluminum Sulfate, Chlor-Alkali, Hydrochloric Acid, And lime
Industries
All chlor-alkali plants will incur substantial pollution abatement costs
which, ifpassed on in price increases, may result in a reduced demand for
chlorine caustic and plant closings.
Certain segments of plants producing aluminum sulfate, hydrochloric
acid, and lime will incur substantially higher water pollution abatement ex-
penditures than other plants in their industry. Where these high-cost plants
compete directly with plants not similarly affected, they will be unable to
pass on the added costs as price increases. The annualized costs per ton
for these plants are in the range of six to nine percent of the selling price;
it is likely that these added costs will force some plants to close.
-3-
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2. ANALYSIS OF THE IMPACT ON PRODUCERS FOR EACH OF THE TEN
CHEMICALS INDICATES THAT CERTAIN SEGMENTS OF PRODUCERS
WILL BE FORCED TO CLOSE
The initial review of the ten chemicals considered four factors:
The after tax cost per ton necessary to amortize the abatement cost
investment over five years and cover the operating costs per ton.
Availability of possible substitutes.
Present capacity utilization.
Percent captive use.
Statistics summarizing the findings for each of the ten chemicals are presented
in Exhibit II, following this page.
(1) Aluminum Chloride Plants Are Not Likely To Close With The
Indicated Level Of Cost Impact
The maximum after-tax cost increase required to amortize the capital
investment and cover the operating costs over a five year period is $5. 07 per
ton, about 1. 8 percent of the selling price.
With capacity utilization at 69 percent, the availability of some possible
substitutes, and negligible captive use, it will be difficult to sustain a price
increase to cover the full cost. No major abatement costs differences be-
tween producers have been identified, however, and it appears likely that
some cost increases can be passed on. Even if some costs have to be absoibed,
however, the costs do not appear sufficiently large to be the determining factor
in closing an otherwise profitable plant.
(2) Small Aluminum Sulfate Plants Competing Directly With Large Plants
Will Probably Be Forced To Close
The maximum cost increase for medium sized aluminum sulfate plants
is estimated to be $1. 58 per ton. This cost amounts to 3. 8 percent of the
selling price. Costs per ton for large plants, however, may be as little as
0. 8 percent of the selling price.
-4-
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Although capacity utilization is in the range of 50 to 75 percent, and
captive use accounts for less than 10 percent of production, there are no
major substitutes for aluminum sulfate. Where the small plants are not
directly in competition with large plants, even the small plants will pro-
bably be able to pass on their added costs as price increases. Where small
plants are directly in competition with large plants, however, the small
platns will probably be forced to close.
(3) Substantial Chlor-Alkali Pollution Abatement Costs May Force Major
Price Increases, Reduce The Demand For Chlor-Alkali, And Result
In Plant Closings
Water pollution abatement costs for mercury and diaphragm cell
plants appear to be similar. The maximum cost increase for a diaphragm
cell plant is $5.48 per ton or 6. 9 percent of the selling price. The maximum
cost increase for a comparably sized mercury cell plant is $4. 88 per ton
or 6.1 percent of the selling price.
Although 58 percent of chlorine production is captive and capacity
utilization is approximately 95 percent, substitutes exist for both chlorine
and its coproduct, caustic soda. To maintain present profitability, general
price increases of 12 to 18 percent will be required to produce additional •
after tax revenues of $4. 00 to $5.50 per ton. Price increases of this magni-
tude may reduce the overall demand for chlorine and caustic and thus force
some plants to close.
(4) Water Pollution Abatement Costs May Force Plants Producing
Hydrochloric Acid Other Than As A By Product To Close
Water pollution abatement costs for direct hydrochloric acid production
are estimated to be $2. 27 per ton or 5.2 percent of the selling price. By-
product production, however, has no separately identifiable water pollution
abatement costs.
Over 88 percent of hydrochloric acid is produced as a by-product, and
the price level is determined by the price negotiated for by-product acid.
There appears to be little or no special market need for direct product acid
and therefore, no opportunity for these producers to pass on the substantial
costs of pollution abatement. The water pollution abatement costs will
probably force direct producers to close. Plants producing hydrochloric acid
directly that are part of chlor-alkali facilities, however, will not have the
pollution abatement costs due to using the waste acid stream to neutralize
caustic effluent.
-5-
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(5) Water Pollution Abatement Costs For Hydrofluoric Acid Are Likely
To Be Covered By Price Increases
The maximum cost impact per ton for hydrofluoric acid producers is
$8.34 per ton or 2.5 percent of the selling price.
This cost increase could probably be passed on to end, users. Capacity
utilization is approximately 95 percent, production is 98 percent captive or long
term negotiated contract, and there are no major substitutes.
(6) Hydrogen Peroxide Plants Are Not Expected To Close Due Solely To
The Indicated Level Of Pollution Abatement Costs
The maximum cost impact per ton for hydrogen peroxide producers is
$11. 86 per ton or 2. 0 percent of the selling price.
There are few substitutes for hydrogen peroxide in many of its uses but
the industry has substantial excess capacity. Plant utilization in 1971 was
only 44 percent. Cost increases may not be passed on, but rather absorbed
by larger producers in an attempt to increase plant utilization.
Smaller plants will likely close as producers adjust capacity to meet
demand. While the pollution abatement costs may hasten the decision to
close these plants, the costs are not large enough to be a determining
factor in the basic readjustment to bring capacity in line with demand.
(7) Lime Plants Presently Using Water Scrubbers jVIa£J3e Forced To Close
If They Are In Direct Competition With Plants Using Dry Collection
Methods
The maximum cost impact for producers using water scrubbers, based
on EPA estimates, is $0. 75 per ton or 5.4 percent of the selling price.
Producers not using water scrubbers have only minor pollution abatement
problems due to a small volume of process water and leaks.
Although only 3T percent of industry production is captive and substi-
tutes are available, plants using water scrubbers may be able to pass on
these costs through price increases where they are not in direct competition
with producers using dry collection methods. Fuel cost increases have
forced the average price per ton to increase from $13. 69 in 1969 to $15. 78
in 1971, indicating some ability to pass added costs on to customers.
-6-
-------
(8) Some Nitric Acid Plants Are Expected To Close In The Next Five Years,
But Not Primarily Because Of Pollution Abatement Costs
The maximum cost impact for nitric acid producers is $0.23 per ton or
0.4 percent of the selling price.
There are substitutes for nitric acid in each of its uses and industry
production is substantially under capacity. Plant utilization is estimated to
be in the range of 70 to 80 percent, so it is unlikely that cost increases could
be readily passed on. Although the water pollution abatement costs may hasten
the decision to close plants as producers adjust capacity to meet demand, the
air pollution abatement capital costs of $300,000 to $400,000, as compared to
water pollution abatement capital costs of $80,000 to $100,000, will have al-
ready spurred the decision to close marginal plants in many cases.
The 0.4 percent impact of water pollution costs does not appear likely to have
a major economic impact or to be the determining factor in closing an otherwise
viable plant.
(9) Water Pollution Abatement Costs, While Not The Determining Factor,
May Hasten Decisions To Close Phosphorus Plants
The maximum cost impact for phosphorus producers, based on cost
estimates provided by EPA, is $0.71per ton or 0.2 percent of the selling price.
Industry contacts estimate the costs to be substantially higher, approximately
$ 3.35 per ton or 0. 9 percent of the selling price.
The added costs estimated by industry sources do not appear likely to be a
significant factor in deciding to close otherwise viable plants. The substantial
capital expenditures estimated by industry to be required (up to 2 million),
however, may hasten the decision to close plants facing a declining market.
The market for phosphorus is declining. The eutrophication problem has led
to substantial reductions in the use of phosphates for detergents; phosphoric
acid is increasingly being produced by the wet method rather than from furnace
phosphorus.
(10) Some Sulfuric Acid Plants Are Expected To Close Within The Next Five
Years But Not As A Result Of Water Pollution Abatement Costs
The maximum cost impact for sulfur-burning contact plants is approximately
$0.47 per ton or 2.4 percent of the selling price. The maximum cost impact
for refinery-sludge processing plants is $1. 50 per ton or 6. 8 percent of the
selling price for reprocessed refinery sludge acid.
-7-
-------
Although the refinery sludge processing plants have higher pollution
abatement costs, the added costs will probably be absorbed by the refinery.
The sludge processing plants provide a pollution abatement service to re-
fineries by reprocessing spent acid used in alkylation units, and refineries
are presently paying more per ton of acid than other users to compensate
for the added costs of reprocessing.
There are substitutes for sulfuric acid, and industry production is only
75 percent of capacity, so it does not appear that general cost increases can
be readily passed on. Although the water pollution abatement costs may
hasten the closing of otherwise marginal plants as producers adjust capacity
to meet demand, these costs are not expected to be the determining factor
in deciding to close plants. The air pollution abatement capital costs of
$1.2 million to $2 million, as compared to the $80,000 to $200,000
for water pollution abatement, will have already forced these decisions in
many cases.
# * * *
Although the data obtained provides an indication of the kinds of effects
that might be expected, e.g. price increases, cost absorbtion, and plant closings;
in no case is the data sufficiently comprehensive, as will be discussed in the next
section, to identify and quantify specific effects that might be expected. With a
few exceptions which will be noted, it was in general not possible within the time
frame of the study, to identify or quantify any of the following:
Predicted price increases
Impact on profitability
Impact on capital availability
Likely number of plant closings
Resultant unemployment
Community impacts
In the financial area, although some product cost and profitability information
was obtained, the additional information such as cash flow, fixed and variable
costs, and market value of assets was also not obtained. Given sufficient time ,
these data could be obtained—they were not obtained, however, within the time
frame of this study.
-8-
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II. DETAILED ECONOMIC IMPACT FINDINGS
Detailed economic impact analyses have been made for those chemicals
identified in the early phase of the study as most likely to be affected by
pollution abatement costs.
The overall approach to financial analysis and the explanation of the con-
tents of each of the six reports follows.
1. AN ANNUALIZED FIVE-YEAR POLLUTION ABATEMENT COST PER
TON HAS BEEN USED TO MEASURE ECONOMIC IMPACT
In evaluating the economic impact of water pollution abatement costs on
producers of these chemicals, the primary objective has been to identify severe
economic impact, i. e. , plant closings, with attendant employment and community
impacts. Although new plant decisions generally are made on the basis of a
nine or twelve percent return (discounted cash flow, after tax), existing plants
will continue to be operated at essentially zero profitability if the plant is pro-
ducing a positive cash flow, has a competitive process, and is in a stable or
growing market.
The water pollution operating cost estimates were converted to a net
(after tax) cost per ton, as shown in Exhibit HI, following this page. A five-
year amortization was used, as allowed by the Tax Reform Act of 1969, to esti-
mate conservatively the annual costs to be borne by the most marginal producers.
Producers with substantial borrowing capacity may choose to depreciate the
capital costs over 12 or 15 years for internal pricing and profitability reporting
purposes. The marginal producers, however, may be forced to borrow and
repay the capital within five years.
Taken directly, the one cost per ton (after tax) is the amount of earnings
necessary to repay the investment and cover the operating costs: it measures
the producer's ability to absorb the added costs. The pretax cost per ton equals
the price increase necessary to maintain present earnings.
-9-
-------
EXHIBIT HI
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s indicated that an impact great enough to cause a negative cash ilow, rather than
mvestment, would usually be the basic criterion for decif'ing to close plants immediately
divided by two to reflect declining balance due to amortization.
rcent for 330 days/year, since actual capacity utilization data were not obtained.
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2. DETAILED ECONOMIC IMPACT FINDINGS ARE PRESENTED FOR THE
CHEMICALS MOST LIKELY TO BE AFFECTED BY POLLUTION
ABATEMENT COSTS
The impact analysis has concentrated on the five chemicals which appear
most likely to be affected by the water pollution abatement costs:
Aluminum Sulfate
Chlor-Alkali
Hydrochloric Acid
Lime
Sulfuric Acid
In the course of the general analysis, substantially higher pollution abate-
ment costs were identified for phosphorus than were initially estimated by EPA.
A detailed economic impact section for phosphorus is also included in this
report.
The economic impact sections for each of the chemicals discuss the seg-
ments within each chemical and possible effects of the pollution abatement costs.
Plant financial profiles are presented for most of the chemicals together with
the pollution abatement cost estimates prepared by EPA. Industry comments
on EPA's abatement approaches and estimated costs are included. An assess-
ment of the possible impact of the water pollution abatement costs is also
presented, to the extent permitted by limited data, together with an assessment
of the limitations of the analysis.
-10-
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II-A. ALUMINUM SULFATE
1. NINETY PERCENT OF ALUMINUM SULFATE IS PRODUCED BY
THE SAME PROCESS
(1) The Primary Process Is the Reaction of Bauxite or Clay
with Sulfuric Acid
Aluminum sulfate is produced by reacting sulfuric acid with natural
bauxite or clay. The process is relatively simple and problem free.
Plant size is the only significant variable affecting water pollution abate-
ment costs. There are approximately 101 plants operated by 27 producers.
The industry is dominated by a few large producers: three major producers
have 50 percent of all plants. A list of producers and plant locations is
provided in Exhibit A-I following this page.
(2) Ten Percent of Aluminum Sulfate Is Produced as By-Product
Ten percent of aluminum sulfate is produced by two oil companies
as a by-product of long-chain alcohol production. There are no abatement
problems associated with this production attributable to the by-product
production.
2. THE WATER POLLUTION ABATEMENT COSTS WILL PROBABLY
RESULT IN LIMITED PRICE INCREASES
(1) Aluminum Sulfate Prices Are Determined Through
Negotiations Between Local Producers and Customers
Aluminum sulfate markets are local rather than nationwide. Since
most aluminum sulfate is sold in solution, transportation economics
limit sales to within a radius of about 100 miles of the plant in most
cases. The trend toward increasing liquid consumption is forecast to
continue and, therefore, markets will remain primarily local. Some
cost increases may be passed on to consumers subject to local com-
petitive conditions
-11-
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EXHIBIT A-I
Environmental Protection Agency
ALUMINUM SULFATE PRODUCERS
Indusl. Chems. Oiv.
American Cyanamid Co.
Indust. Chems. and Plastics Oiv.
Birmingham. City of
Burns Chem.. Inc.
Cities Service Co.. Inc.
North American Chems. and Metals
Group
Indust. Chems. Div.
Columbus. City o'
Water So'tening and Filtration Plant
Div.
Crown Zeiierbach Corp.
Chem. Products Div.
Chillicotho. Ohio
Cleveland. Ohio
Covington. Va.
Denver. Colo.
Detroit. Mich.
East Point. Ga.
East St. Louis. III.
El Segundo. Calif.
Hopewell. Va.
Jacksonville. Fla.
Johnsonburg. Pa.
Kolamazoo. Mich.
Kennewick, Wash.
Macon. Ga.
Menasha. Wise.
Miodletown. Ohio
Monroe. La. f*
Newell. Pa.
North Clavmont. Del.
Pme Pluff. Ark.
Pittsburg. Calif.
Port St. Joe. Fla.
Savanngh, Ga
'Tecoma. Wash.
Vancouver, Wash.
Vicksburg. Miss.
Wisconsin Rapids. Wise.
Chattanooga. Tenn.
Cloquet. Minn.
Coo.-a Pmei. Ala.
De Bidder. La.
Cscanaba. Mich.
Georgetown. S.C.
Hamilton. Ohio
Joliet. III.
Kalamazoo. Mich.
Linden, N.J.
Michigan City. Ind.
Mobile. Ala.
Monticello. Miss.
Plymouth, N.C.
Birmingham. Ala.
Calawba. S.C.
East Point. Ga.
Springfield. Tenn.
Augusta. Ga.
Cedar Springs. Ga.
Fernandma Beach, Fla.
Columbus, Ohio
Bogalusa. 1.8.
Delta Chems.. Inc.
E. I. du Pont de Nemours & Co.. Inc.
Indust and Biochems. Dept.
Essex Chem. Corp.
Chems Div.
Ethyl Corp
Indust. Ch9ms. Div.
Filo Color and Chem. Corp.
Filtrol Corp.
Howerton Gowen Chems.. Inc.
W. R. Grace & Co.
Indust. Chpms. Group
Davison Chem. Div.
Hamblet & Hayes Co.
J. M. Huber Corp.
Imperial West Chem. Co.
Mallmckrodl Chem. Works
Indust Chems. Div.
The Mead Corp.
Nalco Chem Co.
Indus! Div
North Star Chems.. Inc.
Olm Corp.
Chems. Div.
Sacramento. City of
Southern States Chem. Co.
Stauffer Chem. Co.
Indust. Chem. Div.
Wright Chem. Corp.
Seersport. Me.
Linden, N j
Newark. N J.
Pasadena, Tex.
Newark. N J
Jackson, Miss
Los Angeles. Calif.
SaU La«e City. Utah
NonolK. Va.
Cincinnati. Ohio
Cur;i< Bay. Md.
iav.e Charles, ta.
Saiem. Mass
Etowah. Tenn,
Havre de Grace. Md.
Antioch. Calil
St. Louis. Mo.
Kmgsport. Tenn.
'Chir^io. Ill
Pine Bend. Minn.
Baltimore. Md.
Sacramento. Calif.
Atlanta, Ga
Elaslrop. La
Baton Rouge. La
Counce. Tenn
V.anch stcr. Tex
Naheols, Ala
North Port.ana. Ore.
Richmond (Siege). Calif.
Sprmghill, La.
Tacoma. Wash,
Acme. N.C.
-------
(2) Water Pollution Abatement Costs for Small Aluminum
Sulfate Plants Would Require Major Price Increases
to Pass All Costs Through to Consumers
The maximum effect of the EPA water pollution abatement costs
would be$l. 58 per ton for a small plant operating at a typical capacity
utilization of 60 percent, as shown in Exhibit A-II, following this page.
Price increases in the range of about 7-8 percent would be required
to pass all net after tax increased cost for small plants on to consumers,
assuming an average price of $42 per ton. Cost increases for large
plants are estimated to be considerably smaller—in the $0. 20-$0.40 per
ton range. These plants could pass on all of their added costs with price
increases of less than 1 percent.
3. FINANCIAL DATA FOR SEVERAL TYPICAL ALUMINUM SULFATE
PLANTS INDICATE THAT PROFIT MARGINS RANGE UP TO 24
PERCENT OF SALES
(1) Detailed Data on Profitability of Aluminum Sulfate
Production Are Hard to Obtain and Vary Widely
Producers for which financial data is available are large integrated
companies which produce many chemicals and these producers have as
many as 27 aluminum sulfate plants. Data on individual plant economics
is considered highly proprietory, especially by small companies vulner-
able to price reductions by larger producers. Though costs vary greatly
from plant to plant primarily with raw material cost, local supply/
demand functions, and local pollution abatement and solid waste disposal
considerations, some general production cost figures are shown in
Exhibit A-m, following Exhibit A-II.
(2) A Gradual Trend Away From Small Individual Producers
Appears to be Continuing
While regionality of markets and transportation economics, as well
as the relatively low capital cost of building a plant, permits many small
plants to continue profitably, many single plant producers have dropped
out of the market in the past 10 years, especially smaller plants. At the
-12-
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-------
EXHIBIT A-III
Environmental Protection Agency
1972 COSTS OF LIQUID ALUMINUM
SULFATE PRODUCTION
Capacity: 100 tons per day, 330 days per year
Figures below reflect operations at 60% of capacity, which is
typical.
Capital Investment: $1,000, 000
(1)
Dollar/
Ton
$42.00
Product Economics:
Sales Price
Cost of Goods
Raw Materials (Bauxite
delivered)
(Sulfuric acid delivered)
Operating Labor
Maintenance/Supplies
Depreciation
Sludge Removal
All others: Tax, Adm. ,Util.
Total COG
Gross Profit
Corp. Sales,Adm., O/H Expense
Federal Income Taxes
Net Profit 3. 00
Percent
Selling
Price
100
Typical
Range $
3 40. -46.
11.50
10.50
1.62
3.40,,
3. 03<4>
.25
1.70
32.00
10.00
4.00
3.00
27
25
4
8
7
1
4
76
24
10
7
9. -12. 5
7. -16.
0-. 50
20. -35.
3. -20.
0-5.
1.-10.
/2}
v 'Local captive clay versus imported South American Bauxite.
(3)
Captive at cost in same complex versus outside with transportation.
^At 6% of capital.
-------
same time several large, integrated producers have increased their num-
bers of plants considerably. There are presently 83 plants producing
aluminum sulfate, and 50 of these are owned by only three producers.
Plants are considered to be small if in the 5-10, 000 ton/year
range, medium sized if in the 10-30,000 ton/year range, and large if in
the 30-70,000 ton/year range. One major producer had about 20 percent
large plants, 30 percent medium plants, and 50 percent small plants.
However, it is not known whether this distribution holds true throughout the
industry.
(3) Local Capacity Utilization Is A Major Factor in Price
Since aluminum sulfate is marketed regionally, local capacity
considerations often play an important role in price competition.
Approximately two thirds of the cost of aluminum sulfate is raw
material cost. The remaining one third is called the "conversion cost. "
At least 80 percent of the conversion cost is fixed cost, as can be seen
in Exhibit A-EII, preceding this page. This means that unit cost per ton
decreases significantly as capacity utilization increases. This in turn
permits either higher profits, or greater leaway for discounting and
price competition.
4. PRODUCERS GENERALLY AGREE WITH THE EPA CAPITAL COST
ESTIMATES, BUT THEY DISAGREE, WITH THE OPERATING COST ESTIMATES
(1) The Pollution Abatement Cost Developed by EPA Are
Based On The Use of Neutralization, Settling, and
Recycling
The treatment configurations proposed by EPA are presented in
the table below:
Treatment Configuration
I II
Neutralization (including Neutralization
equalization and sludge Settling Pond
dewatering) Recycle
Settling Pond
-13-
-------
Treatment I is expected to meet the ELG "B" water effluent
guidelines of . 08 pounds per ton of suspended solids. Treatment II
is based on the requirements of the ELG "A" guidelines of no water-
borne process effluent.
(2) Producers Consider Treatment II - Recycle- Impractical
For This Product in Some Plants
However, several producers objected strongly to the Treatment
II technology, stating that neutralization is not possible with a total re-
cycle system with this product, because product quality requirements
are very high, and product contamination would result.
Some producers were also concerned that if pond lining were re-
quired to prevent percolation of disolved solids to ground water supplies,
this could cause problems with pond overflow and sludge dewatering in
some areas where both rainfall and humidity are high. In such areas
recycle might have to be supplemented by treatment of pond overflow.
(3) Producers Believed The Operating Cost Estimates Should Be As
Much As 100 Percent Higher
Some producers agreed with the EPA capital and operating cost
estimates. Others thought the operating cost estimates for the "A"
guidelines should be up to 100 percent higher. Most producers appear
to already be utilizing Treatment I, and many plants may incur little
additional cost in meeting the ELG "B" Guidelines.
5. THE OPERATING COST DATA OBTAINED INDICATES THAT THE
WATER POLLUTION ABATEMENT COST IMPACT IS LIKELY TO
RESULT IN SOME SMALL PLANTS CLOSING
(1) The Impact of Water Pollution Abatement Costs Is Likely to
Cause Already Marginal Small Plants to Close
The impact of EPA's water pollution abatement cost estimates on
after tax profitability per ton, as shown in Exhibit A-n, are summarized
in the table below.
-14-
-------
The table summarizes these impacts and compares them with the range
of profitability for plants of approximately 33, 000 tons/year capacity
operating at about 60 percent capacity.
Range of After Tax Net Profit Per Ton
For Plants of About 33,000 Tons/Year
Capacity $1.00-$10.00
Abatement Costs Per Ton
Treatment I 16,500 tons/year $1.58
Treatment E 16,500 tons/year $1.45
Treatment! 165,000 tons/year $0.34
Treatment II 165,000 tons/year $0.24
The abatement costs shown above for small plants could exceed the
present profit margin of the least profitable plants. The added costs of
water pollution abatement, as estimated by EPA, may force some presently
marginal plants to close.
(2) Small Plants Will Require Price Increases of Up to Eight Percent
Calculated on the basis of a current average selling price of $42.
per ton, EPA's cost estimates for a small plant could require a price
increase of up to eight percent to fully pass on the capital costs and
operating costs over a five year period. It should be noted, however,
that the EPA "small" plant was 16,500 tons per year, and thus is 50 per-
cent larger than a significant proportion of all existing plants. The cost
impact may be substantially higher on a per ton basis for smaller producers,
thus placing these smaller producers at significant competitive disadvantage
in those areas where they compete directly with larger producers. EPA's
abatement cost estimates for large plants would require only a one to three
percent increase in selling price to pass on.
In addition some plants have been operating in locations where water
pollution standards have been enforced locally for some time. Therefore,
a wide spread exists between plants regarding their present state of com-
pliance with new EPA "Temporary Guidelines. " To date, the major waste/
pollution problem faced by most producers has been solid waste or sludge.
The particular technology used to deal with this problem can lead to signifi-
cant variations in the incremental cost of meeting water quality standards.
-15-
-------
(3) The Capital Costs May Be Hard for Some Producers to Raise
Existing plants are estimated to have cost between $100, 000 and
$1 million, depending on size and sophistication. EPA has estimated
capital required for abatement facilities at $87-$95,000 for a 16-18,000
tons per year plant. Preliminary estimates are that such a plant would
cost between $200,000 and $750,000, depending on location, sophistication,
and whether dry product was required. This would mean a capital in-
crease from about 20 percent to 50 percent of the present plant invest-
ment, and this relative amount of capital may be hard to raise for some
small producers.
(4) Although Price Increases From One Percent To Eight Percent Would
Be Required, It May Be Possible To Pass On Some Or All Of These
Costs If Local Competitive Conditions Do Not Prevent It
Since demand is steady and growing, and no substitute products exist,
small cost increases could, in general, probably be passed on to customers
with the balance absorbed by the producers. Small plants, however, in
direct competition with large aluminum sulfate producers, will incur
pollution abatement costs approximately four to five times larger than
those of the large plant. The small plant will have to absorb most of the
costs in the competitive situation; small plants in this situation are likely
to be forced to close.
6. THE ANALYSIS INDICATES THAT SMALL PRODUCERS COMPETING
DIRECTLY WITH LARGER PRODUCERS MAY BE FORCED TO CLOSE
The data obtained are not statistically representative of the effects to be
expected on all producers. They do indicate, however, the likely effects that
could be expected.
(1) The Range of Error of the Estimates Cannot Be Determined
The operating data were provided by industry personnel who have
intimate knowledge of plant economics. The data are, however, the
average for a typical plant of 33, 000 tons per year.
Aluminum sulfate plants have annual capacities ranging from 5, 000 tons
to 70,000 tons per year. Any model, therefore, such as the one shown in
Exhibit A-m, can only be made representative up to a point. The production
cost model included in this report is indicative of plants between 15, 000 tons
-16-
-------
and 40,000 tons per year. However, this represents only about 60 percent
of all plants, although it represents a higher percentage of total production.
The data obtained does not represent all producers, and thus the error of
the estimate, as applied to specific producers or groups of producers cannot
be determined.
(2) There Are Two Critical Assumptions
The abatement costs estimates provided by EPA, as supplemented by
industry contacts, are assumed to be representative of all process and
raw material combinations.
The plant financial data obtained, though it does not include the full
range of plant capacities, are assumed to be representative for the industry.
(3) Major Impact Questions Remain Unanswered
Without detailed knowledge of specific plant capacities, it is not possible
to identify those specific plants that face serious competition from larger plants.
It is not, therefore, possible to identify the specific plants, communities, em-
ployees, or suppliers and consumers that would be affected. It might be assumed,
however, that the distribution of plant sizes cited for the large producer (50 per-
cent small plants) is similar to the distribution for all producers making the con-
servative assumption that all of these plants would be forced to close and that each
plant employs an average of five people, approximately 200 people would be
affected.
With imports less than one percent of domestic consumption, the balance
of payments effects are likely to be negligible.
(4) The Major Conclusion of the Analysis, That the Impact of Water
Pollution Abatement Costs Is Likely to Be Limited to Small Producers
Competing Directly With Large Producers, Would Be Altered Under
Either of Two Circumstances
If the pollution abatement costs prove to be much higher for some
specific producers, they might be significantly affected. This is not likely
to be the case, however. No additional groups were identified by the environ-
mental specialists contacted.
If specific producers, or groups of producers, are much less profitable
than shown in data obtained or if they are unable to pass on cost increases,
these producers may be significantly affected.
-17-
-------
II-B. CHLOR-ALKAU
The chlor-alkali industry includes many products and sub-products.
Three major products are chlorine, caustic soda, and soda ash. Chlorine
and caustic are produced as co-products in the electrolysis of brine; soda
ash is produced by the Solvay-lime process and through direct mining at the
Trona mines in Wyoming.
This economic impact analysis concentrates on the joint production of
chlorine and caustic. Although caustic soda competes directly with soda
ash, the doubling in demand for chlorine since 1961 has produced caustic in
excess of demand; caustic has tended to become a low-cost, low-price, by-
product. Soda ash, in contrast, incurs direct production costs in either the
Solvay process or mining; caustic soda has made major inroads in previous
soda ash markets in recent years.
The significant price increases that will be necessary for chlor-alkali
producers to cover the pollution abatement costs are expected to be borne
primarily by chlorine. Producers are likely to raise the price of caustic soda
only if the demand for chlorine drops to the point where the coproduct caustic
production, which has been in excess of demand, is equal to or less than de-
mand. Soda ash competition is not a major problem for chlorine-caustic
producers, and it has not been included in this analysis.
1. THERE ARE TWO MAJOR PROCESSES USED IN THE ELECTROLYSIS
OF BRINE TO PRODUCE CHLORINE AND CAUSTIC
The two major processes are the diaphragm cell and the mercury cell.
A list of plants showing producers, date opened, and cell type is shown in
Exhibit B-I, following this page.
These processes have similar pollution abatement problems, however.
Both have dissolved solids and suspended solids in their effluent. Diaphragm
cells have lead in their effluent; mercury cells have mercury.
2. COSTS INCURRED AS A RESULT OF WATER POLLUTION ABATEMENT
WILL LIKELY RESULT IN PRICE INCREASES
Chlorine and caustic can be considered as coproducts with the costs of
pollution abatement borne equally by both products. As indicated, however,
industry sources expect chlorine to carry the main burden of any increases.
-18-
-------
EXHIBIT B-I (1)
Environmental Protection Agency
CHLORINE PLANTS IN THE UNITED STATEb
State (, City
Alabama
Huntsv i 1 le
Le Moyne
Me Intosh
Mobi le
Muscle Shoals
Arkansas
Pine Bluff
Cal i fornia
Domi nguez
Pi ttsburg
Delaware
Delaware City
Georg ia
Augusta
Brunswick
Brunswick
1 1 1 inois
East St. Louis
Kansas
Wichita
Kentucky
Calvert City
Calvert City
Lou i s i ana
Baton Rouge
Baton Rouge
Ge i smar
Gramercy
Lake Charles
dquenn ,ie
„ . Gabrirl
Taft
Ma i nc
Orr i ngton
Mich i gan
Midland
Montague
Wyandotte
Wyandotte
Nevada
Henderson
New Jersey
L i nden
Newark
New York
N iagara Fa 1 1 s
N iagara Fal 1 s
N iagara Fa 1 1 s
N iagara Fal 1 s
Niagara Falls
Syracuse
Producer
(U.S. Government)
Stauffer Chemical Company
01 in Corporat ion
Diamond Shamrock Chemical Co.
Diamond Shamrock Chemical Co.
(U.S. Government)
Stauffer Chemical Company
The Dow Chemical Company
Diamond Shamrock Chemical Co.
01 in Corporation
Al 1 ied Chemical Corp.
Brunswick Chemical Co.
Monsanto Company
Vulcan Materials Co.
B.F. Goodrich Chemical Corp.
Pennwalt Corp.
Ethyl Corporation
Allied Chemical Corp.
BASF Wyandotte Corp.
Kaiser Aluminum 6 Chemical Corp.
PPG Industries, Inc.
The Dow Chemical Company
Stauffer Chemical Company
Hooker Chemical Corp.
Sobin Chlor-Alkal i Inc.
The Dow Chemical Company
Hooker Chemical Corp.
BASF Wyandotte Corp.
Pennwal t Corp.
Stauffer Chemical Co. of Nevada Inc.
GAF Corp.
Vulcan Materials Co.
E.I. du Pont de Nemours 6 Co., Inc.
Hooker Chemical Corp.
Hooker Sobin Chemical*
01 i n Corporat ion
Stauffer Chemical Co.
Allied Chemical Corp.
Year
Bu i 1 1'''
-
19*43
1965
1952
196*4
1952
19*43
1963
1917
19&5
1965
1957
1967
1922 '
1952
1966
1953
1938
1937
1959
1958
19*47
1958
1970
1966
1967
1897
195*4
1938
1898
19*42
1956
1961
1898
1898
1971
1897
1898
1927
Cells
Hooker S(diaph.)
De Nora 22 x 5 (mere.)
01 in E8 (mere.)
De Nora (mere.)
De Nora 2k x. 2M(merc.)
Hooker S (diaph.)
BASF (mere.)
Dow (diaph.)
De Nora 18 x *4 (mere.)
01 in El IF (mere.)
Solvay V-100 (mere.)
Hooker 5*4 (diaph.)
De Nora 18x6 (mere.) ('62)
Hooker S.S3A.S3B (diaph.)
De Nora 2*4H5 (mere.)
01 in El IF (mere.) ('67)
Downs (fused sa 1 1) ,
Hooker S3D (diaph.)
Allen-Moore (mod i f ied) (d iaph.)
Hooker S*4 (diaph. ('68)
Diamond D3 (diaph.), Uhde 30 sq.m.
(mere.) ('6lt) , Hooker S1) (d iaph. ) ( '69)
Hooker S3B (diaph.)
Columbia N 1, Hooker S3B (diaph.)
De Nora *t8H5 (mere.) ('69)
Dow (diaph.)
Uhde 30 sq. m. (mere.)
Hooker 5*4 (diaph.)
De Nora 2*)H5 (mere.)
Dow (diaph.)
Hooker S3A (diaph.)
Hooker S3B (diaph.)
Diamond 03 (diaph.) ('60)
Hooker S (diaph.)
Krebs (mere . ) ( '63) ; modified
BASF-Krebs ('69)
Hooker S (diaph.), Hooker S*4 ('68)
Downs (fused salt)
Hooker S.S3A, Gibbs (modified)
(diaph.) ('61)
Uhde 20 sq.m. (mere.)
01 i- cl IF (mere.) ('60)
Hooker S,S3M (diaph.)
Allen-Moore (mod i f ied) (d iaph. )
Solvay Process SO 12 (mere.) ( ''tfc)
Solvay S60 (mere.) ('53)
Hooker S^ (diaph.) ('68)
Conta i ners
Fil led
--SB
--SB
- - S -
--SB
- T S -
- - S -
- - S -
- - S -
- - - -
- - S -
C T S -
- - - -
--SB
- - S -
- - s -
--SB
--SB
- T S B
- - S -
--SB
- - S -
- - S -
- - s -
- - s -
- - s -
C T S -
- - S -
- T S -
- - S -
....
- T S -
- - S -
- - s -
- - s -
- - s -
••• See Table 5
-------
EXHIBIT B-I (2)
Environmental Protection Agency
CHLORINE PLANTS IN THE UNITED STATES
tate 6 City
North Carol ina
Acme
Canton
Pi sgah
Ohio
Ashtabula
Ashtabula
Ba rberton
Pa i nesvi 1 le
Oregon
Al bany
Portland
Tennessee
Char) eston
Memphi s
Memphi s
Texas
Cedar Bayou
Corpus ChristI
Denver City
Freeport ""•'•'
Deer Park
(Houston)
Houston
Houston
Houston
Point Comfort
Port Neches
Snyder
Virginia
Hopewel 1
Sal tvi 1 le
Wash i ngton
Bel 1 i ngham
Longv i ew
Tacoim
Tacor
West Virginia
Moundsv i 1 1 e
New Mart i nsv i 1 le
So. Char 1 "•=!•'">'•
Wi scons in
Green Bay
Port Edwards
PUERTO RICO
Guayan ilia
Producer
Al 1 led Chemical Corp.
U.S. Plywood -Champ ion Papers, Inc.
01 in, Ecusta Operations
Detrex Chemical Industries, Inc.
RMI Company
PPG Industries Inc.
Diamond Shamrock Chemical Co,
Oregon Metallurgical Co.-
Pennwalt Corp.
01 i n Corporat ion
E.I. du Pont de Nemours 6 Co., Inc.
Velsicol Chemical Corp.
Baychem Corp.
PPG Industries, Inc.
Vulcan Materials Co.
The Dow Chemical Co.
Diamond Shamrock Chemical Co.
Ethyl Corporation
Shel 1 Chemical Co.
U.S. Plywood-Champion Papers, Inc.
Aluminum Co. of America
Jefferson Chemical Co., Inc.
American Magnesium Co.
Hercu 1 es , 1 nc .
01 in Corporat ion
Georgia-Pacific Corp.
Weyerhaeuser Company
Hooker Chemical Corp. ,
Pennwa It Corp.
Al 1 ied. Chemical Corp.
PPG 1 ndust r ies 1 nc .
FMC Corporation
Fort Howard Paper Co.
BASF Uyandotte Corp.
PPG Industries Inc.
Year
Built*
1963
1916
I9
-------
(1) Chlorine and Caustic Prices Are Determined Through Negotiations
Between Producers And Major Customers
Most chlor-alkali plants are located within a short distance of
bulk users, thus minimizing freight costs. Approximately 58 percent
of chlorine production is used captively. Sales are usually based on
long-term contracts which lends some price stability to the product.
The industry is operating at approximately 90 percent capacity, how-
ever, and local competitive conditions may permit increases.
(2) There Are Several Factors Which Influence The Magnitude And
Nature Of The Price Increases
The largest single use for chlorine (approximately ten percent
of total production) is in the production of vinyl chloride monomer.
Over 60 percent of chlorine production used for vinyl chloride is pro-
duced captively, and cost increases will likely be passed on for this
major use. Approximately 20 percent of vinyl chloride monomer pro-
duction has switched to the oxyhydrochlorination process, but the im-
pact of this process appears to have been absorbed.
With the significant growth in the demand for chlorine since
1961, caustic soda has tended to become a low-cost by-product. Be-
cause of its relatively low price, caustic has made inroads into industries
formerly using soda ash or lime as sources of alkalinity. Although major
price increases could force customers to revert to substitute products
again, some price increases for caustic may also be possible, thus re-
ducing the added costs to be borne by chlorine.
3. FINANCIAL DATA FOR CHLOR-ALKALI PRODUCTION INDICATE
AFTER TAX PROFIT MARGINS IN THE RANGE OF ZERO PERCENT
TO 8.0 PERCENT OF SALES
Operating cost and profitability data for diaphragm and mercury cell pro-
ducers indicate the processes to be of approximate equal profitability. Major variations
in cost result from alternative raw material sources and variations in electric power
rates from area to area. Some producers are located over brine sources and obtain
their raw materials at essentially the cost of water instead of having to buy and trans-
port sodium chloride. Some areas of the country, such as Tennessee and Idaho, enjoy
very low cost power rates as compared with other areas.
-19-
-------
Profitability data for plants using 100 tons per day mercury cells
are shown in Exhibit B-II, following this page. Profitability data for
producers using 350 tons per day diaphragm cells is shown in Exhibit
B-III, following B-n. The plant data were drawn from different parts
of the country as reflected in the difference in average selling prices.
4. PRODUCERS CONSIDER THE EPA COSTS REALISTIC TO MEET PRESENT
GUIDELINES
(1) The Pollution Abatement Costs Developed By The EPA Are Based
On Three Configurations Required To Meet Proposed Guidelines
The treatment configurations proposed by EPA are presented in
the following table:
Treatment Configurations
I II IE
Neutralization Neutralization Neutralization
(including equalization Settling pond Settling pond
and sludge dewatering) Partial Evaporation of Evaporations with
Settling pond basic with recycle recycle
Chemical treatment
filtration
Treatment I is expected to be sufficient to meet the ELG " B" guide
lines:
6. 3 pounds of suspended solids and 0. 2 pounds of lead per ton
of product for a diaphragm cell
4. 3 pounds of suspended solids per ton of product and 0.1
pound mercury per day of operation for a mercury cell.
-20-
-------
EXHIBIT B-II
Environmental Protection Agency
1972 PRODUCTION COSTS OF
CHLOR-CAUSTIC : MERCURY CELL
CAPACITY: 200 tons per day, 330 days per year
CAPITAL INVESTMENT: $13,000,000
PRODUCT ECONOMICS
Percent
Dollars/ Selling Typical
Ton Price Range
Chlorine Price $ 68.76 55 $50.00-71.00
Caustic Soda Price 56.25 45 42.00-58.00
Total Sales Price 125.01 100 92.00-130.00
Cost of Goods
Raw Mate rials W $16.87 14 $11.00-19.00
Electric Power 34.97 28 23.00-36.00
Operating Labor 8.03 6
Maintenance 11.66 9 9.00-26.00
Depreciation (2) 11.82 10
Other (3) 23.98 19
Total Cost of Goods 107.33 86
Gross Profit 17.68 14
Corp. Sales, Adm. ,Dist. ,O/HExp. 9.76 8
Federal Income Tax 3.80 3
Net Profit $4.12 3 $0.00-7.00(4)
(1) Includes mercury, salt, misc. chemicals
(2) At 6. '% of capital
(3) Includes freight equalization, plant administration
(4) Maximum profitability is for plants located over brine sources
-------
EXHIBIT B-m
Environmental Protection Agency
1972 PRODUCTION COSTS OF
CHLOR-CAUSTIC: DIAPHRAGM CELL
CAPACITY: 350 tons per day, 330 days per year
CAPITAL INVESTMENT: $20,000,000
PRODUCT ECONOMICS
Percent
Dollars/ Selling Typical
Ton jPrice Range
Chlorine Price $53.73 55 $51.00-71.00
Caustic Soda Price 43.97 45 42.00-58.00
Total Sales Price 97.70 100 92.00-130.00
Cost of Goods
Raw Materials (NaCl) W $6.77 7 $ 4.00-20.00
Electric Power 21.24 22 17.00-32.00
Operating Labor 6.35 6
Maintenance 9.45 9 7.00-11.00
Depreciation <2> 10-38 10
Other <3) 18.53 19
Total Cost of Goods 81.10 83
Gross Profit 24.71 17
Corp. Sales, Adm. ,Dist. ,O/HExp. 8.09 8
Federal Income Tax 3«?6 4
Net Profit $ 4.33 5 $1.00-8.00(4)
(1) Includes graphite, salt, miscellaneous chemicals
(2) At 6. % of capital
(3) Includes freight equalization, plant administration
(4) Maximum profitability is for plants located over brine sources
-------
Treatment II is expected to meet the "A" guidelines for some plants,
but other plants will require Treatment HI. The ELG "A" guide-
lines are:
1. 0 pounds of suspended solids and 0. 04 pounds of lead
per ton of product for a diaphragm cell
0. 6 pounds suspended solids per ton of product and 0.1
pounds of mercury per day of operation for a mercury cell
A PH range of 6 to 9 is required for all effluents under both "A" and "B"
guidelines.
Although industry sources generally agree that the proposed technology
was sufficient to meet the guidelines, they doubt the ability of this technology
to meet additional guidelines which may be issued for dissolved solids.
(2) Industry Contacts Believe The Cost Estimates Are Realistic If
Only Mercury, Lead and Suspended Solids Are To Be Removed
The estimated capital investment and operating and maintenance
costs prepared by EPA are shown in Exhibit B-IV, following this page.
In most of the interviews, company representatives indicated they
had not had the time necessary to analyze the figures in detail. In some
cases the ability of the industry to achieve the low flow rate of 8, 000
gallons per ton of chlorine was questioned; there was also a general feel-
ing that the costs would vary significantly from plant to plant. In general,
however, the companies contacted believed the costs to be realistic.
If additional guidelines are established for dissolved solids, how-
ever, the costs are expected to increase significantly.
-21-
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5. ALTHOUGH THE INDUSTRY COULD GENERALLY ABSORB THE ADDED
COSTS TO MEET THE "B" GUIDEUNES. MAJOR PRICE INCREASES
WILL BE NECESSARY TO MEET THE "A" GUIDELINES
(1) Pollution Abatement Cost Impacts For Mercury And Diaphragm
Cell Producers Are Similar
The pollution costs, both in total dollars per ton and as percent of
net income are shown in the following table:
Diaphragm Cell^ Mercury Cell (2)
Dollars Percent Dollars Percent
Net Income 4.33 4.1?
Treatment I 1.59 36.7 1.41 34.2
Treatment II 5.25 112.1 4.67 113.3
Treatment HI 5.48 126.5 4.88 118.4
Although the costs are not strictly comparable due to differences in
plant size between the two sets of data, the data do indicate that the costs
for diaphragm and mercury cell producers will be similar.
(2) The Costs For Meeting The "B" Guidelines Could Generally Be
Absorbed Without Price Increases
Abatement costs for Treatment I, the treatment necessary to meet the
B guidelines, are approximately 50 percent of the average net income. Pr -
ducers in the lower range of profitability, with net profit margins of 1. 5
percent of sales or less, however, will not be able to cover even the Treat-
ment I costs without price increases. Some producers in this range of
profitability, in direct competition with more profitable producers, may
be unable to raise their prices and thus be forced to close.
(1) Diaphragm cell net profit data are for 350 ton plant; cost data are the average
of cost data developed for a 200 ton per day plant and a 500 ton per day plant.
(2) Mercury cell net profit data are for 200 ton per day plant; operating cost
data are for 270 ton per day plant.
-22-
-------
(3) Only The Most Profitable Producers Could Absorb The Added
Costs To Meet The "A" Guidelines
The costs of meeting the "A" guidelines are approximately $6.00
per ton. This cost compares with average profit margins for data
obtained of approximately $4. 00 per ton and maximum profit margins
in the range of $7. 00 to $8. 00 per ton.
(4) Increasing Prices To Maintain Present Margins And Cover The
Added Costs of Meeting The "A" Guidelines Will Likely Force
Additional Plants To Shut Down
As a percent of the selling price, the "A" guideline costs range
from five percent to approximately seven percent of the selling
price. Since these costs are on an after-tax basis, the price increases
to"cover added costs would be double. Price increases of 10 to 14 percent
would be required. Although some price increases would likely be passed
on, price increases of the magnitude required may be sufficient to reduce the
overall demand for chlorine-caustic and thus force additional plants to shut down.
(5) Closing Chlor-Alkali Plants Will Affect As Many As 2500 People In
A Single Plant
Chlor-alkali plants employ between 85 and 2500 people.
The largest plants, plants employing 2,500 people, are in regions of
high industrial activity, however, where re-employment may not be
a problem.
Chlor-alkali production is widely dispersed, and approximately
23 states have at least one plant. Unemployment will not be concentrated
in any one region.
6. THE DATA ARE NOT STATISTICALLY REPRESENTATIVE OF THE
FINANCIAL IMPACT ON ALL PRODUCERS; THE DATA INDICATE
HOWEVER. THAT SOME PLANTS MAY BE FORCED TO CLOSE
(1) The Range of Error of the Estimates Cannot Be Determined
The financial data obtained do not by any means cover all plant and
process variations. The range in abatement costs as applied to specific
plant situations is also unknown. The possible error, therefore, in
applying the profitability and cost data to specific plant situations is
probably quite high.
-23-
-------
(2) There Are Two Critical Assumptions
Although the real abatement cost data as applied to a range of
specific plant situations are unknown, the analysis assumes that the
abatement costs provided are somewhat representative of the costs that
would be incurred.
Thefinancial data are assumed to be somewhat representative, but
the amount of data obtained does not enable us to verify this assumption.
(3) Major Impact Questions Remain Unanswered
With the data obtained, we have not been able to identify the specific
plants which will be unable to pass on price increases and thus be forced
to close. The resulting community and employment impact has not, therefore,
been determined. In addition, the impact on the industry's producers and sup-
pliers has not been identified.
Imports and exports are small, however. The effects on the balance
of payments will be minimal.
(4) The Major Conclusion of the Analysis, That the Impact of Water
Pollution Abatement Costs on Chlorine-Caustic Producers Will
Be Significant, Would Be Altered Under Either of Two Circumstances
Some plants may require substantially smaller expenditures due to
abatement procedures installed at the time the plant was constructed;
others may be part of chemical complexes where the pollution abatement
problems are treated together for the entire complex. In the case of a
chemical complex, the costs as applied to any one chemical may be sub-
stantially lower than the costs of treating the abatement problem for that
chemical alone.
If chlorine caustic production is significantly more profitable in
specific situations, or if the costs can be more readily passed on than
we have estimated, the added abatement costs will also not force plants
to close.
-24-
-------
II-C. HYDROCHLORIC ACID
1. BY-PRODUCT AND DIRECT PRODUCERS ARE THE TWO SEGMENTS
OF HYDROCHLORIC ACID PRODUCTION
(1) Direct Producers May Have Water Pollution Abatement
Costs Which By-Product Producers Do Not Have
Direct producers have water pollution abatement problems
resulting from the use of a water scrubber to scrub the exhaust
gases from the absorber. The scrubber solution forms a weak
stream of hydrochloric acid. If these producers are part of a
chlor-alkali facility, they will be able to use the waste stream to
neutralize the caustic effluent and thereby essentially eliminate
the acid waste stream. Other direct producers will have pollution
abatement costs.
Hydrochloric acid produced as a by-product is simply a
result of other processes. By-product production has no separately
identifiable waste stream, and therefore, no directly attributable
water pollution abatement costs.
(2) By-Product Production Is the Dominant Process
Approximately 88 percent of hydrochloric acid production in
1971 came from by-product production, and it has continued to in-
crease in importance.
Sixteen companies were reported to be producing hydrochloric
acid directly at 24 locations in 1970. Only four of these companies
are still producing hydrochloric acid directly.
-25-
-------
2. THE WATER POLLUTION ABATEMENT COSTS OF DIRECT
PRODUCERS CAN NOT BE PASSED ON IN PRICE INCREASES
(1) Hydrochloric Acid Prices Are Determined by By-Product
Producers
By-product acid accounts for 88 percent of total production,
and production exceeds demand by as much as 30 percent. Since
the acid is produced as a by-product at low incremental cost, the
price for hydrochloric acid is determined by the price negotiated
by by-product producers.
(2) Direct Hydrochloric Acid Production Has No
Special Uses That Will Absorb the Added Costs
No special uses for direct production of hydrochloric acid have
been identified. Direct producers of hydrochloric acid are unlikely,
therefore, to be able to pass their added costs on to customers.
3. THE ECONOMIC IMPACT OF WATER POLLUTION ABATEMENT COSTS
MAY FORCE THE REMAINING DIRECT PRODUCERS TO SHUT DOWN
(1) There Are Four Remaining Direct Producers
No secondary source was found which identified the type of
production for each hydrochloric acid producer. Industry experts
identified 16 companies as probably the companies reporting di-
rect production to Census in 1970. Direct contacts were made
with each of these companies to identify any remaining producers.
Only four were identified as continuing to produce direct product
acid:
Pennwalt Corp.
Morton-Norwich Products
Detrex Chemical Industries
Vulcan Materials Co.
They operate a total of six plants.
-26-
-------
(2) Although Raw Material Costs May Be Negligible, Direct
Producers Do Have Conversion Costs Which Make Them
High Cost Producers
Contacts with direct producers indicated that the primary reason
for direct production was to use raw materials available from other
processes as low cost by-products. No attempt was made to obtain
financial data on direct production, but the conversion costs alone
will give them identifiable production costs and make these companies
the high-cost producers compared to companies producing the acid as
a by-product.
(3) Pollution Abatement Costs for Direct Producers Not Part of
a Chlor-Alkali Facility Are Approximately 5.2 Percent of the
Selling Price
The treatment proposed by EPA is neutralization and sludge
dewatering to meet the ELG "A" guidelines of no water borne
process effluent. The annualized abatement costs, based on capital,
operating and maintenance costs provided by EPA, are presented in
Exhibit C-I, following this page.
(4) The Water Pollution Abatement Costs May Force Direct
Producers to Discontinue Direct Production
Profit margins for direct producers are likely to be minimal:
less than the possible pollution abatement cost impact of five percent
of sales. Where direct producers are not part of a chlor-alkali
facility and thus able to avoid the abatement costs, they will probably
be forced to discontinue operation.
(5) Employment, Community, and Other Impact Questions Remain
Unanswered, But These Impacts Are Likely to be Small
With the small and declining importance of direct production,
further analysis of employment, community, and other impacts were
not undertaken.
-27-
-------
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The impact on customers and suppliers appears to be minimal,
however, with the small volume of direct production and excess ca-
pacity in the industry of approximately 30 percent. Exports and im-
ports are less than 3 percent of sales; the impact on balance of
payments would be negligible.
-28-
-------
II-D. LIME
1. PLANTS USING WATER SCRUBBERS AND PLANTS USING DRY
COLLECTION METHODS FOR AIR POLLUTION ABATEMENT FORM
TWO MAJOR SEGMENTS IN THE LIME INDUSTRY
(1) Some Producers Have Installed Bag Houses and Electrostatic
Precipitators Rather Than Water Scrubbers to Deal With the
Air Pollution Abatement Problem
Both of the dry collection methods are rated by the industry as more
efficient than water scrubbers for the removal of particulate matter from
the air. Bag house collection is considered the most efficient procedure
although lower maintenance costs provide interest in electrostatic collection.
In certain locations, where inexpensive land is not available for
settling ponds, dry collection methods are necessary since water scrubbing
would not be economically feasible.
(2) Producers Using Dry Collection Techniques Have Minor Water
Pollution Problems Caused by Process Water
Leakage during the hydrating process as well as equipment cleaning
and maintenance procedures are sources of high pH effluent which must be
treated prior to disposal. In addition, water for cooling compressors in
the hydration process or for washdown is drawn from wells in some locations
at a pH of 10. 5 or more. This water must also be neutralized prior to
surface disposal. These problems are minor, however, as compared to
the water pollution abatement problems of water scrubbers.
(3) Plants With Water Scrubbers Have Major Water Pollution Problems
A study done by the Lime Association indicates that plants using water
scrubbers are about 25 percent of the total, as shown in Exhibit D-I, following
this page. Data obtained indicate that approximately 40 percent of the
remaining plants are using bag houses and 10 percent electrostatic pre-
cipitators. About 50 percent of the plants a^ , continuing to operate with
-29-
-------
EXHIBIT D-I (1)
Environmental Protection Agency
ALABAMA
Landmark - Cheney Lime & Cement Co.
Montevallo - U. S. Gypsum Co.
Roberta - Southern Cement Co.,
Div. Martin Marietta Corp.
Saginaw - Longview Lime Co., Div.
Woodward Co., Div. Mead Corp.
Siluria - Alabaster Lime Co.
ARIZONA
Douglas - Paul Lime Plant, Inc.
Globe - Hoopes & Co.
Nelson - U. S. Lime Div., The
Flintkote Co.
Batesville - Batesville White Lime Co.,
Div., Rangaire Corp.
CALIFORNIA
City of Industry - U. S. Lime Div.,
The Flintkote Co.
Diamond Springs - Diamond Springs
Lime Co.
Lucerne Valley - Pfizer, Inc., Minerals,
Pigments and Metals Div.
Richmond - U. S. Lime Div., The
Flintkote Co.
Salinas - Kaiser Aluminum & Chem. Corp.
(currently captive lime)
Sonora - U. S. Lime Div., The
Flintkote Co.
Westend - Stauffer Chemical Co.
COLORADO
Ft. Morgan - Great Western Sugar Co.
CONNECTICUT
Canaan - Pfizer, Inc., Minerals,
Pigments and Metals Div.
FLORIDA
Brooksville - Chemical Lime Co.
Sumterville - Dixie Lime and Stone Co.
HAWAII
Honolulu - Gaspro, Ltd.
ILLINOIS
Marblehead - Marblehead Lime Co.
McCook - Standard Lime & Refractories
Div., Martin Marietta Corp.
Quincy - Marblehead Lime Co.
So. Chicago - Marblehead Lime Co.
Thornton - Marblehead Lime Co.*
COMMERCIAL LIME PLANTS: WATER
SCnUBBL.n, USAGE
INDIANA
Buffington - Marblehead Lime Co.
IOWA
Davenport - Linwood Stone Products Co., Inc.
KENTUCKY
Carntown - Black River Mining Co.**
LOUISIANA
Morgan City - Pelican State Lime Corp.
New Orleans - U. S. Gypsum Co.*
MARYLAND
Woodsboro - S. W. Barrick & Sons, Inc.
MASSACHUSETTS
Adams- Pfizer, Inc., Minerals,*
Pigments and Metals Div.
Lee - Lee Lime Corp.
MICHIGAN
Detroit - Detroit Lime Co.*
Ludington - Dow Chemical Co.*
(currently captive lime)
Menominee - Limestone Products Co.,
Div. C. Reiss Coal Co.
River Rouge - Marblehead Lime Co.
MINNESOTA
Duluth - Cutler Magner Co.
MISSOURI
Bonne Terre - Valley Dolomite Co.
Hannibal - Marblehead Lime Co.
Ste. Genevieve (3) - Mississippi Lime Co.
Springfield - Ash Grove Cement Co.
Apex - U. S. Lime Div., The Flintkote Co.
Henderson - U. S. Lime Div., The
Flintkote Co.
McGill - Morrison-Weatherly Corp.
Sloan - U. S. Lime Div., The Flintkote Co.
^WJERSEY
Newton - Lime?'one Products Corp. of America
* Signified water scrubber operation
** Signified possible water scrubber operation
Source: National Lime Association
-------
OHIO
Ashtabula - Union Carbide Olefins Co.
Carey - National Lime & Stone Co.*
Cleveland - Cuyahoga Lime Co.
Genoa - U. S. Gypsum Co.
Gibsonburg (2) - Pfizer, Inc., Minerals,
Pigments and Metals Div.
Gibsonburg - National Gypsum Co.
Huron - Huron Lime Co.**
Marble Cliff - Marble Cliff Quarries Co.
Millersville - J. E. Baker Co**
Woodville - Ohio Lime Co.*
Woodville - Standard Lime & Refractories
Div., Martin Marietta Corp.
OKLAHOMA
Marble City - St. Clair Lime Co.*
Sallisaw - St. Clair Lime Co.*
OREGON
Baker - Chemical Lime Co. of Oregon
Portland - Ash Grove Cement Co.
PENNSYLVANIA
jt
Annville - Bethlehem Mines Corp.
Bellefonte - National Gypsum Co.
Bellefonte - Warner Co. *
Branchton - Mercer Lime & Stone Co.
Devault - Warner Co.
Everett - New Enterprise Stone & Lime Co.
Pleasant Gap - Standard Lime & Refractories
Div., Martin Marietta Corp. ^
Plymouth Meeting - G. & W. H. Cor son, Inc.
PUERTO RICO
Ponce - Florida Lime Corp.
SOUTH DAKOTA
Rapid City - Pete Lien & Sons, Inc.
TENNESSEE
Knoxville - Foote Mineral Co.
Knoxville - Williams Lime Manufacturing Co.
TEXAS
Blum - Round Rock Lime Companies
Cleburne - Texas Lime Co., Div.
Rangaire Corp.*" ^
Clifton - Clifstone Lime Co.
EXHIBIT D-I (2)
Environmental Protection Agency
COMMERCIAL LIME PLANTS: WATER
SCRUBBER USAGE
Houston - U. S. Gypsum Co.
McNeil - Austin White Lime Co. #
New Braunfels - U. S. Gypsum Co.
#
San Antonio - McDonough Bros., Inc.
UTAH
Grantsville - U. S. Lime Div., The
Flintkote Co.
Lehi - Rollins Mining Supplies Co.
VERMONT
Winooski - Vermont Assoc. Lime Industries, Inc.
VIRGINIA
Clearbrook - W. S. Frey Co., Inc.
Kimballton - Foote Mineral Co.
Kimballton - National Gypsum Co.
Stephens City - M. J. Grove Lime Co.,
Div. The Flintkote Co.
Strasburg - Chemstone Corp.
WASHINGTON
Tacoma - Domtar Chemicals Inc.
WEST VIRGINIA
Riverton - Germany Valley Limestone Div.,
Greer Steel Co.
WISCONSIN
Eden - Western Lime & Cement Co.
Green Bay - Western Lime & Cement Co.
Knowles - Western Lime & Cement Co.
Manitowoc - Rockwell Lime Co.
Superior - Cutler-LaLiberte-McDougall Corp.
CANADA
ALBERTA
Kananaskis - Steel Bros. Canada Ltd,
BRrriSHCOLlJMBIA
Crows Nest - Summit Lime Works, Ltd.
MANITOBA
Moosehorn - Winnipeg Supply & Fuel Co., Ltd.
Winnipeg - Winnipeg Supply & Fuel Co., Ltd.
* Signified water scrubber operation
** Signified possible water scrubber operation source: National Lime Association
-------
EXHIBIT D-I (3)
Environmental Protection Agency
COMMERCIAL LIME PLANTS: WATER
SCRUBBER USAGE
ONTARIO
Beachville - Chemical Lime Ltd.
Beachville - Cyanamid of Canada, Ltd.
Beachville - Domtar Chemicals Ltd.
Guelph - Canadian Gypsum Co., Ltd.
Hespeler - Domtar Chemicals Ltd.
Niagara Falls - Cyanamid of Canada, Ltd.
Spragge - Reiss Lime Co. of Canada, Ltd.
Joliette - Domtar Chemicals Ltd.
Lime Ridge - Dominion Lime Ltd.
Shawinigan Falls - Shawinigan Chemicals, Ltd.
* Signified water scrubber operation
** Signified possible water scrubber operation
Source: National Lime Association
-------
cyclones and dust chambers; no special air pollution abatement equipment
has been installed.
Estimated water pollution abatement capital expenditures required for
producers using water scrubbers are in the range of $150, 000 to $450, 000.
Producers using dry collection methods require negligible water pollution
abatement expenditures.
2. ONLY LIMITED PRICE INCREASES WILL BE POSSIBLE TO COVER
WATER POLLUTION ABATEMENT COSTS
(1) Lime Prices Are Determined Through Negotiations Between Local
Producers and Customers
Lime markets, because of the severe impact of delivery costs on
price, are local rather than nationwide. Industry economics tend to limit
interregional shipment. The degree to which cost increases that occur can
be passed on, therefore, is subject to local competitive conditions. Some
cost increases are likely to be passed on, however, as they have been with
fuel cost increases forcing the average price per ton to increase from
$13. 69 in 1969 to $15. 78 in 1971.
(2) A Number of Factors Will Tend to Inhibit Major Price Increases
Limestone, which is independent of fuel costs, can be substituted for
lime in steel making, agricultural and soil stabilization uses. Additionally,
the BOF-G process developed by U. S. Steel permits the consumption CF
about 20 percent less lime. At the present time only 37 percent of industry
production is captive.
3. NET PROFIT MARGINS FOR LIME PRODUCTION APPEAR TO BE IN
THE RANGE OF THREE TO SIX PERCENT
(1) Process Cost Data For Lime Production Based on 1969 Costs
Indicates Profit Margins in the Range of Three to Five Percent
Process cost data were developed by EPA to indicate the possible
profitability of lime production for the "Economics of Clean Air" study.
-30-
-------
Process cost data were developed only after initial efforts to obtain
financial data directly from producers and compilations of IRS tax
data proved unproductive:
The producers were unwilling to provide operating costs
data directly to the EPA people who were conducting the study.
IRS provided grouped, total company profitability data, but
these data were of limited value since they were for the total
company rather than specific plant types and sizes.
Process cost data were finally developed to at least provide an indication
of the profitability of various plant types and sizes, as shown in Exhibit
D-n, following this page.
(2) Producers Were Unwilling to Provide Financial Data for This Study
The Lime Association and producers contacted were particularly
angry at EPA's previous attempt to use IRS data, and they refused to pro-
vide detailed financial data for this study.
(3) Industry Contacts Claim That Lime Plants Realize a Maximum Profit
Margin of Four to Six Percent of Sales
The producers contacted estimated that no one in the industry operated
with an after tax profit margin greater than four to six percent. They
claimed that some multi-plant producers will continue to operate individual
plants at minus profitability to maintain satisfactory relationships with local
customers that are served in other locations by more profitable operations.
A few small, family-owned plants are said to continue to operate at what
is claimed to be essentially zero profitability.
-31-
-------
EXHIBIT D-II
Environmental Protection Agency
MODEL LIME PLANTS
BASIC DESCRIPTION AND INCOME STATEMENT
(Dollars In Thousands)
Capacity (tons/year)
Utilization at 90% (tons/year)
Investment
Total Sales (add OOO's)
Cost of Goods Sold *
Taxable Income
Income Tax
Net Income
Net Income per ton
Selling Price 1969 (dollars/T)
Net Income as percent of
selling price
Plant 1
3 Vertical Kilns
90 T/day each
89,100
80,190
$ 2,000
1,114
1,068
46
12
34
$ 0.42
$16.69
3%
Plant 2
1 Rotary Kiln
270 T/day
89,100
80,190
$ 2,600
1,114
1,066
48
12
36
$ 0.46
$13.69
Plant 3
6 Vertical Kilns
50 T/ day each
and 1 Rotary
225 T/day
173,250
155,250
$ 4,300
2,166
2,000
166
55
111
$ 0.71
$13.69
Plant 4
1 Vertical Kiln
400 T/day
and 1 Rotary
600 T/dav
330,000
297,000
$ 7,700
4,125
3,879
246
91
155
$ 0.52
$13.69
3%
5%
* Includes limestone, fuel, electric, labor, maintenance, administration, depreciation, othe"
Source: Economics of Clean Air, March, 1972; pages 4-92 and 4-93
-------
4. PRODUCERS ESTIMATE THE COST FOR BAG HOUSES TO BE ALMOST
10 TIMES THE EPA ESTIMATES
(1) The Pollution Abatement Costs Developed by EPA Are Based
on the Use of Bag Houses and Water Scrubbers
Two treatment configurations were proposed by EPA and are
presented in the following table.
TREATMENT CONFIGURATION
I II
Neutralization (including Change from wet scrubbing to
equalization and sludge dry collection
dewatering)
Settling
Treatment I is expected to be sufficient to meet the the ELG
"B" guidelines; 0. 03 pounds suspended solids and 0. 03 pounds COD
per ton of product. A pH range of 6-9 is also required. Treatment
II is based on the requirements of the ELG "A" guidelines: no water-
borne process effluent. The annualized costs of these treatment
methods, assuming a flow basis of 200 gallons per ton, are shown in
Exhibit D-III, following this page.
(2) Industry Contacts Estimate That the Costs for Treatment II
Should Be Substantially Higher Than EPA Estimates
Industry experience is that for a plant with two kilns each pro-
ducing about 74,000tons/^ear, bag house capital investment costs will
run about $900,000. This cost includes installation, electrical, and
auxiliary equipment. Producers also estimated that the costs for
disposing of collected fines, approximately $3. 00 to $5. 00 per
ton, were not included in the operating costs.
These costs are substantially higher than those developed by
EPA. The annualized cost per ton for these costs, based on amor-
tizing the investment over five years, is also presented in Exhibit D-III,
as Treatment II B.
-32-
-------
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-------
5. SUBSTANTIAL ECONOMIC IMPACT IS ANTICIPATED IN THE
LIME INDUSTRY
(1) The Pollution Abatement Costs, As Estimated by EPA, Can
Be Covered by Only the Most Profitable Producers
Pollution abatement costs exceed the estimated net income
per ton and range as high as 25 percent of sale price for a 200 ton/
day plant, as shown in the table below:
Sales Price Per Ton $15. 78
Net Income Per Ton 0. 45
Abatement Costs
Treatment I $0. 64
Treatment HA 0. 84
Treatment HB 3.91*
The net income of $0. 45 per ton equals three percent of the selling
price based on 1961 prices. Industry contacts estimate maximum net profits
per ton in the industry to be in the range of four to six percent of sales:
$0. 64 to $0. 95 per ton based on a 1971 price of $15. 78 per ton. The in-
dustry abatement cost estimates for bag-house scrubbers may be'over-
stated, however. These cannot be covered by even the most profitable
producers.
(2) Some Plants Presently Using Water Scrubbers May Be Forced
to Close and Force Some Employees to Find Work Outside the
Lime Industry
Approximately 25 percent of the plants are presently using water
scrubbers. The water abatement costs for Treatment I exceed the
estimated profitability for all but the most profitable plants.
*Industry cost estimate for Treatment II
-33-
-------
Producers with sufficient financial backing will likely convert
to dry collection methods. The other producers will probably pass
some cost increases on. In local competitive situations, however,
it is likely that plants using water scrubbers, and competing directly
with plants using dry collection methods, will have difficulty passing
on these added costs. Some of these plants will probably be forced
to close.
Lime plants producing 200 tons/day were estimated by industry
sources to employ from 25 to 80 people. The actual number em-
ployed depends on process variations and type of raw material. The
closing of a specific plant would probably force some people to find work
outside of the lime industry. Lime plants with water scrubbers tend
to be concentrated in Texas, northern Ohio, and eastern Pennsylvania.
6. WHILE NOT STATISTICALLY REPRESENTATIVE OF THE FINANCIAL
IMPACT ON ALL PRODUCERS, THE DATA DO INDICATE THAT
PLANTS USING WATER SCRUBBERS WILL BE MOST SIGNIFICANTLY
AFFECTED
Plants using water scrubbers will face significant water pollution
abatement costs, while plants using dry collection methods will have only
negligible water pollution abatement costs. Plants using water scrubbers
that are in direct competition with plants using dry collection methods wfl
probably not be able to pass the added costs on and will be forced to close.
(1) Although the Data Are Assumed to Be Somewhat Representative,
the Range of Error of the Estimates Cannot Be Determined
The real abatement cost data are not known. They are, however,
likely within the range of cost estimates presented by EPA and the
industry.
The financial data are assumed to be somewhat representative,
but actual financial data could not be obtained to verify the process
cost estimates- Without this data, there is no basis for determining
the possible error of applying the process cost data to a particular
plant.
-34-
-------
(2) Major Impact Questions Remain Unanswered
Without specific knowledge of the financial capability and
employment of each of the plants, it is not possible to identify the
specific plants that are likely to close and the resulting community,
employment, supplier and consumer impacts that are likely to re-
sult. About 26 plants use water scrubbers, however; a brief review
of the geographic proximity and corporate affiliation of these plants
indicates that possibly as many as ten plants may be forced to close.
If these plants have an average employment of fifty people, as many
as five hundred people may be affected.
Imports and exports are negligible. The effects on the balance
of payments will be minimal.
(3) The Major Conclusion of the Analysis, That the Impact of Water
Pollution Abatement Costs on Producers Using Water Scrubbers
Will Be Significant, Would Be Altered Under Either of Two
Circumstances
If the water pollution abatement expenditures are much lower
than estimated, many producers could possibly absorb the costs
which could not be passed on.
If lime producers are significantly more profitable than shown
by the estimated data, or if the costs can be more readily passed on
than we have estimated, the added abatement costs will not force
plants to close.
-35-
-------
E-E. SULFURIC ACID
1. SULFUR-BURNING AND REFINERY SLUDGE REGENERATION
CONTACT PLANTS FORM TWO MAJOR SEGMENTS IN THE
SULFURIC ACID INDUSTRY
The chamber process forms a third segment, but these plants
have declined from 10.5 percent of total production in 1960 to 1.1 per-
cent of total production in 1970.
(1) The_S_ulfur Burning andLRe finery Sludge Regeneration Con-
tact Plants Account fc^A^prpjamatelyJ32 Percent of All
Plants
About 120 of the 150 sulfuric acid plants are sulfur burning
or refinery sludge; the remaining 18 percent include chamber
process plants (eight percent) and contact plants burning other
forms of sulfur. The producers, plant sites, annual capacity,
date opened, process type, and raw materials used are shown
in Exhibit E -I, following this page.
(2) Producers Processing Refinery Sludge Have Fairly Severe
Water Pollution Problems
The water scrubber used to purify sulfur dioxide prior to
putting it into the contact plant produces a waste stream of weak
sulfuric acid which cannot be recycled. It is estimated that
about two percent of acid production goes to waste water. Treating
this waste water requires substantial expenditures.
(3) Sulfur Burning Contact Plants Have Moderate Water
Pollution Problems Caused by Leaks
Leaks which contaminate cooling water are usually monitored
automatically, and repaired promptly to avoid damage to plant
equipment. Other leaks are drained to central sumps and neutralized.
-36-
-------
EXHIBIT
ENVIRONMENTAL PROTECTION'
PRODUCER
AFC, Inc.
Allied Chem. Corp.
Indust. Chems. Div.
American Can Co.
Wilson Pharmaceutical
& Chem. Corp. Subsid.
Central Chem. Co. Div.
American Cyanamid Co.
Indust. Chems. and Plastics
Div.
Organic Chems. Div.
American Metal Climax, Inc.
AMAX Lead & Zinc, Inc., Div.
American Plant Food Corp.
American Smelting and Refining Co.
The Anaconda Co.
Arkansas Louisiana Gas Co.
Arida Chem, Corp., Subsid.
Atlantic Richfield Co.
ARCO Chem. Co., Div.
Atlas Corp.
Atlas Minerals, Div.
Bagdad Copper Corp.
Beker Indust. Corp.
Agricultuial Products Corp.
National Phosphate Corp.
Bethlehem Steel Corp.
Borden, Inc.
Borden Chem. Div.
Smith-Douglass
PLANT
Edison r.-ihf.
Anacorles, \Vash.
Baton Kmigi-, La.
Butf.lln X. V.
Chicago, 111.
Cleveland Ohio
•Detroit, Mich.
East St. loins. 111.
Elizabeth. V. J.
*E1 Segundo, Calif.
Front Royal, Va.
Geismar, La.
Hopewell. Va.
Newell, I'll.
Nitro, W. Va.
North Clavmonl, Del.
Plttsburg, Calif.
Richmond, Calif.
Ehvood, 111.
Hamilton, Ohio
Johet, 111.
Kalamazoo, Mich.
Linden, N. .1.
*New Orleans, La.
Bound Brook, N. J.
Bixbv, Mo.
*Galena Park, Tex.
Columbus, Ohio
Corpus Christi, Tex.
El Paso, Tex.
Hayden, Ariz.
Tacoma, Wash.
Anaconda, Mont.
Weed Heights, Nov.
Helena, Ark.
Fort Madison, Iowa
Philadelphia, Pa.
*Mexican Hat, Utah
Bagdad, Ariz.
Conda, Idaho
Marseilles, HI.
T.ift, 1.1.
Sparrows Point, Md.
Norfolk, Va.
Palmetto, Fla.
•Streator, 111.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
200
100
IfiO
500
200
250
140
3 SO
140
220
'10
50
25
240
70
170
270
b.~)
360
140
210
30
513
90
80
490
40
AGENCY
List of Producers and Plants: 1972
Sulfunc Acid
DATE ON STREAMS
PROCESS TYPE
1%7 - C
!!).->* - C
I <)r>4 - C
1 !)flf) - C
1:100 - c
I'll'l - C
1'l41 - C
l')28 - C
i'i:> 7 - c
x\
I'm; - c
1M67 - C
KM.6 - C
I'lll - C
1048 - C
11)1.1 - C
1010 - C
1043 - C
NA - C
NA - C
NA - C
N'A - C
NA
NA - C
NA - C
NA - C
1967 - C
NA - C
NA - C
1953 - C
1967 - C
NA - C
1%1 - C
IMI,-> - c
I'll, 2 - C
I'lhj - C
1953 - C
1937 - C
1956 - C
1951 - C
KVU MUKUm.
\NI> RKMUtKS
F'lemental
Klement.tl: sludge
Imlrngen sulfide
rlemental sludge
riemental , sludge
li\ di ogen sulfide
Klemental sludge
Kleinenl.l]
Klemont.ll , sludge
Elemental
Element. i] sludge
sludge llvdrogen
TlemenUi 1
Klemental
riemental mav be
e\l)anrled
sludge, pvi ites
Elemental
sludge, in-rite1:
Elemental sludge
sludge , hydrogen
sulfide
Elemenlal, sludge -
Leased from U.S.
Go\ ernment
Klemental
Elemental
rlemental
Elemental
Elemental
Elemental
Smelter gases
Elemental
SmeHei gases
Smelter gase^
Smelter ises
Smelter ^ases
Smelter gases
Smelter gases
Elemental, sulfur
oie, smelter
gases - May
be closed
Elemental
Elemental
Klemental sludge.
ludrogen sulfide
Elemental -
On stand-by
Elemental
l*\ rites; hvdrogen
sulfide
Elemental
Elemental
Elemental -
May be closed
(Continued)
-------
EXHIBIT E-I (2)
PRODUCER
Burdett Oxygen Co. of Cleveland,
Inc.
Carihc Nitrogen Corp.
CF Indust., Inc.
Bartow Phosphate Complex
Plant City Phosphate Complex
Cities Service Co. , Inc.
North American Chems. and
Metals Group
Agricultural Chems. Div.
Indust. Chems. Div.
North American Petrochems. Group
Pigments and Specialties Div.
North American Petroleum Group
Climax Chem. Co.
Coastal Chemical
Columbia Nitrogen Corp.
Commonwealth Oil Refining Co.,
Inc.
Delta Chems., Inc.
Detroit Chem. Works
Pressure Vessel Services, Div,
Diamond Shamrock Corp.
Diamond Shamrock Oil and
Gas Co.
E. I. du Pont de Nemours & Co.
Inc.
Explosives Dept.
Indust. and Biochems. Dept.
Organic Chems. Dept.
byt s and Chems. Div.
Eagle-Picher-Indust., Inc.
Agricultural Chems. Div.
Eastman Kodak Co.
Eastman Chem. Products, Inc.
Subsid.
Distillation Products Indust.
Div.
Eli-Lilly Marian Mfg. Div.
Essex Chem. Corp.
Chems. Div.
Farmland Indust., Inc.
Freei>ort Minerals Co.
Freeport Chem. Co., Div.
Georgia Fertilizer Co.
Georgia-Pacific Corp.
Belhngham Div.
W. R. Grace & Co.
Agricultural Chems. Group
I'LAXT
Parker.sburg, W. Va.
Guanica. P.R.
Bartow , Fla.
Plant Cih , Flu.
Tampa, Fla.
Augusta, Ga.
Copix'i lull. 'IVnn.
Monmouth Junction, N..I.
Lake Charles, La.
Monument, N. M.
Paseagoulo, Miss.
Augusta. Ga.
Charleston, S. C.
Penuelas, P. It.
Searsport, Me.
Detroit, Mich.
Dumas Tex.
Gibbstown, N. J.
Burnside, La.
Cleveland, Ohio
Cornwells Heights, Pa.
East Chicago, Ind.
La Porte, Tex.
Linden, N.J.
North Bond, Ohio
Richmond, Va.
Wurtland, Ky.
Deepwater, N. J.
Galena, Kans.
'Rochester, N. Y.
Streator, 111.
Newark, N. J.
Humford, R.I.
Baitow , Fl.i.
I'ncle Sam, La.
'Valdosta, Ga.
Belhngham, Wash.
Baltimore, Md.
Bartow, Fla.
Charleston, S. C.
•Norfolk, Va.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
DATE ON" STREAMS
PROCESS TYPE
1500
130
12(10
J 10
5 1 0
215
70
I! 7.",
.V>0
325
125
150
40
180
20
I')fi2 - C
lilOG - C
NA - C
1067 - C
NA - C
NA
1343 - C
1952 - C
li)58 - C
NA - CH
NA - CH
NA
NA - C
NA - C
1930 - C
1951 - C
1 956 - C
1929 - C
i9r>5 - c
250
850
40
22
19(35 - C
NA - C
NA - C
NA -C
NA - CH
K\\\ MM'FKIU.
AND Hi: MARKS
Klenu'nt.i]
Elemental - Ma\
be closed
Elemental
Elemental
Elemental
Elemental
P\ rites; smelter gases
sludge; hydrogen
sulfide
Elemental;
hvdi o^en suitide
Elemental
Elemental
Elemental: sludge;
In di ot;en sulfide
Elemental
Elemental
1958
NA
11)07
NA
NA
NA
NA
NA
NA
NA
NA
NA
1 954
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
- C
sludge ; hydrogen
sulfldt*
Elemental
Elemental; sludge
Elemental
Elemental;
Elemental, sludge
Elemental , sludge
Elemental
Elemental
Elemental
Elemental ; sludge
E 'mental
Elemental; smelter
gases
Elemental
Elemental;
hydrogen sulfide
Prmer plant stack
^?^ emissions
Elemental
Elemental
Elemental
Elemental
Elemental
(Continued^
-------
EXHIBIT E-I (3)
PRODUCER
PLANT
ANNUAL CAPACITY
(THOUSANDS OF TONS)
DATE ON STREAMS
PROCESS TYPE
RAW MATERIAL
AND REMARKS
Gulf Oil Corp.
Gulf Oil Chems. Co., Div.
Petrochems Div.
Gulf Resources & Chem. Corp.
The Bunker Hill Co. , Subsid.
Gulf 4 Western Indust., Inc.
The New Jersey Zinc Co., Subsid.
G 4 W Plant Life Services Inc.
Home Guano Co.
International Minerals &
Chem. Corp.
Agricultural Operations
Rainbow Div.
Kennecott Copper Corp.
Ray Mines Div.
Utah Copper Div.
Kerr-McGee Corp.
Kerr-McGee Chem. Corp. Subsid.
L. J. & M. La Place Co.
Minnesota Mining and Mfg. Co.
Chem. Div.
MisCoa
Monsanto Co.
Monsanto Commercial Products
Co., Agricultural Div.
Monsanto Indust. Chems. Co.
National Distillers and Chem.
Corp., U. S. Indust. Chems.
Co., Div.
National Zinc Co.
Newmont Mining Corp.
'- L Indust., Inc.
1'itamum Pigment Div.
North Star Chems., Inc.
Occidental Petroleum Corp.
Hosker Chem. Corp., Subsid.
Farm Chems. Div.
Occidental Chem. Co., Subsid.
Occidental of Florida Div.
Western Div.
Olm Corp.
Agricultural Chems. Div.
Chems. Div.
Port Arthur, Tex.
Kollogg, Idaho
PalmerUm, Pa.
Sandusky, Ohio
*Duthan, Ala.
Ozark-Mahoning Co.
*Americus, Ga.
*Florcnce, Ala.
*IIartsvillc, S. C.
*Indianapolis, Ind.
*Spartanburg, S. C.
*Tupelo, Miss.
Hay den, An/,.
Salt Lake City, Utah
Grants, N. M.
*Baltimore, Md.
Cottonclalc, Fla.
'Jacksonville, Fla.
Edison, X. J.
Copley, Ohio
*Paseagoulo, Miss.
El Dorado, Ark.
Avon, Calif.
Everett, Mass.
Sauget, 111.
Do Soto, Kans.
Dubuque, Iowa
Bartlesville, Okla.
San Manuel, Ariz.
St. Louis, Mo.
Sayreville, N. J.
Pine Bend, Minn.
*Taft, La.
White Springs, Fla.
Lathrop, Calif.
Plamview, Tex.
Pasadena, Tex.
BaltimoM', \ld.
Beaumont, Te\.
*Joliet, HI.
North Little Rock, Ark.
Paulsboro, N. J.
Shreveport, La.
Tulsa, Okla.
140
310
160
21.)
600
70
110
30
40
70
60
,120
175
135
120
340
100
70
100
(650)
350
600
120
510
700
225
100
NA - C
1954 - C
NA - C
NA
NA
NA
1968 - C
NA - C
1958 - C
1917 - CH
1 !).•><> - CH
1946 - CH
1067 - C
1942 - C
1958 - C
NA
NA
- C
- C
NA - C
NA - C
1943 - C
1943 - C
NA - C
1934 - C
1934 - C
1959 - C
405
100
300
140
120
1966 - C
1957 - C
1963 - C
1947 - C
i'in - c
11)57 - C
1942 - C
1947 - C
1959 - C
1941 - C
Skid no;
In dromon sulfide
Smeller gases
Elemental;
smelter gases
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
Elemental
EU mental
Smelter gases
Smelter gases
Elemental
Elemental
Elemental
Fie mental
Elemental
Elemental
Elemental
Elemental; sludge,
hydrogen sultide
Elemental
Elemental
Elemental
EU mental
Elemental, smelter
gases
Smelter gases,
by 1973
Elemental
Elemental
Elemental; sludge -
May be closed
Elemental -
For sale
Elemental
Elemental
Elemental
Elemental
l.i, , • ,U (I
Skhl ;.•,
hydrogen sulfide
Elemental
Elemental
Elemental; sludge
Elemr al
(Continued)
-------
EXHIBIT E-I (4)
PRODUCER
Pelham Phosphate Co.
Pehnwalt Corp.
Chem. Div.
Pfizer Inc.
C. K. Williams & Co., Div.
Phelps Dodge Refining Corp.
Reignhold Chems., Inc.
Rohm and Haas Co.
Royster Co.
St. Joe Minerals Corp.
J. R. Simplot Co.
Minerals and Chem. Div.
Southern States Phosphate
& Fertilizer Co.
Standard Oil Co. of California
Standard Oil Co. (Indiana)
American Oil Co., Subsid.
Stauffer Chem. Co.
Fertilizer and Mining Div.
Indust. Chem. Div.
Swift ,i Co.
Swift Agricultural Chems. Corp.
Div.
Texaco Inc.
Texas Gulf Sulphur Co.
Union Carbide Corp.
Chems. and Plastics Div.
Union Oil Co. of California
Colmer Carbon and Chem.
Corp., Subsid.
United States Steel Corp.
USS Agri-Chemicals, Div.
PLANT
Pelham, Ga.
*Calvert City, Ky.
*East St. Louis, 111.
Easton, Pa.
Morenci, An/,.
Tuscaloosa, Ala.
Deer Park, Tt>.\.
*Philadelphia, Pa.
*Athens, Ga.
Charleston, S. C.
Chesapeake, Va.
Mulberry, Fla.
Herculaneum, Mo.
Monaca, Pa.
Pocatello, Idaho
Savannah, Ga.
El Segundo, Calif.
Honolulu, Hawaii
Texas City, Tex.
Pasadena, Tex.
Baton Rouge, La.
Baytown, Tex.
Dormnguez, Calif.
Fort Worth, Tex.
Hammond, Ind.
Le Moyne, Ala.
Manchester, Tex.
Martinez, Calif.
*Richmond (Stage), Calif.
Calumet City, 111.
Dothan, Ala.
*Memphis, Tenn.
Norfolk, Va.
*Savannah, Ga.
Wilmington, N. C.
Port Arthur, Tex.
Aurora (Lee Creek), N. C.
Texas City, Tex.
Wilmington, Calif.
Bartow, Fla.
Fort Meade, Fla.
Wilmington, N. C.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
20
50
15
270
20
20
330
120
355
800
35
NA
40
175
450
750
275
325
120
275
210
1400
250
175
50
30
15
60
20
35
95
1100
NA
140
290
540
95
DATE ON STREAMS
PROCESS TYPE
1012 - CII
11)48 - C
NA - C
NA - C
1965 - C
NA - C
NA - CH
UA\\ \,ATEHIAL
AND REMARKS
NA
NA
NA
NA
- CH
- CH
- C
- C
NA - C
1959 - C
NA - CH
NA - C
NA - C
NA - C
1925 - C
1955 - C
1924 - C
1925 - C
1929 - C
1956 - C
1920 - C
NA -C
1944 - C
1947 - C
1966 - C
1903 - CH
1947 - C
1902 - CH
1955 - C
1965 - C
1966 - C
NA
1950 - C
1964 - C
1963 - C
1968 - C
Elemental
Elemental
Ferrous sulfate -
High-punU iron
oxides as by-product
Ferrous sulfate -
High-purity iron
oxides as by-product
Smelter gases
Elemental - May
be closed
Recovery from
methyl methacrylate
Elemental - May
be closed
Elemental
/lemontal
Elemental
Elemental
Smelter gases
Smelter gases
Elemental
Elemental
Refinery
Sludge; other
Elemental; sludge,
hydrogen sulfide
Elemental
Elemental; sludge
Elemental; sludge;
hydrogen sulfide
Elemental; sludge;
hydrogen sulfide
Elemental
Elemental; sludge
Elemental
Elemental; sludge;
' yclrogen sulfide
Jlemental; sludge
Elemental
Elemental - Some
may be closed.
Sludge; hydrogen
sulfide - May be
closed.
Elemental
Elemental
Elemental; sludge;
hydrogen sulfide
Elemei il
Elemental
Elemental - May
be closed
(Conti .ed)
-------
EXHIBIT E-I (5)
PRODUCER
USS Chems. Div.
Valley Nitrogen Producers, Inc.
Arizona Agrochemical Corp.
Subsid.
Weaver Fertilizer Co., Inc.
Western Nuclear, Inc.
The Williams Companies
Agrico Chem. Co., Inc.,
Subsid.
Witco Chem. Corp.
Sonneborn Div.
Wright Chem. Corp.
PLANT
Neville Island, Pa.
Helm, Calif.
Chandler, Ari^.
Norfolk, Va.
Jeffrey Citv, \Vyo.
Riverton, \Vyo.
*Baltimore, Md.
Bay City, Mich.
Cairo, Ohio
Humboldt, Iowa
Pierce, Fla.
Petroha, Pa.
Acme, N. C.
ANNUAL CAPACITY
(THOUSANDS OF TONS)
50
360
Note: Capacity data are in thousands of short tons, 100'r II SO equivalent.
* Plants starred are reported by industry contacts to be closed.
Source:1972 Directory of Chem. and Procedures
25
40
45
20
700
45
60
DATE ON STREAMS
PROCESS TYPE
NA - C
1!)59 - C
1059 - C
NA - C
1962 - C
1958 - C
NA - CH
1957 - C
I960 - C
1956 - CH
1964 - C
1933 - C
1964 - C
RAW MATERIAL
AND RF.MARKS
Elemental,
hvdi"o<;en sulfide
Elemental
Elemental
Elemental
Elemental
Elemental
Sludge
Elemental - May
be closed
-------
2 • THE WATER POLLUTION ABATEMENT COSTS ARE LIKELY
TO RESULT IN LIMITED PRICE INCREASES
{1) Sulfurlc Acid Prices Are Determined Throughjjegotiations
Between Local Producers and Customers
The markets for sulfuric acid are local rather than nation-
wide. Because sulfuric acid has a low dollar value of $19. 00 to
$23. 00 per ton, the costs of transportation over long distances are
prohibitive. The practical distance for shipping sulfuric acid
varies from 50 to 100 miles in the densely populated mid-Atlantic
states to 500 to 1,000 miles in the southeast to 1,000 to 1,500 miles
in the west. Some cost increases are likely to be passed on to
users, subject to local competitive considerations.
(2) There Are^ However, A Number of Fa_ctors_Wbich^Tend
to Inhibit Major Price Increases
Sulfuric acid has substitutes for almost every end use; either
another acid, such as the use of hydrochloric acid in pickling steel,
or another technology such as making ethyl alcohol directly from
ethylene (without going through ethyl sulfate). Its major competitive
strength is its low cost.
Since present capacity utilization is approximately 75 percent,
competition may result in major low-cost producers absorbing
additional costs in an attempt to increase plant utilization.
Only about 60 percent of production is used captively; the
remaining 40 percent requires competitive selling.
(3) Refinery Sludgyjgrocesjsers May Be Able to Pass on Greater
Price Increases
After acid is used in the refinery alkylation process, it becomes
sludge acid. Reprocessing the refinery sludge eliminates a waste dis-
posal problem for the refineries. The refineries presently pay more
than new acid prices for their regenerated acid to compensate for the
added costs of regenerating sludge acid. The market for regenerated sulfuric
-37-
-------
acid is forecasted to increase. Pollution problems have caused the
discontinuance of the use of lead as a catalyst to raise the octane of
gasoline at a time when air pollution control devices on automobiles
are causing decreased engine efficiency and increasing the require-
ment for higher octane fuel. The use of sulfuric acid in the alky-
lation process is presently the only economical alternative to lead
for raising the octane of gasoline.
(4) Plant Capacity Utilization Is an Especially Critical Prcjplejn
for Regeneration Plants
Capacity utilization is an important factor in all sulfuric acid
plants because 80 to 90 percent of the conversion costs are fixed
costs. To operate a plant at 50 percent of capacity does not cost
significantly less than operating at 100 percent of capacity. There-
fore, higher utilization rates can have a significant effect on unit
costs. It is a particularly important problem for regeneration
plants, because conversion costs and fixed costs are higher.
Regeneration plants also make acid from elemental sulfur or other
sources of sulfur and sell acid to other markets besides refineries.
These other markets are called "disappearance" markets in the
regeneration industry, because this acid is not recycled. Dis-
appearance markets have been an important factor in capacity
utilization for regeneration plants. However, competition is in-
creasing for all acid producers, due to greatly increasing supplies
of surplus sulfur. As high cost producers, regeneration plant
managers will probably pass on the added costs of refinery sludge
processing directly to their refinery customers and avoid the need
for general price increases.
3. FINANCIAL DATA FOR BOTH SULFUR BURNING AND REFINERY
SLUDGE PLANTS INDICATE COMPARABLE PROFITABILITY FOR
BOTH SEGMENTS
Typical production costs for a 1,000 tons per day sulfur burning
contact plant range from $12. 50 to $15. 20 per ton, as shown in Exhibit E-E,
following this page. Cost ranges are shown where major variations were
found to exist. Production costs for a refinery sludge regeneration plant
range from $13.60 to $15.60 per ton, as shown in Exhibit E-HI, following
Exhibit E-II. Costs are shown for plants of equal p;^e to facilitate com-
parison.
-38-
-------
EXHIBIT E -II
Environmental Protection Agency
1972 PRODUCTION COSTS OF SULFURIC ACID
SULFUR BURNING CONTACT PLANT
Capacity: 1, 000 tons per day, 330 days per year
Figures below reflect production at 75% of this capacity, which
is typical.
Capital Investment:
Product Economics:
Sales Price
Cost of Goods
Fixed $6,000,000V ;
Working 500,000
$6,500,000
Percent
Dollar/ Selling
Ton Price
Typical
Range
$19.75
100
19.-21.
Raw Materials (Sulfur)
Operating Labor (Salaries
and O/H)
Maintenance (Labor, Supplies,
and O/H)
Depreciation
Utilities
All Other (Local Tax, In-
surance, etc.)
Total COG
Gross Profit
Corp. Selling, Admin. , O/H
Expense
Distribution (Freight) Expense
Federal Income Taxes
Net Profit
8.40
1.20
1.58(2)
.60
1.02
14.40
5.35
2.18
.77
1.20
43 8. -9. 00
6"
8
8
3
73
4.50-6.50
» for
"conversion
27
11
4
6
1.20
.50-2.00
(1)
Basis: Fixed capital = $5, 000 (1972) per daily ton, plus approximately
$1, 000, 000 for air pollution control modifications for plants in
this size category. Capital requirements can vary +20% for
modified plants.
of capital.
-------
EXHIBIT E-IH
Environmental Protection Agency
1972 PRODUCTION COSTS OF SULFURIC ACID
REFINERY SLUDGE REGENERATION CONTACT
PLANT
Capacity: 1,000 Tons per Day, 330 Days per Year (figures reflect production at 75%
of this capacity, which is typical)
(1)
Capital Investment: Fixed - $9,000,000
Working 500,000
$9,500,000
Product Economics: $/Ton
Sales Price $22.00
Cost of Goods:
(2)
Raw Mate rials (Sulfur) 8.60
Operating Labor (Salaries & O/H) 1.40
Maintenance (Labor, supplies & O/H) 1.90
Depreciation 2.30(3)
Utilities . 70
All Other (local tax, insurance, etc.) 1.02
Total Cost of Goods $15. 92
Gross Profit 6.08
Corporate Selling, Administration, O/H, Exp. 2.18
Freight Expense (2 ways) 1.50
Federal Income Taxes 1.20
% Selling
Price
100
39
6
9
10
3
5.
72
28
10
7
5
Typical
Range
20.- 23.
Note (2)
5. - 7. for
"conversion'
Net Profit
1.20
.50 - 2.00
(1) Basis: Fixed capital = $8,000. (1972) per daily ton, plus approximately $1,000,000.
For Air Pollution Control Modifications for plants in this size category, capital re-
quirements can vary +20% for modified plants.
(2) The price paid to refineries is negotiated. It must include the cost of round trip
freight. This freight is a major factor in the raw material cost. Theoretically
this cost should result in regenerated acid being noncompetitive in price with acid
from other raw material. However, in practice some of the higher cost of re-
generation can be passed through to refineries because they have no cheap alter-
native way of disposing of spent acid.
(3) 6% of capital.
-------
BothPlant Types Have Profitability Ranges From 3 to 10
Percent^JjioughRegeneration Plants
Higher Ope ration Costs
Both plant types have profitability ranges between 3 and 10
percent as shown in Exhibits E-II and E-III. However, a com-
parison of the operating data indicates that the regeneration plant
has significantly greater conversion costs — 18 percent above
the sulfur burning plant. (The total of all costs except raw
materials is called the conversion cost.)
The higher costs of conversion for regeneration are gen-
erally offset by higher negotiated prices, as shown in Exhibit E-HI,
to make refinery sludge processing as profitable as sulfur-burning.
The refineries are willing to pay the added costs because the
reprocessing eliminates the problem of disposing of the sludge acid.
(2) Be finery: Sludge Proce ss ing Plants Have Substantially Highe r
Overhead, However
As shown in Exhibits E-II and E-in, the plant investment for
a 1,000 ton per day regeneration plant is $9 million, as compared
with $6 million for a 1,000 tons per day sulfur burning plant.
4. INDUSTRY SOURCES INDICATE THAT COST ESTIMATES SHOULD
BE SUBSTANTIALLY HIGHER FOR REFINERY SLUDGE PROCESSING
(I) The Pollution Abatement Costs Developed By EPA Are
Based On The Use Of Neutralization, Settling, And
Recycling
Two treatment configurations were proposed by EPA, as
shown in the table on the following page.
-39-
-------
Treatment Configuration
I H
Neutralization (including Recycle
equalization and sludge
dewatering)
Settling
Treatment I is expected to meet the ELG "B" water effluent
guidelines of . 25 pounds per ton of suspended solids. Treatment II is
based on the requirements of the ELG "A" guidelines of no water-
borne process effluent.
(2) Industry Sources Indicate Actual Water Abatement Costs for
Regeneration Plants Are Higher Than EPA's Estimates
The EPA water abatement cost estimates for 285 tons per day
plants range from $0. 29 to $0. 76 per ton as shown in Exhibit E-IV,
following this page. Industry sources indicate that water abatement
costs for 285 tons per day refinery regeneration plants are substantially
higher: the cost impact per ton ranges from $0.95 to $1. 50.
(3) Industry Sources Believe That Treatment n—Recycle—Is Not
a Practical Technology
Industry sources explain that leaks and spills must be neutralized
with soda ash or other material for occupational safety reasons, and that
effluents from wash downs of this treatment cannot practically be recycled
because of production contamination.
5. THE IMPACT OF WATER POLLUTION ABATEMENT COSTS
ALONE IS NOT LIKELY TO RESULT IN MORE THAN A FEW SMALL
PLANTS CLOSING
(1) Comparison of Pollution Abatement Costs Per Ton With Unit
Production Costs for Sulfur Burning Contact Plants Indicates That
Profitability Impact Could Be Significant for Some Plants
The estimated range of after tax net income for a 330,000 ton per
year plant operating at 75 percent capacity, as compared to the EPA cost
estimates, is shown below.
-40-
-------
>
1
EXHIBIT E
CJ
e
v
a
a
•H
nmental Protect
2
'S
e
W
«g
o ,
d
TJ
to to
b£ 3
C „
C
o
H
o
o
o
a
a.
O
o o o
o o o
O M O
O O
o o
CM CO
ooo
O CM O
O -i CO
O
o
CO
o
IN
cu $
'S <-T
= i
o E
•a 'S
a. |
CU C
u '"^
5 °
T3 £
3 5
15 «>
o y
e o-
£ s
CQ *•*
0) CO
S «
X
Ed
c
c
o
o 2
t. c
II
I!
Five year payba
an impact great
deciding to closi
8% interest rate
Assumes capaci
"•* ^ ^2
-------
Range of After Tax Net Profit Per
Ton for Plants in the Capacity Range
250,000-410,000 Tons/Year $0.50 -$2.00
Abatement Costs Per Ton
Treatment I 94, 000 Tons/Year $0.76
Treatment II 94,000 Tons/Year $0.29
Treatment I 495,000 Tons/Year $0.54
Treatment H 495,000 Tons/Year $0.31
Although neither of the plant sizes on which EPA based its cost
estimates are directly comparable with the plant sizes on which financial
data were obtained in this study, the plant sizes analyzed are within the
range of the two plant sizes used by EPA. It therefore seems likely that
the range of abatement cost per ton is reasonable for the plants for which
operating data were obtained. The abatement costs shown above for
Treatment I exceed the present profit margin of the least profitable plants
shown in the range above. Some presently marginal plants might, therefore,
be forced to close from the added costs of water pollution abatement unless
prices can be raised. Industry sources indicate that negative cash flow
rather than lack of profitability generally would be the criterion used in
deciding to close plants. Nevertheless, some few marginal plants could
be forced to close if obliged to spend the full amount estimated by EPA.
It was not possible within the scope of this study, however, to identify
these plants specifically.
(2) Cost Data Obtained Are Only Indicative of Average Sulfuric Acid
Profitability and Do Not Permit Identification of Specific Plan'
Effects
There are major cost variations between plants depending on plant
location, proximity to source of raw materials, management techniques,
market conditions, etc.
(3) Financial Data Indicate That Water Pollution Abatement Costs of the
Magnitude Estimated by EPA for Treatment I Could Be Absorbed by
Most Sulfur Burning Contact Plants
The profit margin, if the increased cost is absorbed, would be reduced
from six percent to four percent. If fifty percent of the added costs were
passed on, the profit margin would be five percent.
-41-
-------
(4) Refinery Sludge Processors, Although Facing Significantly
Greater Pollution Abatement Costs, Will Probably Pass These
Costs on to the Refineries
Industry contacts estimate the added costs for water pollution
abatement in a 285 tons per day plant processing sludge-acid may be
as high as $0. 75 to $1. 50 per ton. The average profit margin, if the
costs were absorbed, would be reduced from a range of $0. 50-$2.00/ton
to a range of $1. 50 (loss)-$0. 50/ton.
The refinery sludge processors are, however, passing some of the
added costs of refinery sludge processing on to refineries in the form of
higher prices. While this market segment only absorbs about ten percent
of total sulfuric acid production, some amount of added cost due to special
abatement problems may be accepted by refineries in higher prices, since
without sludge processors, refineries would face critical sludge disposal
problems.
In addition, the demand for sulfuric acid, instead of lead as a
catalyst to raise gasoline octane, is increasing. The refineries have no
economic alternative to sulfuric acid as a substitute for lead.
There may be some temporary dislocations as some refineries build
their own plant rather than pay to abate the plants of their supplier. The
dislocations are expected to be only temporary, however.
(5) Plants Will Probably Continue To Close
The added costs of water pollution abatement are not likely to be the
determining factor causing their closing. As compared to the air pollution
abatement costs of $1. 2 million to $2. 0 million per year for a 100,000 ton
per year sulfur burning plant, the water pollution abatement capital costs
of $80, 000 to $200,000 are relatively minor.
Industry utilization is, however, approximately 75 percent; the industry
has substantial excess capacity. There will be additional closings as pro-
ducers adjust capacity to meet demand.
-42-
-------
6. THE ANALYSIS INDICATES THAT WHILE SOME PLANTS MAY BE FORCED
TO CLOSE. THE WATER POLLUTION ABATEMENT COSTS ARE NOT
LIKELY TO FORCE MAJOR INDUSTRY SEGMENTS TO CLOSE
The financial and pollution abatement cost data are by no means statis-
tically representative of all sulfuric acid producers. These data do, however,
indicate the impacts that might be expected.
(I) The Possible Range Of Error Of The Estimates As Applied
To A Specific Plant Is High
The data were provided by industry personnel who understood plant
economics. The data are, however, for a typical plant of 1,000 TPD.
Sulfuric acid plants have annual capacities ranging from 5,000 tons
to 1,700,000 tons per year. Any cost data, however, such as those shown
in Exhibits E-II and E-in, can only be representative of plants within a
certain size range. The production cost data included in this report are
estimated to be indicative of plants between 250,000 tons and 410,000 tons
per year. Even this range represents only about 30 percent of all plants.
(2) There Are Two Critical Assumptions
The abatement costs estimates provided by EPA, as supplemented by
industry contacts, are assumed to be representative of all process and raw
material combinations.
The plant financial data obtained, though it does not include the full
range of plant capacities, are assumed to be representative for the industry.
(3) Major Impact Questions Remain Unanswered
Within the time available for the study, it is impossible to collect data
to assess the economic impact on specific plants, community, employment,
and upon the industry's suppliers and consumers.
With imports less than . 5 percent of domestic consumption, the balance
of payments effects are likely to be negligible.
-43-
-------
(4) The Major Conclusion of the Analysis, That the Impact of Water
Pollution Abatement Costs Is Likely to Be Limited, Would Be
Altered Under Either of Two Circumstances
If the pollution abatement costs prove to be much higher for some
specific producers, they might be significantly affected. This is not likely
to be the case, however, for sulfur burning or refinery sludge processing
contact plants which account for 82 percent of the plants. Smelter gas and
pyrites plants may be within the range of costs for refinery sludge pro-
cessing. Abatement cost data were not obtained for the chamber process
plants which account for 1.1 percent of total production.
If specific producers, or groups of producers, are much less pro-
fitable than shown in data obtained or if they are unable to pass on cost
increases, these producers may be significantly affected.
-44-
-------
H-F. ELEMENTAL PHOSPHORUS
1. NO MAJOR SEGMENTS HAVE BEEN IDENTIFIED WITHIN THE
PHOSPHORUS INDUSTRY
The water pollution abatement cost differences between producers are not
sufficiently great to indicate a significant impact on some producers as compared
to others.
2. THE WATER POLLUTION ABATEMENT COSTS WILL PROBABLY
RESULT IN ONLY LIMITED PRICE INCREASES. IF ANY
(1) Phosphorus Prices Are Only Partially Subject To Market
Pressures
Most phosphorus is used captively for the production of furnace
phosphoric acid and other phosphorus based chemicals, with only limited
quantities sold in competitive markets. Thus, the price of major portions
of consumption is determined by complex intercompany transfer factors.
Published prices of phosphorus are in the vicinity of $380 per ton
on a freight equalized basis. The f. o.b. price of this chemical as cal-
culated from the Bureau of Census figures of total shipments and their
value is $359 per ton.
(2) There Are A Number Of Factors Which Will Tend To Inhibit
Major Price Increases, However
The factors inhibiting price increases are related to the difficulties
encountered by the industry in view of the dwindling demand for furnace
phosphoric acid, and the resulting decline in plant utilization. Detailed
and reliable data on the current Utilization is not available but it is be-
lieved to be in the vicinity of 80 percent.
The demand for furnace phosphoric acid declined mainly due to the
ecological attack on the use of phosphates in detergents. According to
Chemical Profiles, the total production of this chemical will decline for
the next five years by about five percent per year. With the declining
demand for phosphorus, the added costs of pollution abatement are
likely to result in only limited price increases.
-45-
-------
3. FINANCIAL DATA OBTAINED FOR PHOSPHORUS PRODUCTION
INDICATES AFTER - TAX PROFIT MARGINS OF APPROXIMATELY
TWO PERCENT
With a gross profit for phosphorus production of approximately 16
percent of the selling price and a corporate allocation of 12 percent, the
after tax net profit is about two percent of the selling price, as shown in
Exhibit F-I, following this page.
4. PRODUCERS DISAGREE WITH THE POLLUTION ABATEMENT
COSTS DEVELOPED BY EPA
(1) The Pollution Abatement Costs Developed by EPA Are Based On
The Use Of Neutralization, Settling, And Recycling
Two Treatment configurations were proposed by EPA as shown in
the following table.
Treatment Configuration
I II
Neutralization Neutralization
(including equalization and Settling
sludge dewatering) Recycle
Settling
Treatment I, assuming a flow basis of 100 gal./ton is expected to meet
the ELG "B" water effluent guidelines of:
1. 7 Ibs. of suspended solids per ton of product
0.2 Ibs. of phosphates per ton of product
0. 001 Ibs. of elemental phosphorus per ton of product
A pH maximum of 6-9 is required for all products
Treatment II is expected to be sufficient to meet the "A" guideline re-
quirement of no process effluent. Water pollution abatement costs,
based on capital and operating cost estimates prepared by EPA, are
presented in Exhibit F-II, following Exhibit F-I.
-46-
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EXHIBIT F-I
Environmental Protection Agency
1972 COSTS OF PHOSPHORUS PRODUCTION
Capacity: 137, 500 tons/year (costs below reflect production
at 87% of this capacity) (1)
Capital Investment: $55, 000, 000
(2)
Product Economics:
Sales Price
Cost of Goods
Raw Materials
Electric Power
Operating Labor
Maintenance
Depreciation
All Other
Total COG
Gross Profit
Corp. Sales, Adm., Dist. , O/H Exp.
Federal Income Taxes
Net Profit
Dollars/
Ton
$380. (3
$ 62.
78.
60.
44.
20.
56.
320.
60.
44.
(4)
(5)
Percent
Selling
Price
100
16
21
16
12
5
14
84
16
12
2
Typical
Range $
$360.-380.
$3.-11.
(1) Washing 10-11 percent phosphorus ore. Higher grade ore for which washing
is not required may partially offset higher freight cost to market.
(2) Includes $8,000, 000. Water pollution abatement, plus $4, 000, 000 air pollution
abatement. Approximately $2, 000, 000 additional air and water pollution abate-
ment planned.
(3) Freight equalized
(4) Includes: Phosphate ore, coke, silica, furnace electrodes and lime
(5) Includes: Freight equalization and by-product credit
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—
-------
(2) Industry Sources Indicate Actual Water Pollution Abatement
Costs Are Likely To Be More Than Ten Times The EPA
Estimated Costs
Estimated capital costs as developed by EPA, for Treatment in a
plant producing 300 tons per day are approximately $142, 000 for neutrali-
zation, settling and recycling. Industry contacts estimate over $1.5 million
in capital requirements would be required, however, as follows:
Total recycle, ore washer; tailing pond $ 190,000
Convert to ladel slag handling to allow
air cooling 1,340,000
Convert to recycle of burden and coke
dust collector effluents 93,000
Secondary treatment of a sanitory 37,000
sewage
$ 1,660,000
The impact of these costs, on a cost per ton basis, are shown in
the following table.
Revised Water Pollution Abatement Costs*
Capital Investment $1,660,000
Operating Cost 332,000
Cost Per Ton 3.35
Net Income Per Ton 3. 00 - 11. 00
The abatement cost of$,3.35 per ton amounts to 0. 9 percent of the
the selling price; it amounts to approximately 40 percent of after tax
net income.
5. PLANT OPERATING DATA INDICATE THAT THE IMPACT OF WATER
POLLUTION ABATEMENT C.OSTS IS LIKELY TO BE VERY LIMITED
(1) The Cost Data Obtained Is Not Sufficient To Permit Identification
Of Specific Plant Effects
The cost data obtained should be treated with caution, since
the variations in costs between plants can be significant. For example,
while power costs may be 20 percent of the selling price in one location,
these costs vary significantly from one plant location to another depending
*Based on industry estimates
-47-
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on the local power rates. Another possible source of variation depends
on the degree to which water pollution equipment is already installed in
existing plants. At least one plant is known to operate currently with no
water discharge.
(2) Financial Data Indicate That Pollution Abatement Costs of the
Magnitude Estimated by the Industry Could Be Absorbed by
Producers
The price of phosphorus as reported by the Bureau of Census is
$359 per ton. Assuming plant profitability of one to three percent after
taxes, the net profit per ton will be in the range of $3. 00 to $11.00. The
revised water pollution abatement cost is $3. 35 per ton. While this re-
presents a substantial decrease in profit, it is not likely to be a determining
factor in causing plants to close.
(3) Plants Will Probably Continue to Close, But Water Pollution
Abatement Costs Are Not Likely to Be the Determining Factor
With the growing concern over the eutrophication question and
competition from the wet phosphoric acid route, the market for phosphorus
is declining. Faced also with increasing energy costs, phosphorus pro-
ducers can be expected to seriously review the projected long-term
viability to determine whether it warrants an additional $2 million
investment.
If the plants are operating in a stable or growing market, the water
pollution abatement costs would be unlikely to force any plants to close.
With the declining market, however, the substantial capital investment
costs, while not the determining factor, may hasten decisions to close
plants.
6. THE ANALYSIS INDICATES THAT THE WATER POLLUTION ABATEMENT
COSTS. WHILE NOT LARGE ENOUGH TO CAUSE PLANTS TO CLOSE,
MAY HASTEN THE DECISIONS TO CLOSE SOME PLANTS
The financial and operating cost data obtained are not statistically re-
presentative of all producers. The data indicate, however, that the substantial
capital investment costs required (as estimated by industry) may hasten decisions
to close plants in the face of a declining market.
-48-
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(1) The Range of Error of the Estimates Is Probably High
When Applied to a Specific Plant
The variations in plant costs and profits are related to such
factors as:
Plant location
Kind of raw materials used
Process modifications and variations
Power cost and power requirements
Labor availability
By-product credit or by-product sales
Detailed data necessary to analyze the relative importance of these
factors on a plant by plant have not been obtained, however.
(2) There are Two_ Critigal_Assumptions
The real abatement cost data are not known. It is very likely
that the real estimates are between industry estimates and EPA
estimates.
The financial data represent a more significant source of
error since it is very hard to judge their representativeness.
(3) Major Impact Questions IfemainJJnanswered
Within the time frame of this study, it was not possible to assess
the effects on employment in given communities and the effects upon the
industry's suppliers and customers.
Since imports and exports of phosphorus are negligible, the effects
on balance of payments will be minimal, however.
(4) The Major Conclusion of the Analysis, That the Impact of
Water Pollution Abatement Costs Is Likely to be Limited,
Would be Altered Under Either of Two Circumstances
If the pollution abatement costs prove to be much higher than
currently estimated for specific producers not yet identified, because
of local conditions or certain process modifications, or if specific
producers or groups of producers are much less profitable than shown
in financial profile, the impact could be substantially different.
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