United States
Environmental
Protection Agency
Office of Air Quality
Planning and Standards
Research Triangle Park,
NC27711
EPA-453/P-97-001
November 1997
Air
Economic Impact Analysis for the
EPA Proposed Primary Copper
Smelting NESHAP
-------
FIGURES
Number Page
2-1 Primary copper production 2-2
4-1 Smelter names and locations 4-3
-------
CONTENTS
Section Page
1 INTRODUCTION 1-1
2 THE SUPPLY SIDE 2-1
2.1 Production Process, Inputs, and Outputs . . 2-1
2.2 Types of Products and Services 2-3
2.3 Major By-Products, Co-Products, and
Substitution Possibilities 2-3
2.4 Costs of Production and Plant Size
Efficiency 2-4
2.5 Production Facilities and Locations .... 2-5
2.5.1 Plant Descriptions 2-5
3 THE DEMAND SIDE 3-1
3.1 Product Characteristics 3-1
3.2 Uses and Consumers 3-2
3.3 Trends in Consumption 3-3
4 INDUSTRY ORGANIZATION 4-1
4.1 Market Structure 4-1
4.2 Manufacturing Plants 4-2
4.3 Firm Characteristics 4-5
4.4 Historical Market Data 4-6
5 THE REGULATION 5-1
6 ECONOMIC IMPACTS OF THE REGULATION 6-1
REFERENCES R-l
IV
-------
TABLES
Number page
2-1 Primary Copper, SIC 3331: Value of Shipments
and Cost of Inputs, 1982-1992 2-4
2-2 Primary Copper Producers 2-5
2-3 Anode Copper Production and Capacity, 1992 . . . 2-6
2-4 Estimated Anode Copper Capacity, 1996 2-7
2-5 Estimated Smelter Copper Production, 1996 . . . 2-8
3-1 U.S. Consumption of Refined Copper and
Copper Scrap by Product, 1992 3-2
3-2 U.S. End-Use Markets for Copper and Copper
Alloy, 1992 3-3
3-3 Copper Mill Products Consumption By End Use . .3-4
4-1 U.S. Copper Smelting Facilities: Production
and Employment 4-4
4-2 Estimated Smelter Sales of Refined Copper ... 4-4
4-3 Characteristics of Companies Owning Primary
Copper Smelters 4-5
4-4 Historical Data on the Market for Refined
Copper 4-6
5-1 Estimated Costs of Complying with the Primary
Copper Smelting NESHAP 5-2
6-1 Estimated Impacts of Primary Copper Smelting
NESHAP 6-1
VI
-------
SECTION 1
INTRODUCTION
The U. S. Environmental Protection Agency's (EPA's) Office
of Air Quality Planning and Standards (OAQPS) is compiling
information on primary copper smelting as part of its effort to
develop National Emission Standards for Hazardous Air Pollutants
(NESHAP) under Section 112 of the 1990 Clean Air Act. The NESHAP
is scheduled to be proposed in 1997 and the Innovative Strategies
and Economics Group is responsible for developing an economic
impact analysis in support of the evaluation of impacts
associated with the regulatory options considered for this
NESHAP. This report analyzes the economic impacts of the NESHAP.
Primary copper smelting falls under the Standard Industrial
Classification (SIC) code 3331, Primary Copper Smelting and
Refining. Primary Copper includes establishments primarily
engaged in the smelting of copper from copper ore and in the
refining of copper by electrolytic or electrowinning processes.
According to the 1995 Annual Survey of Manufactures, in 1992 SIC
3331 employed 5,600 people, and produced products valued at
$8,660.9 million. Production of primary smelter products in 1995
was valued at $3,168.6 million. The U.S. primary copper industry
is concentrated in the southwestern U.S., in Arizona, New Mexico,
Texas, and Utah. Within SIC 3331, copper smelting is classified
as product class code 33311.1>2
1-1
-------
This report is organized as follows. Section 2 includes a
detailed description of the smelting process. Section 3
describes the characteristics, uses, and consumers of copper
smelting products as well as substitution possibilities.
Section 4 discusses the organization of the industry and provides
facility-level and company-level data. In addition, small
businesses are reported separately for use in evaluating the
impact on small businesses to meet the requirements of the Small
Business Regulatory Enforcement and Fairness Act (SBREFA).
Section 4 also contains market-level data on prices and
quantities and discusses trends and projections for the industry.
Section 5 describes the costs of complying with the NESHAP, and
Section 6 estimates facility-specific impacts of complying.
1-2
-------
SECTION 2
THE SUPPLY SIDE
Copper smelting is part of the primary copper production
process. Primary copper production starts with mining of copper
ore having copper content of only 1 percent to 2 percent and ends
with commercial grade copper that is 99.99 percent pure. This
NESHAP covers only a part of the primary copper production.
2.1 PRODUCTION PROCESS, INPUTS, AND OUTPUTS
Two basic production processes are used to produce pure
copper from copper ore: smelting and solvent extraction-
electrowinning (SX-EW). Ore is mined with less than 1 percent
copper content. It is then concentrated at the mining site into
a concentrate having approximately 20 percent copper. Also
included in the concentrate are sulfur, iron, and a number of
impurities that are hazardous air pollutants (HAPs), including
arsenic, lead, cadmium, cobalt, manganese, nickel, selenium,
antimony, beryllium, and mercury. Copper concentrate is the input
to the smelting process.
Under the traditional smelting process, shown in
Figure 2-1, the concentrate is shipped to the smelter, blended,
dried, and fed to the smelting furnace. Both slag and matte
copper are tapped from the bottom of the furnace every few hours.
The slag is disposed of and the matte copper
2-1
-------
Concentrate
V
Dryer
Reactor/
Furnace
Matte
Converter
Blister
Anode
Furnace
Product
^
Slag
Slag
Figure 2-1. Primary copper production.
(now typically over 50 percent copper) is charged to the
converters. The converter operation continues to remove sulfur,
iron, and other impurities and produces blister copper, which is
at least 95 percent copper. The blister copper is charged to the
anode furnaces, where further refinement takes place. The anode
copper, now 99.5 percent pure copper, is cast in copper anodes.
Copper anodes are the output of the smelting process.
SX-EW is an alternative method of producing purified copper
from oxidized ores. In this process, a solution of sulfuric acid
is poured over the copper concentrate, leaching the copper out of
it. Then electrically charged pure copper ions are attracted out
of the solution to a charged copper cathode. Currently,
approximately 30 percent of copper is produced using SX-EW; the
rest is produced using the traditional smelting process.
The copper anodes are then taken to an electrolytic
refining plant, where 99.99 percent commercial grade copper is
produced. The Primary Copper Smelting NESHAP includes only the
smelting operations and does not include the mining,
concentrating, or electrolytic refining operations.3
2-2
-------
2.2 TYPES OF PRODUCTS AND SERVICES
Primary copper smelting is a single part of the copper
production process, which produces a single product: 99.9
percent pure copper, which can then be refined and fabricated.
2.3 MAJOR BY-PRODUCTS, CO-PRODUCTS, AND SUBSTITUTION
POSSIBILITIES
The copper smelting process generates slag (waste materials
remaining after the copper is concentrated and converted). In
addition, smelters generate air emissions. The HAPs emitted from
primary copper smelters consist primarily (approximately 80
percent by mass) of compounds of lead and arsenic. Other
metallic HAP emissions include compounds of antimony, beryllium,
cadmium, chromium, cobalt, manganese, mercury, nickel, and
selenium. Sulfur dioxide is another by-product or co-product of
the smelting process. The sulfur dioxide is captured and
converted to sulfuric acid at all the smelters in co-located acid
plants.
Input substitution possibilities are limited. Scrap copper
can be substituted for the matte copper in charging the
converter. In addition, another production process, SX-EW can be
substituted for the traditional smelting process for oxide ores
and secondary sulfide ores. It is not suitable for primary
sulfide ores, however, which predominate in many U.S. mines.4
2.4 COSTS OF PRODUCTION AND PLANT SIZE EFFICIENCY
According to the 1995 Annual Survey of Manufactures, SIC
3331 had a value of shipments of $8,660.9 million; major types of
cost incurred in this producing the commodities valued are (1)
2-3
-------
payroll ($254.1 million), (2)materials ($6,858.4 million), and
(3) new capital expenditures ($179.7 million). As shown in
Table 2-1, materials have historically been the major cost of
production in this industry.5
TABLE 2-1. PRIMARY COPPER, SIC 3331: VALUE OF SHIPMENTS AND
COST OF INPUTS, 1982-1992
Year
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
Wages
($106)
254
238
199
188
152
145
119
110
97
116
149
181
203
216
.1
.9
.6
.6
.5
.5
.0
.5
.8
.7
.7
.1
.7
.9
Cost of
Materials
($106)
6,
4,
4,
4,
2,
3,
3,
3,
2,
1,
1,
2,
2,
2,
858
719
527
598
987
216
315
122
177
847
795
532
763
630
.4
.4
.3
.7
.0
.2
.8
.5
.1
.0
.8
.0
.1
.9
New Capital
Expenditures
($106)
179.
702.
312.
195.
110.
95.
44.
NA
33.
13.
42.
187.
272.
112.
7
7
8
5
3
5
5
6
8
5
7
5
8
Value of
Shipments
($106)
8,
6,
5,
5,
3,
4,
4,
3,
2,
2,
2,
2,
3,
3,
660
185
596
578
898
201
146
825
556
065
239
753
467
077
.9
.1
.0
.2
.1
.2
.8
.4
.9
.0
.1
.3
.0
.5
NA = not available
Source: U.S. Department of Commerce, Economics and Statistics
Administration, Bureau of the Census. 1992 Census of
Manufactures: Industry Series, Smelting and Refining of
Nonferrous Metals and Alloys, Industries 3331, 3334, 3339, and
3341. Washington, DC, Government Printing Office. 1995.
Table la, Historical Statistics for the Industry, p. 33C-7.
2-4
-------
2.5 PRODUCTION FACILITIES AND LOCATIONS
Seven facilities, owned by five companies, produce primary
copper in the U.S. These facilities and their locations are
shown in Table 2-2.
TABLE 2-2. PRIMARY COPPER PRODUCERS
Plant Location
ASARCO, Inc. El Paso, TX
ASARCO, Inc. Hayden, AZ
BHP, Inc. San Manuel, AZ
Cyprus Miami Mining Corp. Claypool, AZ
Kennecott Utah Copper Corp. Magna, UT
Phelps Dodge Hidalgo County, NM
Phelps Dodge-Chino Hurley, NM
2.5.1 Plant Descriptions
According to Daniel Edelstein, the U.S. Geological Survey's
copper expert, production capacity at U.S. smelters in 1996
totaled approximately 1.7 million short tons.6 EPA gathered data
on production capacity in 1992 through an Information Collection
Request sent to the facilities. Reported capacity and production
in 1992 are shown in Table 2-3.7
The 1995 Minerals Yearbook reports several increases in
production or capacity relative to these data. Total national
primary copper smelter production in 1995 is reported as
2-5
-------
TABLE 2-3. ANODE COPPER PRODUCTION AND CAPACITY, 1992
Plant
ASARCO-E1 Paso
ASARCO-Hayden
BHP, Inc.
Cyprus Miami
Kennecott
Phelps Dodge-Hidalgo
Phelps Dodge Hurley
Total
Capacity
( tons /year )
133,000
>210,093
>368,000
256,800
160,000
232,237
215,000
>1, 688, 136 (1993)
>1, 838, 136 (1995)
1992
Production
(tons /year)
107,787
210,093
370,913
104,290
156,934
181,283
148,000
1,360,661
Source: U.S. Environmental Protection Agency. Final Summary Report Primary
Copper Smelters National Emission Standard for Hazardous Air
Pollutants (NESHAP). Research Triangle Park, NC, U.S. Environmental
Protection Agency. July 1995. p. 45.
1,364,000 tons. Smelter production from scrap in 1995 was 393,800
tons, and total smelter production was 1,760,000 tons.
Asarco reported that production at its El Paso smelter
increased to 115,000 tons in 1995. Phelps Dodge's Hidalgo
smelter produced 224,000 tons of anode in 1994. Cyprus Miami's
smelter produced 172,000 tons in 1995. Conversely, Kennecott's
installation of a new flash furnace was plagued by successive
startup problems, including the failure of a cooling element in
the flash converter, and failure of the heat recovery system at
the acid plant. Consequently, production in 1995 declined 40
percent from already depressed 1994 levels.8
In a recent teleconference, Daniel Edelstein of the U.S.
Geological Survey, provided information on 1996 capacity at U.S.
2-6
-------
smelters. Mr. Edelstein also stated that, with the exception of
Kennecott's smelter, all the smelters were operating at or near
their design capacities. The smelter capacities are reported in
Table 2-4.9
TABLE 2-4. ESTIMATED ANODE COPPER CAPACITY, 1996
Smelter
1996 Capacity (tons/year)
ASARCO-E1 Paso
ASARCO-Hayden
BHP, Inc.
Cyprus Miami
Kennecott
Phelps Dodge-Hidalgo
Phelps Dodge Hurley
126,500
220,000
374,000
198,000
310,200
242,000
187,000
Total
1,657,700
Source: Telecon. Edelstein, Daniel, U.S. Geological Survey, with Jean
Domanico, Research Triangle Institute. October 9, 1997.
In addition to data provided by Mr. Edelstein, 1995
production data for four smelters was obtained from publicly
available sources .10-11-12 These data show a range of capacity
utilization ranging from 88 percent to 99.6 percent, with a
median capacity utilization rate of 95.1 percent. To estimate
1996 production for all smelters except Kennecott, the Agency
assumed that these four smelters operated in 1996 at the same
capacity utilization rates as they had in 1995. The other two
smelters that are major sources are assumed to operate at the
median capacity utilization rate, 95.1 percent. These capacity
utilization rates are multiplied by the production capacities
reported in Table 2-4 to estimate 1996 production. Mr. Edelstein
reported that Kennecott was operating well below 50 percent of
2-7
-------
capacity. Because the Kennecott smelter is an area source, it
will not be directly impacted by the regulation. Therefore, no
production estimate was made for Kennecott. The resulting
estimates of smelter copper production for 1996 are shown in
Table 2-5.13'14-15-16
TABLE 2-5. ESTIMATED SMELTER COPPER PRODUCTION, 1996
1996
Production
Capacity
Estimated
1995 Capacity
Utilization
Estimated
1996
Production
Smelter
ASARCO-E1 Paso ."X
ASARCO-Hayden
BHP, Inc. ^
Cyprus Miami
Hidalgo
Phelps Dodge
Hurley
Total
( tons )
126,
220,
374,
198,
242,
187,
1,347,
500
000
000
000
000
000
500
(Percent)
99
88
98
95
92
95
.6a
.Oa
.4b
.1
.6C
.1
( tons)
126,
193,
368,
188,
224,
177,
1,279,
000
500
000
258
000
800
094
Sources: Production capacity: Telecon. Edelstein, Daniel, U.S. Geological
Survey, with Jean Domanico, Research Triangle Institute. October 9,
1997.
Capacity Utilization: Based on 1996 capacity and 1995 production from
a ASARCO facilities: ASARCO World Wide Web site.
.
b BHP World Wide Web site. .
c Edelstein, Daniel. Copper. Minerals Yearbook 1995. Reston,
VA, U.S. Geological Survey. . 1997. p. 3 and
Table 1, Salient Copper Statistics.
Thus, the Agency estimates that 1996 production at U.S.
smelters (exclusive of Kennecott) was approximately 1.3 million
tons of anode copper.
2Q
— o
-------
SECTION 3
THE DEMAND SIDE
Copper is widely used in industrial and consumer
applications. Its major use is in building construction for
plumbing and electrical wiring. Demand for copper fluctuates in
response to changes in demand for the products it is used to
produce. Output of primary copper producers is consumed almost
entirely by copper fabricators. Copper fabricators, in turn,
operate brass mills, wire mills, foundries, and powder plants.
Fabricators produce copper and copper alloy mill and foundry
products, such as electrical wire, strip, sheet, plate, rod, bar,
mechanical wire, tube, forgings, extrusions, castings, and
powder. These products are sold to a variety of users: chiefly
the construction industry, manufacturing industries, and the
government. Some mill products, such as wire, cable, and tubular
products, are used without further modification. Most flat-
rolled products,.rod, bar, mechanical wire, forgings, castings,
and powder go through forming, machining, finishing, and
assembling operations before emerging as finished products.17
3.1 PRODUCT CHARACTERISTICS
Copper is valued largely because of its electrical
conductivity and resistance to corrosion. Because of its
conductivity, it is widely used for electrical wiring and in
electronic and electrical equipment. Because of its resistance
to corrosivity, it is widely used to carry water and natural gas
and for roofing and sheathing applications.
3-1
-------
3.2 USES AND CONSUMERS
An average family in the U.S. uses approximately 420 pounds
of copper per year. The majority of this copper is used in
wiring, plumbing, and automobiles.18 Copper use in automobiles
has increased from 30 pounds in 1981 to 50 pounds in 1991.
Similarly, because of larger houses having more bathrooms per
house, the amount of copper used in an average house increased
from about 280 pounds in the 1970s to about 450 pounds in the
1990s.
Table 3-1 shows the shares of U.S. consumption of refined
copper and scrap by copper fabricators by product.19 In 1992,
wire mill products accounted for 75 percent of total consumption
of refined copper.
TABLE 3-1. U.S. CONSUMPTION OF REFINED COPPER AND COPPER SCRAP
BY PRODUCT, 1992
Product Percent
Wire mill products 75
Brass mill products 23
Other industries 2
Total products 100
Source: U.S. Department of Commerce. U.S. Industrial Outlook, 1994.
Washington, DC, Government Printing Office. 1994. p. 13-7.
Table 3-2 shows U.S. copper consumption by various end-use
markets in 1992.20 Building construction, chiefly plumbing
equipment and electrical wiring, accounts for more than 40
percent of total consumption.
3-2
-------
TABLE 3-2. U.S. END-USE MARKETS FOR COPPER AND COPPER ALLOY,
1992
Product Percent
Building construction 40.5
Electrical and electronic products 24.4
Industrial machinery and equipment 13.5
Transportation equipment 11.6
Consumer and general products 10.0
Total 100.0
Source: U.S. Department of Commerce. U.S. Industrial Outlook, 1994.
Washington, DC, Government Printing Office. 1994. p. 13-7.
3.3 TRENDS IN CONSUMPTION
Overall, world consumption of copper is expected to grow,
as China and other developing countries become more
industrialized. China, the world's leading copper importer, was
estimated to consume 775,000 metric tons of copper in 1995, a
decrease from its 1994 imports of 950,000 metric tons. Because
China is increasing its production of refined copper, its imports
of copper cathode are expected to decline, while its imports of
copper concentrates may continue to increase.21
U.S. consumption of copper fell during the period 1989 to
1991, then grew in 1992 and 1993, as shown by Table 3-3.22 In
3-3
-------
TABLE 3-3. COPPER MILL PRODUCTS CONSUMPTION BY END USE (million
pounds)
Sector
1989
1990
1991
1992
1993
Building and
construction
Electrical and
electronic
products
Industrial
machinery
Transportation
equipment
Consumer and
general products
2,806 2,692 2,603 2,707 2,864
1,640 1,668 1,530 1,648 1,632
968
791
660
892
747
621
830
708
619
884
740
604
882
832
606
Total
6,865 6,620 6,290 6,593 6,816
Source: Copper Development Association. In Standard and Poors, Industry
Surveys. New York, Standard and Poors Corporation. January 1996.
Volume 2, M-Z, Copper 1995. p. M81-M86.
1994, it grew by 13 percent relative to 1993. It was predicted to
grow by 3 to 4 percent in 1995, due to slower housing starts.
3-4
-------
SECTION 4
INDUSTRY ORGANIZATION
The market for refined copper is international. The U.S.
is the second largest producer of mine copper, after Chile.
Together, the two countries accounted for approximately 44
percent of world copper production in 1995. The U.S. was the
largest producer and consumer of refined copper in 1995. Japan
and Taiwan were the largest importers of U.S. refined copper,
accounting for 59 percent of U.S. refined copper exports in 1995.
4.1 MARKET STRUCTURE
Copper smelters are owned by vertically integrated copper
producers, which also own mines and refineries. In most cases,
the smelters are co-located with mines and/or refineries. The
seven copper smelters in the U.S. are owned by five companies,
one of which is an Australian company. This small number of
domestic suppliers of refined copper suggests that the markets
for smelted copper may be oligopolistic. Under this market
structure, producers are aware of each other's existence and
overall behavior. Production and pricing decisions are made
based on competitors' assumed responses. Market characterization
is complicated by the fact that much of the output of U.S.
smelters is not marketed; rather, it is consumed to produce final
products by refineries and manufacturing operations owned by the
same parent company.
4-1
-------
4.2 MANUFACTURING PLANTS
As noted in Section 2, seven smelters operated in the U.S.
in 1996. Table 2-2 provides the smelter names and locations.
Figure 4-1 smelting operations in the southwestern U.S. Smelters
are located in New Mexico (2), Arizona (3), Texas (1), and Utah
(1). As noted above, Kennecott Copper in Bingham, Utah is a
minor source of air emissions regulated under this NESHAP. For
this reason, it is omitted from the tables which discuss
estimated production, sales, and economic impacts throughout the
remainder of this report.
Table 4-1 gives 1996 employment information for each of the
smelters, along with estimated production (described in more
detail in Section 2) .23
As mentioned in Section 2, all of the smelters affected by
this regulation were operating at or near design capacity in
1996.
Because of the continued strong demand for copper resulting
from a strong domestic economy, all of the facilities are
expected to continue to operate at or near design capacity. The
major uses for copper include construction (e.g., wiring,
plumbing) and electronics. Because inventories are not
excessive, production is expected to continue at or above 1996
levels into 1997.
4-2
-------
Figure 4-1. Smelter names and locations.
Sales of refined copper produced at each smelter were
estimated by multiplying the estimated production of refined
copper by the 1996 average price of refined copper cathode,
109.044 cents per pound (see Table 4-2).24 The estimated sales
are based on the smelters' total estimated 1996 production of
refined copper, even though much of the smelters' output is not
sold but is used by the same company.
4-3
-------
TABLE 4-1. U.S. COPPER SMELTING FACILITIES:
EMPLOYMENT
PRODUCTION AND
Smelter
ASARCO , Inc .
ASARCO , Inc .
BHP, Inc.
Cyprus Miami
Phelps Dodge
Phelps Dodge
Total
Location
El Paso, TX
Hayden , AZ
San Manuel, AZ
Claypool, AZ
Hidalgo, NM
Hurley, NM
Estimated 1996
Production
(tons /year)
126,000
193,500
368,000
188,258
224,000
177,800
1,274,558
1996
Employment
450
1,658
1,000
993
500
550
5,651
Source: Dun and Bradstreet. Dun's Market Identifiers. On-line database,
accessed through EPA's National Computation Center computer, FINDS
system. October 1997.
TABLE 4-2. ESTIMATED SMELTER SALES OF REFINED COPPER
Smelter
ASARCO
ASARCO
BHP, Inc.
Cyprus Miami
Phelps Dodge
Phelps Dodge
Estimated Refined
Copper Sales3
Location (106 $1996/year)
El Paso
Hayden ,
, TX
AZ.
San Manuel , AZ
Globe,
Hidalgo
Hurley,
AZ
, NM
NM
274.79
422.00
802.56
410.57
488.52
387.76
a Sales estimates are based on production estimates, which vary based on
capacity utilization rates and 1996 production capacity. Estimated 1996
production was multiplied by the 1996 average producers price of refined
copper, $1.09044 per pound.
Source: Edelstein, Daniel. Mineral Industry Surveys. Copper in January
1997. Reston, VA, U.S. Geological Survey. April 1997.
.
4-4
-------
4.3 FIRM CHARACTERISTICS
The seven copper smelters operating in the U.S. are owned
by five companies: four domestic companies and one Australian
company. Table 4-3 shows sales and employment data for the
smelters' parent companies.25
TABLE 4-3. CHARACTERISTICS OF COMPANIES OWNING PRIMARY COPPER
SMELTERS
Smelter
ASARCO , Inc .
BHP, Inc.
Cyprus Miami
Phelps Dodge,
Inc .
Parent Company
ASARCO , Inc .
BHP Copper,
Inc .
Cyprus Climax
Metals
Phelps Dodge
Corporation
Sales
2,696,694,000
504,500,000
444,000,000
3,786,600,000
Employment
12,000
5,000
4,400
15,343
Source: Dun and Bradstreet. Dun's Market Identifiers. On-line database,
accessed through EPA's National Computation Center computer, FINDS
system. October 1997.
All of the copper smelting operations in the U.S. are owned
by large mining companies. According to the Small Business
Administration, small primary metals companies (SIC 3331) are
defined as those having 1,000 or fewer employees. Even the
smallest of the smelter parent companies has four times that
number of employees. Thus, the NESHAP is not projected to have
direct impacts on any small companies.
4-5
-------
4.4 HISTORICAL MARKET DATA
As noted above, the U.S. is the second largest producing
nation for mined copper and is the largest producer and consumer
of refined copper. Table 4-4 provides historical data on smelter
production, consumption of refined copper, prices, imports, and
exports.26-27-28
TABLE 4-4. HISTORICAL DATA ON THE MARKET FOR REFINED COPPER
Year
1989
1990
1991
1992
1993
1994
1995
1996
Smelter
Production
(103 tons)
1
1
1
1
1
1
1
1,
,232
,276
,232
,298
,397
,441
,364
419a
Refined Price of
Copper Refined Copper
Consumption (cents per
(103 tons) pound)
2,
2,
2,
2,
2,
2,
2,
2,
386
386
225
398
596
948
783
893
130
123
109
107
91
111
138
109
.95
.16
.33
.42
.56
.05
.33
.44
Imports of
Refined
Copper
(103 tons)
330
288
318
318
377
517
472
682
Exports of
Refined
Copper
(103 tons)
143
232
289
195
239
173
239
214
a Note: The 1996 smelter production listed here includes smelter production
at the Kennecott smelter, which is omitted from the production estimates in
this report because it is an area source.
Sources: Edelstein, Daniel. Copper. Minerals Yearbook 1993. Reston, VA,
U.S. Geological Survey. Table 1, Salient Copper Statistics. April
1995.
Edelstein, Daniel. Mineral Industry Surveys, Copper, Annual Review
1994. Washington, DC, U.S. Department of the Interior, U.S.
Geological Survey. November 1995.
Edelstein, Daniel. Copper. Minerals Yearbook 1995. Reston, VA,
U.S. Geological Survey. . 1997. p. 3 and Table 1, Salient
Copper Statistics.
4-6
-------
SECTION 5
THE REGULATION
The Agency estimated the costs of complying with the
proposed air emission standard by identifying the capital
equipment each smelter would be expected to purchase and install
to comply with the regulation. Changes in operating,
maintenance, monitoring, and recordkeeping operations that would
be expected to be implemented to comply with the regulation were
also considered, and their costs estimated.
The capital equipment estimated to be purchased and
installed includes baghouses and leak detector systems for
existing baghouses. Some facilities are not expected to incur
any costs of compliance, while others are expected to incur
capital costs exceeding $6,000,000.
Table 5-1 shows the estimated costs of complying with the
regulation.29 Capital costs are lump-sum costs that are incurred
only once, when the capital equipment is purchased and installed.
To estimate the annual burden of these costs on the smelters, the
lump-sum capital costs are converted to a stream of annualized
costs, by annualizing them over 20 years using a 7 percent
discount rate. Annual costs, on the other hand, are continuing
costs that are incurred each year. The total annualized costs of
the regulation are the sum of the
5-1
-------
TABLE 5-1.
ESTIMATED COSTS OF COMPLYING WITH THE PRIMARY COPPER
SMELTING NESHAP
Smelter
ASARCO
ASARCO
BHP
Cyprus Miami
Phelps Dodge
Phelps Dodge
Total
Location
El Paso, TX
Hayden, NM
San Manuel,
AZ
Globe, AZ
Hidalgo, NM
Hurley, NM
Capital
Costs
($1996)
24,
12,
12,
24,
6,136,
6,208,
000
000
0
000
000
000
000
Annual
Costs
($1996)
97,
95,
93,
95,
97,
1,135,
100
300
500
300
100
900
Total
Annualized
Costs
($1996)
99,
96,
93,
96,
99,
1,715,
2,200,
365
433
500
433
365
095
191
Source: Memorandum, from Grumpier, Eugene, Environmental Engineer, U.S.
Environmental Protection Agency to Linda Chappell, Economist, U.S.
Environmental Protection Agency. September 19, 1997. Information
for Development of Costs of Proposed Primary Copper Smelter Standard.
annualized stream of capital costs plus the annual operating and
maintenance, monitoring, and recordkeeping costs.
5-2
-------
SECTION 6
ECONOMIC IMPACTS OF THE REGULATION
The Agency has estimated the economic impacts of the
primary copper smelting NESHAP by comparing the estimated costs
of complying with the NESHAP with the smelters' baseline sales of
refined copper. Table 6-1 shows the ratio of total annualized
compliance costs (TAG) to facility sales.
TABLE 6-1. ESTIMATED IMPACTS OF PRIMARY COPPER SMELTING NESHAP
Smelter
ASARCO
ASARCO
BHP
Cyprus Miami
Phelps Dodge
Phelps Dodge
Location TAC/Sales
El Paso, TX
Hayden , AZ
San Manuel, AZ
Globe, AZ
Hidalgo, NM
Hurley, NM
0
0
0
0
0
0
(percent)
.036
.023
.012
.023
.020
.442
a TAG is computed as described in Section 5. It is compared to the sales
estimates developed in Section 4.
As shown above, the estimated economic impacts of the
primary copper smelting NESHAP on smelting facilities, as
measured by the ratio of TAG to sales, is quite low. One U.S.
smelter, Kennecott, is expected to incur no compliance costs
because it is an area source of air emissions. The NESHAP is
expected to have no direct economic impact on this facility.
6-1
-------
The maximum TAC/sales ratio incurred by any smelter is
less than 0.5 percent. The maximum TAG per refined copper sales
ratio of 0.0442 percent is incurred by the only facility that is
expected to need to install a baghouse, in addition to leak
detector systems. For the other four smelting facilities, total
annualized compliance costs are estimated to be less than
0.1 percent of refined copper sales. Based on the facility-level
TAC/sales estimates above, impacts of the NESHAP on the companies
owning smelting facilities are anticipated to be negligible. On
average, TAC/sales ratios of 0.08 percent are expected for the
facilities affected by the NESHAP. When compliance costs of the
regulation are compared to total company sales, this ratio
declines to 0.003 percent on average. With facilities expected
to incur such small impacts, no appreciable impact on
international trade in refined copper, or on other secondary
markets, is anticipated.
6-2
-------
REFERENCES
1. U.S. Department of Commerce, Bureau of the Census. 1995
Annual Survey of Manufactures. M95(AS)-1, Statistics for
Industry Groups and Industries. Washington, DC, U.S.
Government Printing Office. 1997. pp.1-20 to 1-21.
2. U.S. Department of Commerce, Bureau of the Census. 1995
Annual Survey of Manufactures. M95(AS)-2, Value of
Product Shipments. Washington, DC, Government Printing
Office. 1997. p. 2-23.
3. Grumpier, Eugene, U.S. Environmental Protection Agency.
Memorandum to Jan King and Linda Chappell, U.S.
Environmental Protection Agency. Information about
Primary Copper Smelters. June 1997.
4. Hillstrom, Kevin, ed. Encyclopedia of American
Industries. Volume 1: Manufacturing Industries. New
York, Gale Research Inc. 1994. p. 737-741.
5. U.S. Department of Commerce, Economics and Statistics
Administration, Bureau of the Census. 1992 Census of
Manufactures: Industry Series, Smelting and Refining of
Nonferrous Metals and Alloys, Industries 3331, 3334,
3339, and 3341. Washington, DC, Government Printing
Office. 1995. Table la, Historical Statistics for the
Industry, p. 33C-7.
6. Telecon. Edelstein, Daniel, U.S. Geological Survey, with
Jean Domanico, Research Triangle Institute. October 9,
1997.
7. U.S. Environmental Protection Agency. Final Summary
Report Primary Copper Smelters National Emission Standard
for Hazardous Air Pollutants (NESHAP). Research Triangle
Park, NC, U.S. Environmental Protection Agency. July
1995. p. 45.
8. Edelstein, Daniel. Copper. Minerals Yearbook 1995.
Reston, VA, U.S. Geological Survey.
R-l
-------
Ref.
Ref.
Ref.
Ref.
Ref.
8.
6.
10.
11.
8.
. 1997. p. 3 and Table 1, Salient Copper
Statistics.
9. Ref. 6.
10. ASARCO World Wide Web site.
<(http://www.pmx.com/Clients/Asarco/AnnualReport/
copperbusiness.html>.
11. BHP World Wide Web site. .
12
13
14
15
16
17. Copper Development Association. Copper in the U.S.:
History. . 1997.
18. Copper Development Association. In Standard and Poors,
Industry Surveys. New York, Standard and Poors
Corporation. January 1996. Volume 2, M-Z, Copper 1995.
p. M81-M86.
19. U.S. Department of Commerce. U.S. Industrial Outlook,
1994. Washington, DC, Government Printing Office. 1994.
p. 13-7.
20. Ref. 19.
21. Ref. 18.
22. Ref. 18.
23. Dun and Bradstreet. Dun's Market Identifiers. On-line
database, accessed through EPA's National Computation
Center computer, FINDS system. October 1997.
24. Edelstein, Daniel. Mineral Industry Surveys. Copper in
January 1997. Reston, VA, U.S. Geological Survey.
April 1997.
R-2
-------
25. Ref. 23.
26. Edelstein, Daniel. Copper. Minerals Yearbook 1993.
Reston, VA, U.S. Geological Survey. Table 1, Salient
Copper Statistics. April 1995.
27. Edelstein, Daniel. Mineral Industry Surveys, Copper,
Annual Review 1994. Washington, DC, U.S. Department of
the Interior, U.S. Geological Survey. November 1995.
28. Ref. 8.
29. Memorandum, from Grumpier, Eugene, Environmental
Engineer, U.S. Environmental Protection Agency to Linda
Chappell, Economist, U.S. Environmental Protection
Agency. September 19, 1997. Information for Development
of Costs of Proposed Primary Copper Smelter Standard.
R-3
------- |