Economic Impact
of Anticipated Pollution Abatement Costs
Primary Copper Industry
Report to
Environmental Protection Agency
Part 2 Industry Structure
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ECONOMIC IMPACT OF ANTICIPATED
POLLUTION ABATEMENT COSTS ON THE
PRIMARY COPPER INDUSTRY
Report to
ENVIRONMENTAL PROTECTION AGENCY
PART II - INDUSTRY STRUCTURE
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PART II - INDUSTRY STRUCTURE
TABLE OF CONTENTS
List of Tables
List of Figures
CHAPTER
Page
iv
PREFACE
I. INTRODUCTION
A. PURPOSE AND SCOPE
B. APPROACH
II. BACKGROUND
A. CHRONOLOGY
B. ISSUES
C. COMPARISON OF PUBLISHED COST ESTIMATES
III. TECHNOLOGY CHARACTERISTICS AND TRENDS
A. INTRODUCTION
B. APPARENT RESERVES
C. MINING
D. BENEFICIATION
E. SMELTING PRACTICE
F. REFINING
G. HISTORICAL
H. RECENT TRENDS IN COPPER EXTRACTIVE TECHNOLOGY
I. STATUS OF AIR POLLUTION ABATEMENT TECHNOLOGY
J. GENERALIZED COSTS OF EMISSION CONTROL
K. TECHNOLOGY OF WATER POLLUTION CONTROL
IV. INDUSTRY CHARACTERISTICS
A. INDUSTRY STRUCTURE AND LOCATION.ASPECTS
B. THE INTERDEPENDENCE OF THE COPPER, LEAD AND ZINC
INDUSTRIES
C. BY-PRODUCTS OF THE WESTERN MINING INDUSTRY
D. ECONOMIC ASPECTS
V. MARKET CHARACTERISTICS
A. SUPPLY AND DEMAND
B. PRICES
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6
10
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14
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18
20
24
25
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36
38
40
40
59
62
68
71
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PART II - INDUSTRY STRUCTURE
TABLE OF CONTENTS (CONTINUED)
VI. GOVERNMENT POLICIES 79
A. STOCKPILE PROGRAM 79
B. HEALTH AND SAFETY LEGISLATION 80
C. ENVIRONMENTAL IMPACT ON STRIP AND OPEN PIT MINING 80
D. LAND MANAGEMENT - EXPLORATION 81
E. TRADE POLICIES 83
F. PRICE CONTROL 84
G. DEPLETION 85
VII. THE OUTLOOK FOR SULFURIC ACID, AND BY-PRODUCT SULFUR 86
A. PRODUCTION 86
B. TRENDS 88
VIII. FINANCIAL STRUCTURE 91
A. INTRODUCTION 91
B. FINANCIAL PERFORMANCE 92
C. CAPITAL SPENDING AND FUNDING 92
D. SELECTED COMPANY PROFILES 96
E. HOW SECURITY ANALYSTS AND INSTUTITIONAL INVESTORS VIEW
SELECTED NON-FERROUS METALS COMPANIES TODAY 113
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PART II - INDUSTRY STRUCTURE
LIST OF TABLES
Table No. Page
II-l Federal Ambient Air Quality Standards 5
II-2 Summary of Results of Fluor Utah Study 8
II-3 Comparison of Cost Estimates 12
IV-1 Principal Copper-Producing Companies in the United
States, 1970 41
IV-2 United States Mine Production of Recoverable Copper by
Major Producing States: 1968, 1969, 1970 42
IV-3 Estimated Mining Costs - Major Copper Mines and Mills 43
IV-4 Copper Smelting Works of United States 45
IV-5 Approximate Flow of Concentrates Between Copper Mines
and Smelters 46
IV-6 United States Copper Refinery Capacity 47
IV-7 1969 Free World Principal Copper Producing and Consuming
Countries 52
IV-8 Principal Copper Producers and the Disposition of their
Copper 53
IV-9 Copper Smelting Works of the World at End of 1970 54
IV-10 Copper Refinery Capacity 56
IV-11 Cross-Flow of Materials Between Primary Copper, Lead and
Zinc Industries 60
IV-12 1968 Statistics Regarding By-Products and Co-Products from
U.S. Cu-Pb-Zn Industry 64
V-l World Copper Mine Production by Country 73
V-2 Net Increase in Free World Primary Copper Productive
Capacity - 1973-1975 - in Short Tons, Annual Rate 74
V-3 U.S. Imports of Refined and Blister Copper 75
VI-1 Major Pending Federal Legislation on Strip Mining 82
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PART II - INDUSTRY STRUCTURE
LIST OF TABLES (CONTINUED)
Table No. Page
VII-1 Sources of U.S. Sulfuric Acid, 1969 87
VII-2 Estimated Potential Sulfur Dioxide Emissions 89
VIII-1 Reference Data - Non-Ferrous Metals Companies 93
VIII-2 Financial Performance Data - Copper, Lead and Zinc Companies 95
LIST OF FIGURES
Figure No. Page
III-l Generalized Cost for Different Degrees of Emission Control 37
IV-1 Where the Smelters and Refineries are Located 48
IV-2 Flow of Copper Scrap in United States 50
IV-3 Diagrammatic Representation of Variation in Concentrate
Value with Changes in Wirebar Price 70
V-l Copper Prices (Canadian Funds) 77
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PREFACE
This report was prepared in rough draft form during March-May 1972. At that
point in time, as required by law, the states had submitted their respective
plans for implementation of pollution control (SIP or State Implementation
Plans) but EPA had not decided whether or not these plans would be acceptable.
Because of this,, we evaluated the economic impact of pollution control legis-
lation based on control standards that were judged by us to have a high
probability of being enforced.
The acceptable SIPs were released by EPA on July 27, 1972 (Federal Register
37, 145, July 27, 1972, pp. 15094-15113). These standards vary significantly
from the standards assumed by us for the "base case" in our economic impact
analysis. Because of this, our analysis of economic impact, though consistent
with the assumptions used by us, is somewhat dated. An analysis of the economic
impact of the July 27 regulations would require rewriting of major portions
of this report and the analysis would still be incomplete since the require-
ments for meeting the Secondary Ambient Standards will not be available for
another 18 months. Also, these standards have been challenged in court by
the industry.
In Appendix A we have included a summary of the major differences between
our assumptions and the July 27 regulations and the general consequences.
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I. INTRODUCTION
A. PURPOSE AND SCOPE
This is one of six reports developed under contract with the
Environmental Protection Agency to assess the economic impact on the
primary copper, lead and zinc industry that will result from the air
and water pollution control requirements anticipated through 1976.
For each industry, Part II - Industry Structure - describes industry
characteristics and trends and provides the background information
relevant to analysis of the economic impact. A detailed analysis of
specific economic adjustment problems is given in Part III - Economic
Analysis - while Part I is an Executive Summary of both Parts II and
III. Each part has been bound separately.
There are several topics that Federal policy-makers must consider when
setting regulatory standards. The scope of the present study was basically
limited to an analysis of the impact or consequences of a certain set of
air and water pollution standards. Topics outside the scope of the
present study, but relevant to policy-making would include a cost vs.
benefits analysis of pollution control, impact on the industries! from
Federal regulations in other areas, e.g., Occupational Health and
Safety and means for resolving the differences in philosophy on
how best to achieve a set of environmental goals.
The primary copper, lead and zinc industries are similar in several
respects and for pedagogical reasons, we have covered all three
industries in common in certain sections of the reports and these
sections are repeated in the other volumes. For the convenience of
the reader, these sections have been clearly identified with a foot-
note.
The purpose of Part II - Industry Structure - is to provide background
information in the detail necessary for the understanding of Part III -
Economic Analysis. While all significant aspects of the industry have
been covered from this viewpoint, the presentation does not claim to
be complete in all respects.
B. APPROACH
The information presented here is based upon our knowledge and
experience within the non-ferrous metal industry, plus data available
from governmental agencies, the non-ferrous metal industry and technical
literature.
Chapter II presents the various pollution abatement regulations which
affect the industry; an approximate chronology of events that have
occurred since 1969 in this area; the issues which are the basis for
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disagreements between the industry and governmental control agencies;
and our analysis of published cost data since one of the controversial
issues has been the differences in cost estimates prepared by different
sources.
The technology of copper production has been reviewed in Chapter III
with a special emphasis on technological factors that affect the re-
covery of sulfur oxide emissions and the strategies available to the
primary copper industry for pollution abatement. Included in this
chapter is a generalized analysis of the increase in emission control
cost that can occur with increasing levels of sulfur recovery.
Chapter IV presents characteristics of the industry from the viewpoint
of structure and location aspects; the interdependence of the copper,
lead and zinc industries and the flow of materials between these in-
dustries; an assessment of the by-products produced by these industries;
and finally an aspect of the economic structure of the industry wherein
the smelting and refining plants have been essentially service opera-
tions in the conversion of concentrates to usable metal and alloys.
In Chapter V the characteristics of the market have been presented and
include the uses for copper; supply/demand trends, possible impact on
prices and future trade in copper.
Government policies affecting the non-ferrous metal industry are
summarized in Chapter VI.
Chapter VII summarizes the outlook for sulfuric acid and by-product
sulfur in order to establish the market conditions which will confront
the copper smelters recovering sulfuric acid from smelter off-gases
as a part of their pollution abatement plans.
In Chapter VIII the financial structure and financial performance of
selected producers of non-ferrous metals has been presented.
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II. BACKGROUND
As part of the legislative process resulting from the Clean Air Act of
1970, three types of pollution controls have been proposed which are in
various stages of becoming law at Federal and State levels. The first
type of controls are the Federal ambient air standards which refer to
ground level concentrations of SOx, measured outside plant limits, which
permit certain maximum concentrations of pollutants as measured over var-
ious periods of time; one hour, one day, one year, etc. There are two
levels of Federal ambient air standards. The primary standards define
how clean the ambient air must be so that it will not be harmful to human
health and the secondary standards define how clean the air must be in
order to protect against the known or anticipated effects of air pollution
on property, materials, climate, economic values and personal comfort.
These secondary standards are more stringent than the primary standards.
These standards are shown in Table II-l.
The second is an Emission standard which limits the amount of sulfur that
can be discharged to the atmosphere and is usually expressed as a percent-
age of the total sulfur charged to the smelter. Several states have pro-
posed a 10% limit for the amount of sulfur that can be emitted as sulfur
oxides from smelters. (This is also referred to as the 90% sulfur oxide
recovery standard.) At the present time, these proposals are either con-
tained in recommendations of the Boards of Health in the respective states
or have already been passed as State Law. However, they have not been
submitted to the Federal government by two of the states as a part of their
respective State Implementation Plans (SIP).
The third is a proposal for a tax on all sulfur emissions. In February
1972, President Nixon proposed to the Congress a 15
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TABLE II-l
FEDERAL AMBIENT AIR QUALITY STANDARDS
Primary Secondary
Annual Arithmetic 0.03 ppm 0.02 ppm
Mean (80yg/m3) (60yg/m3)
24 Hour Maximum 0.14 ppm 0.10 ppm
(Not to be exceeded /o/-c / 3\ /-otn / 3\
„. / N (365ug/nr) (260pg/m )
more than once/vear)
3 Hour Maximum — 0.50 ppm
(Not to be exceeded (1300yg/m3)
more than once/year)
"Tton-
enforceable guideline.
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the smelter's profit and represents a sizeable increment over the costs
necessary for 90% emission control.
At the present time, there is considerable disagreement between the non-
ferrous metal industry and governmental control agencies regarding the
status of emission control technology; the cost and ability of the indus-
try to control the emissions to the degree required in some of the more
stringent regulations and accomplish this within the proposed time con-
straints.
We present below an approximate chronology of events that have led to this
polarization. This is followed by a short section in which the contro-
versial issues are identified without comment. We have attempted to add-
ress to these issues in the body of this report.
A. CHRONOLOGY :
1. In December 1967 a contract was negotiated between National Air
Pollution Control Administration (NAPCA) and Arthur G. McKee and
Company to examine the technical and economic factors bearing on
the problems of the control of sulfur oxide emissions from primary
copper, zinc and lead smelting industries in the United States.
McKee also examined the available systems for sulfur oxide recovery
and included an analysis of market factors relating to the sale of
sulfur by-products. A report on this subject was published in
June 1969 (Arthur G. McKee and Company "Systems Study for Control
of Emissions Primary Non-Ferrous Smelting Industry", final report
under Contract PH 86-65-85, Volumes 1-3, June 1969).
2. In March 1970, "The Cost of Clean Air", the second report of the
Secretary of the HEW was submitted to the Congress in which it was
estimated that the copper, lead and zinc industries in operation in
calendar year 1967 in 100 metropolitan areas would have to spend
$67.6 million in capital investment and $61.4 million in annualized
operating cost in order to recover 98.8% of sulfur oxide emissions
and 95% of the particulates. Data from the McKee report appear to
have been the basis for these calculations.
3. On May 18, 1970, legislation was signed into law in Arizona that
allowed the' Arizona State Board of Health to establish an emission
standard applicable to the smelters. The emission standard was
the 10% sulfur emission standard.
4. During May 1970, hearings were held in Montana on the adoption of
proposed emission standards in that state, and ultimately resulted
in the recommendation of the 90-95% sulfur recovery standard by the
Montana State Board of Health.
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5. On January 13, 1971, the proposed Federal ambient standards were
published by EPA in the Federal Register (Volume 36, No. 21).
Two sets of standards were proposed, a primary standard to protect
public health and a more stringent secondary standard to protect
public welfare. The standards apply only to ambient air quality.
The final standards were issued April 30, 1971.
6. In March 1971, "The Economics of Clean Air" was submitted by the
EPA to the Congress. The estimated costs to the non-ferrous
smelting industry to provide the specified emission control levels
were as follows:
Control Cost (Million $)
Level Capital Annual
(% S Removal) Investment Cost
Copper (for about 2/3 of the 94 87.0 42.0
industry)
Lead 96 16.2 7.1
Zinc 93 4.7 2.2
7. On April 20, 1971, a report entitled, "The Impact of Air Pollution
Abatement on the Copper Industry", was published by Fluor Utah
Engineers and Constructors, Incorporated, based on a study commiss-
ioned by Kennecott Copper Corporation in October 1970. This study
considered several alternative approaches for pollution abatement
and a summary of their results is presented in Table II-2. Overall,
their costs were significantly higher than the EPA costs published
in March 1971.
8. In October 1971, the Bureau of Mines published, "Control of Sulfur
Oxide Emissions in Copper, Lead and Zinc Smelting", Information
Circular 8527. The major findings in this report were:
• Production of sulfuric acid is the only proven technology
for removing sulfur oxides from smelter gases.
• Acid production in the conventional smelter is practical
from converter and roaster gases, but under the most favor-
able conditions only 50 to possibly 70 percent of the smel-
ter plant sulfur oxides can be removed.
• To achieve a 90% removal of the sulfur in the copper smelting
process will be difficult at best and may be more restrictive
than is necessary to comply with Federal ambient air quality
standards. It will require the incorporation of innovative
or developing technology into the conventional smelter to
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TABLE II-2
SUMMARY OF RESULTS OF FLUOR UTAH STUDY
Present, Proven Technologies
1. Case 66
Production Curtailment,
Acid Plants, No Scrubber
Additional Capacity
900,000 Tons/Year Copper
2. Case 76
Flash Smelting
Add Acid Plants
Second Level Technologies
3. Case 6
Limestone Scrubbers
17,000 TPD Gypsum
4. Case 79
Caustic Scrubbers in
Series with Limestone
Scrubbers - 15,229
TPD Gypsum
5. Case 78A
Caustic Scrubbers with
Sodium Sulfate Production
8225 TPD Sodium Sulfate
Industry
Inves tment
(Millions
of $)
308
299
607
572
264
275
331
TPD
Cents/ Acid
Ib-Cu Produced
5.2
3.8
5.6
16.6
9870
2.8 15,129
4907
4944
4944
Annual Emission
Ambient Standard
.031 PPM 90%
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes
Yes
Note: All cases use production curtailment, as necessary, to meet Ambient Air Quality
Standards.
Source: Fluor Utah Engineers & Constructors, Inc., "The Impact of Air Pollution
Abatement on the Copper Industry", 20 April 1971.
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capture the sulfur oxides from the dilute gases. An altern-
ative will be the adoption of completely new smelting pro-
cesses capable of providing strong sulfur oxide gases suit-
able for conversion to acid.
• Collectively, about $600 million will be required in the
copper industry to make the changes necessary to achieve
compliance with a 10% sulfur emission standard. This will
result in an average increase in smelting costs of about
4 cents per pound of blister copper. The industry may find
it difficult to pass the additional costs on to the ultimate
consumer because of the worldwide pricing structure of copper
and this might affect the capability of our domestic copper
industry to maintain a competitive position in the world
market.
9. In November 1971, Charles River Associates, Inc., completed a study
for the Council on Environmental Quality on the economic impact of
pollution control regulations on the primary non-ferrous industr-
ies. Summaries of these reports were published in March 1972.
The cost basis used in these reports was essentially the same as
presented under item 11 below.
10. The states were required to submit their implementation plans to
EPA by the end of February 1972. The 90% emission standard was
not included in the State Implementation Plans submitted by the
Governors of Montana and Arizona. The state of Washington has
a SIP for 90% control only in the Puget Sound area. Hence the
situation in these states is still unsettled.
11. In March 1972, EPA submitted "The Economics of Clean Air" to the
Congress. The costs to the non-ferrous industry contained in
this report were estimated internally by the EPA, unlike the earl-
ier costs which had been developed by sub-contractors. The esti-
mated costs were as follows:
Control Cost (Million $)
Level Capital Annual
(% S Removal) Investment Cost
Copper 90 313 100
Lead 90 15.6 65
Zinc 90 17.7 40.7
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B. ISSUES
A major issue is the state of the development of technology for control of
sulfur oxide emissions. It is generally agreed that within the (short
timetable required for implementation of pollution abatement programs,
sulfur emissions can be reduced to a certain extent by improvements in
smelting and/or gas handling coupled with the manufacture of sulfuric acid
for disposal. The status of various types of scrubber technology is a
source of disagreement. The industry believes that this technology is not
proven or tested on an adequate scale in order to guarantee system perform-
ance from an operational standpoint.
The 90% sulfur recovery standard is a major issue for several reasons.
The industry believes that this standard was imposed on the basis that
lime-limestone scrubber technology was an operationally proven technology
which is certainly not the case. Also, for most locations, the Federal
Primary and Secondary Ambient Standards can be met by several other strat-
egies not based on scrubber technology and by recovering a lower percent-
age of sulfur. Hence, the industry believes that the 90% recovery stand-
ard imposes unnecessary financial burden on them and is not necessary to
meet Federal ambient standards.
The cost of pollution control is an issue, even though the differences
between industry estimates and EPA estimates have decreased over the past
two years. There are several reasons for the differences in the cost
estimates that were presented in the "Chronology" section. The non-
availability of detailed engineering-design and operating data on lime-
limestone scrubbing is one reason because it results in overdesign in order
to have adequate flexibility of operation. Another reason for disagree-
ment has been the accounting basis used. For example, some cost estimates
have included only the cost of acid plants while others have included the
changes and modifications in gas handling systems necessary to obtain gas
streams suitable for treatment in the acid plant. Also, the repairs and
modifications in gas handling flues and equipment have to take place in
operating plants without seriously affecting the production. These costs
tend to be higher than the equivalent costs for building similar new facil-
ities. Another reason for disagreement is the use of industry-wide models
as opposed to plant-by-plant analysis for calculating the costs.
The superimposed timetable for pollution abatement is another issue because
it does not allow the copper producers sufficient time to participate in
or await the orderly development of scrubber technology and also the recent
developments in copper smelting technology, which might either decrease the
costs of capturing sulfur oxides or eliminate the problem entirely (hydro-
metallurgy) . The repeated revision of pollution abatement targets is a
related issue since a moving target hinders or prevents the selection of an
optimum strategy.
Another issue has been the capability of the non-ferrous metal industry to
raise the quantity of capital investment required for what has been called
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"a non-productive investment", i.e. an investment which cannot be justi-
fied by the usual return-on-investment criteria.
Strategies for meeting ambient standards are also an issue. The industry
favors the use of "closed loop" control for controlling ambient SOx con-
centrations. EPA's latest regulations indicate that it favors the use of
permanent SOx emission abatement techniques to achieve ambient air
quality.
C. COMPARISON OF PUBLISHED COST ESTIMATES
In this section, we have attempted to reconcile and delineate the differ-
ences between the different cost estimates mentioned in Section A.
There exist four "current" sources for cost estimates - EPA "The Economics
of Clean Air" 1972, U.S. Bureau of Mines 1971, Fluor Utah report and
Arthur G. McKee 1969. The industry-wide summations presented by these
sources are shown in Table II-3.
Our discussions with the engineers at EPA indicate that the latest EPA
estimate is based on limestone scrubber cost data similar to that: in the
Fluor Utah report. Table II-3 indicates that there is general agreement
in the calculated costs between this and the Fluor Utah estimate,, but a
disagreement exists in the assumed efficiency of sulfur removal that could
be obtained by this technology.
The Bureau of Mines costs cannot be compared directly with any of the
others since they are based on a plant-by-plant analysis and include costs
for flue modifications which would have to be carried out in operating
plants without a serious loss of production. We believe that these flue
modification costs are a major reason for the Bureau of Mines costs being
higher than the others. To the best of our knowledge, costs of this type
were not included in the EPA estimates ("difference in the accounting
basis") and are generally very low in the Fluor Utah report.
In the McKee Report no attempt was made to prepare an industry summary
such as given in the Fluor Utah Report; however, both reports contain
sufficiently detailed information on estimating procedures and process
assumptions to determine if and where significantly different capital
cost estimates occur. Consequently, a detailed examination and compari-
son of the two reports was made to determine those areas wherein major
discrepancies might exist, especially those which would significantly
affect industry summations. From a number of comparisons we conclude
that both McKee and Fluor Utah are consistent in estimating module capital
investment requirements for the best developed technologies. Therefore,
the major differences between the two estimating procedures are attribut-
able to the following items and are mostly related to assumptions regard-
ing less developed technology:
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TABLE II-3
COMPARISON OF COST ESTIMATES
Costs
Source
EPA - 1972
Bureau of Mines
Fluor Utah
(limestone-scrubbers)'
Capital Annual
Investment Cost
Approach
Modeling
Plant-by-
Plant
Modeling
% S Removal
90%
90%
Ambient
0.031 ppm
(Million $)
313
596
264
(C/lb)
3.41
4.0
3.8
Fluor Utah
(acid plants; curtailment)'
Modeling Ambient
0.031 ppm
607
5.2
Arthur G. McKee
Modeling no industry-wide summations
$100 million annual costs; assume 1.5 million tons/year production.
"See Table II-2 for other cases.
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• The use by McKee of scaling factors, generally to the 0.8 power
of the smelter size ratio, across the entire capacity range, where-
as Fluor Utah placed upper limits on capacities of individual units
which, consequently, demanded that two units be considered above
certain maximum sizes.
• The inclusion of flue modification, heat recovery and gypsum
disposal facilities by Fluor Utah.
0 The requirements by Fluor Utah that parallel lime-limestone scrubb-
ing systems be included to allow for down time and maintenance as
well as underrating the system design capacity by 1/3 to allow for
surging.
• The inclusion of 10% of installed equipment costs for site pre-
paration and 10% for off-site facilities by Fluor Utah and not by
McKee.
It is readily seen that wide variations in total costs can result when
these assumptions are applied to specific smelter sizes and then summed
for the industry. Consequently, industry totals would be expected to
differ when these two approaches are used.
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III. TECHNOLOGY CHARACTERISTICS AND TRENDS*
A. INTRODUCTION
Copper is widely distributed in nature. The earth's crust is estimated
to contain an average of 55 parts per million. However, despite its wide
distribution, there are relatively few large copper producing areas in
the world. Important copper producing regions are: (1) The Western
United States; (2) the western slope of the Andes in Peru and Chile; (3)
the central African Copperbelt in Zambia and the Congo (Kinshasa); (4)
the Ural Mountains and the Kazakstan region in the U.S.S.R.; (5) the
Precambrian area of central and western Canada; (6) the Keweenaw Peninsula
of Northern Michigan; and (7) Southwest Pacific.
There are many copper minerals but only a few, chalcocite, chalcopyrite,
bornite, chrysocolla, azurite, and malachite, are important commercially.
Copper ores occur in many types of deposits in various host rocks. Porphyry
copper deposits, however, account for about 90% of the U.S. production
and much of the world output, and contain most of the estimated commercial
copper reserves of the world. From a processing viewpoint, copper ores
can be classified into three categories: sulfide ores, oxide ores and
native copper ores.
A sulfide ore is a natural mixture containing copper-bearing sulfide
minerals, associated metals and gangue minerals (e.g., pyrites, silicates,
aluminates) that at times have considerable value in themselves (e.g.,
molybdenum, silver, gold, as well as other metals). The majority of
the sulfide ores of the world can be classified into three major groups,
all of which are represented in the U.S.; namely:
• The porphyry copper and Northern Rhodesian type deposits that carry
copper mostly in the form of chalcocite (Cu2S), chalcopyrite (CuFeS2)
and bornite (CucFeS.). In these ores, copper ranges from a fraction
of one percent to several percent, and iron is generally low. The
copper deposits in the southwestern U.S. are of this type.
• Deposits, such as those found in Rio Tinto in Spain, Cyprus and Tennessee,
commonly known as cupriferous pyrite, which generally have 1-3%
copper as chalcopyrite, and contain abundant amounts of pyrite and
pyrrhotite. Generally, copper to iron ratios and copper to sulfur ratios
are low.
• Arsenic-bearing copper ores, such as enargite (Cu-AsS^), with deposits
occurring in Butte, Montana; Yugoslavia; Tsumeb, Southwest Africa; and
the Philippines.
*Based in part on "Mineral Facts and Problems", U.S. Department of Interior,
Bureau of Mines, Bulletin 650 (1970).
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The sulfide ores are treated primarily by crushing, grinding and
froth flotation to produce a concentrate (or several concentrates) of
sulfide minerals and reject the worthless gangue as tailings.
All non-sulfide, non-native ores of copper are termed "oxide" ores;
the oxide copper content being measured by and synonymous with solubility
in dilute sulfuric acid. An oxide copper ore can contain copper oxide,
silicate or carbonate minerals and gangue. In the southwestern U.S.,
many deposits have a capping of oxide ore, below which can occur a tran-
sition zone containing various mixtures of oxidized and sulfide copper
minerals occurring together and then the primary sulfide deposit. The
oxide ores have been treated metallurgically in a variety of ways; the
character of the gangue minerals having a very important bearing on the
type of metallurgical treatment used. Oxide ores in the U.S. are treated
primarily by leaching with dilute sulfuric acid.
In addition, there are ores in which copper occurs as the native metal.
The Lake Superior District in Michigan is the only major source of ore
of this type. Although the reserves of this ore are quite extensive,
it contributes only a small portion of the total U.S. mine production
of copper.
Commonly associated with copper are minor amounts of gold and silver
and locally lead and zinc, the recovery of which can have an important
bearing on mine profitability. For example, molybdenum, lead or zinc
are recovered as sulfides by differential flotation in some plants
treating copper ores, and minor amounts of selenium, tellurium, precious
metals, etc., are extracted in electrolytic refining. On the other hand,
the presence of arsenic, antimony and bismuth in the ores leads to problems
in standard pyrometallurgical processing and electrorefining and involves
a cost penalty. Similarly, nickel and cobalt can interfere with electrolytic
refining but they do not occur in significant amounts with the U.S. copper
deposits.
B. APPARENT RESERVES
Domestic reserves of copper ore in 1964 were reported by the Bureau of
Mines* as 75 million tons of metal in ore averaging 0.86 percent copper,
assuming recovery at 90% of gross metal content. An additional 58 million
tons of copper were estimated in the potential resources and may be re-
covered with future technological or economic improvements. Arizona,
Montana, Utah, New Mexico, and Michigan were the leading states in measured
and indicated reserves, with Michigan having the largest inferred reserves.
These five states accounted for more than 90 percent of the total reserves,
95 percent of which are in copper ores, and the remainder in mixed or
complex base-metal ores.
*F.D. Everett and H.J. Bennett, "Evaluation of Domestic Reserves and
Potential Sources of Ores Containing Copper, Lead, Zinc and Associated
Metals", USBM, 1C 8325 (1967).
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However, almost half of the reported reserve is in states east of the
Mississippi River which in 1968 accounted for only about 7 percent
of domestic output. The native copper ores in Michigan which., at one
time accounted for substantial domestic production and comprise a
substantial portion of the reported reserves, are complicated by an
erratic mineralization and concealment of outcrops by glacial drift.
A large in-use resource of copper has accumulated and is growing in
highly industrialized countries. In the United States, the copper-in-use
pool resource has reached an estimated 40 million tons. Comparable data
are not available for other countries.
The reserves mentioned above were based on material that could be mined,
processed and marketed at profit under the economic and technological
conditions prevailing at the time of the inquiry—about 1964.
The reserves at any particular mine are affected by the prevailing
economic conditions and depend on the net-backs (net profits at mine)
received by the mine. These economic inputs can be translated into a
cut-off-grade, which is the metal grade of a block of ore which would
produce a predetermined net-back. Thus, any block of ore above the
cut-off-grade is mineable while that below the cut-off-grade can be
either left in place or mined and discarded as waste. Economic factors
such as long-term increases in sales price and lower operating costs
from improved technology permit a lowering of the cut-off-grade and
consequently, an increase in reserves and mine life. Alternately, any
factors that decrease the net-backs to the mine such as increasing
operating costs (from pollution abatement or otherwise) and lower
prices will result in an increase in the cut-off-grade and a decrease
in reserves and mine life. Under extreme pressures, for example when
netbacks are lower than out-of-pocket costs, the mine would have to
be shut down.
C. MINING
Copper ores have been mined by open pit or underground methods. Open
pit mining produces the largest tonnage of copper values in the U.S.
The operations involved in preparing a mine for ore extraction are
called mine development. In underground mines, these operations include
principally preparation of openings to and into the ore body, such as
tunnels, crosscuts, drifts, raises, and shafts. The major operations
in developing an open pit mine are stripping (removal of barren or
low-grade overburden) and the establishment of mine transportation systems.
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Large disseminated deposits lying at considerable depths, veins, and
other deposits of tabular and irregular form which are usually
deep are mined by underground workings. There are three distinct
types of caving methods used in underground mining—block, top slicing,
and sub-level, of which block caving is most important. It consists of
dividing suitable ore bodies into blocks of predetermined size and under-
cutting each to induce rock stresses to cave and crush the ore to sizes
that can be readily handled. Block caving is applicable to homogeneous
and rather weak ore bodies of regular outline with enough horizontal area
to cave freely. The method is nonselective in that lean sections of the
ore as well as waste will be broken up and drawn with the ore.
Underground mining by supported stopes involves excavating the ore by
a series of horizontal, vertical, or inclined workings in veins or
large irregular bodies of ore or by rooms in horizontal deposits. It
covers breaking ore and removing it from underground workings aind timbering,
rock bolting, and filling for support, The costs of this type of under-
ground mining vary greatly and are dependent on the method of support of
the walls and the roof and the methods of handling the broken ore. This
method requires large amounts of skilled labor.
The choice between open pit and underground mining of a given ore
deposit is based upon factors such as size, shape, and depth of ore
body. Relative costs of mining by open pit or by an underground method
are influenced by such factors as the dilution of the ore with waste,
topography and surface improvements required, climate, availability of
skilled labor, probable continuity of operation, and available capital.
An important consideration in choosing the open pit method is preliminary
stripping, which must be done before the ore can be produced at plant
capacity. At several mines in the U.S., waste equal to about 1/5 of the
total estimated ore reserves had to be removed before the planned rate
of production could be attained. Advantages of open pit mining include:
flexibility and ability to obtain large-scale production, ease with which
the rate of production can be increased or decreased once the pit has been
developed fully, small shutdown expense and the ability to mine selectively
to meet requirements for certain grades of ore, virtually complete extraction
of the ore inside the pit limits, the comparatively small labor force required,
and elimination of hazards inherent in underground mining operations. On
the other hand, there are certain disadvantages which have a direct
bearing on the economic considerations of mining. Large open pit operations
involve heavy capital outlay for equipment and when the amount: of over-
burden to be removed is extensive, a correspondingly high capital expendi-
ture is required for stripping. This capital is nonproductive until ore
mining is begun so that during the stripping period interest charges accu-
mulate. The time elapsed before production begins may itself be a serious
disadvantage, especially if exploration is undertaken when ore prices
are favorable and the demand for the metal is strong. Serious problems
can be encountered in the disposal of waste, especially when the terrain
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is flat or dump areas near the mine have a high real estate value,
as well as climatic conditions which may limit or necessitate complete
closing of operations during certain months.
Nevertheless, the cost of open pit mining has been decreasing steadily
because of the use of larger and larger mining and transportation
equipment and it is the predominant method for mining copper.
D. BENEFICIATION
Copper occurs in nature in several different mineral forms (sulfides,
carbonates, oxides, native copper, etc.) and each type requires a
different processing technique. Many methods have been used to bene-
ficiate the ores but, in general, only the sulfide ores are amenable
to concentration procedures such as grinding and froth flotation.
1. Milling of Sulfide Ores
These ores are the most important source of copper and are
concentrated by using froth flotation techniques. This procedure
requires crushing and grinding and classification to about 100 mesh,
or finer, to liberate the particles. Grinding is usually the largest
single item of cost in the process and, hence, of great importance.
After grinding, the ore-water mixture is treated with reagents to
condition the sulfide particles so that their surfaces become air avid.
The sulfides are then collected with the froth produced in the flotation
cells. The final concentrate may contain from 11 to 32 percent copper.
Typical selective or differential flotation practices in copper ore
beneficiation are separation of copper sulfides from pyrite, recovery
of molybdenum from copper concentrate, and recovery of a copper con-
centrate, from complex lead-zinc-copper ore.
The treatment of mixed ore, containing both sulfide and oxide
minerals, depends on the relative proportions of the two types of minerals.
If sulfides predominate, flotation is used, employing reagents that
favor flotation of oxide minerals. When the ore contains almost equal
amounts of sulfide and oxide minerals, combinations of leaching and
flotation are used. In one method, the ore is leached with sulfuric
acid and the residue is treated in a concentrator where sulfide minerals
are recovered by flotation. In another process, the leach-precipitation-
float process (LPF), the oxide minerals are dissolved by leaching and the
copper is precipitated by sponge iron or sulfide ions which readily
respond to flotation thus recovering the reduced copper along with
the sulfide minerals.
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2. Oxide Ores
Oxide ores occurring in the United States are generally not amenable
to flotation, but are generally soluble in various leaching solutions.
a. Acid Leaching
The ore is properly sized, if necessary, and leached with acid
which dissolves the copper. Depending on ore grade and characteristics,
the ore is leached in vats (by percolation or with agitation) in heaps,
or in-place.
Dump leaching is used to extract copper from low-grade waste
material resulting from open pit mining of copper ore deposits; the leaching
cycle is measured in years. Heap leaching is employed to dissolve copper
from oxide ore that has been placed on a prepared surface; the leaching
cycle is measured in months. In-place leaching techniques are applicable
to shattered, broken, or otherwise porous ore bodies for leaching oxide
and sulfide ores of copper and other metals; the leaching cycle is measured
in years. Vat leaching is employed to extract copper from crushed and
sized oxide or mixed oxide-sulfide ores containing more than about 0.5
percent acid-soluble copper; the leaching cycle is measured in days.
Sulfuric acid is usually the only practical acidic solvent for
oxidized copper minerals. The presence of ferric sulfate in the leach
solution can solubilize some sulfide minerals such as chalcocite. For
dissolution of the oxide minerals, about 1.5 pounds of acid per pound of
contained copper are required. However, total consumption is often much
greater because of reaction with gangue minerals. The presence of acid-
consuming minerals, such as calcite or dolomite, in the ore can make the
process prohibitively costly. In the present context, an excess of acid
will be available in the Western U.S. after 1976 which will have to be
disposed. Acid leaching of oxide ores high in acid consuming ingredients
might be a cheaper alternative to limestone neutralization of some of the
acid, if such ores are available.
Copper is recovered from dilute leach solutions by precipitation
with scrap iron and from concentrated leach solutions by electrowinning.
Recently, liquid ion exchange has been successfully used for selectively
extracting copper from dilute streams and producing purified concentrated
streams of copper sulfate ideally suited for electrowinning.
b. Other Methods
Ammonia leaching has been used in the past for copper carbonate
ores where acid consumption was very high due to carbonate gangue minerals.
Flotation has been practiced successfully on some oxide ores in
Africa. Recent work has also indicated some limited success in floating
copper silicates (chrysocolla), but it is far from being acceptable
commercially.
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Cyanide leaching is also a possibility and is currently being
promoted. The problems relate to recovery of the cyanide for reuse and
reagent consumption associated with the cyanide recovery.
A recent pyrometallurgical process is the segregation process
which is based on heating high grade oxide ore with salt and coke.
Copper migrates to the reductant surface and forms a massive film around
coke particles. This metallic copper can then be separated from the
gangue by flotation.
E. SMELTING PRACTICE
Because most of the U.S. copper is extracted from low-grade sulfide ores
that require concentration, current pyrometallurgical practice for recovery
of copper from its sulfide concentrates is fairly uniform from smelter
to smelter and is adapted to treating fine grained sulfide concentrates
consisting mainly of copper and iron sulfides and gangue. The smelter in
Michigan smelting native copper ores uses a similar processing scheme.
Since it is in compliance with Federal ambient standards for SOx emissions,
it will not be discussed further.
Copper's strong affinity for sulfur and its weak affinity for oxygen as
compared with that of iron and other base metals in the ore forms the
basis for the three major steps in producing copper metal from sulfide
concentrates; roasting, smelting and converting.
A detailed description of smelting practice is given below for background
prior to a discussion of technological alternatives available for air
pollution control.
1. Raw Materials
Flotation concentrates containing from 15-30% copper constitute the
bulk of the feed to the smelters. In addition, smelters will charge cement
copper (produced by acid leaching of oxide ores and precipitation with
iron) containing 70-85% copper, siliceous flux and limestone and a quantity
of direct smelting ore containing 4-8% copper. This type of ore,, when
available, functions as a source of both copper as well as flux.
2. Drying
The flotation concentrates received by the smelter are a wet filter
cake and can contain 10-15% moisture. Cement copper can contain as much
as 30% moisture. The charge to a reverberatory furnace can be dried so
that its overall moisture content is 4-8% without unduly increasing
dusting problems in the reverb. The removal of moisture in drying reduces
the fuel requirements in the reverb. Also the drier acts as a blender for
homogenizing the charge. Rotary or multiple hearth driers are used for
drying the feed materials.
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3. Roasting
About half the copper smelters in the U.S. roast their charge prior
to feeding in the reverberatory furnace. The older smelters use multiple
hearth roasters for this purpose while the new smelters used fluidized
bed roasters.
The object of roasting copper sulfide ores and concentrates is to
regulate the amount of sulfur so that the material can be efficiently
melted and to remove certain volatile impurities such as antimony,, arsenic,
and bismuth. However, in modern practice, the grade of the concentrate
produced from some sulfide ores is sufficiently controlled at the concen-
trator to eliminate roasting prior to reverberatory smelting. In the
case of custom or toll smelters, the composition of feed materials can
vary widely. Hence, roasting is practiced to blend and control the sul-
fur content of the charge.
Elimination of some of the sulfur in roasting results in a higher
grade matte in the reverberatory furnace and hence decreases the oxidizing
load on the converters. Sulfide roasting is autogeneous and additional
fuel is not required. The charging of hot roasted calcines into the
reverberatory furnace can decrease its fuel consumption per ton of charge
by about 40% and consequently increase reverb capacity. In addition,
roasting also reduces the emissions of sulfur dioxide from the reverb.
The reason for this is as follows: The two major constituents of concen-
trates utilized by almost all the U.S. smelters are chalcopyrlte, CuFeS-,
and pyrite, FeS,,. These minerals contain sulfur that is loosely held
or "labile" which is given off by melting the minerals.
2CuFeS2 = Cu2S + FeS + S
FeS2 = FeS + S
Cu«S and FeS form matte, whereas the labile sulfur reacts with oxygen
in the reverb gases to form S0_. Removal of the labile sulfur during
roasting can reduce emissions from the reverb. Also the lower fuel
requirement per ton of charge when using calcine smelting reduces the
volume of reverb off-gases.
Both types of roasters (multiple hearth and fluidized bed) usually
operate around 1200°F. Sulfur dioxide concentration in the wet off-gas
is usually 5-10% with multiple hearth roasters because of dilution with
air. With fluid bed roasters the wet off-gases can run 12-14% sulfur
dioxide. Both types of roasters, therefore^ can produce a steady stream
of relatively rich off-gases suitable for sulfuric acid manufacture after
cooling and dust removal. Both types of roasters involve handling and
collecting of large quantities of hot abrasive dust which can lead to
high maintenance costs.
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4. Reverberatory Furnace Smelting
Roasted and unroasted materials are melted after mixing with suitable
fluxes in reverberatory furnaces. Liquid converter slag is also charged
into the reverberatory furnace to recover its copper content. Heating
of the charge is accomplished by burning fuel in the furnace cavity, the
heat being transmitted to the charge primarily by radiation from the roof,
walls and flame.
Almost all the reverbs in the U.S. use natural gas as a fuel and only
one plant uses powdered coal. Because of the impending domestic shortage
of natural gas, most smelters are now installing facilities to burn alter-
nate fuels. The maximum smelting capacity of a reverb is limited by the
amount of fuel that can be burned (a function of reverb shape and size)
and the quantity of heat required by a unit weight of charge. Reverb
throughput can be increased by drying the charge, preheating the charge
by roasting and preheating the combustion air.
In the reverberatory furnace, copper and sulfur form the stable copper
sulfide, Cu-S. Excess sulfur unites with iron to form a stable ferrous
sulfide, FeS. The combination of the two sulfides, known as matte, collects
in the lower area of the furnace and is removed. Such mattes may contain
from 15 to 50% copper, with a 40 to 45% copper content being most common,
and also contain impurities such as sulfur, antimony, arsenic, iron, and
precious metals.
The remainder of the molten mass containing most of the other impurities
and known as slag, being of lower specific gravity, floats on top of the
matte and is drawn off and discarded. Slags in copper smelting are ideally
represented by the composition 2FeO.Si02, but contain alumina from the
various charge materials and calcium oxide which is added for fluidity.
Since reverb slags are discarded, the copper contained in the reverb slag
is a major cause of copper loss in pyrometallurgical practice. The con-
centration of copper in the slag increases with increasing matte grade.
This behavior limits the matte grades normally obtained in conventional
reverberatory practice to below 50% Cu.
When using a reverb for green charge smelting, 20% to almost 45% of
the sulfur in the feed is oxidized and is removed from the furnace with
the off-gases. The wet off-gases can contain 1.5-3% sulfur dioxide.
When using calcine smelting, sulfur dioxide evolution is lower and about
10-15% of the sulfur in the unroasted feed material is contained in the
reverb off-gases. S02 concentration in the wet off-gases in this case
can vary between 0.5 to 1%.
The hot gases from the reverb are cooled in waste heat boilers which
extract up to 50% of the sensible heat in the gases. A considerable
amount of dust is removed in the waste heat boiler and the gases are further
cleaned in electrostatic precipitators before venting to the atmosphere.
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Reverberatory furnaces can vary in width from about 22 feet to 38 feet
and in length from about 100 feet to 132 feet. The roofs of the older
reverberatory furnaces are sprung arch silica roofs, while almost all the
newer furnaces have suspended roofs of basic refractory. Over the years
two types of reverberatory furnaces have evolved, each with its specific
charging methods. The first and older is the deep bath reverberatory
furnace which contains a large quantity of (in excess of 100 tons) molten
slag and matte at all times. In modern deep bath reverberatory furnaces,
the molten material is held in a refractory crucible with cooling water
jackets along the sides which greatly diminishes the danger of a breakout
of the liquid material. In deep bath smelting several methods exist for
charging. Wet concentrates can be charged using slinger belts (high
speed conveyors) that spread the concentrates on the surface of the molten
bath. Dry concentrates or calcines from the roaster can be charged through
the roof or via a Wagstaff gun, (an inclined tube). Roof charging (side
charging) is rarely practiced in conjunction with deep bath smelting because
of dusting problems with fine dry calcine and explosion problems with green
charge. Wagstaff guns minimize these problems and are commonly used.
The second type of reverberatory furnace is the dry hearth type in which
a pool of metal exists only at the tapping end. The dry hearth type furn-
aces are charged with wet or partially dried concentrates (green feed smelt-
ing) , or with calcines through the roof. In the latter case the dusting
problem can be quite severe for fine concentrates.
5. Converting
Matte produced in the reverberatory furnace is transferred in ladles
to the converters using overhead cranes. The converters used in copper
smelting are of the cylindrical Fierce-Smith type, the most common size
being 13' x 30'. Air is blown from the side through a series of openings
called tuyeres. During the initial blowing period (the slag blow) FeS in
the matte is preferentially oxidized to FeO and Fe30^ and sulfur is removed
with the off-gases as S02» Flux is added to the converter to combine with
iron oxide and form a fluid iron silicate slag. When all the iron is
oxidized, the slag is skimmed from the furnace leaving behind "white metal"
or molten Cu2S. Fresh matte is charged into the converter at this stage
and the slag blowing continued until a sufficient quantity of white metal
has accumulated. When this happens the white metal is oxidized with air
to blister copper during the "copper blow". The blister copper is removed
from the converter and cast or subjected to additional fire refining prior
to casting. Converter blowing rates can vary between 12,000 to 30,000 scfm
of air. Also, the S02 content of the off-gases is lower during "slag blow"
than during "copper blow".
Cooling of the hot converter gases is necessary in order to prevent
thermal damage to the dry gas cleaning equipment. Normally, this is
accomplished by adding dilution air that can vary in quantity from 1 to 4
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times the converter off-gas. With dilution air, S0» concentrations in
the converter off-gases can vary from 1-7%. With close fitting; hoods or
with Hoboken converters, the off-gases average 5-10% SO^. How€:ver, when
dilution air is not used, cooling devices such as waste heat boilers, air/
gas heat exchangers or water sprays are necessary.
The converter gases pass via a balloon flue or individual high veloc-
ity flues to dry gas cleaning equipment such as cyclones or electrostatic
precipitators. When these gases are to be used for acid manufacture an
electrostatic precipitator for dry gas cleaning is not essential since the
wet gas cleaning system (wet scrubber, electrostatic demister, etc.) re-
moves all the particulates from the gas stream. Thus, with proper hood-
ing, the converter off-gas is sufficiently high in sulfur dioxide so as to
be suitable for sulfuric acid manufacture, but converting by its very nat-
ure is a batch operation and the off-gas flow rates vary widely. In the
smaller copper smelters which use two or three converters, the scheduling
of converter blows in order to obtain relatively steady flows to the acid
plant is a difficult problem.
F. REFINING
The blister copper produced by smelting is too impure for most applications
and requires refining before use. It may contain silver and gold, and
other elements such as arsenic, antimony, bismuth, lead, selenium, tellur-
ium, and iron. Two methods are used for refining copper - fire refining
and electrolysis.
The fire-refining process employs oxidation, fluxing and reduction. It
is based on the weak affinity of copper for oxygen as compared with that
of the impurities. The molten metal is agitated with compressed air, sul-
fur dioxide is liberated and some of the impurities form metallic oxides
which combine with added silica to form slag. Sulfur, zinc, tin, and iron
are almost entirely eliminated, and many other impurities are partially
eliminated by oxidation. Lead, arsenic, and antimony can be removed by
fluxing and skimming as a dross. After the impurities have been skimmed
off, copper oxide in the melt is reduced to metal by inserting green wood
poles below the bath surface (poling). Reducing gases formed by com-
bustion of the pole convert the copper oxide in the bath to copper. In
recent years, reducing gases such as natural gas or reformed natural gas
have been used. If the original material does not contain sufficient
gold or silver to warrant its recovery, or if a special purpose silver-
containing copper is desired, the fire-refined copper is cast directly in-
to forms for industrial use. If it is of such a nature as to warrant the
recovery of the precious metals, the fire refining is not carried to com-
pletion but only far enough to insure homogeneous anodes for subsequent
electrolytic refining.
In the electrolytic refining step anodes and cathodes (thin copper start-
ing sheets) are hung alternately in concrete electrolytic cells containing
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the electrolyte which is essentially a solution of copper sulfate and
sulfuric acid. When current is applied, copper is dissolved from the
anode and an equivalent amount of copper plates out of solution on the
cathode. Such impurities as gold, silver, platinum-group metals, and
the selenides and tellurides fall to the bottom of the tank and form anode
slime or mud. Arsenic, antimony, bismuth, and nickel enter the electro-
lyte. After the plating cycle is finished, the cathodes are removed from
the tanks, melted, and cast into commercial refinery shapes. The copper
produced has a minimum purity of 99.9%.
G. HISTORICAL
Until the beginning of this century, only the high-grade deposits of
copper could be mined economically and treated for the extraction of
copper. The discovery of froth flotation techniques for beneficiation
of sulfide minerals early in this century enabled the exploitation of low-
grade sulfide deposits. Around this time the market for copper was grow-
ing because of the start of the electrical industry and the producers of
copper were able to satisfy this demand by relying increasingly on the
beneficiation of sulfide ores. The early sulfide concentrates were rela-
tively low in copper and high in sulfur. Hence the early pyrometallurg-
ical practice required roasting in multiple hearth furnaces and converting
to produce blister copper. Several of the older smelters incorporated
sulfuric acid manufacture. With improvements in differential flotation
it was possible to produce a sufficiently high-grade concentrate which did
not require roasting. This led to the phasing out of multiple hearth
roasters and the use of green charge smelting in which the wet concentrates
were charged directly into the reverberatory furnace. Also, as a result
of the availability of inexpensive elemental sulfur from Frasch sources,
the operation of by-product sulfuric acid plants at smelters was no longer
economical and most of them were shut down.
H. RECENT TRENDS IN COPPER EXTRACTIVE TECHNOLOGY
Because of the framework of raw material, fuel and labor costs that has
existed for some time in the U.S., the domestic smelters have used reverb-
eratory furnaces (reverbs) of increasingly larger size and capacity to smelt
copper concentrates. Under the present requirements for efficient sulfur
oxide recovery, it is possible that the copper reverb like its predecessor,
the open hearth furnace in the steel industry, will become obsolete.
Over the past twenty-five years, several alternative smelting approaches
have been developed around the world in response to local conditions of raw
materials, energy and labor costs and by-product markets. These alterna-
tive approaches might be adaptable in the U.S. with minimal research and
development efforts. These and other approaches are briefly discussed
below, purely from the viewpoint of whether they offer technical solutions
to the problems faced by the U.S. copper smelting industry. The discuss-
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ion in this section does not address the question of cost-effectiveness of
this technology compared to that already in use.
In Japan a blast furnace was developed (the Momoda blast furnace) which
would accept a portion of its charge in the form of fine concentrates.
This approach can be economical for small sized plants. For many years,
Nippon Mining Company has smelted pelletized copper concentrates directly
in the converter using an enriched oxygen blast. A similar approach has
been tried at the Garfield, Utah smelter of the Kennecott Copper Corpora-
tion.
The flash smelting processes for smelting sulfide concentrates utilize the
heat of oxidation of the concentrate to form a molten matte and slag. The
best known of these are the Outokumpu flash smelting process developed in
Finland and the Inco oxygen flash smelting process developed in Canada.
In the former, the furnace is kept in heat balance by burning a fuel if
necessary and in the latter by oxygen. The steady SC^-rich stream of gas
produced by flash smelting is ideal for acid manufacture. The Inco oxygen
process produced extremely high concentrations of SO,, and at Inco, the off-
gas was utilized for liquid SO^ manufacture. Outokumpu furnaces have been
installed in several plants around the world. Recent developments in the
Outokumpu process involve producing a matte in the flash furnace that is
essentially at the white metal stage. The advantages claimed for this
approach are the minimization or elimination of converter slag and removal
of a major amount of the sulfur in the concentrate in the flash smelter in
the form of a steady stream of off-gases which minimizes the impact of
cyclic converter operations on the acid plant operation.
Because flash smelting is autogeneous, the availability of uniform feed
is a very important factor when the applicability of this approach is con-
sidered. Some of the Japanese flash smelters are custom smelters and
operate on concentrates from a variety of sources.
There are two developments which would substantially decrease or eliminate
air infiltration and dilution of the converter off-gases. The first is
the Hoboken syphon converter. The Inspiration Consolidated Copper Com-
pany plans to install five of these converters in their new plant. The
second is the use of tight-fitting converter hoods to minimize air infil-
tration and the use of waste-heat boilers for air cooling as used by
Mitsubishi at Onahama in Japan. Most U.S. copper smelters plan on install-
ing various types of tight-fitting hoods and appropriate gas cooling facil-
ities.
Electric arc smelting has been practiced for many years by Boliden in
Sweden for smelting copper concentrates and scrap. This processing tech-
nique is receiving renewed attention on a world-wide basis because of its
potential in reducing and controlling sulfur oxide emissions and its abil-
ity to operate with concentrates as well as scrap feed. Electric furnaces
are being installed at Inspiration and at Tennessee Copper. The cost and
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availability of the required amount of electric energy is a major factor
in the economics of electric smelting.
In the pyrometallurgical treatment of copper concentrates, the major por-
tion of the copper lost during processing is that which leaves the smelter
in the slag. In conventional smelting, the high copper (about 6% Cu) con-
verter slag is fed into the reverberatory furnace for copper recovery while
the reverb slag (about 0.4% copper) is discarded. The copper content of a
slag in contact with a matte increases with increasing matte grade, hence
if the reverb slag is to be discarded, this behavior imposes an upper limit
on the matte grade in the reverb. The commercialization of various slag
flotation schemes for recovering copper from converter slags and flash
smelter slags offers several advantages.
• If converter slags are to be treated for copper recovery, only
the copper recovered has to be recycled to the reverb. This
prevents the introduction of magnetite into the reverb from this
source and avoids the problems associated with the build-up of
magnetite on the bottom of the reverb furnaces.
• The reaction of magnetite in the converter slag with the matte
causes evolution of SCU:
3Fe-0, + FeS = lOFeO + SO
This can be prevented by not recycling the slag and the S02
content of the reverb off-gases is decreased.
• If slag from a primary smelting unit (a reverb, a flash smelting
furnace or a continuous smelting furnace) can be treated success-
fully and economically for recovering its copper content, the
copper content of the slag no longer limits the matte grade in the
primary smelting unit. Thus, high grade mattes up to the white
metal stage (containing about 80% copper) could be obtained in the
primary unit. For example, this approach is the basis for the
improvements in Outokumpu flash smelting.
The treatment of converter slags by slow cooling, crushing, grinding and
flotation has been used at Hitachi and Naoshima in Japan, by Outokumpu and
has been incorporated in some of the recent continuous smelting methods
such as the Noranda process.
All of the developments mentioned above have been tested on a commercial
scale for many years and are adaptable to the U.S. conditions with a mini-
mal research and development effort. There are several schemes for pro-
cessing copper concentrates that are being tested at the present time in
a variety of pilot plants or semi-production facilities that produce only
concentrated SO. streams. Over the long term, they offer a potential for
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reducing operating costs in comparison to the problems and costs associated
with the control of low-level SCL emissions from the copper reverberatory
furnace. Unfortunately, these processes are as yet unproven and could not
be used by the U.S. smelters within the short time scale required to imple-
ment the air pollution abatement programs, even if they provided the most
economical solution to the problems. Prominent amongst these are the Nor-
anda, Worcra, Mitsubishi and other continuous smelting processes, in which
copper concentrates are treated up until the blister copper stage in a
single reactor. Similarly, there are other schemes for the direct smelt-
ing of concentrates in the converter using such equipment as the top blown
stationary converter and the top blown rotary converter.
There exist processes for reduction of sulfur dioxide to elemental sulfur
in various stages of development. Outokumpu is reportedly working on a
modern version of the Orkla process, a process for the reduction of SC^
to elemental sulfur with a solid carbonaceous reductant. We understand
that this process has been tried only in a pilot plant. Other sulfur
reduction reductants are Allied Chemical and Asarco-Phelps Dodge. How-
ever, the reduction of S02 to elemental sulfur is expensive.
There are several hydrometallurgical approaches that can treat sulfide
concentrates. Unfortunately, none of these processes have been developed
to the degree where they can be used as a basis for a full-scale commercial
operation to replace existing copper smelters within the given time scale
for pollution abatement. (Also, the replacement of operating smelters
with new unproven processes would cause a major financial impact on the
industry.) The more interesting processes convert copper sulfide con-
centrates to the metal and produce elemental sulfur which would be easier
to store and cheaper to transport than sulfuric acid. Examples are:
weak acid pressure leaching (Sherritt Gordon-Cominco process), atmospheric
pressure leaching with nitric acid, sulfuric acid bake, ferric ion leach-
ing and chlorine water leaching. Of course, there are several other hydro-
metallurgical processes in which sulfur in the concentrate is oxidized to
sulfate, but these are of lesser interest since sulfate values have to be
disposed or marketed. Typical of these are the ammoniacal leaching pro-
cesses which Sherritt Gordon has operated on a large scale for leaching
nickel sulfides and bacterial leaching.
There are two trends in the U.S. that would also affect the profitability
of domestic smelters in the long term and influence the evolution and
adaptation of new technology. The first is the increase in labor cost.
Since the smelters have been operating in their current configuration for
many years, we would assume that significant increases in productivity
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could only be obtained by a change to the continuous smelting processes.
Unfortunately, the current timetable for implementation does not permit
the consideration of these processes. Also it is doubtful that the potential
economics offered by continuous processes can justify the scrapping of
operating plants.
The expected shortages of natural gas and concommitant increases in the fuel
fuel costs would increase reverb operating costs and increase the attract-
iveness of autogenous processes in the long term. In general, the rising
energy costs in the U.S. would seriously penalize the users of second level
pollution abatement technology (such as scrubbing for SOo recovery, S02
reduction and scrubbing for S0? disposal) since this technology generally
requires a considerable energy input.
I. STATUS OF AIR POLLUTION ABATEMENT TECHNOLOGY
1. Current Methods
At present there are three methods in use at copper smelters for
reducing the sulfur dioxide concentrations in the vicinity of a smelter.
These are: the use of a tall stack to disperse and dilute the smelter
off-gases; the production of sulfuric acid by the contact process from
concentrated gas streams to achieve a degree of reduction in emissions;
and production curtailment.
The tall stack discharges sulfur dioxide at such heights that the
gas is diluted when dispersed into the lower atmosphere. It is possible
to add preheated air into the stack to achieve additional dispersion and
dilution. Because tall stacks and preheated air can achieve dispersion
and dilution when used in conjunction with other means of limiting emiss-
ions, there is no simple relationship which can predict ambient concentra-
tions as a function of percent sulfur recovery. The overall control
strategy has to be well defined and local weather patterns have to be con-
sidered.
The contact sulfuric acid process is well established for treating
S02~containing off-gases from metallurgical plants. Modern contact acid
plants require at least 3.5-4% sulfur dioxide in the feed gas in order to
operate autogenously. For handling lower concentrations of S02 an
additional fuel input is required. The acid plant size is primarily a
function of the volume of gas handled. Hence, for a constant acid out-
put, an acid plant operating on more dilute gases is much larger (and
more expensive) than an acid plant operating on more concentrated gases.
With the currently used vanadium pentoxide catalysts the upper level of
S02 concentration in the feed gas to an acid plant is between 7 and 9%.
Gas streams more concentrated than this require dilution. At present,
some of the copper smelters in the western U.S. make sufficient: acid for
the local needs and a tall stack is used to disperse the remaining emiss-
ions.
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The third method for controlling sulfur dioxide concentrations at
ground level is production curtailment when adverse weather conditions
prevail. This method has been referred to as "closed loop control" when
it is based on the monitoring of sulfur dioxide concentrations at ground
level at various sites in the areas surrounding the smelter and using this
information to control the smelter operating rate. When ground level con-
centrations increase as a result of adverse weather conditions, the smelter
operation is curtailed to reduce the emission rate.
2. Technological Approaches
There are several technological approaches that can be used by copper
smelters to reduce their sulfur oxide emissions. There are two major
factors that influence and limit the options available to the operating
plants. The first is the relatively short timetable required for imple-
mentation which means that prudent business practice would limit the choice
of alternatives only to well-established technology, the so-called first
level technology. The second factor is the manner in which the pollution
control laws are written. For example, an emission control law can re-
quire a different approach than a law that limits ambient concentrations.
There is general agreement that only the production of sulfuric acid
has been developed to a point where its performance as a sulfur dioxide
removal process can be guaranteed. Various schemes for scrubbing off-
gases have been considered as second level technologies, because they
have not yet developed to the point that they could be built in three years
and their performance and operability guaranteed within a smelter. We
believe that scrubber technology is "second level" but regardless of whether
a particular scrubbing scheme is considered first level or second level,
any SOx removal process has to be considered primarily in the context of
copper smelting technology and has to be properly interfaced with the sour-
ces of SOx.
a. First Level Technology
There are four ways in which first level technology (acid plants)
can be interfaced with a copper smelter:
• Acid plants coupled to converter off-gases
• Acid plants coupled to roaster off-gases
• Acid plants coupled to reverb off-gases but first
requiring an SOo concentration step (considered second
level technology)
• Acid plants coupled with new smelting units (flash furnaces
or electric furnaces)
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During conventional copper smelting, between 40 to 60% of the sul-
fur in the feed materials is eliminated from the converters and the cap-
turing of these emissions is a logical starting point to consider for
emission abatement and the other three methods mentioned above could oper-
ate in addition to the conversion of S02 in converter off-gases to acid.
At present, the converter gases are cooled by three to four times their
volume of dilution air, and this air infiltration has to be stopped in
order to maintain high concentrations appropriate for autogenous con-
version to sulfuric acid. The general approach to accomplish this in-
cludes the installation of tight-fitting hoods to prevent air infiltration,
the cooling of hot off-gases with waste-heat boilers or water sprays, dry
gas cleaning with electrostatic precipitators and finally wet gas cleaning
in Peabody-type scrubbers, and acid mist elimination prior to treatment in
a contact acid plant. The only other technical alternative is the use of
Hoboken syphon converters which eliminate entirely the leakage of dilution
air, but still requires the same gas treatment facilities downstream. All
the copper smelters in the west are now preparing to install these changes
which are essential for pollution abatement. Of these changes, the flue
modifications necessary to capture converter off-gases without excessive
dilution can be quite expensive because the construction work has to be
completed in an operating plant with minimal interference with plant pro-
duction. Also, the addition of an acid plant substantially increases the
power demand at a smelter. Currently, most smelters generate more than
adequate power for their internal needs from the waste-heat boilers on the
reverberatory furnaces and power generation can be increased by installing
waste-heat boilers to cool the hot converter gases. This increase in the
power generation capacity is obtained at considerably higher capital cost
as compared to the use of water sprays for converter gas cooling. Because
there is considerable variation in the heat load at smaller smelters, the
use of water sprays would be preferred.
The second approach for further reduction in emissions would be
the one that would require the abandonment of green feed smelting and a
reversion to concentrate roasting in conjunction with deep-bath smelting.
New multiple-hearth roasters as well as fluid bed roasters can
produce off-gases sufficiently high in SO? for autogenous acid manu-
facture. Of the three fluid bed roasters installed at copper smelters,
the smallest unit has operated trouble-free for several years. The inter-
mediate sized fluid bed unit has encountered considerable operating dif-
ficulty in the past but these problems have been successfully overcome, and
the management believes that they have sufficent in-house experience to
properly design a new fluid bed roaster should they choose to do so. The
largest fluid bed roaster has also had considerable operating difficulties
in the past but these seem to have been successfully overcome since the
management of this particular company will rely on the fluid bed roaster
as a part of its strategy to reduce sulfur oxide emissions at that partic-
ular smelter. The advantage of partial roasting is that the loosely held
sulfur in the concentrates is removed and a steady stream of off-gases rich
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in sulfur oxides and ideal for sulfuric acid manufacture is obtained.
In cases where the degree of sulfur elimination and iron oxidation in
fluid bed roasting is not sufficient to substain an autogenous reaction,
supplemental fuel can be burned in the roaster. This technology of burn-
ing supplemental fuel has never been used in the operation of fluid bed
roasters treating sulfide concentrates but only for the partial reduc-
tion of iron ore by Montecatini in Italy. An alternative would be the
utilization of multiple hearth roasters using supplemental fuel.
The usual way to charge hot calcines produced by roasting is by
using Wagstaff guns. This method minimizes dusting problems when compared
to roof charging of calcines and reduces the oxidation of calcines in the
reverberatory furnace atmosphere. At plants currently using green feed
smelting, the addition of roasters could be accomplished relatively easily,
assuming that space restrictions are not very stringent within the plant.
However, the change from green feed smelting using side charging to calcine
smelting would require major modifications on the reverb. These would be
related to the change from dry hearth smelting to deep bath smelting and
require, for example, the installation of cooling water jackets all around
the crucible of the furnace. One copper producer undertook changes of
this type several years ago, hence this approach appears to be technically
feasible, though the costs would be highly variable since they would depend
on the exact configuration of each reverb. The use of properly designed
new roasters along with the facilities for capturing converter off-gases
described previously and the conversion of both the roaster and converter
off-gases to sulfuric acid in a contact acid plant would theoretically
achieve sulfur recoveries as acid in the range of over 80% and perhaps
approaching 90%. (See an example of this, based on data from the McKee
report, in Section J of this chapter.)
The advantages of roasting and calcine smelting are: reduction in
fuel consumption in reverb and potential increase in plant throughput.
The disadvantages are: introduction of large amounts of magnetite into
the reverb and an increase in copper losses in slag resulting from higher
matte grade. In addition, for smelters equipped for roof charging of
green concentrates, this would require essentially the rebuilding of the
entire reverb complex and this might not be the most inexpensive strategy
with respect to meeting the Federal ambient standards.
The third approach (which is being tested at present) is based on
the use of green feed smelting in closed-in reverbs and concentration of
reverb off-gases using dimethylaniline (DMA). The advantages of this
approach are the use of the green feed smelting concept which is easier
from an operational viewpoint. The disadvantages are: DMA scrubbers
have not operated on as large a scale previously and DMA scrubbing is a
higher cost process when compared to roasting. In view of predicted
increases in energy and fuel costs, the operating costs for this approach
can also be expected to increase significantly in the future.
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The fourth approach would require abandoning the reverbs entirely
and the adoption of alternate smelting approaches which would be utilized
in conjunction with properly hooded converters. Of the approaches des-
cribed in the previous section, electric furnace smelting has already been
adapted and flash smelting is under serious consideration.
b. Second Level Technology
One of the major issues involved in the control of sulfur oxide
emissions from non-ferrous smelters is the operational applicability of
removal technologies to the smelters. For example, Arthur G. McKee and
Company, in a 1969 report on the National Air Pollution Control Adminis-
tration (PB184884) stated that "only five control processes have been
sufficiently tested and enough data made available so that costs can be
estimated for their applicability to a range of smelter conditions."
The five control processes selected by McKee were:
Contact Sulfuric Acid
Cominco Absorption (Ammonium Sulfate production)
Reduction to elemental sulfur (Asarco Process)
Lime Wet Scrubbing
Limestone Wet Scrubbing
In a subsequent study by Fluor-Utah in 1971, under the sponsorship
of Kennecott Copper, the same general process technologies were considered
with only acid manufacture defined as first level technology. However,
the Cominco absorption process was replaced by an Asarco developed absorp-
tion process utilizing dimethylaniline (DMA). The major reason for the
selection of DMA was the high sulfur dioxide recovery characteristics.
Although there was some disagreement between Fluor-Utah and McKee on the
sulfur oxide removal capabilities of the Cominco ammonium sulfate process,
there was no disagreement that both processes (Cominco and DMA) are high
in capital and operating costs. Both Fluor-Utah and McKee considered the
possibility of producing elemental sulfur by a process piloted by the
American Smelting and Refining Company. Again, the two agreed that the
capital and operating costs for sulfur production would be high.
Each of the aforementioned processes results in a by-product which
can be an item of commerce, i.e. sulfuric acid, ammonium sulfate, liquid
sulfur dioxide or solid sulfur. The other sulfur oxides removal processes
considered, i.e. lime and limestone scrubbing are not capable of producing
a product of commercial interest since the gypsum from natural sources is
far superior.
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In regard to lime-limestone scrubbing, our assessment is in agree-
ment with that of Slack, Falkenberry and Harrington* who stated "Lime-
limestone scrubbing is being adopted as a basic method of controlling SC>2
emissions from power plants. Use in other industries that emit SC^ is
limited but is likely to increase. At the present time technology is
only in the beginning of development, perhaps usable as a means of con-
trolling emissions but crude and far from being optimized."
The operational status of lime-limestone scrubbing has been char-
acterized by the aforementioned authors as "Scale Formation on scrubbing
surfaces has been the main operating problem throughout the history of
lime-limestone scrubbing—.-. At the present level of development, it
appears that to use lime at reasonable circulation rates it is necessary
to operate at low pH or to dilute the system with water. Both are
undesirable, the latter particularly so because scrubber liquor must be
drained to a water course, with accompanying water pollution, to make
room for the water." Furthermore, as these authors note, in many sec-
tions of the country calcitic limestones are not readily available and if
dolomitic limestones are used, the highly soluble magnesium sulfate that
is produced would present a difficult containment and long term disposal
problem. Consequently, the lime or limestone scrubbing process as well
as the use of sodium hydroxide or sodium carbonate for scrubbing results
in waste streams of solids or concentrated salt solutions which must be
disposed of in a manner which will not pollute ground and surface waters.
The problem of disposing of waste solids generated from scrubbing sulfur
dioxide from gas streams or from neutralization of excess acid has been
recognized by both the industries and regulatory agencies and is a prob-
lem which must be considered for each individual plant location. In
general, where smelters are located near mines, the problem of disposal
of solids generated in sulfur oxides removal is minimal because of the
large amounts of solids already being disposed of in tailing piles.
Furthermore, in the case of the copper industry particularly, arid to some
extent in the lead and zinc industries, the problem of disposal of these
solids is further decreased because of the aridity of the areas where the
mines and smelters are located.
Within the present time constraints, the optimum strategy for the
copper, lead and zinc industries is therefore based, in general., on mini-
mizing the volumes of dilution air historically used or allowed to enter,
increasing SOx concentrations and using the well established contact sul-
furic acid plant for its removal. Since it is often possible to achieve
Sulfur oxide removal from waste gases: Lime-limestone scrubbing tech-
nology - A.V. Slack and H.L. Falkenberry, Tennessee Valley Authority
and R.E. Harrington, Environmental Protection Agency. Journal Air
Pollution Control Assoc. Vol. 22, No. 3, March 1972.
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this concentration by better ducting, hooding, and replacement of equip-
ment, the control of sulfur oxide emissions from these industries involves
considerations other than those of direct treatment of an off-gas which
cannot be altered in composition, as in the fossil fuel electric power
industry. This approach is based not only on the known operational dif-
ficulties inherent in lime-limestone scrubbing but also on the fact that
the lowest concentrations of sulfur oxides present in the major gas streams
(such as reverb off-gases) are considerably greater than those that occur
in, for example, the flue gases from fossil fuel power generating plants.
Some preliminary evidence indicates that scrubber efficiencies for these
higher concentrated gases may be less than demonstrated on power plant
flue gases. Also, the variable flows that occur in smelters have caused
some of the preliminary designs to be limited to less than 100,000 SCFM
units; however, single train scrubbing units of larger capacity are
available which would probably result in lower capital investments than
often estimated. However, because'these scrubbers have not been installed
and operated for long periods of time, it is not surprising to find a
reluctance to consider them when confronted with a relatively short time
period for installation of equipment for compliance with emission regu-
lations. Therefore, the principal control methods being considered by
the industries are toward the removal of sulfur oxides as sulfuric acid;
liquid sulfur dioxide with scrubbing being considered principally for
those gas streams of low sulfur oxides concentration, i.e. where the con-
centration levels have been reduced to the levels characteristic of the
electric power generating industry but are still too high to attain com-
pliance with emission standards.
An additional aspect of second level technology is that it consumes
considerable energy—more than can be generated at smelters by utilizing
waste heat.
As higher and higher degrees of sulfur recovery are considered,
"converter aisle losses" become increasingly important. "Converter aisle
losses" refer to low level SOx emissions that occur either during normal
operations of a copper smelter (for example, tapping of matte, charging
converter slag into the reverb, several converters blowing into a balloon
flue at the same time resulting in inadequate draft, and so on) or during
short-time transients (for example, SOx leakage while converter is being
turned, draft reversal in the reverbs resulting in reverb gas leakage from
all openings, and so on).
These low level emissions are difficult to quantify since they
would have to be calculated by difference and their magnitude is not known
at the present time with any degree of certainty.
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J. GENERALIZED COSTS OF EMISSION CONTROL
As noted earlier, a copper smelter has a variety of options available to
meet a required set of standards. Because the ambient SOx concentrations
are affected by local weather patterns, tall stacks, use of dilution air,
etc., it is not possible to express in a simple generalized relationship
the percent sulfur recovery (i.e. the degree of emission control) necess-
ary to produce a predetermined ambient concentration.
It is however possible to calculate the costs associated with different
degrees of emission control since each type of technology can be the opti-
mum within a particular range of emission control objectives. We have
prepared Figure III-l in order to show the costs associated with different
degrees of emission control. The figure is based on the sequential
selection of emission control strategy. We have selected collection of
converter gases and acid manufacture as the basic strategy (Technology A)
since these gases are a major source of SOx emissions that can be obtained
in adequate concentrations for acid manufacture. Also, all the western
copper smelters have pollution abatement plans that include this approach.
This strategy can recover from about 45% to perhaps 70% of the sulfur in
the feed materials, the exact recovery depending on the nature of the con-
centrate and type of reverb operations. The vertical axis in Figure III-l
has been labelled "relative costs"; however, these costs are approximately
in C/lb. of copper incurred in direct operating costs plus 20% per year of
capital costs for amortization, debt maintenance, taxes and administration
when using a particular technology. For example, the horizontal bar for
Technology A extends from 0% to 50% and indicates the range of emission
control assured by this technology. Its dotted extension to 70% denotes
the area where it might be applicable but where its performance could not
be guaranteed. The cost range denoted by this bar is the range of total
costs (i.e. direct operating plus fixed costs) expected when thiis technol-
ogy is used to obtain the maximum recovery it is capable of or about 50%
sulfur removal. It can be argued that when this technology is used of
only 20% sulfur removal, the costs could be lower than shown in the figure.
However, since the purpose of this exercise is to show what level of emis-
sion control can be obtained at what cost, each technology would logically
be utilized to its limit and we believe that the use of horizontal bar
representation of cost vs. technical capability for emission control is
justified.
We have selected roasting of concentrates (Technology B) as the second
strategy.
We believe that the use of this approach in conjunction with the con-
verter gas collection—acid manufacture approach will recover over 80% of
the sulfur and might approach 90% sulfur recovery, though the latter could
probably not be guaranteed. (For example, Model B in the McKee report
was based on this approach but incorporated the use of dilution air for
cooling of converter gases. The sulfur emitted from roaster, reverb and
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10
RELATIVE
COSTS
V
A + D
A + C
TECHNOLOGY A
20
40 60
% SULFUR REMOVAL
80
100
Note: Technology A
Technology B
Technology C
Technology D
— Acid manufacture from converter gases
— Roasting and acid manufacture in addition
- Scrubber technology such as lime-limestone or DMA
scrubbing plus acid plant
- Scrubber technology such as caustic or DMA scrubbing
plus elemental sulfur production
FIGURE 111-1 GENERALIZED COST FOR DIFFERENT DEGREES OF EMISSION CONTROL
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converter was 50%, 6.7%, and 38.5% or a total of 95.2% of the sulfur in the
plant feed. The acid plant utilized roaster and converter gases at 94%
efficiency and captured 83.2% of the sulfur in the plant feed. The McKee
numbers can be manipulated to show a "sulfur recovery" of over 90% by
assuming a double absorption acid plant and assuming "sulfur recovery" to
include sulfur leaving the plant with reverb slag.)
!
Removal of over 83% of the sulfur requires the application of a variety of
technologies in both the smelting operations and the sulfur oxide removal
processes. A variety of decision paths are possible and we have chosen
such removal technologies as lime-limestone scrubbing or DMA absorption
with recovery of liquid sulfur dioxide for sale or for additional acid
production as representative of Technology C. These technologies are
considered to be those which could be applied when necessary to achieve
90% sulfur removal at minimum cost and where 90% removal would insure meet-
ing ambient air quality standards at all times. Since these technologies
do not as yet have a firm basis for detailed engineering and operating
costs, their application to any specific smelter would result in a wide
variation of costs as shown by the bar for Technology A plus C.
In the case of certain smelters—where local acid markets are non-existent,
where disposal of calcium sulfate from acid neutralization or scrubbing
might create potential water pollution problems, or where greater than 90%
removal might be required to insure meeting ambient air quality standards—
the use of caustic scrubbing, DMA absorption and elemental sulfur produc-
tion and so on might be required. This technology, labelled D, would be
expected to have even higher costs and variability from smelter to smelter
and the total cost is shown as Technology A plus D.
To show approximately the rapid increase in costs of sulfur removal as
higher and higher percentage recoveries are required, the dotted line of
Figure III-l connecting the mid-points of the estimated ranges has been
drawn. This line is characteristic of operating processes as higher and
higher recovery efficiencies are required while reflecting the variability
that exists between smelter locations.
K. TECHNOLOGY OF WATER POLLUTION CONTROL
The primary copper, lead and zinc industries must control water emissions
from three major sources, the mines, the smelters and the refineries. In
controlling water pollution it is often necessary to remember that in con-
trolling the air pollution problems, a water pollution problem can be cre-
ated since some of the most effective air pollution technologies are based
on the use of water in scrubbing. Furthermore, the water drainage problem
from mines and tailings disposal areas is of considerable concern to the
industries, but, of course, much less than in the coal mining industry.
Although air and water pollution control have been considered separately,
it is mandatory that in arriving at solutions to one problem, another one
of equal or greater magnitude is not created.
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Wastewater treatment in the copper, lead and zinc industries is princi-
pally based on physical separations and physico-chemical removal techniques
since there is little biologically active material other than from the san-
itary facilities of the plant. However, in certain instances the chemical
additives used in ore beneficiation can contribute to nutrient enrichment
of receiving waters so that algal growth, for example, is accelerated in
holding ponds. Nevertheless, the technology required for wastewater
treatment is principally that required for removal of suspended solids and
the removal of soluble metals since many of the latter have known toxic
effects in the aquatic environment. Since the industries must deal with
complex minerals containing many minor metals in addition to the major ones
of copper, lead and zinc, the wastewater treatment problems become increas-
ingly significant and difficult to treat as the concentrations of metals
such as cadmium, mercury, chromium, arsenic, nickel and so on increase.
In general the present wastewater treatment technology is based on separ-
ation of suspended solids followed by lime treatment to a pH sufficiently
on the alkaline side to precipitate metallic elements as hydroxides which
have generally low solubilities. The precipitated solids are removed in
settling tanks or allowed to settle out in ponds. The metal values in
the precipitated solids may be recovered if in high concentrations or the
solids are buried or placed in holding ponds or tailing piles. The alka-
line waters can then be neutralized to a pH acceptable for discharge or
reuse. At this point the treated waters will still contain metals equal
to or greater than the solubilities of the precipitated forms. In general
these concentrations are greater than theoretical due generally to incom-
plete reactions, carryover of colloidal particulates, pH fluctuations and
the effects of other ions in solution. Consequently, precipitation-type
treatment systems, while effective, are limited by a number of physico-
chemical laws and if the permissible concentrations of heavy metals are
established at values lower than these limits, other and more costly
treatment methods would be required. Among the latter are ion-exchange,
evaporation, electrodialysis, and reverse osmosis.
The water pollution control problems within the industries are especially
dependent upon plant, and mine location, i.e., in arid regions the water
treatment, reuse and conservation is high out of necessity, whereas in
areas blessed with a greater abundance of water, the water usage practices
are less well optimized. In EPA Contract No. 14-12-870 "Water Pollution
Control in the Non-Ferrous Metal Industry" it has been indicated that the
industries are beginning to take or seriously considering taking a number of
measures to improve the quality of the wastewater discharged. These
procedures are well known throughout the field of wastewater treatment;
however, the major considerations will revolve, undoubtedly, around the
questions of water availability, value of materials, and the currently unde-
fined water discharge standards.
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IV. INDUSTRY CHARACTERISTICS
A. INDUSTRY STRUCTURE AND LOCATION ASPECTS
1. Domestic
a. Introduction
The United States has been the largest copper producing country in
the world since before the turn of the century. The domestic primary copper
industry is composed of approximately 200 firms engaged in producing and
selling copper. The major producers are vertically integrated and have
mining, smelting, refining, fabricating, and marketing interests. Other
large producers mine and have processing facilities through the smelting
or refining stages, and many companies mine and concentrate their ores and
ship the product to custom plants for smelting and refining. The principal
domestic producers are shown in Table IV-1. Of these, Anaconda, Inspiration,
Kennecott, Magma, Phelps Dodge and White Pine are integrated from mining
through primary metal production; Duval, Pima and the Miami Copper Division
of the Tennessee Corp. are involved only in mining and milling and Asarco is
the major custom smelter and refiner who purchases ores or concentrates
from other producers (custom smelting) or will treat them for a fee and
return the metal to the mining company for marketing (toll smelting).
b. Mining and Milling
In the United States, over 300 mines produce copper. Copper ore
was the principal product of almost 200 mines, and the others, mostly lead
and zinc mines, produced copper as a byproduct and coproduct. The top five
mines each produced more than 100,000 tons of contained metal, amounting
to 45% of the total. The ore is beneficiated (crushed, ground and metal
sulfides recovered by flotation) in mills that are located near the mines.
Most of the copper is mined in five western states—Arizona, Montana,
Nevada, New Mexico, and Utah—(93.5% in 1970) and essentially all of the
remainder came from Michigan, Tennessee, and Missouri, as shown in Table IV-2
for the years 1968, 1969, and 1970.
The major copper mines are shown in Table IV-3. Also included in
the table is mine employment (when available). On the basis of published
data we have estimated the cost of mining and milling and divideid the mines
into three relative cost categories: high, medium and low. This table has
been used later in Volume III in isolating the major mines that would suffer
an impact from increased pollution control costs at smelters and refineries.
c. Smelting
Traditionally the smelters have been situated near the mines in order
to minimize transportation charges for concentrates. With the major copper
mines centered in the Western States, most of the smelting capacity is in
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TABLE IV-1
PRINCIPAL COPPER-PRODUCING COMPANIES
IN THE UNITED STATES, 1970
Company
American Smelting and Refining Company
The Anaconda Company
Bagdad Copper Corporation
Duval Corporation
Inspiration Consolidated Copper Company
Kennecott Copper Corporation
Magma Copper Company
Phelps Dodge Corporation
Pima Mining Company
Tennessee Corporation - Miami Copper Division
White Pine Copper Company
Mine
Production,
Short Tons
72,500
242,000
17,000
97,000
66,000
519,000
112,000
313,500
66,000
43,500
68,000
SOURCE: American Bureau of Metal Statistics, Yearbook 1970
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TABLE IV-2
UNITED STATES MINE PRODUCTION OF RECOVERABLE COPPER BY MAJOR
PRODUCING STATES; 1968, 1969, 1970
(Short Tons)
State
Arizona
Michigan
Montana
Nevada
New Mexico
Utah
Other
Total
1968
Amount
631,300
74,590
64,862
72,870
92,300
228,300
34,708
1,199,290
Rank
1
4
6
5
3
2
—
Per-
cent
53
6
5
6
8
19
3
100
1969
Amount
801,363
75,226
103,314
104,924
119,956
296,699
43,097
Rank
1
6
5
4
3
2
—
Per-
cent
52
5
7
7
8
19
3
1,544,579
1970
Amount
910,000
69,500
123,031
101,000
165,260
295,000
42,059
Rank
1
6
4
5
3
2
—
Per-
cent
53
4
7
6
10
17
3
1,705,850
SOURCE: United States Department of Interior, Bureau of Mines
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TABLE IV-3
ESTIMATED MINING COSTS - MAJOR COPPER MINES AND
Company
Kennecott:
Utah Copper Div.
Ray Mines Div.
Chino
Nevada Mines
Phelps Dodge;
Morenci
New Cornelia
Copper Queen
Tyrone
Magma Copper Co. :
San Manuel
Superior Div.
Anaconda Co. :
Twin Buttes
Berkeley Pit
Butte - U.G.
Yerington
White Pine Copper:
Pima Mining Co. :
Inspiration;
Christmas
American Smelting:
Mission
Silver Bell
Duval :
Mineral Park
Esperanza
Sierrita
Battle Mtn.
Bagdad ;
Cities Service:
Copper Cities
Copperhill
Location Tons Ore in 1970
Utah
Arizona
New Mexico
Nevada
Arizona
Arizona
Arizona
New Mexico
Arizona
Arizona
Arizona
Montana
Montana
Nevada
Michigan
Arizona
Arizona
Arizona
Arizona
Arizona
Arizona
Arizona
Arizona
Nevada
Arizona
Arizona
Tennessee
40,147,500
12,432,192
8,276,276
7,698,883
19,172,647
10,560,000
4,800,000
9,147,500
14,000,000
450,000
8,762,000
18,850,800
543,125
9,122,000
7,635,192
14,597,803
9,377,000
1,829,000
8,038,900
3,787,700
5,871,721
5,508,742
14,318,125
1,636,457
2,100,000
4,970,196
1,677,142
MILLS
Mining Cost Employment
L
L
L
H
L
L
H
L
L
L
H
M
L
L
M
L
L
H
L
L
L
L
M
H
M
L
H
7,900*
2,100*
1,500*
1,480*
2,300*
1,250*
1,700
490
2,200*
1,100*
1,000
(3,000
450
2,885*
834
1,750*
275
675
385
411
492
1,205
294
525
-
1,900*
*Includes smelter employment.
SOURCE: ADL Estimates - E/MJ Directory, 1971
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that area. The number of smelters has declined from 20 in 1960 to 15 today,
13 of them west of the Mississippi. The thirteen western smelters are
operated by six companies—Kennecott, Phelps Dodge, Anaconda, Inspiration
and Newmont—who mine a major portion of their respective smelter input,
and by Asarco—a major portion of whose input comes from ores mined by other
companies.
The ownership of the primary copper smelters, and the approximate
capacity of each plant (in tons of charge) in 1970 are shown in Table IV-4.
Of these only the White Pine smelter in Michigan treats low sulfur native
copper ore.
Of the remaining smelters, Magma will substantially increase its
charge handling capacity to about 1 million tons. Should the emission
control regulations in Montana require 90% emission control, Anaconda might
build a new smelter with a capacity of 300,000 tons of copper per year.
The capacity at Douglas will decrease substantially (as a part of an emission
abatement program), while the capacity at other smelters is not esxpected to
change by more than jh 20%.
In addition to these smelters, Phelps Dodge's new smelter in New
Mexico is the only smelter that will definitely be built in the next few
years.
The approximate flow of sulfide flotation concentrates between
mines and smelters is shown in Table IV-5, based on information available
in 1971-1972. The flow of concentrates can vary from year to year in the
case of custom smelters, since the mine can change from one smelter to
another when a better contract is obtained. For example, Pima has switched
from Asarco to Phelps Dodge's Douglas smelter in recent years.
d. Refining
The major portion of the smelter output of blister copper is electro-
refined. Copper electrolytic refineries have traditionally been located
near the consumers on the Atlantic Coast, but several refineries have been
built in the west. The east coast refineries still account for a major
portion—about half—of electrorefining capacity. A smaller portion of
smelter output is fire refined—principally in New Mexico and Michigan.
The primary copper refineries, their ownership and the location, type and
capacity of each refinery are shown in Table IV-6. Figure IV-1 shows the
location of the smelters and refineries.
e. Fabrication
Fabricating companies are the principal consumers of refined copper.
They work the metal into semi-finished form such as sheet, strip, rod, tube,
wire and extruded or rolled shapes which are the raw materials for the manu-
facturing industries. About 35 companies in the United States are recognized
as the important fabricators and users of copper. The larger fabricators,
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TABLE IV-4
COPPER SMELTING WORKS OF UNITED STATES
Approximate Capacity
Tons of Copper Annual Capacity ,_,. Number of
Per Year (4) Tons of Material Employees
Company Location Per Year 14.) Tons of Material Employees
American Smelting & Refining Co. El Paso, Texas 100,000 576,000 975
American Smelting & Refining Co. Hayden, Ariz. 180,000 960,000 450
American Smelting & Refining Co. Tacoma, Wash. 110,000 600,000 1,000
Anaconda Company Anaconda, Mont. 210,000 1,000,000 2,000
Cities Service Company
Copperhill Operations Copperhill, Tenn. 15,000 90,000 *
Inspiration Consolidated Copper Co. Miami, Ariz. 140,000 450,000 *
Magma Copper Company
San Manuel Division San Manuel, Ariz. 100,000 403,000 *
Kennecott Copper Corporation:
Nevada Mines Division McGill, Nev. 70,000 400,000 *
/91
Chino Mines Division Hurley, N.M.v ' 90,000 400,000 *
Ray Mines Division Hayden, Ariz. 80,000 420,000 *
Utah Copper Division Garfield, Utah 300,000 1,000,000 *
Phelps Dodge Corporation:
Douglas Smelter Douglas, Ariz. 110,000 875,000 650
Morenci Branch Morenci, Ariz. 190,000 900,000 *
New Cornelia Branch Ajo, Ariz. 70,000 300,000 *
White Pine Copper Company White Pine, Mich. 90,000 90,000( *
j^. (1)At end of 1970. In tons of 2,000 Ib.
C (2)
"* Produces fire-refined copper as well as blister.
£2 (3)
CT Tons of product.
3. (4)
ft ADL estimates.
3" *Not available separately; included in Table IV-3
SOURCE: American Bureau of Metal Statistics Yearbook, 1970
ADL estimates
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TABLE IV-5
APPROXIMATE FLOW OF CONCENTRATES BETWEEN COPPER MINES AND SMELTERS
SMELTERS
MINES_
Kennecott Utah Copper
Ray, Ariz.
Chino, N.M.
Veteran, Tripp, Nev.
Phelps Dodge Morenci, Ariz.
New Cornelia, Ariz.
Lavender Pit, Ariz.
Tyrone, N.M.
"KX C JJt 1 A -1
Magma, Ariz.
Anaconda Twin Buttes, Ariz.
Berkeley, Mont.
Yerington, Nev.
Butte Hill, Mont.
Inspiration Inspiration, Ariz.
Christinas, Ariz.
Silver Bell, Ariz.
T\ 1 C -I a -v* •»• 4 •*- a
Mineral Park
Esperanza
Battle Mtn. , Nev.
Cities Service - Copper Cities, Ariz.
Copper Hill, Tenn.
Bagdad Cu Bagdad, Ariz.
.d
cfl
4-1
~i
f.
4-1
4J
O
O
01
C
(3
01
1
N
H
U
<
•\
G
01
•a
cfl"
X
M
4-1
4J
O
CJ
o)
a
a
cu
1
sj
z
ft
^
a>
H
M
33
•t
4J
4J
O
O
CU
C
a
a)
1
,;
01
a
M
H
H
H
O
a
S
• i
4J
4J
O-*
O
01
£3
01
^
1
CO
cfl
X
01
-H
*
0
CO
cfl
14
H
-Li"
: "4
O
CJ
CO
CO
<
1
J.
2
2
1
1
cfl
C
O
N
H
M
<
M
a
0)
•a
^»
cfl
35
e «4
O
a
M
cfl
(n
^
1
•I
•*-
1
1
O
2
2
1
•
13
CO
cfl
3
*
cfl
o
0
cfl
H
> M
O
o
cfl
^4
1
.L
1
1
•H
a
C
0)
o
s
A
Q
1
PM
1
1
O
^J
ft
n
i
CM
1
CO
cfl
rH
t>0
0
Q
ft
Q
1
PH
1
1
I
•*•
2
.
s
2
M
3
cu
a
M
n
i
PM
cfl
T)
C
O
CJ
cfl
(3
t-l
0)
Cfl
CO
0)
H
4->
H
U
1
Others
111
1 1
1 - major flow
2 - minor flow
* Flows to Asarco Smelters can vary month to month
SOURCE: ADL Estimates based on data in ABMS Yearbook 1970 and Annual Reports.
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ArthurD Little, Inc.
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TABLE IV-6
UNITED STATES COPPER REFINERY CAPACITY
[Annual Capacity At End Of 1970 In Tons Of 2,000 lb.]
Company
Electrolytic:
The Anaconda Company
Asarco
Asarco
Asarco
Cerro Copper & Brass
Div. of Cerro Corp.
Inspiration Consolidated Copper
International Smelting &
Refining Co.
Kennecott Copper Corp.
Kennecott Refining Corp.
Newmont Corporation
Phelps Dodge Refining Corp.
Phelps Dodge Refining Corp.
United States Metals Refining Co.
(Subsidiary of AMAX, Inc.)
Situation
Great Falls, MT
Baltimore, MD
Perth Amboy, NJ
Tacoma, Wash.
St. Louis, MO
Inspiration, AZ
Raritan, Perth
Amboy, NJ
Garfield, UT
Anne Arundel
County, MD
San Manuel, AZ
El Paso, TX
Laurel Hill,
Maspath, NY
Carteret, NJ
Annual Capacity,
Tons of Material
190,000
318,000
168,000
156,000
44,000
70,000
150,000
186,000
276,000
200,000
420,000
74,000
175,000
Hurley, NM
El Paso, TX (a)
Lake and Fire Refining:
Kennecott Copper Corp.
Phelps Dodge Refining Corp.
United States Metals Refining
Co. (Subsidiary of AMAX, Inc.) Carteret, NJ
White Pine Copper Co. White Pine, MI
(a) From Morenci ores
SOURCE: ABMS Yearbook, 1970 - ADL Estimates
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103,000
23,000
85,000
90,000
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FIGURE IV-1
WHERE THE SMELTERS AND REFINERIES ARE LOCATED
REFINERIES
SMELTERS
SOURCE: METALS WEEK
-------
representing more than 50 percent of the total volume of business, are
affiliated with the major copper producers, who thus have production facilities
from the mines to the finished copper and brass products.
The primary brass mills make up that part of the industry engaged in
initial forming or alloying and forming refinery shapes and scrap into standard
semifabricated forms of copper and copper alloys such as plate, ssheet, strip
tube, rod, and wire. Subsequent operations involve further rolling, drawing,
and shaping so that the products will meet specification dimension and design.
The primary wire mills roll refined copper wirebars or extrude
refined copper billets into rod that are drawn in stages to finished wire.
Wire is also produced by redraw mills that obtain rod from the primary wire
mills. There are other types of mills designed for singular operation such
as insulation and stranding.
We estimate that about two-thirds of the brass mill sales in the
United States are accounted for by companies integrated back through mining
while only one-third of the wire mill sales are so integrated. One major
reason for this difference is the nature of the products. Most brass mill
products are relatively standard, high volume items. On the other hand,
wire products comprise of a large number of high-value-added specialty items
that are sophisticated and low in volume. The standard high-volume items
are produced by integrated companies, while the specialities are produced by
small independent operations.
f. Secondary Copper
Copper recovered from copper scrap as metal, as alloys without
separation of the copper or as compounds, is known as secondary copper.
There are two major classifications of secondary copper. New scrap is genera-
ted in the fabrication or manufacture of copper articles, and includes de-
fective finished or semifinished articles that must be reworked. Copper
produced from old scrap consists of articles that have been discarded after
serving a useful purpose.
The flow of copper scrap is shown in Figure IV-2 which indicates
the channels through which much of the reclaimed copper returns to industry
from scrap dealers and fabricators. The principal source of copper scrap
is in heavily populated industrial areas and most of the plants that treat
secondary materials are located nearby.
2. International
The United States has been the largest copper-producing country in the
world since 1883, except for 1934 when economic conditions adversely affected
domestic production. In 1970, the United States produced about 25% of the
total world mine production. Other principal copper-producing countries are
the U.S.S.R., Zambia, Chile, Canada, the Congo (Kinshasa), Peru, and Southwest
Pacific. The four developing countries—Chile, Peru, Zambia and Kinshasa
(the so-called CIPEC countries)—account for over 50% of the free world mine
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Scrap Dealers
.2
I
LL S
•aO
Accumulation of
Obsolescent Scrap
Free Industrial Scrap
Captive Industrial Scrap
Brass Mills
Scrap Exports
Durable Goods
/ Smelters
r-Base
takers
ries&
aneous
ners
\
— *•
C
Voducts
Captive
Manufacture
Construction
ndustrial Scrap
a
i
D
C '
U.
a
03
.2
§
S
'i.
Source: U. S. Bureau of Mines
FIGURE IV-2 FLOW OF COPPER SCRAP IN UNITED STATES
(Excluding Industrial Homescrap)
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production outside the U.S. The production at mine, smelter and refinery,
and consumption of copper in the Free World are shown in Table IV-7. It
can be seen that the major consumers are the developed countries,, while the
CIPEC countries are major producers. Production and consumption in U.S.
and Australia are more or less in equilibrium, while Canada is a major ex-
porter of domestic production amongst the developed countries.
Tables IV-8, IV-9 and IV-10 show, respectively, the principal foreign
producers and the disposition of their copper, copper smelter capacity and
copper refinery capacity. Many large domestic producers through subsidiaries
or stockholdings operate foreign copper producing properties abroad, and are
also involved domestically in the production of other non-ferrous metals
such as aluminum, lead and zinc. The financial posture of some of the
companies has been changed by expropriation of foreign properties and
nationalization in other countries continues to be a threat.
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TABLE IV-7
1969 FREE WORLD PRINCIPAL COPPER PRODUCING AND CONSUMING COUNTRIES
Oiile
Peru.
Tofol
Australia
Canada .
Chile
Peru
Total
Mine production *
Rank
8
4
3
5
10
6
7
9
1
2
Amount
144,512
551,370
753,493
401.237
441
132,607
219,358
144,842
140, \02
1. 544, 579
1,543
793, 105
5,314,114
Per-
cent
3
10
14
8
3
H
3
3
29
15
Refined exports
Rank
10
3
5
2
6
9
8
4
7
1
Amount
36,045
280,315
209,988
472, 1 !5
202,052
6,834
37,368
29, 101
78, 153
214,987
105,270
677.915
2. 459, 159
Per-
cent
2
11
9
19
8
2
1
3
9
4
28
S-nelter ptoduction
Rank
10
5
3
6
4
C
9
1
7
2
Amount
137. 126
61,508
428, 023
712. 857
401,017
10,472
552, 363
137, 722
140,323
1.585.4V1
203,374
775,689
5,655,623
Per-
cent
2
1
8
13
7
10
3
2
28
4
14
Refined imports
Rank
5
3
4
1
6
2
Amount
205,579
18,188
356,153
219,688
459,769
131,063
392,309
2,3<;0,006
Per-
cent
9
1
15
9
19
5
16
Ret:r.ed production
Rank
10
7
5
4
9
2
S
1
6
3
Amount
152,779
315,029
450, 620
499,232
200,949
40,785
693,567
34,722
67,461
218,476
2, 203, 000
443,235
664,907
6,452,075
Per-
cent
2
5
7
8
3
11
1
3
34
7
10
Unrefined exports
Ronk
8
4
1
2
9
3
6
7
5
Amount
21,164
157,849
251,545
200,067
11,023
180,777
144,842
104,608
5,300
1,323
153,220
1,315,273
Per-
cent
2
12
19
15
1
14
11
8
12
Refined consumption
Rank
8
7
6
5
2
4
1
3
Amount
109,343
123.678
258,489
21,715
369, 050
889,446
4,189
33,250
602,733
2,142,210
722, 778
Per-
cent
2
n
f,
4
6
14
10
34
12
6,2S9,C62| ..
Unrefined imports
Rank
4
6
1
5
2
3
Amount
177,249
17,416
463, 738
49, 163
277, 124
260,473
,317,313
Per-
cent
14
1
35
4
21
20
*Ronk indicates position among ten top countrie: — no rank number indicates country not among top ten.
Amount in short tons.
f indicates percent of total.
SOURCE: WORLD METAL STATISTICS, BDC
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TABLE IV-8
PRINCIPAL COPPER PRODUCERS AND THE DISPOSITION OF THEIR COPPER
CANADA
Anaconda American Brass Ltd. . ..
Anaconda American Brass Ltd. , . .
Asarco, Buchans Unit
Atlantic Const Copper Corp
Bethlehem Copper Corp
i. Ltd...
Campbell Cltibouiramau Mines,
Copperfields Mining Corp., Ltd
CraiRmont M ines. Ltd
Ecstnll Mining. Ltd., Div. of Texas
Gulf Sulphur Co.
Falconbridge Nickel Mines, Ltd
Asarco, Tncoma. Wash. Asmrco. Tacnmn, \Vmh.
Boliden Aktiebolas. Stockholm, ' Bolidcc Aktiebo'.au, Stockholm,
Sweden • Swciien
Norddeutsche Affinerie, Germany j Norddeutsehe Ailinerie, Germany
Gaspe Copper Mines. Ltd. ' Canadian Copper Refiners, Ltd.
Sumitomo Metal Mining Co., i Siunitotno Metal Mining Co.,
Ltd., Shisakajima Island, Jppan ; Ltd., Niihama, Janan
Noranda, Noranda, Quebec. ' Canadian Copper Refiners. Ltd.
* it
j Japan
I Japan
Noranda, Norandn, Quebec.
Japan
Gaspe Copper Mines, Ltd
Gullbridce Mines, Ltd
Hudson Bay Mining and Smelting Co.,
Limited
International Nickel Co. of Canada,
Ltd.
j Japan
I Canadian Copper Refiners, Ltd.
• Anaconda P:I!IM Co.
! Boliden Aktipbo!a-.'.
• Nurd li.'iit.-irhi: Atlinnrie.
! Germany
i Noranda Sa'ios Corp., r.r.u
' Sumitomo >hoji fvuafia
i Ltd., Tokyo, J-ipati
, Nonuda SHIP* Corp.. Ltd.
. Philipp Brothers
The Company
! Texas Gulf Sulphur Cora-
! t •;! Tl V
Own plant, Falconbridge, Ont. Falconbriilge Nikkelverk A/S,
Norway
Own plant, Murdochville, Que. | Canadian
Gaape Copper Mines, Ltd. Canadian
Copper Refiners, Ltd.
, . Copper Refiners, Ltd.
Own plant., Klin Flon, Manitoba [ Canadian Copper Refiners, Ltd.
Own plants. Copper CHIT, and ! International Nickel Co. of Can-
.. Copper Cliff
Copper Hefinera, Ltd.
Copper Refiner*, Ltd.
adrx, l.tla, Quebec.
Mclutyre Porcupine Mines, Ltd I Japan
Noramla Mines Ltd | Own plant. Noranda, Quebec, i Canadian Copper Refiners, Ltd,
Noiiiiet.il Mines Limited ! Noran-'-ci, N>>ra:ida, Quebec. ,' Canadian Oii-per Runners, Ltd,
Opemiska Copper Mines, Ltd I Noranda, Noranda, Quebec, i Canadian Copper Refiners, l.t i.
Patino Mimni; Corp ! Noranda, Noranda, Qtiel«;c. i Can:i-!i:iu Ouppor Rc-lin-'r.-*, Ltd.
Quemont Mines Limited ! Noranda, Noranda, Quebec. ( Caninij.-in Copper Reiinnrs. Lt.l.
Sberritt Gordon Mined, Ltd , Hudson May >tn. & Kef. Co.. Ltd... Can-idijin Copper Hefine-rs. Ltd.
i''lin Flon, Manitoba. Japan. ' Japan.
Solbec/Ciipra Mines | Japan I Japan
Tribay Mining Co., Ltd i Noranda, Noranda, Quebec t Noranda, Noranda, Quebec
Western Mines, Ltd j Japan ! Japan
.i Ltd.
u. >-il-^ Cnrr>., ..
I Noraii-.l;i *•:!,>* Corp.. Ltd.
Philipp Brothers
Norrindu S;i)os Corp., Ltd.
Philipp Brothpr^
OTHERS
A Bar co Mexicana, S.A
Compania Miners de Cananea, S.A. de
C.V
Macocoxac. S.A
Met-Mex Penolea, S.A
Compania »le Cobro, Salvador, 55.A....!
i
Atlas Cons. Mng. i Dev. Corp
Cerro de Pasco Corpn i
Compania ile Coiire, ChuiHiii-amata,
S.A. . !
Compania Mmora Exotica, ri.A J
Cypr:.- Mines Corpn
Generate Congolafee des Minerals. . . .
Own plant, San Luis Potosi. S.L.P. Cobre 'de Mexico, S.A.
Own plant, Cananea, Sonora Cobre de Mexico, S.A.
Asarco Mtxicana, S.A. San Luis I Asarco, Perth Atnboy, Nt-w Jersey
Potosi, S.L.P.
Asarco Mexir.ana, S.A. San Lu:s
Potosi. S.L.P.
Own plant, I'otrerillua, Chile.
Cobre de Mexico, S.A.
Various
do Mexico
Various
Kilembe Mines Ltd —
Lepanto Conaolidated.
MantOB Blancos
Mount Isa Mines Limited
Ncliantra Consolidated Copper Mines
Ltd.
O'Okiep Copper Co., Ltd
Palabora Mining Co., Ltd
Peko Mines, N.L
>\vn n'.-mt, Poirirriilos and Kari- '• Anacoodr. iialci Co.
tan Cupper \\'ks. ,
Mitsubishi Metal Mining Co., , Mitsubishi MutaL Miuini; C-i.. [ MM M A ,\n=or Cor;>.
Japan • Japan.
Own plant. Oroya. Peru. , <">wn pbr,-.. Oro;.i. IVni. ' ^erro Sales Corp.
Own plant, Chuuuicamata, Chile ! Own pbm. C!i:i'trc'.
Chu'tuii'aiiia'u, C'liilt;
Norddeutsche Ainnerie, Germany
Own plants, Coniio
Own plant, Uganda
i ^;ilcs Co.
("liiJ'iui'-.isnat:!. t.'iiilo
Nord(i^iit>olic At!in«rie. Germ:vuy Amctalco, Inc.
O^'n .plant,-*, Coimo, ;inu O'.rn . Soc. Goa. des Minerals
(Belgium) Refinery of Metal- j
lur^rie Ho'poken S.A. j
Nippon Mining -Co. Ltd., Japan ! Falcon hridce Nic-k^l Mines
, .
Asarco, Tacoma, Wash, and vari- | Asarco, Tacoma, Wash, and vari- j \"arious
oua smelters in Japan and ous refineries in Fern, Japan
Korea
Own plant, Mantos Blancos, Chile
and Korea
Shipped as high conductivity fire Sudamin, Brussels, Bel-
Kiu.ni & Associates
! Mount Isa Mines Ltd.
Roan Consolidated Mines Limited—
Chambishi Division(6)
Chibuluma Diviaiun(6).
Luan^hya Divuion(o)..
Mufulira Division(b)
Sociedad Minera Pudahuel
Sociedad Minera El Teniente S.A
i re lined
Own plant, Mount Isa, Australia ! Copper Refineries Pty. Ltd..
i Townsville. Australia :
Own i>lant Nkana, Zaml>ia . Sliipp'-d as bli.-icr, nr refnu-d at i Anrncrcosa .Sal«-s Ltd.
, i-.« n plants Ciiin-ol.i ami Nkana \
Own plant. Republic of South ! Various ' Ametalco. Ltd.
Africa I j
Own plant, Phalaborwa, Repub- i Own pi.int. Piialaborv.-a an-i Nord-! Rio Tinto-Zinc Corp.
lie 01 S. Africa > deutsche AiTinrr:*j. Germany j
Sumitomo's Kunitomi, Japan j Shipped as concentrates to Sumi- ! Duval *fe Co. Ltd., Tokyo,
plant j touio Slioji Ivaisiia Ltd., Tokyo i Japan
Mufulira and Luanshya smelters I MufuHra Division and NCR '• Ametalco Limited
| Division refineries of Roan Con- j
Mufulira smelter
Southern Peru Copper Corp
Taurneb Corp. Ltd
Own plant, Luanshya, Zambia
Own plant, Mufulira, Zambia
Enami, Las Ventanas, Chile
Own plant, Caletones, Chile
Own plant, Ho. Peru
Own plant, Tsumeb, S.U'.A.
a olid a ted Mine?
Mufulira Division and NCR | Ametalco Limircd
Division rotin'-ries of Ruan Con- i
solidated Mines I.iiui'r.l j
Electro-refmed at Nupla Co]»per I Ametaloo Limited
Hennery—NCR Division ot
Roan Consolidated >l:ncii
Limited
Mufulira Division and NCR j Ametalco Limited
I Diyis;on letinories of Roan Con- :
| soluirited Mini's Limited i
1 Enatni, La a Ventams, Chile ' ' An\c-talco Limiieu
Part tire-refined iit own plant in I 5f(":ieH:»d Miu-.-ra
Chile; part sliipptnl as blister: ( Kl Temente S.A,
part, f.-ieciro-rerined nt Knami, ;
Las Ventanr.a, Chile ]
! Various
I Various
Various
Ametalco, Inc.
SOURCE: ABMS Yearbook, 1970
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TABLE IV-9
COPPER SMELTING WORKS OF THE WORLD
AT END OF 1970 (IN TONS OF 2,000 LB.)
CANADA
Falconbridee Nickel Mines, Ltd. . . .
Hudson Bay Mia & Smj. Co., Ltd. .
International Nickel Co. of Canada,
Ltd
International Nickel Co. of Canada,
Ltd
Total
Faleonbridge,
Ont.
Que.
Flin Flon, Mani-
toba
Copper Cliff, Ont.
600,000
260,000
575,000
5,600,000
1.000,000
1,700.000
9.738.000
MEXICO
Asarco Mexicana, S.A San Luis Potosi 1300.000
Cia. Minera de Santa Rocali . S.A... | Santa Rosilia, 100.000
| Raja. Calif. I
Coinpania Minera de Canal
-------
TABLE IV-9 (Cont'd)
The listing of copper smelting works is nc.cordinc to latest available information. The annual capacity is
estimated on the basis of dry tons of materials smelted that yield a product. A blank space ha:3 been left in the
capacity column, where data was not obtainable.
Company
Situation of Works
at End of 1970
Tons
SOUTH AMERICA
Chile:
Cia. Minera Diaputada de las Condes S. A
Empreaa Nacional de Mincria (ENAMl)
Socieda'l Minera Kl Teniente S.\
Peru:
Southern Peru Copper Corp
Potrerillos
Chapres
IIo
2iO.OOO
600,000
35.000
lfi.i.000
1. '.0.000
«.()•>••
ySK.otiu
•I'iO.iii")
500.000
».«
s.t.
s.t.
».t.
«.t.
ro.t.
s.t.
».t.
t.t.
EUROPE (a)
Belgium:
La M6tallo-Chimii|ue S.A
Finland :
Germany, Federal Republic:
Norway:
A/S Sulitjtlmn Gruber
Spain :
Cia. Espanola de Minas de Rio Tinto S.A
Sweden :
Yugoslavia :
Rudnici Bakra i Topionice
Sulitj?lma
Rio Tinto. Hu'lva.
Rdnnskar
Bor
45.000
100,000
«0,000
30,000
•'5,000
6,600
22,000
:is,ooo
(35 000
360,000
m.t.
m.t.
m.t.
m.t.
m.t.
m.t.
m.t.
m.t.
m.t.
m.t.
ASIA
India:
Japan :
Mitsui Mining (fc Smelting Co. Ltd
Mitsubishi Metal Mining Co. Ltd
Onahama Smelting & Refining Co.. Ltd
Toho Zinc Co., Ltd
Korea:
Turkey :
Murgul Bakir Islet mesi Muessescri MudurlugQ.
(Closed)
Onahama, Fukudluma-ken
Artvin-Murgul
38,000
;19 600
38.400
•18,000
1 IS 400
i30 ooo
12,000
90.000
'24 000
15 nOO
72,000
13 600
86,000
18,000
12.000
m.t.
ra.t.
m.t.
m.t.
m.t.
in t
m t.
m.t.
m.t.
m.t.
m t
ra.t.
m.t.
AFRICA
Congo :
Republic of South Africa:
O'Okiop Copper Co., Ltd
Rhodesia :
Messina Rhoclrsia Smelting
-------
TABLE IV-10
COPPER REFINERY CAPACITY
Annual Capacity at End of 1970 in tons of 2,000 Ib.
CANADA
MEXICO
Canadian Copper Refiners
Montreal, East, Quebec 342,000
International Nickel Co. of Canada, Ltd.
Copper Cliff, Ontario 198,000
Cobre de Mexico, S.A.
Atzoapotzalco, D.F.
..79,000
SOURCE: ABMS Yearbook, 1970
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TABLE IV-10 (Cont'd)
COPPER REFINERIES—FREE WORLD—(EXCEPT CANADA AND MEXICO)
(Electrolytic except as otherwise stated; so far as possible plants treating only secondary material have been
omitted.)
Company
Situation of Works
Annual Capacity
at End of 1S70
Tons
SOUTH AMERICA
Chile:
E repress Nacional de Miocria ^ENAAII)
Peru:
72,000
405,000
84,750
°7 800
280 000
45,000
a.t.
8.t.
m t.
8.t.
S.t.
EUROPE (6)
Austria:
Belgium :
La Metallo-Chimique, S.A
Finland :
Outokumpu Oy.
France :
Cie. Gen. d'Electrolyse du Palais
Germany, Federal Republic:
MetallbQttenwerke LQbeck GmbH
Norddeutsche Affinerie (d)
Zinnwerke Wilhelmsburg
Norway :
Falconbridge Nikkelverk A/S
Spain:
Electrolisis del Cobre S.A
Soc. Eapafiola de Construcciones Electro-Mecdnicas, S.A
Sweden :
United Kingdom :
British Copper Refiners Ltd. (a)
Enfield Copper Refining Co., Ltd. (a)
Yugoslavia :
Rudarsko Topionicarski Bazen. Bor
Olen
Pori
Le Palais ...
Hamburg
Kristiansand
Cordoba
Walsall Staffs . . .
Bor
20 000
45000017)
36,000
43,000
30000
75,000
16000
'"0 000
(t)
28,000
20000
18 000
00,000
19 500
53 000
170000
26 000
60000
70.000
m t
m.t.
m.t.
m t
m t
m.t.
S.t.
en t
m t.
m.t.
ra t
m t
1 t
1 t
1 t
m.t.
SOURCE: ABMS Yearbook, 1970
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TABLE IV-10 (Cont'd)
COPPER REFINERIES—FREE WORLD—(EXCEPT CANADA AND MEXICO)
(Electrolytic except as otherwise stated; so far as possible plants treating only secondary material have been
omitted.) (Continued)
Company
Situation of Works
Annual Capacity
at End of 1970
Tons
AFRICA
Congo:
Generate Congolaise des Minerals (o) •.
Generate Congolaise des Minerals (o)
Zambia :
Republic of South Africa :
Rhodesia :
The Mesaina Rhodesia Smelting & Ref Co Ltd (a)
Likasi-Shituru
Luilu, near Kolwezi
Ndola
Mufulira
135,000
1:25,000
135.000
185.000
lOf, onO(v)
300,0000')
13,000
59,000
25.000
m.t.
m.t.
l.t.
l.t.
m.t.
l.t.
m t
It
ASIA
India:
Japan:
Furukawa Electric Co., Ltd
Mitsubishi Metal Mining Co., Ltd
Mitsubishi Metal Mining Co., Ltd
Onahama Smelting & Refining Co., Ltd
Toho Zinc Co. Ltd
Korea, South :
Turkey:
Rabak Elektrolitik Bakir Fabrikaai .
Koaaka Akita-ken
Nikko, Tochigi-ken
Osaka.
Naoahima, Katfiiwa-ken
Onahama, Fukuehima-ken
Kirikkale
9,600
42 000
10800
42,000
84,000
84.000
75.600
7° 000
108 000
120,000
)-'0,000
14 400
5 400
3 600
10000
m t.
m.t.
rn.t.
m t
• •
m.t.
m t
AUSTRALIA
Electrolytic Ref. & Sm. Co. (d)
Port Kembla, N.S.W
100 000
120000
1 t
1 t
In this table, data with respect to most companies has been directly reported to ABMS; in a few instances
supplementary sources of information have been used.
(a) Furnace refining. (6) Copper refineries in U.S.S.R. and other Iron Curtain countries are omitted owini; to absence of accurate
data, (c) Includes electrowinning facilities, (d) Tankhouse. (/) Electrolytic copper products, of which 240.000 ton? from the refinery's
own tankhouse. (o) Cathode produced at Chin;. >la are cast into wirebars at Nkana. (A) Type of plant: L'.-ichinc— Klectrowinnini;.
Quality: Electrolytic, (i) Formerly Mufulira Copper Mines Limited. (;') The annual capacity of refinery Tankhouse for proiiunng cath-
ode copper. The furnanni; capacity for F.lectrolytic shape? is :i2f;.000 short tons, (k) Taken over hy N'onMi-uische Atfinerip. vd Hieli
conductivity fire refined {in ingot bars or cakes) conforming to the specifications of ASTM designation for electrolytic copper, B o-4:',.
except that it is not produced by electrolytic process, (w) Formerly Luanshyu Mines Limited. NMoLa Copper Refinery, (n't Includes
semi-continuous cast cakes, billets and special alloys, (o) Cathodes produced at Luilu near .Kolwezi are cas1; into wirel»ars partly at
Shituru-Likasi (Gecoruia-Congo; and Olen (METALLURG1E-HGBOKEN—Belgium).
SOURCE: ABMS Yearbook, 1970
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B. THE INTERDEPENDENCE OF THE COPPER. LEAD AND ZINC INDUSTRIES*
The copper, lead and zinc industries, located in western U.S. are
mutually interdependent and the existence of one industry depends to a
certain extent on the existence of the other because the economics of
any particular mine, mill or smelter are dependent on obtaining co-
product and/or by-product credits for their other outputs. The overall
crossflow of materials between these industries is shown in Table IV-11
and described in detail below.
Several copper mills produce a small tonnage of lead or lead-zinc
concentrates. Similarly, several lead mines and mills in Missouri produce
a copper concentrate which is shipped to a copper smelter. Lead and zinc
occur almost invariably together in the same deposit in the Western U.S.
and the mining and exploitation of these deposits is based on obtaining
adequate co-product credits for both lead and zinc and associated pre-
cious metals.
On the smelter side there is also a flow of materials between copper,
lead and zinc industries which enables each plant to obtain by-product
credit for small quantities of residues that cannot be processed in an
economical fashion internally within a particular smelter. An example
of this flow is the El Paso smelter of Asarco where a copper smelter, a
lead smelter and slag fuming facilities for zinc extraction are integrated
in the same plant. Lead, zinc and other by-products in the copper circuit
are eliminated as fume and dust during roasting and converting. These
high lead/zinc fumes are an input into the lead circuit. The existence
of this and other Western smelters also provides an outlet for the lead
containing copper converter dusts from the Arizona copper smelters. If this
dust were recycled, a deleterious buildup of lead would occur,. In the
lead circuit, copper in the lead is eliminated during dressing as a matte
and this matte is transferred back to the copper circuit. Zinc in the
lead circuit is slagged in the blast furnace and this slag is treated by
slag fuming to produce zinc oxide which is then shipped to an electrolytic
zinc plant. Several by-products are recovered from the fume and from im-
pure lead bullion during refining.
The interrelationship beweeen western lead and zinc production is
even closer because the western ores differ from the Missouri ores or
those in the eastern U.S. in having a more intimate association of copper,
iron, lead and zinc sulfides and usually having a higher impurity and/or
precious metal content. As a result, the three western lead smelters
(Asarco in El Paso, Texas and East Helena, Montana; and Bunker Hill in
Kellogg, Idaho) include slag fuming facilities to recover zinc from the
lead blast furnace slag and very extensive refining and by-product
recovery facilities. The value of the by-products passing through a
This section is identical in the copper, lead and zinc reports.
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TABLE IV-11
CROSS-FLOW OF MATERIALS BETWEEN PRIMARY COPPER. LEAD AND ZINC INDUSTRIES
A) Mining and Milling
B) Smelting
O
I
C) Refining
Source
Cu mills
Pb-Zn mills
Pb mills
Pb-Zn mills
Cu smelter
Pb smelter
Pb smelter
Pb smelter
Zn-Pb smelter
Zn Horizontal
retorts
Zn electrolytic
Cu smelter
Pb smelter
Ag-Pb-Sb-Cu cone,
Pb refinery
Pb refinery
Pb refinery
Cu refinery
Cu refinery
Material Produced
By Source
Pb-Zn concentrate
Cu concentrate
Cu concentrate
Pb cone.; Zn cone.
Pb-Zn converter dust
ZnO fume from slag
Pb-Cu dross
Au, Ag Cu matte
Cd fume
Pb-Zn residue
Pb-Zn residue
Cu-As-Sb converter dust
Cu-As-Sb speiss
Cu-As-Sb speiss
Bi dross
Au-Ag skimmings
Pb-Cu dross
Slag fume & residues
anode slimes
Industries Where Treated
Western Pb smelter; Zn smelter
Cu smelters
Cu smelters
Pb smelter; Zn smelter
Western Pb smelter
Electrolytic Zn plant
Pb smelter
Cu smelter
Cd refinery
Western Pb
Western Pb
Cu smelter
Cu smelter
Cu smelter
smelter
smelter
(Tacoma)
(Tacoma)
(Tacoma)
Bismuth refinery
Au,Ag refinery
Pb smelter
Cu &/or Pb smelter
By-product refinery
(Au, Ag, Pt, Se, Te, Ni)
SOURCE: ADL
c
-\
D
-------
western lead smelter is of the same magnitude as the value of the lead
recovered. Thus, the western lead smelters are called "lead" smelters for
convenience but, in reality, handle, process and collect several other
metals such as silver, cadmium, bismuth, antimony, and others as discussed
in detail in the next section. In Missouri, the lead blast furnace slag
is sufficiently low in zinc and can be discarded. The lead bullion is
quite pure and can be refined adequately by a smaller number of refin-
ing steps than necessary for western bullion. Should the western lead
smelters close for one reason or another, the Missouri smelters would
require major modifications in their flowsheets in order to treat western
lead-zinc ores. These modifications would have to include slag fuming
facilities and much more extensive lead purification and by-product
recovery facilities. In other words, even if the western lead-zinc mines
could absorb the additional freight for sending the concentrates to Missouri,
major changes would have to occur at the smelters before the concentrates
are acceptible.
The western type lead smelters also provide an essential service to
the primary zinc industry. All the processes producing primary zinc also
produce a residue that is high in lead and other inert materials such as
zinc ferrite. The amount of residue, containing zinc, associated copper,
lead and precious metals is generally higher for the marmatitic type
western zinc ores. Up to 15% of the zinc in feed materials can be tied
up in this fashion. The zinc smelter economics depend to a considerable
extent on being able to realize a value for this residue. We under-
stand that the value of this residue is related to its copper, lead, and
precious metal content and contained zinc is not accounted for. Several
alternative technologies exist for treating these residues for zinc
recovery but the existence of the western type lead smelters has enabled
several zinc smelters to realize a value for the other metal content
of the residue. For example the residues from Bunker Hill's zinc plant
in Kellogg, Idaho are treated in the adjoining lead plant, and the re-
sidues from the Oklahoma and Texas zinc plants are treated at the El
Paso lead plant. The two remaining eastern zinc smelters (New Jersey
Zinc and St. Joe Minerals), treat purer zinc ores and because of the pro-
cessing conditions, produce residues much lower in zinc or other by-products
than either the electrolytic or the horizontal retort processes used in
Oklahoma and Texas. Both these eastern plants treat their residues in-
ternally for zinc recovery.
The western lead smelters also act as collectors of silver that is
associated with the copper concentrates obtained in several mills in
Northern Idaho. If anodes high in silver are electrorefined in a copper
refinery, silver carry-over to the purified cathodes cannot be prevented.
By charging the high silver copper concentrates into a lead smelter, silver
and copper are separated. Silver collects in the lead bullion while copper
is recovered as a sulfide dross and can then be shipped to a copper
smelter.
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The copper and lead ores in Idaho and Montana contain significant
amounts of arsenic and antimony. The lead smelters produce a mixture of
complex copper arsenides and antimonides termed "speiss" which requires
separate handling. Arsenic in copper concentrates can be eliminated as
fume from roasters or converters and arsenic trioxide obtained by repeated
distillation. The Tacoma smelter of Asarco is the only smelter in the
U.S. that accepts arsenical ores and concentrates or arsenical residues
from other smelting operations (for example flue dust from Anaconda and
speiss from the western primary lead and silver smelters and high arsenic
concentrates from abroad).
Because arsenic is undesirable in the copper product, Tacoma produces
As203 as a by-product and is the only domestic producer. The closing of
the Tacoma smelter for any reason would affect several northwestern pro-
ducers who require both East Helena and Tacoma to process their complex
arsenic and antimony containing products and residues. Even more impor-
tant, these residues are not disposable since the arsenic in it is in
soluble form and could be leached out by groundwater. Hence, the only
realistic alternative for them would be to set up their own arsenic
treatment facilities similar to Tacoma's and in this sense Tacoma's
arsenic handling capability is irreplacable.
C. BY-PRODUCTS OF THE WESTERN MINING INDUSTRY*
The nonferrous mining industry involved in the production of copper,
lead and zinc produces substantial quantities of by-products and/or co-
products that are a major portion of the domestic production of these
respective metals.
About 98% of the U.S. mine production of copper is recovered from ores
mined primarily for their copper content, the remainder being recovered
from complex or base metal ores. In addition to copper, important quanti-
ties of gold, silver, molybdenum, nickel, selenium, tellurium, arsenic,
rhenium, iron, lead, zinc, sulfur, and platinum-group metals were recovered
as by-products.
Ores containing lead also contain other valuable and recoverable com-
modities including antimony, arsenic,cadmium, copper, fluorspar, gallium,
germanium, gold, indium, selenium, silver, and zinc. Lead ranges from
the major product, as in the Missouri ores, to a co-product, as in the
complex western ores, to a by-product in the eastern ores. When treating
mixed ores, a division in contained metals is initiated during benefi-
ciation with certain amounts of other metals remaining in the lead con-
centrate. Smelter further separates the various metals, and refining
completes the dissociation. Copper, gold, silver, and zinc are the major
*
This section is identical in the copper, lead and zinc reports.
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Arthur D Little, Inc
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co-products or by-products associated with western lead ores, and minor
by-products consist of antimony, bismuth, sulfur, and tellurium.
Zinc production affects, and in turn is affected by, the demand for
and the economic aspects of a variety of co-products and by-products.
Ores containing zinc also contain a varying amount of other valuable and
recoverable materials including cadmium, copper, fluorspar, gallium,
germanium, gold, indium, lead, manganese, silver, sulfur, and thallium.
Zinc ranges from the major product as in the Tennessee, New York, New
Jersey deposits, to a co-product as in the complex western ores and the
Missouri lead belt. In concentration of the ore, a division of metals
is initiated with certain metals remaining in the zinc concentrate.
Metallurgical treatment to recover the zinc by roasting, followed by
distillation, or electrolytic process further separates the metals and
permits commercial recovery. The major products associated with zinc
and recovered at zinc plants in stack gases, flue dusts, and residues are
sulfur, cadmium, germanium, thallium, indium and gallium. Manganese is
a co-product of zinc-lead manganese-silver ores at Butte, Montana, and
zinc-manganese ores at Ogdensburg, New Jersey.
According to the U.S. Bureau of Mines, the smelting segment of the
zinc industry realizes about 89 percent of its revenue from production
of zinc. The two principal by-products are cadmium and sulfuric acid,
representing about 7% and 3%, respectively, of total revenue. Other by-
product metals including germanium, indium, thallium, and gallium are
very minor contributors to total revenue, accounting for a combined
total of about 1%.
Each individual by-product is discussed briefly below and available
production statistics for 1968 (the latest year for which a consistent
set of statistics were available from a single source) are presented in
Table IV-12. The Table shows the quantity of by-products and co-products
produced and their gross value based on projected average prices indicated
by the Bureau of Mines and in line with current prices. The gross value
is shown mainly to indicate the relative dollar-volume represented by
these commodities. It should be realized that several of these commodities
fluctuate widely in price and that their value at the stage they are
separated from the primary product is considerably below the value shown
since additional processing is necessary. The table also puts the by-
product production in the perspective of the domestic mine production,
smelter or refinery production and the domestic demand for each of these
metals. Sulfur is a potential by-product that will be recovered (mainly
as sulfuric acid) from the copper-lead-zinc industries in quantities
amounting to about 2 million tons per year. As indicated in subsequent
chapters, it will have a negative value in most cases.
Antimony
Three mines located in Idaho account for the bulk of the domestic
primary production of antimony, all of which is derived incidental to
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TABLE IV-12
1968 STATISTICS REGARDING BY-PRODUCTS AND
CO-PRODUCTS FROM U.S. Cu-Pb-Zn INDUSTRY
Estimated Quantity of
Quantity Gross By-Product
of By-Product Value as % of
By-Product in Million Domestic Mine
or Co-Product Source Short Tons $ Production!
Antimony lead-silver 1,019 1.1 58
Arsenic copper- lead 2,900 0.4 100
Bismuth lead-zinc 350 2.8 100
Cadmium zinc-lead 1,890 11.3 100
Gallium zinc NA NA NA
Germanium zinc 10 1.8 100
Gold copper 510* 30.6 34
Indium zinc 230* 0.7 100
Manganese zinc 8,000 5.3 NA
Molybdenum copper 11,700 46.8 25
Nickel copper 2,000 5.0 13
Platinum copper 5* 0.6 100
Rhenium copper 1.2 2.9 100
Selenium copper 316 5.7 100
Silver lead-zinc- 34
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the production of lead-silver ores. Primary production of antimony at
smelters was 12,500 tons in 1969. Only about 15% of this production was
supplied by domestic sources chiefly as a co-product from silver ores or
a by-product of lead ores. By-product antimonial lead produced at pri-
mary lead refineries was 1174 tons.
Arsenic
The only producer of arsenic in the U.S. is the Tacoma, Washington
smelter of Asarco. Their current output is around 12,000 tons per year
of arsenic oxide of which about 4-5000 tons is refined or white arsenic.
We understand from Asarco' that Tacoma's arsenic production is currently
about 60% of the domestic demand.
Bismuth
Virtually all domestic production of bismuth results from the
treatment of lead smelter products. The major bismuth producers are the
Omaha refinery of Asarco and the U.S. Smelting Refining and Mining Company
in East Chicago, Illinois (now shut down). Almost all domestic bismuth
production is a by-product of the processing of complex western base metal
ores. The bismuth normally enters primary and secondary lead smelters in
varying quantities through the inputs and follows lead in the production
sequence finally reporting to the lead refinery in lead bullion. Other
sources are electrolytic sludges from copper and zinc refineries which
are sent to a lead smelter for separation and refining.
Cadmium
Cadmium is a by-product mainly of zinc smelting and to a lesser
extent of lead smelting. As such it provides income of about 4-10% of
the value of slab zinc produced. The domestic production in 1969 amounted
to about 6,300 tons based on domestic as well as imported flue dust, and
imported zinc concentrates. Of these, 5,400 tons were produced at zinc
plants, about 2,000 tons at electrolytic zinc plants and the remainder from
retort and electrothermic plants. Until recently the domestic production
and consumption of cadmium have been more or less in equilibrium but is a
cyclical commodity and is rarely in balance for very long.
Gallium
Gallium is a by-product derived entirely from the processing of
certain aluminum and zinc ores. Gallium is recovered by just one zinc
producer, Eagle-Picher Industries, Incorporated.
Germanium
Germanium is a by-product of zinc production. One domestic
refinery produces germanium by refining residues from zinc concentrates,
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from domestic mines and from residues from other zinc refineries.
Germanium is a minor aspect of this producer's base metal or manufac-
turing activities.
Gold
In the U.S., by-product and co-product production of gold
accounted for 34% of the 1968 output. The major by-product gold pro-
ducer was Kennecott who recovers gold as a by-product of copper pro-
duction from the anode slimes obtained during copper electrorefining.
Lead smelters and refineries are also important collectors and pro-
cessors of gold (and silver).
Indium
Indium is a by-product of zinc production. The domestic indium
industry is composed of two producers—Asarco and Anaconda—both of whom
began production about 1940. Indium metal is produced mainly as an in-
tegral part of zinc operations or by processing indium-containing residues
generated by other zinc producers. Indium is collected in western type
lead smelters for subsequent recovery.
Manganese
Manganese is a co-product of lead-zinc manganese silver ores in
Montana and in New Jersey.
Molybdenum
About one-third of the domestic production of molybdenum is ob-
tained as a by-product or co-product during the processing of copper,
tungsten and uranium ores. Kennecott is the largest producer of by-
product molybdenum and recovers molybdenum from copper ores at its mines
near Salt Lake City, Utah; Hurley, New Mexico; McGill, Nevada; and Ray,
Arizona. Other large producers from copper ores are Duval and Magma.
Six other companies recover molybdenum from copper ores. Most of these
companies sell their production as molybdenite (molybdenum sulfide con-
centrate or molybdic oxide).
Nickel
Nickel is produced as a co-product of copper mined in a number
of localities outside the U.S., but is not found in significant amounts
in association with U.S. copper deposits. Nickel in anode copper can
cause problems in electrolytic refining and is extracted from the electro-
lyte. Nickel in lead ores follows copper and is obtained in the sulfide
skimmings.
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Platinum
The major part of the U.S. output is recovered as a by-product
of copper refining in the form of anode mud.
Rhenium
Rhenium occurs in small percentages with molybdenum, copper,
manganese and non-metallies, from which it might be recovered during
roasting or smelting. Currently, rhenium supply is wholly dependent upon
recovery of molybdenite from porphyry copper ores. Molybdenite concen-
trates from Kennecott mines in the western U.S. and flue dust and gas at
Garfield, Utah, are a primary source of rhenium.
Selenium
Selenium is derived domestically as a by-product of electrolytic
copper refining. Five plants account for all the selenium production in
the U.S. These are the large electrolytic refineries of Amax, Asarco,
International Smelting and Refining and Kennecott Copper.
Silver
About 60% of the domestic silver output in 1968 came from ores
mined chiefly for copper, lead and zinc. These ores occur in the western
U.S. and the high silver concentrates (even when they are copper concen-
trates, or antimony concentrates) are treated in western lead smelters
where the silver collects in the lead and is extracted from lead bullion
dur ing re f inin g.
Tellurium
Tellurium is a minor by-product of electrolytic refining of
copper and lead and the producers of these commodities are producers of
tellurium.
Thallium
Thallium metals and compounds are produced by Asarco which main-
tains thallium producing facilities as an integral part of its cadmium
operations. Production of thallium is derived mainly from lead smelter
flue dusts, residues and other products. The value of thallium output
is negligible.
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D. ECONOMIC ASPECTS*
An important aspect of the primary copper, lead and zinc industries
is that traditionally the smelters and refineries have been operated at
a fixed and relatively low profit margin which is not very sensitive to
the price of the finished product. As a result, the value of the con-
tained metal in a typical concentrate is a high proportion of the value
of the primary metal product. This, in turn , means that the smelting
and refining plants are operated mainly as service operations in the
conversion of these concentrates to usable metal and alloys. Hence,
any changes in price of the primary metal have to be reflected back to
the mine and affect directly the value of the concentrate.
We illustrate this mechanism based on data from the copper industry
but a similar mechanism occurs in the lead and zinc industries. In the
60's, the traditional rule-of-thumb in determining concentrate value in
the copper industry has been to assume 4
-------
adequate supply of concentrates is not available. Alternately, if a
particular mine does not have other outlets for its concentrates, it has
to close if the additional smelting costs cannot be absorbed.
In the case of producers integrated from mining through smelting and
refining, a cathode or wirebar is the first product that is actually
sold. However, the internal transfer price of the concentrates is cal-
culated on the basis of the primary metal price. Thus, any fluctuations
in the primary metal price are again reflected back to the mine and have
a major influence on mine profitability.
Figure IV-3 illustrates this mechanism qualitatively. The figure is
based on actual custom smelting contracts that were in effect several
years ago. It can be seen that any change in wirebar price affects the
concentrate value directly and the smelter and refinery margins remain
unchanged.
Identical mechanisms operate in the lead-zinc industries and
any increases in smelting costs would bave to be reflected back to the
mines. The smelter operating margin in the lead industry varies greatly
because of the significant by-product values passing through the western
lead smelters and is very approximately 4-6
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1500
1400
1300
1200
ffi
.£ 1100
ro
«-*
I
c
o
0)
a.
V)
CO
D
1000
900
800
700
600
500
Refinery
Operating
Margin
Smelter
Operating
Margin
I
50
30 40
LME* Wirebar Copper Price (U.S. I Per Lb)
* (London Metal Exchange)
Source: Arthur D. Little, Inc.
60
70
FIGURE IV-3 DIAGRAMMATIC REPRESENTATION OF VARIATION UN CONCENTRATE
VALUE WITH CHANGES IN WIREBAR PRICE
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V. MARKET CHARACTERISTICS
A. SUPPLY AND DEMAND
1. The World Situation
Over the past twenty years, world consumption of copper has increased
at an average annual rate of 4-4 1/2% to its present level of 7.9 million
tons per year of the refined metal. Of this total, about 6.3 million tons
are consumed by the Free World countries.
Although copper is used in myriad applications, most of these fall
into five broad categories:
Electrical/electronic equipment - 49%
Building construction - 16%
Transportation - 12%
Non-electrical industrial equipment - 10%
Ordnance - 6%
The remaining 7% is divided among such applications as chemicals, in-
organic pigments, jewelry, and coinage.
Copper is facing increasing competition in a number of these applica-
tions. Plastics, for example, have made some inroads into tubing mar-
kets; stainless steel is making inroads into some building construction
markets. The most serious threat, however, has come from aluminum—a
commodity product that has a relatively stable price, is produced in
many areas, and is much less subject to political and economic pressures
than is copper. Aluminum is used for virtually all high-voltage, overhead
power-transmission lines; it has replaced copper in some building con-
struction uses; and it is being pushed as a replacement for brass in auto-
mobile radiators.
Despite these competitive forces, consumption of copper is expected
to continue to increase worldwide at an average annual rate of about
4 1/2% over the next decade with a lower growth rate in the industrialized
countries. Some of this increase will be the result of copper's gaining
a larger share of certain markets (e.g. coinage). Some will simply be the
result of the anticipated 5%-per-year increase in industrial production
throughout the world.
To keep pace with this mounting demand, the industry has explored for
new deposits, added capacity, and improved mining, metallurgical, and
fabricating technologies. Despite occasional setbacks—for example,
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from strikes, political upheavals and natural disasters—world mine pro-
duction has increased about in line with demand, rising from 5.4 million
tons in 1965 to 6.9 million tons in 1970. The bulk of Free World pro-
duction comes from just 11 countries (Table V-l). Four of these—the
so-called CIPEC countries of Chile, Peru, Republic of Congo, and Zambia—
account for more than half the Free World's mining production outside the
United States.
At present, copper concentrates and electrolytic refined copper are
available from.most of the major producing countries. Blister copper
(copper that has been smelted but not refined) is available in quantity
only from the CIPEC countries.
Primary copper capacity is expected to increase throughout the world
(Table V-2). Overall, another 1.2 million short tons of mining capacity
is expected to be added by 1975, an increase of about 6.2% per year. Bar-
ring serious upheavals, future demand may not be strong enough to absorb
all of the additional output that is planned.
2. The Situation in the United States
The United States is both the leading producer and leading consumer
of copper, accounting for about one-third of Free World Production and
consumption. In 1970, for example, the figures were:
Free World
U.S.A.
(million short tons)
Mine Production
Refined Production
Refined Consumption
5.66
6.80
6.32
1.7
2.3
2.0
30.2%
33.5%
32.3%
SOURCE: S.D. Strauss, Trans., Inst. Min. Met. (London)
80, A169 - A174 (1971).
Despite its position as the leading producer of copper and a heavy
user of scrap copper, the United States has been in a position of under-
supply since the early 1960's. Thus it has had to make up a considerable
portion of its needs with imports of refined and blister copper (Table V-3).
Most of the imported refined metal has come from Canada; essentially all
of the imported blister copper has come from foreign sources that are
tied financially to U.S. refiners. However, recently U.S. copper mine
production has been increasing at an adjusted rate of 3.5% per year, whereas
consumption has yet to regain the 1966 level.
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TABLE V-l
WORLD COPPER MINE PRODUCTION BY COUNTRY
(Thousands of Short Tons)
Country
U.S.A.
Chile
Zambia
Canada
Republic of the Congo
Peru
Republic of South Africa
Japan
Australia
Philippines
Mexico
Other Free World
Sino-Soviet Bloc
TOTAL WORLD
1965
1966 1967 1968
1969
1970
1,356
645
767
510
318
199
67
118
96
70
76
343
867
5,433
1,408
701
687
508
349
194
137
123
116
81
82
365
927
5,678
950
728
731
603
353
212
141
130
94
95
69
343
1,009
5,458
1,203
726
755
633
358
223
141
132
112
122
67
371
1.077
5,920
1,535
758
793
573
399
219
139
134
135
145
73
397
1,160
6,460
1,706
747
765
674
425
234
164
132
152
177
67
404
1,207
6,854
SOURCE: Yearbook of the American Bureau of Metal Statistics - 1970
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TABLE V-2
NET INCREASE IN FREE WORLD PRIMARY COPPER PRODUCTIVE CAPACITY - 1973-1975
IN SHORT TONS, ANNUAL RATE
(Estimated as of March 16, 1972)
Area or
Country
North America;
United States
Canada
Other
Total
South America:
Chile
Peru
Other
Total
Africa;
Zambia
Zaire
South Africa
South West Africa
Other
Total
Asia;
Japan
Philippines
Bougainville
West Irian
Other
Total
Australia:
Europe ;
Yugoslavia
Finland
Other
Total
(CIPEC)
Total Net Increases
TOTAL FREE WORLD
CAPACITY
Percent Increases
Estimated
Capacity
1971
1,820,000
825,000
95,000
2,740,000
840,000
240,000
15,000
1,095,000
850,000
450.000
165,000
40,000
50.000
1,555,000
140.000
220,000
85.000
445,000
205.000
110.000
35.000
130,000
275,000
2,380,000
-
6,315,000
Free
World
Share
_ili_
28.8
13.1
1.5
43.4
13.3
3.8
0.2
17.3
13.5
7.1
2.6
0.6
0.8
24.6
2.2 ,
3.5
1.3
7.0
3.2
1.7
0.6
2.1
4.4
37.6
Total
Planned
1972-74
197,000
202 ,000
38,000
437,000
28,000
35,000
63,000
104,000
115,000
45,000
(1,000)
52,000
315,000
10,000
7,000
180,000
65,000
67,000
329,000
75,000
15.000
7,000
18,000
40,000
247,000
1,259.000
-
Estimated
Capacity
1975
2,017,000
1,027,000
133,000
3,177,000
868 ,,000
240 .,000
50,000
1,158,000
954,000
565,000
210,000
39,000
102,000
1,870,000
150,000
227 ,000
18(3,000
65,000
152,000
774,000
280,000
125,000
42.000
148,000
3.15,000
2,627,000
7,574,000
6.2Z
(Per Year)
Free
World
Share
_ffi_
26.6
13.6
1.8
42.0
11.5
3.2
0.7
15.3
12.6
7.5
2.8
0.5
1.3
24.7
2.0
3.0
2.4
0.9
2.0
10.2
3.7
1.7
0.6
2.0
4.2
34.6
SOURCE: American Metal Market
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TABLE V-3
U. S. IMPORTS OF REFINED AND BLISTER COPPER
(Thousands of Short Tons)
Year
1965
1966
1967
1968
1969
1970 (est.)
Refined Copper
137
163
330
400
131
132
Blister Copper
333
350
269
271
238
224
SOURCE: Copper Supply and Consumption, 1951-1970, CDA, Inc.
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B. PRICES
Currently, refined copper in the United States is consumed at an annual
rate of about 2 million short tons. About two-thirds of this metal is
derived from domestic ores and sold by the major producers at the so-
called producer price. The remainder comes essentially from four sour-
ces: 1) refined imports of copper; 2) imports of blister for process-
ing in U.S. refineries; 3) toll refining of concentrate from some of the
smaller domestic mines; and 4) scrap.
The imports depend on foreign sellers being able to realize a netback at
least equal to that available outside the United States; i.e., to remain
in the United States, it must be sold at the world price. In practice,
much of the refined copper produced from such imported material.is sub-
sequently re-exported. Thus, although the domestic producer price does
not apply to all sales of refined metal in the domestic market, it does
cover the greater part.
Shortly after World War II, the practice of having a uniform delivered
price to all consuming destinations within the continental United States
came into being. Until recently, the quoted price applied to wire bars,
ingots and ingot bars, with cathodes available at a modest discount,
indicating the absence of melting and casting costs. Cakes and billets
sell at premiums to cover additional casting costs. However, two major
producers now refer to their cathode price as representing the standard
quotation for copper; they also quote a price for wire bars, but as yet
the differential over cathodes has not been standardized and some time will
probably elapse before a uniform procedure is adopted by most sellers.
Typically, U.S. copper producers sell on the basis of the price prevailing
on the date of shipment, regardless of when the buyer placed his order.
However, not all producers follow this practice; some sell at the average
for the month of shipment as quoted in Engineering and Mining Journal or
some other publication. In addition, some sales are made at a firm price
(usually that prevailing at the time of sale), particularly to fabricators
who prefer this method of fixing the cost of raw material rather than to
operate in the hedge market, to protect their profit margin.
The basic reason behind the use of the domestic producer price is to
minimize price changes which are considered undesirable because users want
to know what their raw material costs will be. The wide fluctuations in
copper price in markets outside the United States and on commodity exchanges
(see Figure V-l) are believed to have encouraged the substitution of other
materials for copper - notably the use of aluminum, plastics,, and stain-
less steel. At times the U.S. government has interceded in copper pric-
ing - notably during World War II and the Korean war when price ceilings
were placed on copper as well as other metals and again during the Vietnam
war when President Johnson, in the fall of 1965, virtually forced domestic
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90
80
70
60
50
40
—— U.S. Producer Price
U.S. Mill Base Product
Price
London Metal Ex-
change Price
Canadian Producer
Price
Suspended
Suspended
1968
1969
1970
1971
1972
Source: Noranda Mines Limited, Annual Report, 1971.
FIGURE V-1 COPPER PRICES (Canadian Funds)
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producers to rescind a 2<: price advance to 38(?/lb., even though prices on
the London Metal Exchange at the time were over 60c/lb.
The outside market (accounting for about one-third of refined sales) is,
of course, not bound by price ceilings such as those imposed during World
War II and the Korean war. If the ceilings are too restrictive, imports
decline and scrap flow to the refineries declines. During the Korean
war, therefore, the government sanctioned a higher price ceiling for copper
of foreign origin than for metal of domestic origin.
Under reasonably balanced conditions, the outside market tends to follow
closely the London Metal .Exchange price. However, if business is expand-
ing in Europe and slow in the United States, the outside market in the
United States tends to be lower than London. When there is a severe short-
age in the United States - for instance, during the 1967-68 strike - the
outside market in the United States typically moves to a premium over the
L.M.E. price sufficient to attract increased imports.
The outside market can be at a discount from the producer price as well
as at a premium. From early 1964 through mid-1970 the outsside market was
consistently at a premium, but in the summer of 1970 the L.M.E. price
dropped below the U.S. producer price. During most of the last half of
1970 and the first few months of 1971, sellers in the outside market in
the United States offered copper at substantial discounts from the producer
price. A similar situation prevailed from 1961 through 1963. The dis-
counts available during such periods were far smaller than the premiums
asked during periods of extreme shortage. Consequently, even though there
may be an immediate saving by purchasing on the outside market, most U.S.
consumers maintain their purchases from the large domestic producers in
order to ensure future availability of copper in times of scarcity.
The recent devaluation and readjustment of the currencies has also had an
effect on the worldwide pricing structure of copper.
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VI. GOVERNMENT POLICIES*
The U.S. Government affects the copper, lead and zinc mining industries
not only by its general economic policy actions but also by specific
programs and regulations for these industries and the mining industry
in general. Some of the major government policies affecting these
industries are discussed below.
A. STOCKPILE PROGRAM
For national security and defense reasons the U.S. Government maintains
a stockpile of so-called strategic meterials both metallic and non-
metallic. In 1965 some 95 items were in the stockpile but about 18
items carry quotas of zero so only about 77 are actively stockpiled.
Among these are copper, lead and zinc.
As of September 30, 1971, the General Services Administration had 251,615
short tons of copper in government stockpiles, which represents about
14 percent of total 1970 domestic consumption. This is considerably
less than the desired stockpile objective of 775,000 tons. At times,
in the past, stocks have been considerably above the objective. Large
quantities have been released in the past decade, at first: to bring stocks
more closely in line with the objective and more recently to assist in
stabilizing the market in periods of excess demand.
On December 31, 1964, inventories of copper in government stockpiles
totaled 1,095,483 tons. From 1965 through 1968 the government released
760,000 tons from its stockpile and 62,000 tons from Defense Product
Act Inventories. During 1969 only about 8,000 tons of copper were
released.
During World War II and in 1951-1952 the government regulated the lead
industry to provide adequate supplies for all essential purposes. Lead
was recommended for stockpile in 1941 and by 1943, 260,000 tons had
been purchased. Withdrawals during the war reduced stocks to 65,000
tons. Stockpiling was resumed in 1950, expanded in 1954 and by the end
of 1962 about 1,386,000 tons of lead were in the stockpile. Disposals
for government and commerical use had reduced the stockpile to 1,149,251
at the end of 1969 as compared to a stockpile objective of 530,000 tons.
The surplus lead in the stockpile amounts to about a one year's supply.
Zinc stockpiling followed a similar pattern to lead discussed above and
at the end of 1969, 1,140,060 short tons of slab zinc were in the stock-
pile. This is in excess of the stockpile objective of 560,000 tons set
in December 3, 1969 by the U.S. Government.
* This section is identical in the copper, lead and zinc reports.
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B. HEALTH AND SAFETY LEGISLATION
The health and safety of workers in the mining industry in the U.S. is
protected and regulated by the U.S. Government, who has passed various
laws on the subject. The health and safety of coal miners is regulated
by the new Federal Coal Mine Health and Safety Act passed in 1969, while
all other mines are regulated by the Federal Metal and Non-Metallic
Mine Safety Act of 1966. The U.S. Bureau of Mines is charged with the
enforcement of these acts. Copper, lead and zinc mines of all types
(underground and open pit) are covered by the Metal and Non-Metallic
Act.
The Metal and Non-Metallic Act consists of a total of 1,806 standards
covering all the aspects of health and safety in mines, such as roof
control, equipment design and operation, respirable dust hazards,
radiation hazards in uranium mines, noise hazards, and many others.
All copper, lead and zinc mines must meet the required standards and
are regularly inspected. If violations of mandatory standards for
health and safety are found by inspectors, withdrawal orders can be
issued and the mines closed. The record has been however that mines
promptly correct violations and operate within the requirements.
It is anticipated that an increasingly active effort will be made by
the U.S. Government to enforce health and safety laws and make them
even stricter in specific areas if this appears to be necessary.
As a result of the Williams-Steiger Occupational Safety and Health Act
of 1970, the Occupational Safety and Health Administration (OSHA) of
the Department of Labor has been setting standards for control of in-
plant emissions which affect plant employees. In general, we under-
stand that the setting of these standards will be based on a cost-
effectiveness approach that will take into account the economic impact,
the safety impact, the social impact and other such criteria.
C. ENVIRONMENTAL IMPACT ON STRIP AND OPEN PIT MINING
Increased public concern about the environmental impact of mining
operations (particularly strip mining) has resulted in government and
state regulatory bodies planning and taking actions that will have a
considerable impact on many parts of the mineral industry.
At the present time Federal legislation is being considered to control
strip mining and require complete land restoration. Some 15 bills are
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in Congress proposing various regulations for strip mining. The major
bills are listed in Table VI-1. They cover the entire range from
complete abolishment of strip mining to the "Administration Bills"
which are industry oriented and "do nothing" bills. These bills cover
coal mining and in some cases the mining of minerals in general which
would include copper, lead and zinc.
It is our belief that the 92nd Congress will pass legislation before
its adjournment in January 1973 to regulate the strip mining industry.
We believe these regulations will be limited to surface mined coal only
and that no form of strip mining will be abolished totally. However,
contour coal stripping will be effectively halted by outlawing stripping
"when the disturbed land cannot be reclaimed." We anticipate that re-
clamation will be defined to require soil profile restoration which
would require segregation of overburden during stripping.
The copper, lead and zinc mining industries will probably not be severely
effected by the Federal strip mining legislation discussed above.
D. LAND MANAGEMENT - EXPLORATION
In recent years there has been increased governmental participation
and control and restrictions placed on the mining use of public lands.
The principal Federal acts that effect the industry are the Classification
and Multiple Use Act of 1964 and the Wilderness Act also of 1964. The
main effect of these laws on the mineral industry is that they allow for
the withdrawal of public lands from exploration and from location and
development of mineral deposits. Many areas promising for mineral dis-
coveries have been withdrawn. This action is of concern to an industry
charged with supplying the present and future basic mineral needs of
this country. The rate of land withdrawal under the acts has been in-
creasing. For example, from 1968 to 1970, land was withdrawn from
mineral entry at the rate of about 2.4 square miles per day.
As a part of the mining industry, the copper, lead and zinc industries
are effected by the above laws and will probably find it increasingly
difficult to discover and develop U.S. copper, lead and zinc mines in
the future. These metals will definitely be effected since they are
known to occur in areas that will probably be withdrawn from mined
entry.
The mining industry views the question of being able to explore and
develop ore bodies and the hampering of that effort by unrealistic
government regulations as being probably the most serious problem facing
the industry.
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TABLE VI-1
MAJOR PENDING FEDERAL LEGISLATION ON STRIP MINING
RAKGHG BILL HOMERS
H.R. 4556
S. 1498
SPONSOR
Ken Hechler (D-W.Va.)
Gaylord Helton (D-Wi».)
TYPE OF CONTROL
OVER STRIP mHIHG
AbolUhnent
COVERAGE
Co*l
AGENCY CHARGED
WITH ENFORCEMENT
I
oo
Ib H.K. 8174 John SLeberllng (D-Ohto)
S. 3000 Howard Baker (R-Tem.)
John Cooper (R-Ky.)
S. 1777 Mike Gravel (D-Aka.)
I.R. 1O758 Wayne Aaplnall (D-Colo.)
4 H.R. 97362'3 Wayne Hayi (D-Ohlo)
Abollabamt
Regulatory
Regulatory
Abollabvent &
Regulatory
Coal
Ganeral Wnerala
Departawnt of
Interior
Independent
Cmnitalon
rr
"THE ADMIHISTRATIOS BILLS"
H.R. 4704 William Broomfleld (R-Mich.)
H.R. 4967 William Harsha (R-Ohio)
H.R. 5689 Craig Hosmer (R-Calif.)
H.R. 6560 Charles Chamberlain (B-Mich.)
H.R. 7422 Carl Perkins (D-Ky.)
Discretionary
General Minerals
Department of
Interior
DESCRIPTION
No new strip mining permitted following enactment;
existing operations to terminate within 6 months;
existing operations to submit to EPA within 60
days plans for reclaiming disturbed land; where
operator falls to reclaim, EPA could do work and
bill operator. Provides civil and criminal pen-
alties; provides class action citizen suits.
H.R. 4556 establishes a reclamation fund provid-
ing 90X federal support for reclamation of pre-
viously atrip-mined lands owned by government
bodies, or for reclamation of lands intended for
use by the public.
H.R. 4556 also establishes an EPA regulatory
structure for underground mining; prohibits
underground mining In wilderness areas; Units
underground mining in national forests.
Identical to Hechler Bill; provides for salary
compensation to workers laid off by mine shut-
down; provides relocation allowance for workers
able to find work outside specified commuting
distance.
Calls for 270 day freeze period on new strip
mines after enactment; present operators to be
Investigated; allows some state supervision;
Institutes 5 year liability period for strip-
mine reclamation projects.
Defines reclamation; calls for restoration to
"original use or original potential use" of land;
requires soil profile be restored; Institutes 5
year liability period but permits operators to be
released from responsibility as early as 2 yrs.;
calls for public hearings on license application.
Ban on strip-mining in areas where reclamation is
impossible or where stream pollution, landslides,
stream dislocation, or destruction of recreational
areas is threatened.
Sets up 3 man Strip Mine Reclamation Commission
(appointed by the president) for enforcement;
calls for submitted plan of reclamation and pub-
lic liability insurance policy prior to licensing;
authorizes Commission to set rules governing
stripping on steep slopes.
States given two years to conduct public hearings,
after which time they may set plans for strip
mining regulation; enforcement would remain
within the states; sets up Federal advisory
committee; Inspections of operators left to dis-
cretion of. DOI.
REMARKS
Co-sponsored by 6 Senators
and 88 Representatives
(including 3 from Illinois);
extremely strong legislation;
gathered much public support;
probably will not be passed
in present form.
Does not define "reclama-
tion"; does not ban con-
tour stripping but places
morltorlum on area stripping.
Most stringent definition of
"reclamation"; would require
segregation of overburden--
expensive; public hearings
section weak.
Good definition of "reclama-
tion"; includes few oppor-
tunities for public Involve-
ment; no public hearings
specified.
State oriented; very favor-
able to industry; doesn't
define "reclamation";
essentially a "do nothing"
bill.
1 Ranking in terms of amount of control placed on atrip-mining operations.
2 No House (or Senate) sister bill as of 1 March, 1972.
3 Rep. Clarence Miller (R-Ohio) has Introduced a bill identical to H.R. 9736, but giving regulatory powers to EPA.
-------
With regard to exploration programs themselves, the Government does
provide for some exploration assistance. For copper exploration, the
Office of Mineral Exploration provides for government participation of
50% of approved exploration costs. This program was terminated in 1962
but was reinstated in 1966 so it is currently in force. However,.
exploration for lead and zinc is not eligible for exploration assistance.
E. TRADE POLICIES
The domestic tariff on primary copper products has generally been low,
and in the past refined copper entered the U.S. duty-free. In 1958
the U.S. tariff on ore concentrate, matte, blister, refined copper,
scrap and many semifabricated products became $0.017 per pound (copper
content). In accordance with the Kennedy Round tariff reductions this
tariff was reduced by stages to $0.008 per pound in January 1972. Since
February 1966, however, tariffs have been suspended on copper-bearing
ores and materials, blister copper, anode copper, all other unwrought
copper (except that containing nickel and silver), as well as copper
waste and scrap; the most recent suspension expired in June 30, 1972,
and to date the suspension has not been reimposed although bills to
do so are pending in Congress.
The tariffs on various forms of refined copper and fabricated copper
products are still in effect, and vary according to type. Since the
1970 tariffs on these products are usually less than the present tariff
plus the 10 percent surcharge, the former will be the effective tariff
as long as the 10 percent surcharge continues.
The U.S. Government has also effected severe quota limitations on the
export of refined copper and scrap. In 1969 exports of refined copper
from domestic primary sources and scrap were limited to 50,000 and
60,000 short tons of contained copper, respectively. Export controls
may be part of the explanation of why prices in Europe can sometimes
remain at levels far higher than domestic copper prices. As the LME
price has declined and even fallen below the domestic producers' price,
these restrictions have been modified, and in September 1970 the United
States lifted its copper short-supply Export-Control Restrictions.
Foreign tariffs on primary copper products are also generally low. In
1964, the Scandinavian countries, Austria, Switzerland, and the EEC ad-
mitted unwrought copper duty-free. The British tariff ranged from zero
to 10 percent ad valorem.
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Trade in fabricated products is to some extent limited by tariffs. The
domestic tariff on fabricated products is generally modest, but some
European tariffs are substantial. In 1962, for example, the EEC duties,
were in the range of 13-15 percent ad valorem,and the British tariff on
some copper semis was 20 percent.
Lead was excluded from the "Kennedy Round" on the General Agreements
on Tariffs and Trade. The present import duty is 0.75 cents per pound
on lead in ore and 1.0625 cents per pound of lead metal. This duty
applies to all free world areas and is one half the statutory rate which
applies to certain designated Communist countries.
Zinc similarly was excluded. The present duty on zinc in ores or fumes
is 0.67C per pound and 0.7
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price was quoted at $0.658. As a result, copper producers presently
have a price ceiling considerably above the prices now prevailing.
G. DEPLETION
"Depletion is to the owner of a mineral property what depreciation is
to the owner of a depreciable asset. A manufacturer, for example, may
recover the cost of a plant by means of depreciation deductions over
the period of its useful life. Similarly, the owner of a mine may recover
the cost of the mineral deposit during the period in which the mineral
is extracted." !
The U.S. copper producers receive a 15% depletion allowance, calculated
on the value of the first marketable product (concentrate), from their
domestic as well as foreign operations.
/
The lead and zinc industries receive a 23% depletion allowance on
domestic production and 15% on foreign production.
724CCH, Standard Federal Tax Reports, Commerce Clearing House, Inc.
1971, p. 45,007
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VII. THE OUTLOOK FOR SULFURIC ACID. AND BY-PRODUCT SULFUR*
A. PRODUCTION
The United States produced about 30 million tons of sulfuric acid
(100% acid basis) in 1969 and this is expected to grow at an annual av-
erage rate of 4% during the next decade. About 51% of this quantity was
used in the fertilizer industry, primarily for the production of phosphate
fertilizers. Twenty-five percent went to the production of a wide variety
of chemicals, and the remainder was used in the petroleum and refining
industry, in the iron and steel industry and in miscellaneous uses.
The sources of this acid are given in Table VII-1. Some 22 million
tons of sulfuric acid were produced from elemental sulfur, or about
75% of total acid production. This was equivalent to about 7.4 million
tons of sulfur. Most of this was Frasch sulfur recovered from deposits
along the Gulf Coast but a substantial portion - close to 2 million
tons - was sulfur recovered from the production of natural gas and from
refinery desulfurization.
With the preponderance of sulfuric acid produced from elemental sulfur,
acid prices follow sulfur prices very closely. Sulfur prices have
dropped sharply in recent years, from a high of close to $40.00 per
long ton in 1969, to an average of $18.00 per long ton in 1971, on an
FOB Gulf Coast basis. The principal reason for this sharp decline was
a major increase in production of recovered sulfur from Canadian natural
gas production. Sulfur production from this source is expected to con-
tinue to increase at a substantial rate since the demand for natural
gas continues strong, and production from sour gas fields in Alberta
continues to increase.
It is important to note the increasing extent to which by-product
sources of sulfur, or sulfur values, will represent an increasing and
preponderant portion of the total raw material for the manufacture of
sulfuric acid. The increase in availability of such by-product sources
of sulfur recovered from natural gas and oil desulfurization, and
sulfur dioxide recovered during stack gas cleaning, will be more than
adequate to meet the normal increases in demand for sulfuric acid. The
discretionary sources of sulfur - principally Frasch sulfur, and pyrites
- will show little if any increase in total consumption volume and may
actually decrease. For example, we estimate that in 1970 approximately
7.1 million tons of discretionary sulfur were produced in North America
(almost entirely Gulf Coast Frasch sulfur) out of a total of 15.0 million
* This section is identical in the copper, lead and zinc reports.
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TABLE VII-1
SOURCES OF U.S. SULFURIC ACID, 1969
(millions of short tons of 100% acid)
New Sulfur
Elemental 22.19
Hydrogen Sulfide 1.03
Smelter Gases 1.77
Pyrites 1.10
SOURCE: ADL Estimates
Subtotal 26.09
Sludge Acid 2.15
Fortified Acid 1.30
Total Production 29.54
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tons of sulfur values. By 1975 we estimate that Frasch sulfur pro-
duction will decrease slightly to 7.0 million tons production while
total North American sulfur production will increase to 20.1 million
tons. Thus, the non-byproduct sulfur will have dropped from 47% to
32% of total North American production. These volumes are substantially
in excess of North American needs and the remainder goes into export
markets.
B. TRENDS
The outlook for sulfuric acid at least during the first part of the
next decade is for continued surpluses and low prices, corresponding
to the expected continued surplus and depressed prices for sulfur. In
addition to a continued oversupply of elemental sulfur, the situation
will be further aggravated by an increase in the secondary sources of
sulfuric acid. A major such secondary source (which will represent an
increasingly large volume of sulfuric acid to be marketed) will be the
stack gas cleaning in the smelting industry, and to a lesser extent
in electric generating plants.
It is clear that a substantial cleanup of stack gas emissions of sulfur
dioxide will be enforced by regulation during the 1970's. Sulfur di-
oxide may be recovered in potentially saleable form, i.e., as sulfur or
sulfuric acid, may be removed by processes which produce a nonsaleable
product such as gypsum, or may be reduced through the use of low-sulfur
fuels.
The total sulfur dioxide emissions into the air over the United States
have been estimated and summarized in Table VII-2. While only a portion
of these total emissions will be recovered, and only a portion of the
recovered sulfur dioxide will be in saleable form, the total magnitude
of the emissions indicates the potential for adding substantial volumes
of sulfuric acid to the national market.
While it is likely that there will be a significant amount of sulfuric
acid produced from smelter stack cleanup, current indications are that
the amount of saleable product from powerplant emission control will not
be significant during the 70's. Major emission reduction in power plants
will probably take place either through the use of low sulfur fuels or
through stack gas cleaning processes producing nonsaleable product such
as gypsum. Also, the much lower sulfur dioxide content of fuel combustion
gases as compared to smelter gases makes recovery as acid difficult.
The recovered sulfur from Canada will probably be the most important
factor in maintaining an excess supply of sulfur and therefore of sulfuric
acid. Production in Canada is estimated to increase from an estimated
4.4 million long tons of sulfur in 1970 to approximately 8 million tons
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TABLE VII-2
ESTIMATED POTENTIAL SULFUR DIOXIDE EMISSIONS
(without abatement)
Source Annual Emissions of SO,,
(millions of tons)
1970 1980
Power plant operation 20.0 41.1
Other coal combustion 4.8 4.0
Other petroleum product combustion 3.4 3.9
Smelting 4.0 5.3
Refinery Operation 2.4 4.0
Miscellaneous 2.0 2.6
Total 36.6 60.9
Source: "Abatement of Sulfur Dioxide Emissions from Stationary
Combustion Sources" - National Academy of Engineering,
National Research Council, 1970.
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by 1975. While a substantial portion of this would be exported
outside of North America, a significant volume will be coming into
the U.S.
In addition, significant quantities of sulfur recovered from natural
gas can be expected from fields being developed in Mississippi, Alabama,
and Florida where much of the gas is turning out to be sour. There
will also be significant quantities of sulfur produced from crude oil
desulfurization.
On the basis of a 4% annual growth rate for sulfuric acid demand, the
1969 demand of about 30 million tons of sulfuric acid will increase to
44 million tons by 1979. Thus, an additional 14 million tons of sulfuric
acid will be needed. This is equivalent to about 4.7 million tons of
additional sulfur required annually by 1979. When we see that an increase
in available supply from Alberta alone will be about 3.6 million tons
per year by 1975, there seems little question that this additional
quantity of sulfuric acid will be readily available, and excess supplies
will continue.
The outlook for sulfuric acid pricing will continue to reflect an
excess capacity, and there seems no reason to believe that a significant
increase in prices can be expected. Therefore, that quantity of acid
which will be marketed from smelter stack gas cleanup will be entering
a highly competitive market, where acid prices are expected to remain
low, and in most areas of the country, substantially below $20 per ton
on a delivered basis.
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VIII. FINANCIAL STRUCTURE
A. INTRODUCTION
As developed earlier in Chapter IV of Part II, the primary copper, lead
and zinc industries are mutually interdependent to a considerable extent.
Also, several major companies are involved in the production of all three
metals. Because of this, these non-ferrous industries have been treated
as a group in this chapter. However, Section D, "Selected Company Pro-
files" discusses only the major copper producers.
The primary copper, lead.and zinc industries are rather concentrated in-
dustries. For example, the top three producers in copper—Kennecott,
Phelps Dodge, and Anaconda—account for well over half of mine output
and smelting capacity, are vertically integrated, and also account for
a substantial share of fabricated product sales.* Similarly, in lead
and zinc, St. Joe Minerals is a major factor in both metals. Because
of the raw material characteristics, substantial by-product, or co-pro-
duct metal recovery occurring in these industries, the major producers all
tend to have significant production of all three metals as well as by-
product recovery of silver and other valuable metals. Another feature
is their extensive holdings in foreign mining ventures (including diver-
sification into other minerals), their participation in joint ventures
with each other, and their equity holdings in other companies which
complement their degree of participation in the primary non-ferrous metal
industry. Due to major differences in end-product market characteris-
tics—between copper, on the one hand, and lead and zinc, on the other—
as well as to the historical development of these industries; the lead
and zinc companies are not integrated forward into fabricated products
or end-products—e.g., storage batteries, tetraethyl lead, galvanized
steel products or zinc die castings.
From the companies' viewpoints, the major influences on earnings are oper-
ating rate and metal prices. These fluctuate much more than annual con-
sumption or demand and prices tend to be sensitive to small imbalances
between supply and demand. Although the non-ferrous metal market is not
a classic commodity market in the sense of a very large number of small
independent producers, the non-differentiated nature of primary metal
products and supply-demand characteristics in the industry including the
foreign sources, indeed result in a commodity market in copper, lead and
* In June 1970, Triangle Industries, Inc., filed suit against several
domestic copper producers and fabricators, alleging various violations
of the Federal antitrust laws and seeking treble damages and dives-
titure by the producers of their fabricating subsidiaries. Reading
Industries, Inc., filed a similar suit in October. The proceedings
are in the pre-trial stage and the outcome would clarify the status
of vertical integration in this industry.
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zinc. At the same time, the nature of the cost and marketing structure,
as well as tax laws result in the commodity of commerce being the refined
metal. Under these conditions, smelting and refining are equivalent to
toll services on a relatively fixed margin even for companies integrated
from mining to refining and more, if not most, profits come from mining
operations. The upshot is that profitability of all companies is sensi-
tive to changes in refined metal prices—and since metal prices are in-
fluenced by traditionally cyclical forces, the non-ferrous metals com-
panies' revenues and earnings are highly cyclical.
B. FINANCIAL PERFORMANCE
Fifteen or so firms dominate the U.S. primary copper, lead and zinc in-
dustries (excluding secondary producers, independent fabricators, etc.).
It is difficult to generalize about profitability and financial condi-
tions on an industry-wide basis because each company has some unusual
features. We present in Table VIII-1 an estimated breakdown, of revenues
and earnings, by source and geographic area, as well as other information,
to illustrate this point. Table VTII-2 presents financial performance
data for the four years 1968-1971 (two relatively good years and two re-
latively poor years for most of the companies) . The highest: rates of
return on equity are shown by Inspiration and St. Joe Minerals. Newmont
Mining, a holding company which owns Magma Copper, has the highest con-
solidated operating margin. Newmont earns substantial income from its
large investment holdings, as do Amax and Asarco. Anaconda and Gulf
Resources and Chemicals have shown the lowest rates of return on equity
recently. Anaconda's valuable Chilean properties which were expropriated
were written off in 1971, leaving the company with relatively low margin
domestic mining operations. Gulf Resources has had heavy expenses and
low offsetting volume at the Bunker Hill lead-zinc operations recently;
but, more significantly, has had substantial write-offs associated with
its other minerals and chemicals projects, i.e., Mexican Sulphur (1969),
and the Great Salt Lake project (1971).
The aggregated average annual net after-tax income of the eleven com-
panies in Table VIII-2 exceeds $500 million.
C. CAPITAL SPENDING AND FUNDING
Annual new plant and equipment expenditures for the companies in Table
VIII-2 averaged about 10% of their gross plant, as stated on the balance
sheets. In 1971, which was a relatively poor year for most of the com-
panies, aggregate cash flow was about $650 million, or very roughly
equal to aggregate capital expenditures. The debt-to-equity ratio of the
non-ferrous metals companies has been increasing of late as the pace of
their expansion and diversification programs has increased. For example,
Kennecott, Phelps Dodge and Amax, combined, raised $500 million in long-
term financing in 1971. In the face of cost-cutting moves and weaker
earnings in 1971, several companies cut their dividends. The require-
ment for pollution abatement expenditures, which was acknowledged by
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TABLE VIII-1
rr
-t
D
Asarco
Percent Change
in Farnlnftff
Due to lc copper
price change: Cow)
Due to Pb-Zo Metal*
price change: (low)
Due to aluBlauB
price change:
Reported Income
Tax Rate. Percent
1971 11.01
1970 22.31
Mine Production-
U.S.A.
Copper (thoua. abort
tona)
1971 75.8
1970 ' 83.4
Lead (thoua. abort
tona)
1971 18.7
1970 28.4
Zinc (thoua. abort
tons)
1971 43.1
1970 63.3
Silver (million
troy ounces)
1971 6.66
1970 6.84
Aliminun Production
(thous. short tons)
1971 33.6% In-
terest in
1970 Revere Cop-
per and
Brass
REFERENCE DATA
NON-FERROUS METALS COMPANIES*
Copper Inspiration Kennecott Nevmont Phelps
Anaconda Co. 'Range ' Consolidated Copper Mining Dodge
(high) ( high) ( med-hlgh) (low) (lov-med) (low)
(high) (high) (med.) (low) • (low)
(low) (low)
$440 Ml U.S. (credit) 27.71 1ST 19.31 35.071
tax loaa carry
forward 1971-81 29.4Z 33. IT 301 32.21 37.61
(and $190 Ml
foreign tax
credits)
182.0 58 6 34.4 456.1 101 1 281.2
1
242.1 67.8 67.1 518.9 112 J. 313.5
16.4] Toole . 68.6 Joint Note:
V Smelter venture P-D
18.1 Closed '71 83.7 with owns
' Asarco. 772,500
Also holds shares
8.11 of Amax stock
St. Joe
0.7] Great Falls 17.4 Minerals
I Closing '72
0.1] 21.7
-
3.87 3.7
5.02 4.3
171.7 owns 925,000 40Z Interest
shares in Consolidated
177.3 Kaiser Aluminum Aluminum Corp.
(Conalco)
St. Joe Gulf Resources
Minerals Anax (Bunker Hill)
(high) (low) (med..- high)
(mad.)
29.81 17x1 excludes nil
(•dividend
29.61 22X1 Income 27Z
Note;
Also 201 Equity In
Copper Range Co.
182.0 "I
I custom
215.0 [ smelter
J refined
303.2 N.A. 44-own
85-othera
318.4 75.0 40-own
83-others
144.0 N.A. 67-ovn
(cone, produced) 53-others
66.4 mine 32.0 50-own
64-others
20.0 9.6l
[refined
40.0 7.8
1
260.0
247.0
and .itlii'r sources
believed to be reliable, but its accuracy and completeness are not guaranteed.
For ft discussion of New Jersey Zinc Company, a subsidiary of Gulf and Western Industries, sre text.
-------
TABLE VIII-1 (Cont'd)
Estimated Revenue
Ireakdoim
Copper
Mining 13-171
Fabrication
Cuito* Smelting 13-17Z
.obtotal 26-3*1
line
Anaconda Co.
5-101
60-451
nom.
65-751
Copper
Range
75-85Z
15-201
Inspiration
Consolidated
94-981
2-061
95+Z
1001
50-551
10-15Z
nom.
60-701
851
85-901
Phelps
Dodge
St. Joe
Minerals
Gulf
Resources
Cyprus
Mines
40-451
40-451
5-101 .
90-931
441
3SZ
25-301
*** 25-301
[«*• J 10-151
1 Includes 1
1 silver . [
Coal
25Z
13X
15-171
7-10Z
35Z
1
VO
1
rrlmmrr
Fabrication
Other Sales
all Other, n.e.c.
«^pp ro.rl.Bmit ft Irflmlng
Distribution
Copper
Htnln|-U.S.
BUnlns^Fonlfn
subtotal
Fabrication
Custom Smelting
Total, Copper
Zinc
Lead
66-74Z
IOOZ
•
20-25Z
40-45Z
60-70Z
22
70-75Z
8-20Z
100:
60-70Z
15-20Z
80-85Z
2- 4Z
1- 2X
84-88Z
nom. 8-11Z 10-15Z 211
IOOZ IOOZ IOOZ IOOZ IOOZ
95-105Z 92+Z 68-722 40-452 79-83Z
10Z -30-35Z 5Z
95-105Z 92+2 78-822 70-80Z 85±Z
(nil) nom. nom. 5-WZ
nom. nom.
95-100Z 95Z 85±Z 70-80Z ****
30±Z
65±Z
3JZ 11Z
1001 lOOX"
7-102 (Lead, line
and silver
account for
41Z of profit
In 1970. and
a loss In
1971)
45-551
50-60X
I 10-151
Coal
10-121
5
Aluminum
Primary
Fabrication
Other Sales
All Other, n.e.c.
Including Interest
and dividends
Approximate Source
of Pre-tax Profits
U.S.A.
Canada
Mexico
South America
Australia
Africa
Other
25-302
IOOZ
40-502
5±Z
5-10Z
15-20Z
25-302
(nom.)
IOOZ
nil
10-15Z
IOOZ
70-80Z
2±Z
15-202
(nom.)
IOOZ
£52
IOOZ
IOOZ
IOOZ
10-15Z
3- 5Z
IOOZ
20-30Z
IOOZ
25-35*
IOOZ
yjts.
nil
nil
inn*
t. / U/o
57
fnom.)
20-30
inn?
95Z
12
52
(12)
80-902
\ 5±z
10-152
1002
40-50%
10-157.
10-201
10T20%
15-20%
1007.
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TABLE VIII-1 (Cont'd)
VO
SELECTED FINANCIAL DATA: MAJOR U. S. NON-FERROUS METALS COMPANIES
1971
Sales (in millions of dollars)
Pre-tax Profit
(in millions of dollars)
Het Income
(in millions of dollars)
Cash flow from Operations and
Holdings (In millions of dollars)
Increase (Decrease) In Debt
Dividends Paid
Current Ratio: Assets/Liabilities
Net Working Capital
Capital Expenditures
As arc o
656.8
51.7
46.0
60.0
14.4
46.2
2.1
174.0
37.4
Anaconda
946.5
(5.2)
(8.7)'
84.5
25.0
10.9
3.1
265.0
89.9
Copper
Range
88.6
(6.1)
(3.5)
4.9
12.0
0.6
3.2
30.3
11.9
Phelps
Inspiration Kennecott
66.2 1,066
12.1 102
8.7 87.
0
.9
.9
.2
14.6 180.0
(0.1) 52.
4.8 58.
3.7 2.
19.0 269.
9.8 150.
0
.0
.4
0
0
Newnont
0
240.5
67.5
54.5
86.0
93.2
28.2
3.5
79.3
129.1
Dodge
703.
113.
73.
|_ St. Joe
6 194.4
7 27.9
8 19.6
110.3 29.1
78.
42.
3.
209.
7 (1.0)
9 13.7
4 3.0
0 46.5
75.5 21.2
Am*
. 756.9
65.8
55.4
86.5
130.6
36.5
3.3
302.0
139.5
Culf
Resources
0
116.2
(3.5)
(3.9)
1.2
4.6
1.1
1.9
18.3
7.4
Cyprus
Mines
203.2
58.6
27.8
52.}
(5.5)
9.1
1.8
35.8
38.1
(net)
Long-term Debt, year end
Equity, year end
Debt T (debt and equity)
Percent based on book values
Scheduled Debt Repayment
(1972 payment excluded from long-
term debt at year end 1971)
1972
1973
1974
1975
1976
Long-term Financing
(In millions of dollars, 1971)
Employment, year end
Hares: o • nreliminarv: e M estlma
38.1
673.3
5.4
3.6
3.6
3.6
5.2
1.6
13,600
tt
391.5
821.0
32.3
24.6
19.2
35.5
58.1
64.0
27,481
36.3
101.7
m
27.3
1.3
7 .0_.
7.0
N.A.
N.A.
20.0
3,644
nil 314.
69.7 1,192.
nil 20.
43.
43.
62.
5.
21.
200.
2,009 30,400
.6
9
9
*e
2e
3'
,l"
7e
.0
201.6
444.1
31.2
8.7
26.7
31.8
44.3
33.5
101.9
N.A.
166.
710.
0 10.7
2 171.3
19.0 5.9
0.
0.
12.
0.
0.
ISO.
15,500
1 1.0
1
9
1
lc
0
4,503
(USA)
392.0
625.2
38.5
15.7
23.4
27.5
20.6
29.7
156.9
16,000
8
48.6
28.4
63.1
2.9
6.5
6.0
5.9
5.9
22.0
2,700
1,940
Bunker
Hill
34.9
207.5
tt.3
^4 a> Before extra-ordinary charge due to write-off of Chilean properties and other expense.
3" b/ Agreement for $13M< advances from toll customer.
C cl Above before $22 Ml to be received from Conalco debentures.
~* d/ $19.7)M write-down! and reserves, net, excluded.
C^ o/ Includes other revenues and/or Income, as reported.
The information preaented above has been obtained from company annual reports and SEC filings, statistical services, financial manuals, and r.tSer sources
believed to be reliable, but its accuracy and completeness are not guaranteed.
-------
TABLE VIII-2
Company
Anox
|07|
p;n
T'6"
I"6S
Anaconda
1971
1170
1060
Asorcp
1071
1970
1969
1968
Copper Range
1971
1970
1069
1968
inspiration
Consolidated
1971
1970
1969
1068
Kennecott Copper
1971
1970
1969
1968
Cypr'ja Mines
find. Pirn* Consol
1071
P70
1060
1068
Phclps Dodge
1971
1970
I960
1968
St. Joe Minerals
1971
1970
1969
1968
Chemical
1971
1970
1969
1968
Newmfnt Mining
1971
1070
1069
1968
FINANCIAL PERFORMANCE DATA
COPPER, LEAD AND ZINC COMPANIES*
Net Sales Operating Income Esrnlngi (Before Cspltal Operating Income As A Return On
MILLIONS OF DOLLARS • " "' *ERCENT
756 9 97.0 55.4 139.5
840'? 115.2 83.6 110. 2 (ex. RST)
753.5 99.8 69.1 63.0
A.,.IH Avg. ToTT *vg. »•« ."•••»•*
946.5 66.9 (»•') 89.9
077 4 108.9 ' 68.1 90.5
1410.6 393.1 . . |H Av, mi »»«• "•" *yg' 4'n
Avg. 52.9 Avg. 102.4 Net Income/Sales
656 6 26.3 46.0 37.4
717.8 57.5 88.8 68.7
771.0 60.1 99.4 25.0
634.1 38.1 AVB Ug Avg |Ll Avg. 6.5x Avg. n.ox Avg.. 13. IX
88.6 4.7 (3-24) !>•'
97.5 21.9 9.6 14.0
10.23 27.8 15-9 J2.1
82'1 "•' Avg. -H Avg. M Avg. »-n Avg. 9.6X
65.8 16.9 8.7 9.8
88.8 30.5 l'-8 9.7
69.5 22.5 13-4 »•*
"•' 8'7 Avg. iH Avg. rf »»>• »•« »«»• 2l-01
..., . 191 4 87.2 162. 5] Includes Av.
Ill] 1 322.3 185.0 163.2 lot 34.8/Y,.r
0500 286.9 165.4 152.0 Capitalized
7":5 171'9 Avg-lM Avg.HH1"1"1"800"' *v, 24.4X Av, 13.U
202^ [141. 8 "1 74.2 [32.6 1 27.4 JMl.''1'1'
U3.5L«'«MJ 24.4 L«» "Mj "-0 1', L (Including Pl.s
113.0 21.2 ^ 1L| ^ _ii Avg „ „ 1970-1971) Avg. 15.2%
703.6 140.5 "-8 »•'
716.2 Restated 184.7 Reatatad 108.0 89.2
672.1 626.9 138.4 S.A. 89.5 87.3
550.4 531.7 98.1 .... ^ _6£6. ^ ZM ^ „ „ Avg. 14.n
104.4 29.* 19.6 21.2
161.3 35.2 26.2 15.2
179.0 33.1 37.5 »-4
Avg.fM Avg. ftj
115.2 7.8 (3-85) 7.*
114.4 13.1 »-S» *•«
113.7 12.1 J-77 5.4
104'' U'7 Avg. HI Avg. H Avg. M.OI- »"•• >•*
197.5 55*2 54.5 129.1
214.8 97.6 75.2 135.3
197.0 83.8 64.1 57.0
-54-1 6l'3 Avg.lH Avg.-ffi A'8- 39.0X *••• »•«
Ratio of Capital
Expenditures
To Groaa Plant At
Year End
Avg. 14.67.
Avg. 8.1*
Avg. 0.07.
Avg. 7.97.
Avg. 9.67.
Avg. 10.5%
Avg. 14.47
Avg. 10. IV.
Avg. 6.87
Avg. 6.27.
Avg. N.A.
NOTE: While reasonable care va» taken In compiling this data and presenting It tn aa consistent • faehlon as la poaalbla,
ue cannot guarantee absolute comparability from one company to the next, due to differences In the nature of earn-
ings, and differences In their eccounting for certain balance sheet end Income statement It ens. To the best of our
knowledge the above data present an eccurete end meaningful basis for selective comparisons.
The Information presented above has been obtained fro. company annual reports and SEC filings, statistical services.
financial manuals, snd other sources believed to be reliable, but Its accuracy and completeness are not guaranteed.
•For a discussion of Nev Jersey Zinc Company, e subsidiary of Gulf and Western Industries, see text.
*Thls table should be reed In conjunction with Table VI11-1.
••Excludes dividends. Interest, net gain on sales of securities snd other Income In the following amounts:
1968 - $39.3
1969 - 40.4
1970 - 43.6
1971 - 43.0
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many of the companies back in 1970 after passage of the Clean Air Act,
may result in a further increase in their debt, and hence, according to
financial convention and theory, further "deterioration" in their finan-
cial structures as a result of more highly-leveraged earnings (higher
debt-to-equity ratios) and higher fixed charges.
D. SELECTED COMPANY PROFILES
1. The Anaconda Company
Anaconda is the third largest producer of primary copper and the
sixth largest aluminum producer in the United States. In addition to
primary copper and aluminum, Anaconda produces brass and wire mill pro-
ducts and fabricated aluminum products. In 1971, total sales were $947
million. The estimated breakdown of sales and earnings by product line
were presented in Tables VIII-1 and VHI^-2, which also include a four-
year financial review. Anaconda suffered substantially from the nation-
alization of its Chilean properties in July 1971. The Chilean copper
mines provided, it is believed, over 40% of 1970 earnings and an even
greater proportion in prior years. Anaconda's North American copper
mines, which provide the majority of present earnings, are relatively
high in cost, creating wide cyclical swings, depending on price move-
ments. Production of lead bullion ceased as of December 31, 1971, and
zinc production is expected to cease in 1972. Other products produced
and sold by Anaconda include uranium oxide concentrates, silver, gold and
also lumber. Cadmium production, which totalled 418,000 pounds last year,
will no longer be produced after the closing of zinc operations. Over
40% of North American copper production comes from Montana, about 30%
from Arizona and the balance from Nevada and Mexico. Major investments
in Montana over the past two years have resulted in the ability to handle
substantially larger tonnages at the Berkeley pit, the concentrator at
Butte and at the Anaconda smelter. Except for strike periods last year,
Anaconda's copper refineries were operated at capacity at both Great Falls,
Montana and Perth Amboy, New Jersey.
During 1971, approximately 10% of consolidated sales were derived
from operations in foreign countries, principally Canada and Mexico;
these operations are expected to continue to be a significant source of
income to Anaconda.
As of December 1, 1971, Anaconda held 27.7% of the stock of Inspira-
tion Consolidated Copper Company, which accounts for about 5% of U.S.
mine output and a net income before taxes of over $12 million in 1971.
(Inspiration Consolidated will be discussed subsequently.)
Anaconda had aluminum and aluminum product sales of $177 million
last year. It is committed to invest approximately $120 million in
various aluminum production facilities, the major portion which relates
to the aluminum plant in Sebree, Kentucky. According to Anaconda's
annual report, "financing is now being negotiated to provide funds for
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the Sebree production plant and for pollution control facilities at the
Anaconda smelter, the only major scheduled projects not fully financed."
Anaconda has a 37% interest in an alumina production facility in
Jamaica, West Indies. Anaconda is entitled to receive its share of the
alumina produced and is committed to pay its share of the venture's costs,
The new aluminum production plant at Sebree, Kentucky, will have a capa-
city of 120 million tons a year, supplied primarily from the Jamaica
venture. With Sebree, Anaconda will be able to produce all the primary
aluminum needed for its manufacturing operations (not yet substantial
contributors to profits).
2. American Metal Climax, Inc. (AMAX)
On December 31, 1957, American Metal Co., Ltd., and Climax Molyb-
denum Co. merged under the name American Metal Climax, Inc. American
Metal Co., Ltd. (incorporated 1887) grew rapidly from a purely trading
concern into a factor in the mining and smelting industry in the United
States and Mexico. In 1929, the company acquired its first interest in
the Zambia copper mines, an interest that has grown tremendously up to
1970 when the Republic of Zambia acquired a substantial interest in
these copper mines. Amax engages in metallurgical and petroleum enter-
prises through subsidiaries and stock interests in many companies. In-
dustrial operations of the subsidiaries are in the United States, Mexico,
Canada, Zambia, Botswana, South West Africa, South Africa, and most re-
cently, Australia, but metal-trading activities are virtually world wide.
The principal products and by-products are aluminum, coal, coke,
copper, copper-powder, gold, silver, palladium, platinum, seilenium,
tellurium, and arsenic; lead, lead powder, solder, terne metal, zinc,
cadmium, bismuth, and germanium; molybdenum sulfide (concentrates),
molybdenum trioxide, calcium molybdate, molybdenum, and ferromolybdenum;
and potash, uranium, vanadium, and iron powder.
The wholly-owned subsidiary, United States Metals Refining Co.,
operates a copper smelter and refinery at Carteret, New Jerssey, which
produces refined copper from domestic and foreign ores, concentrates,
blister copper, and copper scrap. The total annual refining capacity of
275,000 short tons consists of 150,000 tons of electrolytic capacity
and 125,000 tons of fire-refining capacity.
In July 1972, Amax said it would enter the copper mining business
in the U.S. in a two-step transaction in which it would acquire Banner
Mining Co., which owns the Twin Buttes (Pima County, Arizona) property
currently mined by Anaconda; and then enter into a joint venture with
Anaconda to expand operations at Twin Buttes.
Other enterprises in which American Metal Climax, Inc., has sub-
stantial interests are:
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Ponce Mining Company, Inc.
*Blackwell Zinc Company, Inc.
Missouri Lead Company
Heath Steele Company (Canada)
Climax Molybdenum Company & Subsidiaries
Climax Uranium Company
RST International Inc.
PERCENT
and minority interests in:
(Roan Consolidated Mines Ltd.
Chisangwa Mines Ltd.) 20%
Botswana RST, Ltd. 30%
Tsumeb Corporation, Ltd. 29%
O'okiep Copper Company, Ltd. 17%
Copper Range Company 20%
Canada Tungsten Mining Corp., Ltd. 41%
3. American Smelting and Refining Company (ASARCO)
Asarco is an important non-ferrous metals miner and the leading
smelter and refiner of metal ores, concentrates and scrap. The fifth-
largest U.S. copper producer, it holds sizable equity interests in for-
eign mining subsidiaries. In 1971, equity in earnings of companies above
50%-owned was about 81% of total profits.
Mine output in 1971 was 75,800 tons of copper, 6,658,000 ounces of
silver, 43,100 tons of zinc, and 18,700 tons of lead. Including pur-
chased materials, refined output was 406,500 tons of copper, 56,311
ounces of silver, 189,000 tons of lead, and 133,700 tons of zinc and by-
products.
Copper is mined primarily at the Mission and Silver Bell pits in
Arizona. Zinc, lead and silver are also mined in the U.S. Extensive
smelting and refining operations are at 13 U.S. plants. The Federated
Metal Division carries on secondary metal and fabricating activities.
Asarco's holdings in other companies are:
Southern Peru Copper Corporation - 51.5%
Northern Peru Mining Corporation - 100%
Revere Copper & Brass Inc. - 33.6%
Asarco Mexicana S.A. - 49%
Neptune Gold Mining Co. - 51.8%
Lake Asbestos of Quebec Ltd. - 100%
Granduc Mines Ltd. (NPL) - 50%
* will close their zinc smelter in Blackwell, Oklahoma
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Asarco Exploration of Canada Ltd. - 100%
Asarco (Australia) Pty. Ltd. - 100%
SOURCE: Jane's World Mining Who Owns Whom, 1970.
The company announced recently that it has begun a $13 million de-
velopment of copper deposits on the San Xavier Indian Reservation near
Tucson. On completion in 1973, the mine and processing plant will pro-
duce about 1000 tons per month of 82% cement copper.
The new project will mine about 4000 tons of ore daily for about
eight years from two large low-grade deposits of ore, averaging only
0.5% copper. Leaching of the copper from the ore will consume about 11%
of the sulfuric acid Asarco makes from sulfur dioxide stack gases at its
Hayden, Arizona smelter, in a new acid plant.
American Smelting and Refining Company also recently announced it
was going to spend $36 million to dig a combination open pit-underground
mine with reserves of more than 47 million tons of 0.76% copper ore.
This mine will be located about five miles from Casa Grande, 45 miles
southeast of Phoenix. The company said it will begin as an open-pit
mine in a little more than two years and be phased into an underground
mine in 1979.
Asarco has announced publicly a $50 million program to improve air
quality at its three copper smelters. The sulfuric acid plant at the
Hayden, Arizona smelter was completed and dedicated on January 25 of this
year. An acid plant is under construction at El Paso and construction of
a liquid sulfur dioxide plant is expected to get under way soon at Tacoma.
Each of these facilities will result in recovery of more than 50% of the
sulfur contained in ores and concentrates smelted at the plant. In addi-
tion, Asarco is engaged in programs to control air quality at: other
smelters and secondary plants and to minimize liquid effluents and im-
prove the appearance of waste dumps and tailings dams associated with
mines.
Asarco has also acknowledged that the stricter Occupational, Health
and Safety Standards (OHSA) under Federal legislation will call for
significant outlays at most operations.
In 1971 with earnings considerably reduced, Asarco's cash flow fell
short of its dividend and capital expenditures. The Board cut the divi-
dend in October 1971 and the company entered into arrangements for $28
million of short term bank loans as well as arranged to deliver $18
million in five-year notes and part payment for the purchase of American
Zinc assets. The company commented that the adjustment in the dividend
rate brought the dividend "more in line with earnings and the require-
ments for substantial capital expenditures to maintain the strength of
the company and to provide for its future growth." Furthermore, the
considerable increase in inventory as a result of strikes in 1971 indi-
cate the potential for liquidation of inventories this year of "at
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least as much as $28 million in bank loans outstanding at the year end."
Thus, Asarco continues to have a strong balance sheet and very low debt
to equity ratio and by its own admission "is in a position to take ad-
vantage of attractive opportunities for profitable investment that may
become available."
4. Inspiration Consolidated Copper Company
Inspiration is almost entirely a domestic copper producer, opera-
ting several open-pit mines located close together in Arizona. A copper
rod-making facility rolls about 65% of Inspiration's mine output into a
simple fabricated form.
Inspiration accounts for about 5% of the U.S. mine output, with the
bulk of output coming from relatively low cost open-pit operations in
Arizona. Sales were $66 million in 1971.
Total mine production in 1971 was 117,679,775 pounds of copper, of
which some 75% was obtained from open-pit mining. The Inspiration area
mines contributed 62%, Christmas Mine 13%, and leaching (including Ox
Hide Mine's heap-leaching operations) 25%.
The average price received for the 108,679,160 pounds delivered was
51.98 cents a pound versus 58.12 cents in 1970. Costs before taxes,
depreciation and depletion were about 37.6 cents a pound compared with
38.0 cents a pound in 1970.
Reserves are relatively small compared with other domestic producers
but have been expanded periodically by inclusion of lower-grade ores as
the company becomes able technically to treat such ores economically.
While the amount of ore treated is expanded, the lower grades of ore are
a partially offsetting factor.
Ore reserves at the Christmas mine are estimated at 283,803 tons
mineable underground and 137,261 tons mineable in open-pits. Underground
mining has been plagued by water inflow and unstable rock conditions which
resulted in a fatal rock burst in 1966. Underground operations were
subsequently suspended and the low-grade open-pit operations expanded.
The underground operations are being maintained on a standby basis. An
additional 14,852 tons of reserves are estimated at the Sanchez (Arizona)
mine, presently being developed.
The oxide-sulfide ores are concentrated at the company's dual-pro-
cess plant and shipped to a nearby smelter (acquired in 1969 from an
Anaconda subsidiary) for smelting. Under the dual process, the oxide
ores are first treated by acid leaching, and the leached ore is put
through the flotation concentrator along with the pure sulfide ores.
The company is undertaking to process pure oxide ores by leaching only,
which would allow more sulfide ores to be processed in the concentrator.
Anode copper produced in the smelter is then refined by electrolytic
process in Inspiration's plant.
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Inspiration faces one of the heaviest burdens for pollution abate-
ment expenditures and costs, relative to the size of the company and its
financial resources. Inspiration's plan for meeting Arizona smelter
emission control standards by 1974 calls for a new installation costing
about $45 million. Some $13.2 million will be advanced by a toll cus-
tomer, to be repaid over the term of a ten-year contract for treating
the customer's concentrates. The balance is being borrowed on bank re-
volving credit, to be replaced by long-term debt financing.
5. Duval Corporation (Subsidiary of Pennzoil United, Inc.)
Pennzoil United, Inc., formed in 1968 by the consolidation of
Pennzoil Company and United Gas Corporation is a natural resource com-
pany engaged in oil and gas exploration; production, refining and mar-
keting of motor oil, lubricants and related products; natural gas trans-
mission; and the mining and processing of copper, silver, gold, molyb-
denum, potash and sulphur.
Duval Corporation, a wholly-owned subsidiary, mines and processes
copper, molybdenum and silver ore in Arizona and copper, gold and sil-
ver ore in Nevada, mines and processes potash ore in New Mexico and
Canada and mines sulphur in Texas.
The following table sets forth for the years 1967 through 1970 total
assets, gross revenues and gross operating income (net income before
total interest charges, Federal income tax, minority stockholders' in-
terest, general corporate overhead and an extraordinary item in 1967)
attributable to the major components of the business of Pennzoil United
and its consolidated subsidiaries without adjustment for certain inter-
company transactions. (In the opinion of the company, it is impracti-
cable to allocate the foregoing items in such a manner as to fairly
reflect the contribution of such components to net income.)
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(Expressed in thousands)
1967 1968 1969 1970
Total Assets
Integrated Oil and Gas Operations $331,381 $354,024 $391,047 $409,455
Natural Gas Transmission $428,939 $424,344 $432,365 $471,998
Mining Operations of Duval $183,850 $220,015 $295,161 $347,993
Retail Gas Distribution $150,700 $135,643 $134,825 $
Gross Revenues
Integrated Oil and Gas Operations $166,542 $172,372 $193,043 $218,333
Natural Gas Transmission $332,690 $359,420 $394,131 $440,444
Mining Operations of Duval $ 61,445 $ 74,947 $ 82,697 $ 95,347
Retail Gas Distribution $ 68,795 $ 78,020 $ 77,247 $ 51,018
Gross Operating Income (as defined)
Integrated Oil and Gas Operations $37,433 $39,905 $47,737 $52,353
Natural Gas Transmission $ 33,943 $ 33,014 $ 27,461 $ 42,756
Mining Operations of Duval $ 17,775 $ 18,564 $ 17,494 $ 24,237
Retail Gas Distribution $ 8,909 $ 12,913 $ 13,915 $ 13,705
Source: Pennzoil United Inc. Prospectus dated March 23, 1971.
The following table reflects the approximate contributions to gross in-
come (net income before total interest charges, Federal income tax and un-
allocated general corporate overhead) attributable to the mining operations
of Duval for the periods indicated:
1966 1967 1968 1969 1970
Metals 77% 86% 86% 98% 90%
Potash 14% 3% (1%) (2%) 7%
Sulphur 9% 11% 15% 4% 3%
( ) Indicates negative figure.
The potash data set forth above for the years 1966-1969 relates only
to potash produced by Duval in New Mexico while the data for the year 1970
includes Duval's potash production in Canada.
Duval has three principal subsidiaries, Duval Sierrita Corporation,
Duval Sales Corporation and Duval Corporation of Canada. Duval Sales Cor-
poration is the marketing agency for Duval's potash, molybdenum, sulphur
and a portion of its copper and conducts a brokerage business in fertilizer
components. Duval carries on an active exploration program and maintains
exploration offices in Texas, Arizona, Utah, Nevada, Canada and Australia.
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The prospectus dated March 23, 1971, in connection with a Pennzoil
United debenture offering presented the following financial and accoun-
ting information, which is useful to an understanding not only in the
case of Duval, but perhaps more generally with respect to many other major,
publicly-held, mining-based companies (e.g., a discussion of Kennecott's
treatment of Peabody Coal).
Mine development costs of Duval are capitalized for financial
reporting purposes and are depreciated or depleted over the
operating lives of the related properties. For Federal in-
come tax purposes such costs are deducted as incurred. To
the extent such capitalized costs are utilized in reducing
current income tax, such reduction in current tax is charged
to income and credited to deferred income tax. In 1969,
Duval sold mineral production payments in the amount of $100
million and the taxes payable resulting from this sale have
been charged to deferred income tax. Proceeds applied to the
liquidation of the production payments are included in in-
come as produced and the related income tax charged against
income.
Duval operates two open-pit copper-molybdenum mines in Arizona known
as the Esperanza and Mineral Park Properties. Duval estimates its pro-
ven ore reserves as of December 31, 1970, at Esperanza to be 25,936,000
tons, with an average copper content of 0.37% and an average molybdenum
content of 0.034%, and at Mineral Park to be 33,797,000 tons with an
average copper content of 0.47% and an average molybdenum content of
0.048%. The Esperanza Property has been in production since 1959 and
the Mineral Park Property since the latter part of 1964.
Duval operates two copper-gold-silver open-pit mines located some
11 miles apart near Battle Mountain, Nevada, known as the Copper Canyon
and Copper Basin mines, which were placed on a full production basis in
July 1967. Duval estimates its proven ore reserves as of December 31,
1970, at Copper Canyon to be 13,942,000 tons with an average copper con-
tent of 0.78% and an average silver and gold content of 0.51 and 0.024
ounces per ton of ore, respectively; and at Copper Basin to be 1,331,000
tons with an average copper content of 1.55% and an average silver and
gold content of 0.27 and 0.022 ounces per ton of ore, respectively.
Duval constructed a concentrator and related facilities near the Copper
Canyon mine. The concentrator has a design capacity of 4,000 tons of
ore per day.
Duval Sierrita*
In November 1967 the United States Government through the General
Services Administration (GSA) and Duval Sierrita Corporation, an opera-
ting subsidiary of Duval, entered into a domestic copper production
* The above information is taken from Pennzoil-United's March 23, 1971
prospectus.
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expansion contract pursuant to the provisions of the Defense Production
Act of 1950 for the development of a low-grade copper-molybdenum ore
body (Sierrita Property) adjacent to Duval's Esperanza Property. Con-
struction of a mill and related facilities designed to process an annual
average rate of ore throughput equal to not less than 66,000 tons per
day and the pre-mining stripping of 126 million tons of waste overbur-
den were substantially completed in March 1970. Approximately $181
million was required to develop the original project (not including the
cost of the expansion project referred to below) of which $83 million
was obtained from the GSA in the form of advances against future de-
liveries of copper produced from the property; $48.75 million from com-
mercial bank loans guaranteed in part by the GSA; $10 million from the
Company; and the remainder from Duval in equity or loans. Duval provides
management and technical guidance to Duval Sierrita at cost.
The contract with the GSA provides that repayment of advances will
be made by delivery of about 218.4 million pounds of copper to the GSA
prior to June 30, 1975. The advances will be credited at the rate of
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Duval estimates the proven ore reserves of the Sierrita Property to
be 524 million tons with an average copper content of 0.33% and an average
molybdenum content of 0.033%. The stripping ratio during the operational
life of the mine, excluding pre-mining stripping of waste overburden, is
estimated to be 1.28 to 1. The stripping ratio during the first five
years of operations is estimated to be 2.25 to 1.
Marketing Conditions
In the years 1968, 1969 and 1970 Duval's production (including
Duval Sierrita in 1970) of copper represented approximately 5%, 5% and
6%, respectively, of domestic mine production, the bulk of which was
accounted for by three principal producers, and Duval's molybdenum pro-
duction represented 6%, 5% and 9%, respectively. During the period July
1967 through March 1968 Duval made sales of copper in the foreign mar-
ket pursuant to special export licenses granted by the Department of
Commerce. Such sales were necessitated by work stoppages at smelters
that previously processed Duval's concentrates and were made at prices
generally more favorable than those theretofore prevailing in the domes-
tic market.
American Smelting and Refining Company has agreed to purchase at
least 50% of Duval and Duval Sierritafs aggregate production of copper
concentrates and precipitates other than that to be delivered to the GSA
(as previously described). The remaining concentrates and precipitates
are smelted and refined on a toll basis by American Smelting and Refin-
ing Company with the resultant refined copper being marketed by Duval
and Duval Sierrita to various copper consumers. The marketing of molyb-
denum production is the responsibility of the respective companies.
Although the companies have a number of short-term sales contracts and
to date have not encountered any difficulty in marketing copper produc-
tion, there are no existing long-term contractual commitments for the
sale of a substantial portion of the companies' copper production.
6. Copper Range Company
Copper Range Company owns and operates the White Pine Mine (in
Michigan's Upper Peninsula), through White Pine Copper Co., a wholly-
owned subsidiary. White Pine is an underground mine which produces
approximately 5% of U.S. copper output. Reserves are estimated to ex-
ceed 300 million tons assaying 1% copper. The company is a relatively
high cost producer deriving most of its revenues and virtually all of its
net income from White Pine. The mill has sufficient concentrating capa-
city to handle 25,000 tons of ore per day and adequate smelter capacity
to handle the output of the concentrating plant. The smelter reportedly
can produce over 87,000 tons per year of lake grade copper (a fire re-
fined metal).
Copper Range sells most of its output to U.S. and foreign fabrica-
tors. It has a captive demand through the Hussey Fabricating Division
for a portion of output. Hussey accounts for about 1/3 of Copper Range's
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consolidated sales. The Hussey Metals Division sales consist mainly of
sheet and strip and the remainder from the distribution of various cop-
per base products made by other mills.
Compared to Western ores, the White Pine ore has a low sulfur con-
tent and Copper Range states that it presently meets both the primary
and secondary Federal Air Quality Standards under the Clean Air Act of
1970. The company has stated that "but given presently available tech-
nology, we do not believe that it would be economically feasible for us
to meet a 90% emission standard. A research and development effort is
in progress to identify and develop a process which will reduce sulfur
dioxide emissions from our White Pine smelter on a reasonable economic
basis."
7. Cyprus Mines Corporation
Cyprus Mines was incorporated March 10, 1916, in New York. It opera-
ted the Old Dick mine near Bagdad, Arizona. Together with Union Oil
Company of California and Utah International Inc., each of whom owns
about 25%, has a 50-percent interest in and manages Pima Mining Company,
which operates the Pima open-pit mine near Tucson, Arizona. Pima's opera-
tions are now consolidated in Cyprus' financial statements. The company
has leasehold concessions on copper and pyrite mines on the Island of
Cyprus. Other non-ferrous interests are the wholly owned copper-zinc
Bruce mine, Arizona and 60% ownership of the Anvil lead-zinc mine, Yukon
Territory, Canada. The corporation also has interests in 43 producing
oil wells and gas wells in Kansas, Texas, and Louisiana; owns United
Sierra—a talc producer—, sawmills and plywood plants at Medford, Oregon,
and timberlands in Oregon, California, Alabama, and British Columbia.
It has minority interests in Marcona Mining Company, 46 percent; Mount
Goldsworthy in Australia, 33 percent; Cia. San Juan, S.A., 44.65 percent;
Albatross Sulfuric Acid and Chemical Works, Rotterdam, 45 percent;
Hawaiian Cement Corp., 42 percent; and Titanium Dioxide Works, Ltd.,
Rotterdam, 22.50 percent. In addition, the company operates several di-
visions fabricating non-ferrous metal products.
8. Phelps Dodge Corporation
Phelps Dodge is the second largest domestic copper producer. The
principal business of Phelps Dodge Corporation (PD) is the production of
copper from mines located in the United States, the sale of part of such
copper as refinery shapes or as rods, and the fabrication of the remain-
der of such copper (as well as copper purchased from others) for sale as
wire, cable and tubular products. PD also smelts and refines copper,
and rolls rod on toll for others. On March 31, 1971, the corporation's
aluminum fabricating subsidiary, Phelps Dodge Aluminum Products Corpora-
tion, merged into Consolidated Aluminum Corporation ("Conalco"). As a
result of such merger, PD holds 40% of the outstanding shares of the
capital stock of Conalco.
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PD Corporation obtains most of its copper requirements from its own
domestic mines, but supplements its own copper with purchases from others.
The corporation continues to import a relatively small tonnage of alumina,
all or most of which it sells to Conalco.
During 1970 and 1971, mine output of copper averaged about 300,000
short tons. Some 40% was produced at the Morenci mine, 20% from Ajo, 20%
at Bisbee, and 20% at Tyrone. Reserves are large, with the exception of
the Bisbee mine. Additional capacity is expected to be brought in dur-
ing the early 1970's to replace the Bisbee operations, raising overall
capacity to 330,000 tons a year.
Rated refinery capacity of 537,000 tons is located at El Paso
(445,000 tons electrolytic and fire-refined) and Laurel Hill, New York
(72,000 tons electrolytic and 20,000 tons fire-refined). The latter
plant is a custom operation, processing copper for other producers and
treating scrap. Refined production including custom output totaled
604,900 tons in 1970. Wire mills are located in New York (4), New Jersey
(2), Indiana (2), Kentucky, and Arkansas. Tube mills are in California
and New Jersey. A brass foundry is operated in Alabama and interests
are held in 13 foreign fabricating operations.
Copper Mining
The corporation expects to shut down the open-pit mine at Bisbee due
to exhaustion of ore reserves early in 1973. It appears likely that the
Bisbee underground mines will also shut down at that time, unless the
price of copper is high enough to make their operation economic for a
while longer.
In December 1970, the Company decided to stretch out by two years
the development program of a new mine near Morenci, Arizona,, to be known
as the Metcalf mine. This mine is expected to be ready for production
in late 1974 with an estimated annual rate of production in excess of
50,000 tons of copper. The cost of developing the Metcalf mine will be
in excess of $150,000,000 of which $38,000,000 was expended through
December 31, 1970.
All the ore at Phelps Dodge's mines is classified as sulphide ore,
except for some oxide ores at the Bisbee underground mines. As of
January 1, 1971, Phelps Dodge estimated the copper ore reserves at its
mines at not less than 1,524,300,000 tons of ore. The table below sets
forth such ore reserves (expressed in millions of tons), together with
average ore grades, at each of such mines:
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Ore Grade
Reserves of Ore
Morenci 737 0.80%
Ajo 138 0.70
Bisbee
Open-Pit 8 0.94
Underground 2 5.41
Tyrone 292 0.81
Metcalf
Open-Pit 221 0.74
Underground 127 0.92
In general, Phelps Dodge is thought to be one of the lowest cost
copper producers. The company has reported that production costs at
Phelps Dodge's operating mines, per pound of copper mined, are lowest at
Morenci, which is its largest mine, and are by far the highest at the
Bisbee mines. Costs at Ajo and Tyrone are somewhat higher than at
Morenci and are about the same as the average costs of all Phelps Dodge
operating mines. Phelps Dodge anticipates that costs of production at
the Metcalf mine, when it begins operation, will be similar to those at
Ajo and Tyrone and thus appreciably lower than those at Bisbee.
Copper Smelting
Phelps Dodge's copper smelters are located at Morenci, Ajo and
Douglas, Arizona. Production of the Morenci mine and most of that from
Tyrone is treated at the Morenci smelter, which has the capacity to treat
approximately 900,000 tons annually of new metal-bearing material (that
is, copper-bearing materials such as concentrates, ore and scrap). Pro-
duction of the Ajo mine, and a portion of the Tyrone production, is
treated at the Ajo smelter, which has the capacity to treat approximately
300,000 tons of new metal-bearing material annually. Production from
the Bisbee mines and a portion of that from Tyrone, as well as custom
material and scrap, is treated at the Douglas smelter, which has the
current capacity to treat approximately 860,000 tons of new metal-bear-
ing material annually. The smelters produce anode copper—copper which
is nearly pure and which is then shipped to Phelps Dodge refineries for
refining. The combined current capacity of Phelps Dodge's three smel-
ters would be sufficient to treat the increased production anticipated
when the Metcalf development has been completed.
Under the air quality law of Arizona, standards were established in
1970 fixing the amounts of particulate matter and sulfur dioxide to be
permitted in the general atmosphere, and emission regulations to imple-
ment those standards were issued. Phelps Dodge's smelters did not comply
with these emission regulations as this report went to press. The
Arizona law requires that smelters must meet the emission regulations by
the end of 1973. Until then, each smelter may only operate under an
annual permit issued by the state and conditioned on satisfactory
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performance under a plan for compliance acceptable to the state. Phelps
Dodge has instituted programs, based in part upon technology not hereto-
fore applied in a copper smelter, designed to enable it to satisfy the
regulations at each of its smelters, and it has received permits to operate
each smelter. The Douglas smelter faces the most severe pollution abate-
ment costs to meet proposed standards, and there has been much publicity
concerning its likely shut down.
PD has announced that it plans to construct, at a cost of approxi-
mately $100 million, a new copper smelter in New Mexico to treat the
production of its Tyrone, New Mexico mine.
Substantial capital expenditures, as well as increased operating ex-
penses, will be required to enable Phelps Dodge to comply with existing
Arizona air quality regulations at its existing smelters. Construction
of air pollution control facilities at the Ajo smelter, the Company's
smallest smelter, is under way at an estimated cost of $27,000,000. The
proposed programs at Morenci and Douglas are more complicated because the
material being treated contains more sulfur per ton of copper than at
Ajo and because the design of those smelters will necessitate the re-
placement of basic furnace units.
The program at Ajo includes new converter flues with waste heat
boilers, improved electrostatic precipitators, an absorption plant—of a
size beyond any ever tried before—to concentrate the SO-, and a large
sulfuric acid plant.
At the Morenci and Douglas smelters installation of new electro-
static precipitators, either replacing or supplementing less efficient
existing units, was completed during 1971 and at Morenci construction of
a new reverberatory furnace with improved emission control equipment was
begun. Detailed engineering and cost studies were completed for addi-
tional emission control facilities that may be required at these two
smelters.
Investments and Holdings
Phelps Dodge has the following investments and stock holdings in
other corporations:
Percent of
Voting Power
American Metal Climax 3%
Southern Peru Copper Corporation 16
Allied Nuclear Corporation (Wyoming) 34
Apache Powder Company (New Jersey) 38
Consolidated Aluminum Corporation (New York) 40
Metminco Incorporated (Delaware) 43
PhelDrak International Corporation (Delaware) 50
Phelps Dodge Enfield Corporation (Delaware) 71
Phelps Dodge Svenska Metallverken
International Corporation (Delaware) 67
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9. Newmont Mining
Newmont is a diversified holding company, whose subsidiaries explore,
develop, finance, manage and operate mineral properties. Newmont also has
interests in petroleum and cement companies and maintains a securities
portfolio.
Magma Copper Company, wholly owned, is the fourth largest U.S. cop-
per producer. Its principal copper properties are located at Superior
and San Manuel, Arizona, which together treat some 44,700 tons of ore
daily. In Canada, the Granduc copper mine in Northern British Columbia,
jointly leased with American Smelting & Refining Company, is expected to
reach full operation at a rate of 7,500 tons daily in late 1971. The
wholly-owned Similkameen project being developed near Princeton, B.C.
should begin producing copper concentrates by mid-1972. Design capacity
is 15,000 tons of ore daily. Newmont has sold its share of concentrates
production at both Canadian properties for several years to Japanese in-
terests.
Newmont has announced that it will spend $30 million by the end of
1973 to reduce sulfur dioxide emissions from Magma's copper smelter in
San Manuel, Arizona. The expenditures cover a converter gas collection
system and an acid plant of 2,000 tons per day capacity which will handle
the entire sulfur dioxide output from the converters. The San Manuel
smelter can treat about one million tons of copper concentrates in a year.
O'okiep Copper Company, 57.5% owned, operates several South African
copper mines with current production of about 9,000 tons of ore daily.
Other mining subsidiaries include Carlin Gold Mining Company, wholly-owned;
Draw Mining Company, 51% owned; and Idarado Mining Company, 80.1% owned.
A joint venture with Asarco is developing a lead-zinc property in Colorado;
production began early in 1971.
Newmont is engaged in petroleum and natural gas exploration and pro-
duction in the U.S. and Canada. It also owns, jointly with Cerro Corpora-
tion, Atlantic Cement Company Newmont's equity in Atlantic's net assets
at the end of 1970 was $36,590,000.
Investments are substantial and, at December 31, 1971, had a market
value of $291 million. Investments include 18.8% ownership of Canadian
Export Oil & Gas Ltd.; 4.4% of Continental Oil Co.; 32.8% of Foote Mineral
Co.; 11.9% of Highveld Steel & Vanadium Corp., Ltd.; 42.3% of Palabora
Holdings Ltd.; 2.7% of Palabora Mining Co., Ltd.; 8.1% of St. Joe Minerals
Corp.; 39.6% of Sherritt Gordon Mines Ltd.; 10.3% of Southern Peru Copper
Corp.; 38.7% of Tsumeb Corp., Ltd.; and 1.6% of Transcontinental Gas Pipe
Line Corporation.
Dividends, paid each year since 1934, averaged 47% of reported net
in 1967-71.
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Beginning in 1972, Newmont will account on an equity basis for invest-
ments in companies 20% owned or more.
10. Kennecott Copper Corporation
Kennecott Copper Corporation is the largest domestic producer of cop-
per, the second largest domestic producer of molybdenum and an important
source of gold, silver, lead, zinc, high quality iron and titanium slag.
Kennecott is an integrated producer of minerals, metals and metal products.
Kennecott is also engaged in the coal mining business through its wholly-
owned subsidiary, Peabody Coal Company. Total annual revenues exceed $1
billion. Peabody is one of the two largest producers of coal in the
domestic market and the largest supplier of coal to the electric utility
industry in the United States.*
Kennecott's 49% interest in Sociedad Minera El Teniente S.A., a
Chilean corporation which owns and operates the El Teniente copper mine
in Chile, was expropriated by the Chilean Constitutional Reform Bill,
which became effective in July 1971. In prior years, Kennecott received
over $20 million per year in dividends from El Teniente. (Kennecott's
investment in Chile was carried at $143.3 million at December 31, 1971.
$84.6 million is the subject of a Contract of Guaranty with the U.S.
Overseas Private Investment Corporation.)
Wholly-owned subsidiaries include Chase Brass and Copper Co., and
Ozark Lead Company. Chase is a leading fabricator of copper and brass
mill products. Chase buys a large portion of its copper from Kennecott,
accounting for 15-20% of Kennecott's domestic copper mine output. Profit
margins are typically low in this part of the industry; in fact, Chase
showed a loss in 1971.
Kennecott also holds two-thirds of Quebec Iron & Titanium Corpora-
tion. (Gulf & Western and New Jersey Zinc have minority interests.)
Kennecott operates four copper properties in the United States. In
1971, these divisions produced 456,000 tons of copper, and 13,000,000
pounds of molybdenum. Kennecott's Utah Copper Division mine in Bingham,
Utah is the second largest copper producer in the world, ranking next to
Chile's Chuquicamata mine. (The El Teniente mine in Chile is the world's
largest underground copper mine.) Blister copper from the Utah smelter
is refined at the company's electrolytic refinery at Garfield, with an
annual capacity of 204,000 tons.
* In 1968, the Federal Trade Commission issued a complaint against
Kennecott alleging that the acquisition of Peabody Coal violated
Section 7 of the Clayton Act and seeking divestiture if such a
violation is established. A resolution of these issues is not
expected until early 1973.
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The Chino Mines Division comprises the Chino mine at Santa Rita, New
Mexico and a concentrator and smelter at Hurley, New Mexico, nine miles
away. The Chino mine is an open-pit operation and produced 80,000 tons
in 1970 and 71,500 tons in 1971. The Ray Mines Division operates an open-
pit mine at Ray, Arizona. The ore is concentrated and smelted in company
facilities at Hayden, Arizona.
At the Nevada Mines Division, mining is by the open pit method in
Ruth, Nevada. The ore is concentrated, then smelted in company plants at
McGill, Nevada. Blister copper produced from the Ray Mines and Nevada
Mines is refined at the refineries of Kennecott Refining Corporation and
American Smelting and Refining Company in Baltimore, Maryland.
The following tables show, for the period indicated, the approximate
amounts of Kennecott's consolidated sales and income (before income taxes,
minority interest and extraordinary items) attributable to each of its
principal lines of business or other source:
(In Thousands of Dollars)
1967 1968 1969 1970
Sales Income Sales Income Sales Income Sales Income
Minerals, metals
& metal products
(1) 489,322 115,059 548,768 130,762 789,263 198,686 849,567 239,712
Coal(2) .... - - 175,720 21,527 260,726 23,843 283,494 21,694
Dividends & other
non-operating in-
come(3) .... - 52,999 - 44,291 - 42,509 - 41,998
Non-operating in-
come deductions(4) - (46.158) - (46,839) - (32.237) - (35.580)
Total. . . . 489,322 121,900 724,488 149,7411,049,989 232,801 1,133,061267,824
(1) In both 1967 and 1968 operations were adversely affected by an eight month industry-
wide strike which ended in March 1968.
(2) Peabody Coal Company was acquired on March 29, 1968. Sales and income exclude
revenues applied against the Peabody production payment.
(3) Includes dividends and interest received from Sociedad Minera El Teniente S.A.
after April 13, 1967.
(4) Consists of unallocated interest expense, research, shutdown and other general
corporate expenses.
Source: Kennecott Prospectus dated April 22, 1971.
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Breakdown of Sales of Minerals & Metal Products (In Thousands of Dollars)
Copper & copper products (1)
Gold
Silver
Sorelmetal(2)
Other
Total
1967
$408,784
7,529
4,317
19,301
22,040
16,707
3,591
7,053
$489.322
1968
$457,746
11,325
6,132
16,845
26,051
19,569
4,734
6,366
$548.768
1969
$645,629
18,181
6,465
40,267
28,186
23,607
14,520
12,408
$789.263
1970
$695,007
14,552
5,569
35,877
33,478
29,060
18,860
17,164
$849.567
(1) Does not include sales of Sociedad Minera El Teniente S.A. after
April 13, 1967. Includes minor amounts of non-copper fabricated
metal products.
(2) Trade name for a high quality iron produced by the Company's sub-
sidiary, Quebec Iron and Titanium Corporation.
Source: Kennecott Prospectus dated April 22, 1971.
For financial statement purposes mining costs attributable to
Peabody's production of coal dedicated under a reserved production pay-
ment agreement are being capitalized. Such costs are being amortized
using per ton rates designed to write off the total estimated mining
costs to be capitalized over the Company's share of the estimated tonnage
to be produced in a thirty-year period. (These costs are deducted for in-
come tax purposes, as incurred.) Revenues of $45,125,523 in 1971 and
$52,184,848 in 1970 have been excluded from income and applied against
the reserved production payment, including principal and interest. The
unpaid principal amount (off the balance sheet) at December 31, 1971, was
$217,839,960. Capitalized mining costs and amortization thereof amounted
to $41,478,700 and $7,397,800, respectively, in 1971, compared to
$45,602,400 and $8,112,200, respectively, in 1970.
Kennecott's expenditures for property, plant and equipment exclu-
sive of such coal mining costs capitalized were $121.1 million in 1971
and $115.6 million in 1970.
E. HOW SECURITY ANALYSTS AND INSTITUTIONAL INVESTORS VIEW SELECTED
NON-FERROUS METALS COMPANIES TODAY1
The primary non-ferrous metal companies are viewed by institutional
analysts in the context of cyclical commodity-based businesses which are,
for the most part, quite sensitive to changes in metal prices and rela-
tively vulnerable to adverse foreign political developments such as
nationalization of properties, or changes in the basis for taxation. In
Based in part on a Non-Ferrous Metals Forum presented by The Wall Street
Transcript and published in the April 10, 1972, edition.
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respect to copper, there seems to be a consensus that the demand for
copper will remain fairly steady with a secular growth trend of 4-5% per
year in consumption. Kennecott is acknowledged to be the largest pro-
ducer with copper mining costs estimated at about 40
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