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OCR for page R1
COMPETITIVENESS
OF THE
U.S. MINERALS
AND METALS INDUSTRY
Committee on
Competitiveness of the Minerals and Metals Industry
NATIONAL MATERIALS ADVISORY BOARD
COMMISSION ON ENGINEERING AND TECHNICAL SYSTEMS
NATIONAL RESEARCH COUNCIL
NATIONAL ACADEMY PRESS
Washington, D.C.
1990
OCR for page R2
NATIONAL ACADEMY PRESS · 2101 Constitution Avenue, N.W. · Washington, D.C.
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National
Research Council, whose members are chosen from the councils of the National Academy of Sciences, the
National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible
for the report were chosen for their special competences and with regard for appropriate balance.
This report has been reviewed by a group other than the authors according to procedures approved by a
Report Review Committee consisting of members of the National Academy of Sciences, the National Acad-
emy of Engineering, and the Institute of Medicine.
This report was supported by the U.S. Department of the Interior, Bureau of Mines under Grant No.
GO 1 78055.
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished
scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technol-
ogy and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress
in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and
technical matters. Dr. Frank Press is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National
Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its adminis-
tration and in the selection of its members, sharing with the National Academy of Sciences the responsibility
for advising the federal government. The National Academy of Engineering also sponsors engineering
programs aimed at meeting national needs, encourages education and research, and recognizes the superior
achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the
services of eminent members of appropriate professions in the examination of policy matters pertaining to
the health of the public. The Institute acts under the responsibility given to the National Academy of
Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative,
to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute
of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate
the broad community of science and technology with the Academy's purposes of furthering knowledge and
advising the federal government. Functioning in accordance with general policies determined by the Acad-
emy, the Council has become the principal operating agency of both the National Academy of Sciences and
the National Academy of Engineering in providing services to the government, the public, and the scientific
and engineering communities. The Council is administered jointly by both Academies and the Institute of
Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the
National Research Council.
Library of Congress Cata'oging-in-Publication Data
National Research Council (U.S.) Committee on Competitiveness of the
U.S. Minerals and Metals Industry.
Competitiveness of the U.S. minerals and metals industry: report
of the Committee on Competitiveness of the U.S. Minerals and Metals
Industry, National Materials Advisory Board, Commission on
Engineering and Technical Systems, National Research Council.
p. cm.
Includes bibliographical references and index.
ISBN 0-309-04245-3
1. Mineral industries—United States. 2. Metal trade—United
States. 3. Mineral industries. 4. Metal trade. 5. Competition,
International. I. Title.
HD9506.U62N34 1990
338.2'0973—dc20 90-39804
CIP
Printed in the United States of America
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NATIONAL ACADEMY OF ENGINEERING
2101 Constitution Avenue N W
Washington D C. 20418
Mr. T S Ary
Director
Bureau of Mines
U.S. Department of the Interior
2401 E Street, N.W.
Washington, D.C. 20241
Dear Mr. Ary:
Office of the President
I am pleased to transmit a report on The Competitiveness
of the Minerals and Metals Industry, prepared by the National
Materials Advisory Board of the National Research Council
(NRC). As with all reports of the NRC, the report is the
responsibility of the committee, but its review has been
monitored by the Academies' Report Review Committee.
The National Academy of Engineering (NAE) has long been
concerned about the competitiveness of U.S. industry in an
increasingly integrated global economy. The U.S. minerals
industry was selected for study after an initial workshop in
February 1986 that highlighted the increasing competitive
pressures experienced by the industry. At the workshop it
became apparent that a much larger effort would be required to
assess the future health of the industry.
In June 1987, the Assistant Secretary for Water and
Science of the Department of the Interior requested that we
consider a study focused on the opportunities that would
significantly improve the ability of U.S. producers to compete
with foreign producers and the opportunities that exist for
advanced materials and new technology to improve operating
efficiency in the minerals industry. The issues raised by the
Assistant Secretary were parallel to the concerns of the NAE
and resulted in the present study funded by the Bureau of
Mines.
The minerals industry contributes significantly to the
nation's economic strength and represents a multi-billion
dollar enterprise that employs on the order of one half
million U.S. workers and provides much of the materials
foundation for U.S. manufacturing. The report stresses that
although the domestic industry is currently competitive, this
NAE't~25
OCR for page R4
competitiveness may be transitory. The competitiveness of the
industry is based largely on non-technological measures that
have already yielded many of their possible benefits. As a
result, the domestic industry must in the future focus
increasingly on other measures, most notably the use of
technology.
The minerals and metals industry although unique in some
respects is very much like most basic industries. It is
noteworthy that the report echoes many of the recommendations
of studies of other industries including the need for new
mechanisms for conducting cooperative research and development
between industry, universities, and the government.
It is our hope that the Bureau of Mines which has
recognized the importance of maintaining the competitiveness
in the U.S. minerals and metals industry will find the
recommendations in this report useful in the formulation of
policies and programs that can achieve this goal.
Sincerely,
Robert M. White
President
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COMMITTEE ON COMPETITIVENESS OF
THE U.S. MINERALS AND METALS INDUSTRY
ALVIN W. TRIVELPIECE (ChairmanJ, Oak Ridge National Laboratory,
Oak Ridge, Tennessee
ROBERT R. BEEBE (Vice Chairman), Homestake Mining Company, San
Francisco, California
GEORGE S. ANSELL, Colorado School of Mines, Golden
NATHANIEL ARBITER, Consultant, Vail, Arizona
PATRICK R. ATKINS, Aluminum Company of America, Pittsburgh,
Pennsylvania
R. STEPHEN BERRY, University of Chicago, Chicago, Illinois
PETER CANNON, CONDUCTUS, Sunnyvale, California
JAMES ECONOMY, University of Illinois, Urbana
JAMES A. FORD, Consultant, Johnson City, Tennessee
NORMAN A. GJOSTEIN, Ford Motor Company, Dearborn, Michigan
BRUCE A. KENNEDY, P. T. Pelsart Management Services, Jakarta,
Indonesia
WILLIAM W. LEWIS, McKinsey and Company, Washington, D.C.
JAMES S. MOOSE, The World Bank, Washington, D.C.
HAROLD W. PAXTON, Carnegie Mellon University, Pittsburgh,
Pennsylvania
JOHN E. TILTON, Colorado School of Mines, Golden
A. DOUGLAS ZUNKEL, A. D. Zunkel Consultants, Inc., Vancouver,
Washington
Liaison Representative
GEORGE WHITE, Bureau of Mines, Washington, D.C.
NMAB Staff
Lance N. Antrim, Project Officer
Robert M. Ehrenreich, Staff Officer
Courtland S. Lewis, Consultant/Writer
Paul B. Phelps, Editor
Mary W. Brittain, Administrative Officer
Aida C. Neel, Senior Secretary
Klaus M. Zwilsky, Staff Director
v
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NATIONAL MATERIALS ADVISORY BOARD
JAMES C. WILLIAMS (Chairman), General Electric Company,
Cincinnati, Ohio
BERNARD H. KEAR (Past ChairmanJ, Rutgers University, Piscataway,
New Jersey
NORBERT S. BAER, New York University, New York, New York
ROBERT R. BEEBE, Homestake Mining Company, San Francisco,
California
FRANK W. GROSSMAN, Lockheed Missiles & Space Co., Inc.,
Sunnyvale, California
JAMES ECONOMY, University of Illinois, Urbana
JAMES A. FORD, Consultant, Johnson City, Tennessee
ROBERT E. GREEN, JR., Johns Hopkins University, Baltimore, Maryland
JOHN K. HULM (Retired), Westinghouse Research Laboratories,
Pittsburgh, Pennsylvania
FRANK E. JAMERSON, General Motors Research Laboratories, Warren,
Michigan
MELVIN F. KANNINEN, Southwest Research Institute, San Antonio,
Texas
RONALD M. LATANISION, Massachusetts Institute of Technology,
Cambridge
ROBERT A. LAUDISE, AT&T Bell Laboratories, Murray Hill, New
Jersey
WILLIAM D. NIX, Stanford University, Stanford, California
DONALD R. PAUL, University of Texas, Austin
JOSEPH L. PENTECOST, Georgia Institute of Technology, Atlanta
JOHN P. RIGGS, Hoechst Celanese Corporation, Summit, New Jersey
MAXINE L. SAVITZ, Garrett Ceramic Components Division,
Allied-Signal Aerospace Co., Torrance, California
DALE F. STEIN, Michigan Technological University, Houghton
EARL R. THOMPSON, United Technologies Research Center, East
Hartford, Connecticut
JAMES R. WEIR, JR., Oak Ridge National Laboratory, Oak Ridge,
Tennessee
NMAB Staff
Klaus M. Zwilsky, Director
Stanley M. Barkin, Associate Director
Mary W. Brittain, Administrative Officer
Vl
OCR for page R7
Abstract
This report of the Committee on Competitiveness of the Minerals and
Metals Industry contains comprehensive assessments of the recent history
and current structure of the global minerals and metals industry and of the
competitive status of the U.S. industry within that global marketplace. The
industry contributes significantly to the nation's economic strength and military
security, representing a multibillion dollar enterprise that employed 500,000
U.S. workers in 1989 and provided the material foundation for U.S. manufacturing.
The report assesses the technologies currently in use by the domestic industry
and recommends research and development (R&D) needed to pursue future
technologies. Projected trends in demand for metals are examined in light
of increasing demand for and substitution by new materials. The nation's
industrial and academic capabilities for R&D in these fields are evaluated,
and human resource issues are discussed quantitatively. Federal support of
mining- and metals-related R&D across all agencies is summarized. The
federal role in support of this industry is discussed in depth, with a particular
focus on the role of the Bureau of Mines. Minerals and metals policies of
some other nations are briefly reviewed. Mechanisms for improving the
development and implementation of new technologies by the domestic industry
are suggested. Finally, a number of recommendations are directed at government,
industry, and academe recommendations that are intended to foster the
development of partnerships among these three sectors for the pursuit of
technology to improve the competitiveness of the U.S. industry.
v''
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Preface
Throughout the 1980s a dominant theme heard in Washington and in
corporate boardrooms across the nation was concern about the declining
competitiveness of U.S. industry. The decline of exports, jobs, and market
share in one industry after another became almost a litany, as the nation's
leaders struggled to understand the decline and find ways to reverse it. One
of the hardest-hit industries was the minerals- and metals-producing indus-
try, a diverse group of mining companies, mineral processors, and metal
fabricators. The industry was facing intense competition not only from
low-cost foreign producers of commodity minerals but also from alternative
materials such as plastics, ceramics, and optical fibers. By late 1985, after
four consecutive years of heavy losses, observers were predicting the "death
of mining" in the United States and a very dim future for U.S. metals
producers.
This prospect was of concern not only to the industry but also to many
people in government, and in particular to the U.S. Department of the Inte-
rior and the Bureau of Mines. In June 1987 the Assistant Secretary of the
Interior for Water and Science wrote to the president of the National Acad-
emy of Engineering (NAE) requesting a study of "the implications of materials
science and engineering to the minerals producing industries." The NAE
turned to the National Research Council (NRC), which initiated a study by
the National Materials Advisory Board (NMAB) under the sponsorship of
the Bureau of Mines.
Following discussions with Bureau of Mines representatives, NMAB developed
a tentative set of objectives for the study. Essentially, the study would (1)
IX
OCR for page R10
x
PREFACE
seek to identify significant new technologies that might improve minerals
production and processing, (2) attempt to gauge their likely impact on the
competitiveness of the domestic industry, and (3) recommend ways to improve
the development and implementation of technologies throughout the indus-
try. The intent was to build on the parallel NRC study on Materials Science
and Engineering for the l990s and determine where and how science and
technology could exert significant leverage to lower the cost or improve the
performance of the products of the materials industry. An important underlying
focus of both studies was on identifying ways in which the federal govern-
ment can contribute to the effective application of technology in industry.
The Committee on Competitiveness of the Minerals and Metals Industry
was formed by the NRC. The membership of the committee was selected to
bring balanced and broad-based expertise to bear in addressing these issues.
As the committee was beginning its deliberations, however, conditions in
the minerals and metals industry changed. In 1987 both prices and the
demand for metals turned sharply upward. At the same time, the value of
the dollar was declining against many major currencies, increasing demands
for U.S. minerals. These trends generated a sudden and very welcome
surge in profits for U.S. minerals and metals producers. Drastic restructur-
ing undertaken over the preceding years had significantly reduced the size
of the industry, but for the short term at least what remained of the industry
was suddenly in an improved financial situation. Having seen numerous
cycles of profit and loss in the past, however, committee members remained
concerned about the long-term implications of this business revival. Nevertheless,
the change in climate prompted the committee to take a step back from the
immediate situation and address the longer-term technological basis of the
industry and its interactions with its "support base" in government and
academe. Thus, to the initial focus on specific technologies was added a
second focus on long-range structural improvements to generate technology
and put it into practice in the minerals and metals industry.
The committee organized itself into three working groups dealing with
the structure of the industry, patterns of supply and demand, and the role of
science and technology. The committee's efforts respectively became the
basis for Chapters 1, 2, and 3. The committee as a whole participated in the
formulation of institutional issues (Chapter 4), policy issues (Chapter 5),
and of course in the recommendations (Chapter 61. The committee also
held two workshops "Changing Patterns of Supply and Demand" and the
"Role of Science and Technology in the Competitiveness of the Minerals
and Metals Industry" and sought advice from many individuals in govern-
ment, industry, and academe.
Perhaps the overriding conclusion of the committee is that, through cut-
backs in funding for industry and academic research and development (R&D),
through a loss of boldness in the R&D sponsored or performed by government
OCR for page R11
PREFACE
Xl
laboratories, and through a lack of cooperation among the various sectors of
the minerals and metals community, the "technology pipeline" for the domestic
industry has all but dried up. Most of the committee's recommendations
are intended to reopen that pipeline and stimulate a strong, steady flow of
new technologies by fostering a three-way partnership between government,
industry, and academe that will produce a coherent national program of
mining and minerals R&D.
We believe that the committee's recommendations represent a roadmap
for ensuring that the United States can continue to remain strong in providing
competitive raw materials. This report is offered with the hope that its
recommendations will be adopted by those who are responsible for decisions
that will determine the future of the vital U.S. minerals and metals industry.
ALVIN W. TRIVELPIECE, Chairman
ROBERT R. BEEBE, Vice Chairman
Committee on Competitiveness of the
U.S. Minerals and Metals Industry
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Acknowledgments
This study on the competitiveness of the diverse minerals and metals
industry could not have been accomplished without the contributions of
many individuals. The work of the committee was supported by the Bureau
of Mines of the U.S. Department of the Interior, and we acknowledge this
support with thanks. T S Ary, Director of the Bureau of Mines, maintained
an active interest in the committee throughout the study. David S. Brown,
Associate Director for Information and Analysis, and his deputy, Hermann
Enzer, provided invaluable information to the committee. David R. Forshey,
Associate Director for Research, and John Breslin, Chief of Staff for Research,
supplied background and pertinent information requested by the committee.
The chief of the Office of Mineral Institutes, Ronald Munson, also provided
valuable information, as did Steven Hill, director of the Salt Lake City
Research Center, and Lewis Wade, director of the Twin Cities Research
Center. The Bureau of Mines Chief Staff Officer, John D. Morgan, pro-
vided valuable information related to policy from the minerals and metals
standpoint. Additional information was supplied by James Donahue, chief
of the Budget Office; William Schmidt and Philip Meikle, research program
managers; and by many commodities specialists at the Bureau.
Presentations to the committee by experts from industry, academe, and
government provided information that was instrumental in establishing the
framework for the study. They are Paul H. O'Neill, Aluminum Company of
America; John Alic, Office of Technology Assessment; Dodd A. Carr, In-
ternational Lead-Zinc Research Organization; William Dennis, American
. . .
x'''
OCR for page R14
XIV
ACKNOWLEDGMENTS
Iron & Steel Institute; William Drescher, International Copper Association;
Douglas W. Fuerstenau, University of California at Berkeley; Carl Peterson,
Massachusetts Institute of Technology; Bruce Tippen, University of Ala-
bama; Dick J. Wilkins, University of Delaware; John C. Williams, U.S.
Department of Commerce; William R. D. Wilson, Northwestern University;
Jenifer Robison, Office of Technology Assessment; Hans Landsberg, Resources
for the Future; William A. Owczarski, Office of Science and Technology
Policy; David Bussard, U.S. Environmental Protection Agency; Simon D.
Strauss, consultant; and Paul C. Maxwell, Committee on Science, Space,
and Technology, U.S. House of Representatives.
The committee is also grateful for the information provided on academic
programs, enrollments, and faculty members in the relevant fields by Eileen
Ashford from the South Dakota School of Mines and Technology.
In addition, the committee appreciates the assistance of the many indi-
viduals in government agencies, including the National Science Foundation;
U.S. Geological Survey; U.S. Department of Energy; National Institute of
Standards and Technology; Defense Advanced Research Projects Agency,
U.S. Department of Defense; National Oceanic and Atmospheric Administration;
and the Minerals Management Service of the U.S. Department of the Interior.
The committee also wishes to thank John A. White and John Larsen-Basse
of the National Science Foundation for their assistance and for the information
they provided.
Several industry associations are thanked for their help. They are the
American Iron and Steel Institute, International Lead-Zinc Research Organization,
International Copper Association, Nonferrous Metals Producers Group, American
Mining Congress, Mining and Metallurgical Society of America, and the
Mining and Excavation Research Institute.
The committee acknowledges and thanks the participants of the two workshops.
The workshop on "Changing Patterns of Supply and Demand" was attended
by R. O. Muth, ASARCO, and John K. Hammes, Citibank, and the workshop
on the "Role of Science and Technology in the Competitiveness of the
Minerals and Metals Industry" was attended by Roshan Bhappu, Mountain
States Research and Development; David Bollin, Pincock, Allen, and Holt;
Maurice A. Cocquerell, Acres Davy McKee Engineering; Maurice Davidson,
Newmont Exploration; Terry P. McNulty, Hazen Research, Inc.; Ronald An
Miller, Aluminum Company of America; Hayden Murray, Indiana University;
M. D. Salamon, Colorado School of Mines; and Donald Steeples, Kansas
Geological Survey.
The committee also wishes to acknowledge discussions with the several
executives of mining companies who gave their candid assessments of the
structure of the industry and their views on the future of research and
development in the mining industry.
The committee is especially grateful for the assistance of George White,
OCR for page R15
ACKNOWLEDGMENTS
XV
Director of Special Projects, Bureau of Mines, who served as liaison to the
committee. He obtained a great deal of information for the committee both
in terms of Bureau reports and legislation and in presentations related to the
structure, mission, and program of the Bureau.
Finally, we extend our appreciation to the staff of the National Materials
Advisory Board for their support. They are Lance N. Antrim, project offi-
cer; Robert M. Ehrenreich, staff officer; Courtland S. Lewis, consultant/
writer; Paul B. Phelps, editor; Mary W. Brittain, administrative officer;
Aida C. Neel, senior secretary; and Klaus M. Zwilsky, director.
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Contents
EXECUTIVE SUMMARY ...
Technology and Competitiveness, 3
Recommended Actions, 7
1 U.S. MINERALS AND METALS INDUSTRY IN A CHANGING
GLOBAL CONTEXT.......................................
World Minerals and Metals Industry, 9
Trends in the U.S. Industry, 14
Revival of the Minerals and Metals Industry, 18
References, 24
2 SUPPLY, DEMAND, AND COMPETITIVENESS ......
Overview of the Minerals and Metals Industry, 26
Trends in Mineral and Metal Production, 30
Trends in Metals Demand, 35
Competitiveness of the U.S. Industry, 44
· · 9
......... 26
3 ROLE OF SCIENCE AND TECHNOLOGY IN MINERALS AND
METALS COMPETITIVENESS ISSUES 56
Background, 57
Exploration Technologies, 58
Mining Technologies, 62
Mineral Processing Technologies, 65
Metal Extraction Technologies, 68
Research Agenda, 75
References, 78
xvii
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. . .
XV111
4 RESOURCES FOR RESEARCH AND DEVELOPMENT
Industry Research and Development, 79
Federal Role in Minerals Research and Development, 81
Academic Research Resources and Capabilities, 87
Issues Affecting Future Research and Development, 94
Reference, 99
5 FEDERAL ROLE IN TECHNOLOGY AND
COMPETITIVENESS . . . . . . . . . . . . . . . .
Minerals and Metals Policy in the U.S. and Abroad, 102
Role of the Bureau of Mines, 108
Opportunities for Action, 1 13
6 RECOMMENDATIONS..............
Industry and Academe, 123
Bureau of Mines and Other Agencies, 125
APPENDIX Biographical Sketches of Committee Members
INDEX
CONTENTS
.... 79
100
.123
.131
135
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COMPETITIVENESS
OF THE
U.S. MINERALS
AND METALS INDUSTRY
OCR for page R20
Frontispiece: California hand
jig, c. 1860; California placer
gold gravity rocker, c. 1860
(Courtesy N. ArbiterJ; Gold
operations: Round Mountain,
NV and McLaughlin, Lower
Lake, CA (Courtesy Homestake
Mining Co., photographer
Mickey BrimJ
