Competitiveness of the U.S. Minerals and Metals Industry (1990) / Chapter Skim
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1. U.S. Minerals and Metals Industry in a Changing Global Context
1. U.S. Minerals and Metals Industry in a Changing Global Context
Pages 9-25
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From page 9... ...
By 1920 open pit mines served by steam shovels had become the rule in iron ore and copper, and electrically driven equipment was being introduced in the larger underground mines. The flotation process, invented in England 9
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From page 10... ...
U.S. financial involvement focused initially on Canada and Mexico, but investors eventually became involved in the South African and Australian gold fields, the Chilean copper mines, and other areas.
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Metals and minerals prices increased at first but then declined as the demand for metals dropped with the onset of recession (see Figure 1-11. Burdened with debt and the need for foreign exchange, Third World producers struggled to maximize output despite lower demand.
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Petroleum companies, seeking expansion opportunities for the increased income generated by rising oil prices, bought major minerals and metals companies and supported their expansion plans. Meanwhile, demand for metals remained depressed after the recession in 1975, even when the world economy recovered.
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Third World metal producers, faced with pressing economic demands and limited sources of capital, again tried to increase production despite stagnating demand. This policy kept prices low, which in turn increased their financial burdens, leading to further overproduction.
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From page 14... ...
industry. For example, the cost of complying with federal environmental regulations is about 6 cents per pound of lead and between 9 and 15 cents per pound of copper about 20 percent of the price of each metal in 1986, though rising metal prices have reduced this fraction to more like 10 percent today; the added cost for many other nations with less stringent environmental restrictions is far lower.
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From page 15... ...
~ ~ 1960 1 1970 1 19, 1 198 , 1 1988 YEAR FIGURE 1-2 U.S. mine output, metal production, and consumption of selected metals as a percentage of Western world.
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From page 16... ...
Due to pronounced integration of the domestic iron and steel industry, however, domestic iron ore prices remained more stable than other ore prices. For example, in the 1979-1983 period, real domestic prices of lead, copper, and zinc declined by 68 percent, 37 percent, and 15 percent, respectively, compared to 10 percent or less for iron ore pellets (CRS, 1986, p.
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From page 17... ...
zinc deposits, and low world zinc prices, the health of the domestic zinc industry has declined sharply since the 1960s more so than in the copper, lead, or iron ore industries. The decline has been seen across the board, at mines, smelters, and refineries.
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From page 18... ...
Production of Selected Metals, 1983-1989 (million metric tons, except as noted) 1983 1984 1985 1986 1987 1988 1989 FERROUS METALS Iron ore 38.2 52.1 49.5 39.5 47.6 57.5 58.7 Iron and steel, 106 short ton Pig iron 48.8 52.0 50.0 44.3 48.3 55.7 53.8 Steel and cast iron 84.6 92.5 88.3 81.6 89.2 99.9 96.7 NONFERROUS METALS Aluminum Primary 3.4 4.1 3.5 3.0 3.3 3.9 4.0 Secondary 0.8 0.8 0.9 0.8 0.9 1.0 1.1 Copper Mine 1.0 1.1 1.1 1.1 1.3 1.4 1.5 Refinerya 1.6 1.5 1.4 1.5 1.6 1.9 2.0 Copper from old scrap 0.4 0.5 0.5 0.5 0.5 0.5 0.5 Gold, 106 troy ounce Mine 2.0 2.1 2.4 3.7 5.0 6.6 7.8 Refinerya 7.1 5.4 5.2 5.6 7.0 8.6 10.4 Lead Mine Refinerya Titanium, 103 metric tons Metal Titanium dioxide ~ ~lnc 0.5 0.4 1.0 1.0 12.7 22.1 21.1 691 758 783 0.4 0.4 1.1 0.9 0.3 0.4 1.0 1.1 16.8 17.8 844 879 0.5 1.1 22.2 926 1007 24.0 Mine 0.2 0.2 0.2 0.2 0.2 0.2 0.3 aPrimary and secondary.
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From page 19... ...
Plant closings led to capacity reductions, while rationalization of mining operations reduced costs. Further cost reductions were achieved by reducing labor costs through both layoffs and wage reductions and by broadening the scope of many union jobs to increase flexibility and reduce personnel requirements.
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Third, the dollar weakened against most other major currencies, reducing relative domestic costs of production and making domestic products more attractive to domestic and many foreign consumers alike (see Figure 1-51. This also benefited foreign producers of nonfuel minerals- Canada, Australia, and the Third World as the lower prices in other currencies encouraged increased consumption.
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From page 21... ...
During 1987 and 1988 lead mine and metal production both increased, reversing the trend of the previous years, although production remained below the levels of 1979. The average world lead price rose 62 percent between April 1 1 1 1 Chile U.S.
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From page 22... ...
Despite these reductions, primary refinery capacity utilization of the domestic lead industry was still only 60 percent in 1987, the lowest rate since 1968, St. Joe Lead Mines, Missouri lead operations, circa 1870.
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Demand for domestic steel grew, so that plants operated at well over 85 percent of capacity in 1988, a strong improvement over the 55 to 70 percent utilization rates of 1986. Most domestic steel producers reported profits, but plant closures
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From page 24... ...
However, the iron ore industry lagged behind the general improvement: 1986 was the second-worst year for U.S. iron ore production since 1939, although production increased by 25 percent from 1987 to 1988 as prices held steady.
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From page 25... ...
1988. The Mineral Position of the United States.
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