86 • Marine Minerals: Exploring Our New Ocean Frontier 



to be poor investments due to the 1982-83 

 recession.^ 



As a result, metal prices have remained quite low 

 during the 1980s and will probably remain so un- 

 til demand absorbs the unused mineral production 

 capacity. The World Bank Index of metal and min- 

 eral prices indicates that the constant-dollar value 

 of mineral prices in the 1981 to 1985 period was 

 19 percent below the value from 1975 to 1979 and 

 37 percent lower than the years 1965 through 1974.^ 

 To survive these prices, the domestic industry has 

 undergone a significant shakedown and restructur- 

 ing, coupled with cuts in operations to improve effi- 

 ciency. WhDe the surviving firms may emerge as 

 stronger competitors, their ability and willingness 

 to invest in future risky ventures such as seabed 

 mining are likely to be limited. 



Recent increases in the number of government- 

 owned or state-controlled foreign mining ventures 

 have added a new twist to the structure of the world 



mining industry. The domestic industry tends to 

 blame state-owned producers for ignoring market 

 forces and maintaining production despite low 

 prices or supply surpluses. There is some evidence 

 that state-owned operators may continue produc- 

 tion in order to maintain employment or generate 

 much-needed hard currency.'" 



Until recently, production costs in the United 

 States have been well above the world average. 

 Overvalued currency (high value of the dollar) dur- 

 ing 1981-86 also may have contributed to making 

 North American production less competitive. These 

 factors may have masked any effect that state 

 ownership might have played in distorting the world 

 market.'' Nevertheless, domestic competition with 

 state-owned mining ventures is a trend that will 

 likely continue in the future. 



"Tilton, "Changing Trends in Metal Demand." 

 'World Bank, Commodities Division, "Primary Commodity Price 

 Forecasts," Aug. 18, 1986. 



'°M. Radetzki, "The Role of State Owned Enterprises in the In- 

 ternational Metal Mining Industry," paper presented at Conference 

 on Public Policy and the Competitiveness of U.S. and Canadian Metals 

 Production, Colorado School of Mines, Golden, CO, Jan. 27-30, 1987, 

 p. 15. 



"J. EUis, "Copper," The Competitiveness of American Metal Min- 

 ing and Processing (Washington, DC: Congressional Research Service, 

 1986), p. 17. 



FERROALLOYS 



Manganese, chromium, silicon, and a number 

 of other alloying elements are used to impart spe- 

 cific properties to steel. Manganese is also used to 

 reduce the sulfur content of steel and silicon is a 

 deoxidizer. Most elements are added to molten steel 

 in the form of ferroalloys, although some are ad- 

 ded in elemental form or as oxides. Ferroalloys are 

 intermediate products made of iron enriched with 

 the alloying element. Ferromanganese, ferrochro- 

 mium, and ferrosilicon are the major ferroalloys 

 used in the United States. There are no domestic 

 reserves of either manganese or chromium; there- 

 fore the United States must import all of these al- 

 loying elements. 



U.S. ferroalloy producers have lost domestic 

 markets to cheaper foreign sources. Higher domes- 

 tic operating costs related to electric power rates, 

 labor rates, tax rates, transportation costs, and reg- 

 ulatory costs have given foreign producers a com- 

 petitive edge. 



As a result, the form of U.S. chromium imports 

 has changed during the last decade. Since 1981, 

 the United States has imported more finished fer- 

 roalloys and metals than chromite (figure 3-4). Do- 

 mestic production of chromium ferroalloys has de- 

 creased steadily since 1973, when 260,000 tons 

 (chromium content) of ferroalloy was produced, to 

 59,000 tons in 1984 (largely conversion of stock- 

 piled chromite).'^ Foreign producers now supply 

 U.S. markets with about 90 percent of the high- 

 carbon ferrochromium consumed and all of the ore 

 used domestically for the manufacture of chemi- 

 cals and refractories. 



This shift from imports of ores and concentrates 

 to imports of ferrochromium and finished metals 

 could have important strategic implications. Since 

 1975, an increasing number of ferrochromium 



'^R. Brown and G. Murphy, "Ferroalloys," Mineral Facts and 

 Problems— 1985 Edition, Bulletin 675 (Washington, DC: U.S. Bu- 

 reau of Mines, 1986), p. 269. 



