November/December 1991
While some are calling for a reduction in the $9.1 billion inventory of metals and minerals held for U.S. defense contingencies, others insist the stockpile’s strength must be maintained. How will this debate end?
By Si Wakesberg
Si Wakesberg is New York bureau chief for Scrap Processing and Recycling.
Bit by bit, the U.S. government has been slashing the national stockpile, cutting many of the metals and minerals it has inventoried for defense purposes to lower tonnage levels and planning to reduce some of its long-held materials-including copper, lead, nickel, silver, and zinc-to zero. The process of slimming down the stockpile was begun as far back as the 1960s, but has accelerated sharply in recent months, analysts say. "The recent Gulf war proved that military conflicts have become high-tech and that the need for traditional metals and minerals has lessened considerably," one metals executive notes.
While the Department of Defense seems to be pushing for further reductions of the stockpile, Congress is holding up the acceleration. Rep. Charles E. Bennett (D-Fla.), chairman of the House Armed Services Committee's subcommittee that oversees the national stockpile, has indicated time and again that he believes the United States should have a forceful stockpile program.
The tug-of-war between the Defense Department and Congress appears to be heating up. In a recent a report to Congress, the department proposed a gradual removal from the stockpile of large quantities of metals, arriving eventually for some at “zero goals." Congressional representatives, on the other hand, have not been quick to approve such wholesale slashes of what they believe to be a fundamental bastion of national security. The outcome of the conflict will shape the U.S. stockpile for years to come.
The Stockpile History
While proposals to build a national stockpile can be traced back to 1939, it wasn't until after World War II that a national stockpile policy was developed. The reasoning behind these "accumulations of specific materials deemed critical for defense or essential industry purposes," according to "Trouble in the Third Kingdom: The Minerals Industry in Transition," a 1986 book by former Asarco executive Simon Strauss, is "insurance against unpredictable contingencies."
Stockpiling goals were high during the early years of the program, with the Truman and Eisenhower administrations strongly supporting them. That attitude shifted somewhat during Kennedy's term, when the president called parts of the stockpile "excessive," and the number of commodities in the stockpile was reduced during the following two administrations. (There were some 60 different commodities included in the stockpile in the 1960s; today that number is 39.)
In 1973, Congress made a move to reduce the quantity of each of the commodities held in the national stockpile, passing legislation mandating that only one year's requirements for each material should be maintained. A 1976 review, however, altered the one-year goal to three years--the current level specified for materials still carried in the stockpile.
Releases from the stockpile were made on several occasions when serious interruptions of some metal supplies occurred, such as the Canadian nickel strike in 1969 and the United Nations ban of chromium imports from Rhodesia (now Zimbabwe) in 1966. But in 1979, the Strategic and Critical Materials Stockpiling Revision Act declared that releases of materials from the stockpile could only be made for military purposes.
When stockpile goals are reduced, of course, specified quantities of certain materials may be sold through the Defense Logistics Agency, but they must receive prior Congressional approval. Purchases of metals and minerals for the stockpile--set at $180 million per year--also must be approved by Congress.
This past summer, the House Subcommittee on Seapower and Strategic and Critical Materials considered a bill that would have permitted the Defense Department to sell off large quantities of stockpiled metals and minerals without congressional approval. Before it was passed, however. the measure was amended to retain the congressional-approval requirement. Nevertheless, the amended bill does include specific authority for release of 500,000 pounds of bismuth, 25,000 tons of battery-grade manganese, 173,000 tons of chemical-grade manganese, and 173,000 flasks of mercury.
More Metals to Go?
The Defense Department would like to reduce certain portions of the stockpile even further. In a recent report to Congress, a department official noted that "significant" oversupplies exist of tin, lead, zinc, silver, chromite, ferrochrome, and manganese. Furthermore, according to a recent department report, the Defense Department has “zero goals" for the following metals: bismuth (currently inventoried at 1.889 million pounds), cadmium (6.329 million pounds), copper (24,443 tons), lead (601,043 tons), manganese (14,172 tons), mercury (158,353 flasks), plant-production nickel (37,214 tons), silver (84.839 million troy ounces), and smelter-production zinc (378,768 tons). Other materials slated for zero inventories include aluminum oxide, refractory bauxite, manganese ore, silicon carbide, and vanadium pentoxide.
The report also notes that the Defense Department proposes reductions in the quantities held of platinum, palladium, iridium, chromite, and tin, but would like to increase its stock of columbium, indium, rhodium, ruthenium, and tantalum, all of which are considered vital to national security.
Program Pros and Cons
Proponents of a strong stockpiling program believe it's an important strategy for reducing U.S. dependence on foreign sources for many of the metals and minerals deemed vital for national security. Backing this position up are reports such as a 1985 study of strategic materials by the U.S. Office of Technology, which noted in its opening sentence that "three nations, South Africa, Zaire, and the U.S.S.R., account for over half the world's production of chromium, manganese, and platinum-group metals ... [materials] essential in the production of high-temperature alloys, steel, and stainless steel; industrial and automotive catalysts; electronics; and other applications critical to the U.S. economy and the national defense."
Present-day critics of the U.S. stockpile respond by pointing out that world events have changed the flow of such critical materials. "Russia has been selling much of its metal production to the West because it desperately needs currency, and we are certainly not short of platinum," points out one industry observer. "Our views about the stockpile must change with the times."
Another big argument made in favor of retaining materials in the stockpile is opposition to selling stockpiled metals and minerals for fear of the market effects. Sales of tin from the stockpile, for example, have elicited angry protests from tin-producing countries, which insist that such sales interfere with orderly markets
While Congress has always admonished U.S. sales agencies not to disrupt market patterns, foreign governments and both domestic and foreign producers continually note that just by unleashing amounts of metals to a buying public, the government affects markets. Government sales agency representatives, on the other hand, point out that whatever they sell is sold at established market quotations.
The very existence of a stockpile has been seen by some metals officials as a market menace. "Those supplies are always hanging over our heads, threatening the supply/demand situation," says one metals executive, offering as an example an unfounded rumor that swept the market that the Defense Department was ready to sell 29,000 tons of stockpiled copper in order to achieve its zero goal. "Such a rumor can run down a market," he notes. "Some people just don't realize how difficult it is to get congressional authorization to sell stockpiled metals. They hear 'zero goal' and think it's going to happen tomorrow.”
The Stockpile of the Future
In all likelihood, hitting the zero goals is still a long way off. If Congress approves the Defense Department's proposed stockpile reductions, materials reportedly will be removed from the stockpile gradually. But first, the department must make its pitch to a wary Congress. What will happen is anybody's guess. Insiders say that Congress, grappling with a deficit budget, may look, kindly on any proposal to save money--and plans to scale down the stockpile from its present $9.1 billion to approximately $5.6 billion may appeal to members' sense of fiscal integrity. This savings could result in new funding for the most complex and foreign-based metals, advanced materials research, high-tech applications, and military needs.
How the present inventoried materials will be "disposed" is still a matter of conjecture. No doubt there will be the same historic opposition that existed in previous years and some compromises will have to be made.
Still, when it comes to congressional action, nothing is certain, and it wouldn't be wise to bet that the stockpiling issue will be solved in 1991. One thing, however, is sure: There will be a leaner, slimmer, smaller stockpile if the Defense Department gets its way, with most, if not all, of the traditional metals that once formed its base disappearing.
No Scrap In the Stockpile
A casual reading of the list of metals in the U.S. national stockpile reveals that no scrap is included.
In fact, the shapers of the stockpile have never recognized a need to place scrap into the stockpile, despite a few occasions when such demands were made.
Evidently the rationale for this is that scrap is a domestic product, available in the United States to meet any contingency and, therefore, there's no need to stock it.
Long-time observers of the stockpile point out that the original stockpile did contain brass shells, a secondary product, but this is apparently the only scrap inventoried on the stockpile over its lifetime. •
While some are calling for a reduction in the $9.1 billion inventory of metals and minerals held for U.S. defense contingencies, others insist the stockpile’s strength must be maintained. How will this debate end?